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Multi-Stakeholder Dialogue

Mobilizing Private Funding for Renewable Energy Projects

CPI & AESI Multi-Stakeholder Dialogue — identifying barriers and interventions in mobilizing private funding for renewable energy projects.

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SBH Climate Risk Forum - Workshop by OJK

On 23 July 2025, Climate Policy Initiative (CPI), in collaboration with the Indonesian Solar Energy Association (AESI), convened a dialogue bringing together solar project developers, financial institutions, technology providers, insurers, and PLN to identify barriers to mobilizing private finance for renewable energy projects, particularly solar PV and battery energy storage systems (BESS). The discussion explored challenges from both the project-development and financing perspectives and considered government and market interventions needed to improve project bankability and accelerate investment.

The dialogue took place as Indonesia's Electricity Business Plan (RUPTL) creates significant opportunities for solar and storage deployment and envisages a greater role for Independent Power Producers (IPPs). Participants nevertheless highlighted a persistent gap between ambitious project pipelines and projects that can attract financing on commercially acceptable terms.

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Key Insights

Bankability depends on the fundamentals of the project structure, not only on the availability of capital.

Participants emphasized that financiers require predictable cash flows, mitigated risks, credible off-takers, cost predictability, regulatory clarity, and sufficient sponsor equity. In practice, uncertainty around tariffs, lengthy procurement and negotiation processes, permitting, land acquisition, and contractual arrangements can delay projects or prevent them from reaching financial close.

Project economics and financing needs vary significantly by location and project type

Commercially viable projects may be financed conventionally, but projects in remote areas or those replacing diesel generation can be only marginally viable and may require blended finance. Geography also creates different constraints: projects outside Java can face weak transmission infrastructure and the need for costly storage, while projects in Java face high land costs and complex permitting.

Improved alignment across developers, financiers, PLN, and technology providers is critical

Different assumptions on tariffs, financing costs, technology performance, contractual risks, and project structures can undermine bankability. Participants highlighted the importance of aligning financial assumptions early and avoiding unrealistic bidding assumptions that may produce attractive tariffs on paper but make projects difficult to implement. For BESS in particular, degradation and replacement costs need to be incorporated into long-term project and financing structures.

Public finance and policy interventions should be used strategically to crowd in private capital

The discussion identified instruments including guarantees, blended finance, concessional long-tenor funding, grants, and market-based mechanisms as potential tools to address risks that commercial finance cannot absorb alone. Public and donor resources could be particularly valuable for marginally viable projects, early-stage development, and environmental and social requirements.

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Looking Ahead

Unlocking private finance will require moving from identifying barriers toward addressing specific bottlenecks along the project-development cycle. Priorities emerging from the dialogue include streamlining procurement and environmental permitting, strengthening contractual and regulatory certainty, improving coordination among project stakeholders, and matching financing instruments to different project risk profiles. Developing a pipeline of well-structured pilot transactions could help demonstrate workable solutions and create models that can subsequently be replicated at scale.

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Our work is made possible by a diverse network of partners spanning governments, multilateral development banks, financial institutions, and private sector organisations.

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Asosiasi Energi Surya Indonesia (AESI)
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