The Indonesian government has relaxed the local content requirements (LCR) for developing electricity infrastructure to attract funding for renewable energy projects from international development banks.
Indonesia is targeting a renewable energy mix of 23% by 2025, requiring an estimated US$167 billion.
The relaxation of LCR is expected to unlock significant foreign investment, which is crucial for meeting these ambitious targets. Reducing the LCR could also expedite the disbursement of funds from foreign lenders, such as those under the Just Energy Transition Partnership (JETP).
The JETP is a new model for international cooperation on country-specific efforts to combat climate change. The model combines public and private investments to assist with climate financing for developing countries, particularly to transition energy generation away from fossil fuels.
The JETP model promotes the green economy and addresses the economic and social needs of communities vulnerable to the effects of energy transitions.
JETP aims to invest US$20 billion in Indonesia over the next 3-5 years.
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