Global Blended Finance Alliance (BFA) in Indonesia Presidency G20
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This document discusses Indonesia's proposal to establish the Global Blended Finance Alliance (BFA) during its presidency of the G20 in 2022. The BFA would mobilize international financing and funds to support Indonesia's energy transition from coal to renewable energy. This includes an early retirement plan for 5.9 GW of coal-fired power plants and their replacement with 3.7 GW of renewable energy projects. The document invites G20 member countries to join the BFA, outlines its proposed structure and funding sources, and explains how the BFA will be presented and recognized in G20 agreements and declarations during Indonesia's presidency.
Global Blended Finance Alliance (BFA) in Indonesia Presidency G20
- 1. KEMENTERIAN KOORDINATOR BIDANG KEMARITIMAN DAN INVESTASI GLOBAL BLENDED FINANCE ALLIANCE (BFA) IN INDONESIA PRESIDENCY G20 APRIL 7th 2022
- 2. KEMENTERIAN KOORDINATOR BIDANG KEMARITIMAN DAN INVESTASI 2 Comparison to South Africa Energy Transition Aims : Assist in reaching climate change mitigation targets, provide affordable electricity, reduce power outages and stimulate local job creation Aims : More Ambitious of climate change mitigation targets, provide affordable electricity and stimulate local job creation Sector: Electricity Sector: Electricity Project : Shifting Coal-fired, Renewable Energy Development with transmission infrastructures Shutdown Coal-Fired Power Plants which will end in the near future (2030-2035) Project: Shifting Coal-fired, Renewable Energy Development with transmission infrastructures The huge of GHGs emissions reductions due the year foregone of Indonesian CFPPs of 5.9 GW is more than South Africa. Indonesia CFPPs are still young ages (the end of lifetimes are after the year of 2045 plus the new ones of 13.58 GW will end in after 2050) Finances : ▪ Multilateral, Bilateral Grant ▪ Guarantees and Private Investment ▪ Concessional loans Finances : (Indonesia has more experiences of Global Blinded Finance through Indonesia SDGs One and Global Climate Fund) Many resources of finances already committed to support Indonesian Energy Transition include multilateral, bilateral, international, private/philanthropy and carbon market Renewable Energy Potential : Limited resource Renewable Energy Potential : Huge and various Renewable Energy potential to generate 437 GW such as wind, solar, tidal, and geothermal. This is more than 14 times the country’s current electricity consumption. Indonesia has 40% of the world’s geothermal energy stores, enough for 23.9 GW of energy. Meanwhile, its huge maritime area could provide 17.9 GW of power Investment Certainty : No regulation supports it Investment Certainty : Will have regulations regarding Energy Transition along with Blended Finance (the end of March 2022) and It will become legal certainty in Energy Transition investments that will not affect the change of government SOUTH AFRICA INDONESIA
- 3. KEMENTERIAN KOORDINATOR BIDANG KEMARITIMAN DAN INVESTASI 3 GLOBAL BLENDED FINANCE ALLIANCE (BFA) SUPPORTS ENERGY TRANSITION GBFA Global Blended Finances Alliance ENERGY TRANSITI0N MECHANISM 5.9 GW Early Retirement of CFPPs + 3.7 GW Renewable Energy as Coal- Fired Replacement *** will launch during Presidency G20 Carbon Reduction Fund (Carbon Market) Carbon Cap -Trade - Tax which includes emission certificates (SIE) / allowance Carbon Offset Trading which includes offset certificates (SPEI) / credit + Green Bonds, Stocks, and Financial Instruments Green Funds, Grants, and Aid SDG Indonesia One Sustainable Funds Private/Philantrophy + Bilateral, Multilateral & Internl + THE WORLD BANK ASIAN DEVELOPMENT BANK GERMANY UNITED KINGDOM UNITED STATES OF AMERICA
