Indonesia's ambitious 35GW renewables plan derailed by funding woes

Less than 4% of planned capacity has come online.

Indonesia’s ambitious plan to install 35GW of new renewables capacity by 2019 has proved to be an impossible goal, with projects impacted by funding problems and fickle government policies.

A report by PwC showed that as of April 2018, out of the original planned capacity, only 4% has come online, 35% has been contracted but is not yet under construction, 48% has been contracted and is under construction, and 13% is still being planned.

In particular, there is no guarantee that the 35% of contracted projects which have not yet entered the construction phase will be successfully financed.

PwC’s report also showed that almost half of energy investors believe that lack of transparency in procurement and bidding of new projects is a major barrier to investing in large-scale generation.

“Many perceive that these changes may not have enhanced the investment climate for the sector, as was intended, but instead worsened it. The Government has implicitly acknowledged such difficulties by amending some of the regulations and rolling-back the timeframe for completion of the 35 GW programme to 2024, from 2019 originally,” said Arthur Simatupang, Executive Chairman of the PwC Indonesia.