The Norwegian Climate Investment Fund, managed by Norfund, has announced its inaugural direct investments in renewable energy projects in Indonesia, a nation heavily reliant on coal. This initiative, totaling USD 29.6 million, marks Norway’s commitment to facilitating a just energy transition within the country.
The announcement coincides with the official visit of Norwegian Minister of Energy, Terje Aasland, to Indonesia.
“Norway and Indonesia have cultivated close energy cooperation over the past three decades. The Climate Investment Fund plays a pivotal role in enhancing this collaboration. Norfund brings extensive experience in renewable energy investments in developing nations, while Tinfos contributes critical expertise in hydropower. Together with Indonesian partners, these investments aim to bolster energy security and reduce emissions,” stated Minister Terje Aasland.
During its G20 presidency in 2022, Norway, along with G7 countries, the EU, and Denmark, initiated the Just Energy Transition Partnership (JETP) with Indonesia. The partnership seeks to mobilize USD 20 billion to accelerate Indonesia’s energy transition, half of which is expected to come from private finance. Norway pledged up to USD 250 million through the Climate Investment Fund for investments in Indonesia.
Anders Blom, Senior Vice President of Renewable Energy at Norfund, expressed enthusiasm about the Fund’s purpose: “The Climate Investment Fund targets markets heavily reliant on coal, such as Indonesia, where our investments can make a substantial impact. We are pleased to announce our initial investments in the country.”
Earlier this year, the Climate Investment Fund invested in a regional fund covering Indonesia. Today’s announcement marks the start of direct investments through partnerships focused on rooftop solar, combined solar and battery solutions, and a hydropower project.
“The energy transition in Indonesia poses challenges due to its abundant fossil fuel resources and fragmented national grid. Nevertheless, we recognize the potential of investing in decentralized renewable energy projects,” noted Blom.
These new investments are anticipated to prevent emissions of nearly half a million tons of CO2e annually.
Norwegian Hydropower Expertise in Indonesia
Tinfos, a Norwegian hydropower company with over 130 years of experience, has partnered with Norfund to develop small-scale hydropower projects in Indonesia. Despite modest beginnings, Tinfos aims to develop 1TWh of hydroelectric capacity by 2032.
“Our partnership with Norfund is integral to achieving this ambitious goal,” stated Harald Reigstad, Investment Director at Tinfos.
Tinfos entered the Indonesian market in 2007 and has since developed several small hydroelectric plants across the country.
Minister Terje Aasland’s visit to Jakarta includes participation in the 10th Energy Dialogue between Norway and Indonesia, visits to the JETP secretariat, and meetings with Tinfos and other Norwegian entities active in Indonesia.
USD 25 Million for Rooftop Solar
The Climate Investment Fund has allocated USD 25 million to Xurya, a company offering rooftop solar rental solutions to commercial and industrial enterprises. By renting solar PV systems, businesses can mitigate high installation costs associated with renewable energy adoption, facilitating a shift from fossil fuels. This investment is projected to avoid approximately 370,000 tons of CO2e annually.
“Xurya marks our inaugural direct investment in Indonesia through the Climate Investment Fund. We look forward to actively contributing to the company’s growth through this equity investment,” remarked Anders Blom.
Addressing Complex Electricity Needs Across Islands
Indonesia’s archipelago, comprising over 17,500 islands, presents challenges for electricity supply, with many remote areas lacking connection to the national grid. As part of the JETP initiative, efforts are underway to modernize more than 4,000 fossil-fueled mini-grids in remote regions.
Empat Mitra Indika Tenaga Surya (EMITS) has partnered with Norfund to develop combined solar and battery storage facilities on remote islands. The agreement, signed in Jakarta on July 1st, aims to provide stable and renewable electricity to island residents and businesses.
“This project holds significant potential, and we are eager to explore it further through our partnership,” said Anders Blom.
EMITS aims to install up to 500 MWP of solar capacity by 2025 and has already established a 60 MW installed base across key regions in Indonesia.
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