Alfian, Jakarta – Indonesia will need US$4 billion in investment for energy efficiency projects to slash its energy consumption by a quarter, concludes a survey commissioned by the Asian Development Bank (ADB).
The survey was conducted between May and October this year, Madeleine Varkay, the ADB's senior private sector development specialist for Southeast Asia, said Thursday.
"We did the survey on energy consumption in buildings and factories," Varkay said. "Of the $4 billion, $1 billion is required for energy efficiency in commercial buildings and $3 billion for that in factories."
The types of project range from electrical system retrofits to improving the efficiency of air-conditioning systems, to lighting and waste heat recovery.
"The efficiency efforts will save energy consumption by about 25 percent," said Rehan Kausar, the ADB infrastructure specialist for Indonesia resident mission.
Anthony Jude, director of the energy and water division at the ADB's Southeast Asia Department, said the $4 billion investment required for the energy efficiency projects could be seen as a potential market for commercial banks and the manufacturing sector.
"Indonesia's energy sector is a vast field of investment opportunities awaiting the participation of domestic and international banking as well as the industrial sectors," he said on the sidelines of the seminar "Financing US$4 billion Energy Efficiency Solutions in Indonesia".
The seminar, jointly organized by the ADB, the Indonesian Electrical Power Society (MKI) and the Indonesian Chamber of Commerce and Industry (Kadin), was aimed at promoting the $4 billion investment opportunities among bankers and industrialists.
"From the ADB's side, of the $4 billion required investment, we can contribute loans of between $300 million and $400 million a year," Varkay said.
MKI executive director Andri Doni said the energy efficiency projects needed supporting regulations to make them bankable.
"There must be a regulation ordering (state electricity monopoly) PLN to buy the excess power produced from the energy efficiency efforts at market price," he said, adding the same policy had been applied in other countries.