Indonesia Needs $4 Billion for Energy Efficiency: ADB

The Jakarta Globe, Reva Sasistiya

The Asian Development Bank announced on Thursday that Indonesia needs to invest $4 billion improving real-sector energy efficiency over the next five years to make the economy more competitive.

The ADB’s estimate covers electrical retrofits and other energy-saving projects, including improving the efficiency of air conditioning, lighting and waste heat recovery in commercial buildings and industrial facilities.

Alexander Ablaza, ADB’s regional coordinator for clean energy, said industrial energy efficiency investment could reach $3 billion, with $1.1 billion for overhauling electrical systems and the remainder for fossil fuel-system efficiency improvements, poly generation and waste heat recovery. The potential savings are estimated at $641 million annually, he said.

“For the industrial sector, energy savings may reach 25 to 40 percent, with expectations of returns on investment in four to six years.”

Commercial building efficiency would require $1 billion for similar upgrades, with expected annual savings of $254 million.

“For the commercial sector, including hospitals, hotels, office buildings and malls, efficient lighting and air conditioner systems may save 35 to 40 percent on energy costs,” Alexander said.

The estimates were based an ADB study conducted this year.

Madeleine Varkay, ADB’s senior private sector development expert, said the institution would offer $300 million to $400 million of financing annually to support the energy plan.

“Indonesia’s energy sector is a vast green field of investment opportunities that awaits the participation of the domestic and international banking as well as industrial sectors,” said Anthony Jude, ADB’s director of energy and water for Southeast Asia.

Agus Purnomo, head of Indonesia’s national council on climate change, applauded the ADB review. “We strongly welcome national and international commercial banks, as well as equipment suppliers and energy service companies as our partners.”

According to state-owned PT Energy Management Indonesia, daily industrial energy consumption 194,350 barrels of oil equivalent, with the commercial sector using 134,630 boe.

ADB also announced on Thursday that would finance a $100 million Java-Bali electricity transmission project next year.

Rehan Kausar, an ADB infrastructure specialist in Indonesia, said the bank would also be involved in the second phase of the “fast-track” power generation program, with plans to invest $500 million for the construction of geothermal plants.

Last year, ADB approved nearly $1.7 billion of clean energy projects in the region, far exceeding its $1 billion target. ADB plans to raise energy efficiency financing to $2 billion starting in 2013.

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