Developing a Guarantee Instrument to Catalyze Renewable Energy Investments in Indonesia

Indonesia requires an estimated USD 125 billion by 2025 to meet its clean energy mix target of 23%. While guarantee instruments can address security gaps, improve risk-return profiles, and increase access to long-term funding, no current guarantee products in the Indonesian market specifically cover the renewable energy sector. The document suggests that a local credit guarantee could rejuvenate the market, though it faces challenges such as competition from corporate guarantees and limited awareness among financial institutions.

• Indonesia needs to increase its clean energy mix from 5% to 23% by 2025, requiring estimated investments of USD 125 billion.
• Guarantee instruments can mitigate three specific investment barriers: the security gap for small developers, the risk-return profile of projects, and the lack of access to long-term funding from local banks.
• Despite the presence of ten organizations offering 13 guarantee products in Indonesia, none are specifically dedicated to the renewable energy sector.
• The implementation of a credit guarantee for renewable energy in Indonesia faces four primary challenges: competition with lower-cost corporate guarantees, the requirement for 'first demand' features, limited involvement in default recovery, and low awareness among financial institutions.

APA

Climate Policy Initiative (2019). Developing a Guarantee Instrument to Catalyze Renewable Energy Investments in Indonesia. https://www.climatepolicyinitiative.org/publication/developing-a-guarantee-instrument-to-catalyze-renewable-energy-investments-in-indonesia/

Chicago

Climate Policy Initiative. Developing a Guarantee Instrument to Catalyze Renewable Energy Investments in Indonesia. 2019. https://www.climatepolicyinitiative.org/publication/developing-a-guarantee-instrument-to-catalyze-renewable-energy-investments-in-indonesia/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Developing a Guarantee Instrument to Catalyze Renewable Energy Investments in Indonesia |date=3 June 2019 |url=https://www.climatepolicyinitiative.org/publication/developing-a-guarantee-instrument-to-catalyze-renewable-energy-investments-in-indonesia/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2019developing, author = {{Climate Policy Initiative}}, title = {{Developing a Guarantee Instrument to Catalyze Renewable Energy Investments in Indonesia}}, institution = {Climate Policy Initiative}, year = {2019}, month = jun, url = {https://www.climatepolicyinitiative.org/publication/developing-a-guarantee-instrument-to-catalyze-renewable-energy-investments-in-indonesia/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }