Hendra Iswahyudi, Director of Energy Conservation, Directorate General of New, Renewable Energy, and Energy Conservation, Ministry of Energy and Mineral Resources further noted that there are 459 targeted industrial companies that could adopt energy efficiency measures to support Energy Self-Sufficiency as one of the national priorities.

Head of the Green Industry Center at the Ministry of Industry, Apit Nugraha, urged industry players to transform to green industry, as emission reduction policies in the industrial sector will soon be implemented in line with Indonesia’s Enhanced Nationally Determined Contribution (NDC) targets. He also highlighted opportunities for ESCOs to enter the industrial sector as Green Industry Services Companies (GISCOs).

The first discussion session addressed current industry conditions. Similar to findings from the previous workshop, several companies have already implemented the ISO 50001 Energy Management System, though significant barriers remain. Industrial companies, particularly State-Owned Enterprises (SOEs), often face difficulties in securing CAPEX funding. Additionally, industry players perceive the return on investment (ROI) for energy efficiency technologies as lengthy, and the adoption of efficient technologies can increase production costs. Therefore, support is needed in the form of OPEX-based funding options as an alternative to CAPEX, energy audits to assess energy efficiency and electrification needs in industrial facilities, structured guidelines for energy savings in equipment (such as motors, boilers, furnaces, compressors, and chillers), information on new technologies that enhance energy efficiency, and both technical and non-technical training to raise awareness.

The workshop included a diverse range of industrial participants, representing sectors such as chemicals, pulp and paper, iron and steel, cement and building materials, food and beverages, textiles and apparel, fertilizers and chemicals, and glass and ceramics. This varied representation highlighted the cross-industry interest in developing energy efficiency projects and addressing energy efficiency challenges.

The next session focused on the overview and challenges faced by ESCOs. It was highlighted that ESCOs vary in scope, with some specializing in services like building efficiency, while others focus on niche industrial sectors. Despite some growth, ESCO development in Indonesia remains limited. Tensions often arise due to differing expectations around payback periods, with industrial companies viewing a 10-year ROI as excessive, while ESCOs consider it relatively short. Furthermore, some industries are hesitant to engage with ESCOs, due to concerns about the potential impacts on their financial solvency and opting for direct technology purchases instead. Even when ESCOs are involved, their role often ends at the recommendation stage, as industries feel capable of implementing energy-saving measures independently. To address these challenges, ESCOs, together with FIs, must tailor their offerings to the specific needs of each industry. In addition, stronger regulations and policies are needed to support the development and expansion of ESCOs in Indonesia.

The third session started by addressing the concerns raised by industries and ESCOs which highlighted that FIs tend to be more cautious (risk-averse) in providing financing for energy efficiency activities, which are still perceived as risky. This may be due to collateral issues or the relatively small loan sizes. Financial institutions are encouraged to take bolder risks in financing energy efficiency. This session also featured a presentation on Guarantee Mechanism from GuarantCo and Energy Savings Insurance from CEFIM (Clean Energy Finance and Investment Mobilisation). Both guarantee mechanism and energy saving insurance (ESI) can help reduce the risks in energy efficiency projects that are still considered high-risk with low returns. 

Unlike the previous workshop, the final session concluded with a speed-dating session aimed at fostering collaboration among industrial companies, ESCOs, and FIs to encourage partnerships for energy efficiency projects. A key highlight from this session was the perspective shared by industries on green financing. Sustainability-Linked Loans (SLLs) require comprehensive criteria, including KPI-based assessments and third-party verification, which can increase associated costs. Meanwhile, SLLs typically offer interest rates comparable to conventional loans, which has resulted in industries preferring conventional loans due to their faster approval processes and lower costs. To drive greater adoption of SLLs, FIs need to offer more competitive rates. Moreover, the need for strong government support, particularly through regulations that facilitate procurement via savings schemes, was emphasized to assist ESCOs. Such regulations could serve as a northstar for ESCOs’ development within industries. JETP Secretariat seeks to meet the needs of FIs while also addressing the demands of industries and service providers, such as ESCOs, to enable impactful energy efficiency projects.

The event drew robust participation, with over 100 attendees joining both online and in person. Representatives from 24 industrial companies presented updates on their energy efficiency advancements, while 14 ESCOs shared insights and expertise. During the event, 16 FIs also shared their financial products for the energy sector.

Please click here to access the materials of the speakers and the summary of the proceedings.