- 4. KEMENTERIAN KOORDINATOR BIDANG KEMARITIMAN DAN INVESTASI 4 INVITATION TO G20 MEMBERS TO JOIN BFA The BFA could provide a platform to identify projects, while building investable pipeline, marketing, and meeting investor needs, as well as enabling investment decisions in general. 1. Indonesia is preparing an initiative to raise international funding in the framework of G20 through the formation of Global Blended Finance Alliance (BFA). 2. The Global Blended Finance Alliance (BFA) aims to mobilize and facilitate international financing and funds as a multilateral institution. 3. This BFA will also support and pipeline projects for our energy transition mechanism, carbon market and environment. The Concept of BFA We invite G20 members to join the GBFA which we will establish during the G20 with other countries such as US, EU Member, UK, Singapore, as well as developing and developed countries. Global Blended Finance Alliance (BFA) Invitation to G20 members 1. Structure Membership of BFA Founder Countries Co-founder Member Countries 2. Structure Management Governor, Board of Director, President, staffs. 3. Source of Funds (mobilization) Governments, Philanthropy, carbon markets, Private, International Funding, International/Local Investors
- 5. KEMENTERIAN KOORDINATOR BIDANG KEMARITIMAN DAN INVESTASI
- 6. KEMENTERIAN KOORDINATOR BIDANG KEMARITIMAN DAN INVESTASI BFA In G20 Development Working Group 6 Received input from Issue Note (Part of G20 Principles) Received input from Scoping Note (deep analysis contains data, best practices, Blended Finance recommendation, arranged by OECD) Concept note / explanatory note of BFA will be finalized (Include BFA contribution in the G20 principles implementation) BFA will be presented at 2nd DWG of G20 meeting Representative of BFA should attendant to ensure the delegate of second G20 DWG meeting After 2nd DWG of G20 the concept note will be circulated to the members of G20. Drafting G20 principle which includes the recognition sentence of the BFA as the Indonesia government initiative / contribution. Finalization of G20 principles and G20 development minister communique which includes the recognition sentence of the BFA Development Ministries meeting of G20 7-9 September 2022 Development ministries approve G20 Development Ministerial communique which are the commitments of ministerial (including BFA recognition sentence) Serpa G20 will leverage the BFA recognition sentence to the leaders declaration
- 7. THANK YOU Jalan M.H. Thamrin No. 8, Kebun Sirih, Menteng, Kota Jakarta Pusat, COORDINATING MINISTRY OF MARITIME AND INVESTMENT AFFAIRS 7
- 8. KEMENTERIAN KOORDINATOR BIDANG KEMARITIMAN DAN INVESTASI EARLY RETIREMENT OF THE COAL-FIRED POWER PLANTS NAGAN RAYA 1-2 220 MW LABUHANANGIN 1-2 230 MW CELUKAN BAWANG 1-3 380 MW CILACAP 1-2 600 MW ADIPALA 600 MW SEBALANG 1-2 200 MW PACITAN 1-2 560 MW REMBANG 1-2 630 MW TARAHAN3-4 200 MW TELUK SIRIH 1-2 224 MW PANGKALAN SUSU 1-2 400 MW LONTAR 1-3 945 MW PELABUHAN RATU 1-3 1050 MW SURALAYA 8 625 MW OMBILIN 100 MW SURALAYA 1-4 1800 MW SURALAYA 5-7 1600 MW INDRAMAYU 1-3 990 MW LABUAN 1-2 600 MW TJ. AWAR-AWAR1-2 700 MW PAITON 1-2 800 MW BUKIT ASAM 1-2 130 MW 1. Exercises were carried out on 22 CFPP with total capacity 13,644 MW; Out of that power plants, 20 CFPP are owned and operated by PLN and its affiliates (12,644 MW, 93%), while the other 2 are IPP (980 MW, 7%); 2. Geographically, 8 CFPP are located in Sumatera Grid with total installed capacity of 1,704 MW - 12.5% - PLN Group, and 14 CFPP in Java- Bali Grid, 11,940 MW (87.5%); incorporating 2 IPP-owned CFPPs; 3. Most of the 22 CFPPs were part of the FTP-1 (Fast Track Program), with total capacity of 8,234 MW, excluding Celukan Bawang 1-3, Cilacap 1-2, Bukit Asam 1-2, Ombilin, Suralaya 1-4, Suralaya 5-7 and Paiton 1-2; 4. List of PLN’s proposal 5,505 MW (5.5 GW) are all included into the list of 22 CFPP, comprising Nagan Raya, Pangkalan Susu, Labuhan, Teluk Sirih. Ombilin, Bukit Asam, Tarahan, Sebalang, Suralaya 1-7, dan Paiton 1-2; 5. List of Kemenko Marvest is the same as PLN’s proposal but with addition Celukan Bawang (380 MW), so that total capacity is 5,931 MW (5.9 GW). 8
- 9. KEMENTERIAN KOORDINATOR BIDANG KEMARITIMAN DAN INVESTASI PILOT: EARLY RETIREMENT OF CELUKAN BAWANG 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 NATURAL RETIREMENT OF CELUKAN BAWANG CFPP 3 x 142 MW EARLY RETIREMENT OF CELUKAN BAWANG CFPP 3 x 142 MW A. Capex : USD 700 millions B. Early Retirement of 2029 : Discounted (NPV) USD 895 millions C. Renewable Energy Instalments as Replacement : USD 1,971 millions D. TOTAL COST (B+C) : Discounted (NPV) USD 2,866 millions Replace to Renewable Energy SOLAR 1 GW HYDRO 25.8 MW GEOTHERMAL 225 MW BATERAI ENERGY STORAGE 106 MW WIND 60 MW TIDAL 10 MW BIOMASS 19 MW RENEWABLE ENERGY POTENTIAL IN BALI 9