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Setting knowledge standards in renewable energy projects for banks and financial institution

10 July 2017

In May 2012, during the first phase of the project, USAID ICED provided technical assistance to Bank Indonesia on green banking policy study. Entitled “Overcoming Obstacle to Renewable Energy Development”, the study reviewed financial sector policy and implementation of green banking in the United States, China, Brazil, India, Bangladesh, and Thailand. The study aimed to help Indonesia stimulates commercially-proven small and medium-scale, utility-interactive renewable energy generating projects that are primarily using hydro, biomass, solar, wind and biogas technologies.

USAID ICED discovered huge demands for bank loan officers to be knowledgeable in clean energy project risks, despite the scarce supply. In collaboration with Indonesia’s Financial Services Authority (OJK), Ministry of Finance, and Ministry of Forestry USAID ICED developed and implemented training courses for local banks and financial institutions on financing clean energy and rural electrification projects. The training also covered topics such as introduction to clean energy technology, role and structure of power purchase agreements (PPAs), and credit and risk analysis. Thus “Environmental Analysts Training” (Training Analis Lingkungan or TAL) was born, with focus on hydro power projects.

The three days training focused on environmental risk assessment for mini hydro power plants. It exposed training participants to ‘best practices’ in assessing project’s feasibility. The participants also had the opportunity to obtain first-hand experience in observing the way power plant works by visiting operational power plants closest to the training venues.

At the end of the project, USAID ICED successfully held seven TAL trainings for banks and financial institutions with more than 150 bank risk analyst graduates. USAID ICED also provided inputs to policy and regulatory frameworks and published a handbook called “Clean Energy Handbook for Banks and Financial Institutions”. The OJK adopted and disseminated the handbook to national banks and financial institutions in Indonesia.