OECD-CEFIM Energy Savings Insurance: international focus group discussion, 14 March 2023, Virtual event

1. Matchmaking clinic
Supporting Innovative Mechanisms for
Industrial Energy Efficiency Financing in
Indonesia with Lessons for Replication
in other ASEAN Member States
The Korea Development Bank (KDB) │ GCF Accredited Entity

2. Project Overview
• Title project: Supporting Innovative Mechanisms for
Industrial Energy Efficiency Financing in Indonesia
with Lessons for Replication in other ASEAN
Member States
• Duration: 7 years
• Scope & objectives:
• Component 1 – Guarantee and Financing
• Component 2 – De-risking mechanisms
• Component 3 – Technical Assistance (TA) for
the Market Readiness
• Total budget: USD 105,000,000
- 100 mill Guarantee Line
- Grant: USD 5,000,000 – to be specified for
targeted sectors
• Approved in October 2022 by GCF committee
• Implementing Partners: KDB, ACE and LFIs under the
country ownerships/support via MOF (NDA), EBTKE
and MOI
Component 1:
Financing Assistance for
Energy Efficiency Projects
Component 3:
Technical Assistance for
the Market Readiness
Component 2:
De-risking Mechanisms

3. Component 1 - Structure
Guarantee Focused Structure with Partial F/X Risk Absorption by GCF
(Activity 1.3) Backstopping Credit Risk of Local FIs’ Loan with the GCF Credit Guarantee via Local FIs
ACTIVITY 1.1
✓ Backstopping credit risk of industry players including SMEs
with GCF credit guarantee provision
ACTIVITY 1.2
✓ Monitoring and management with F/X risk follow-up
✓ F/X Risk Absorption and Monitoring in line with Local Market Needs

4. Component 1 - Partners
Locally, and Globally
PT SMI
(PT Sarana Multi Infrastruktur)
PT IIF
(PT Indonesia Infrastructure Finance)
ACE
(ASEAN Center for Energy)
“Supporting Innovative Mechanisms for Industrial Energy Efficiency Financing in Indonesia
with Lessons for Replication in other ASEAN Member States”
PT Bank Shinhan
Indonesia
PT Bank IBK Indonesia
PT Bank Woori Saudara
PT Bank KEB Hana
Indonesia
PT Bank KEB Hana
Indonesia
KEA
(Korea Energy Agency)

5. Component 2, and 3
TA (Technical Assistance)
COMPONENT 2
De-risking
mechanisms
COMPONENT 3
Technical
Assistance (TA)
for the Market
Readiness
✓ Local FIs capacity building activities
Energy Saving Insurance (ESI) ESCOs Financing Scheme
✓ Technical advisory for industry player
✓ Development of EE regulatory framework
✓ Sharing knowledge and understanding gained by the Programme with ASEAN member states

6. Component 2.1: Introduction of Customized
Energy Saving Insurance
“
Risk-return Trade-off for Enterprises
• Introduce the ESI scheme to the Indonesian energy
efficiency market using multiple examples from
advanced countries, including marketing plan
• Develop a customised ESI contract and validation
methodologies through workshops or consulting
with local stakeholders and LFIs, including
capacity building package under the output
component #3
Component 2.1 Expected Output
“Proposes ESI model to address challenges by reducing
the investment risk of enterprises and building trust
between relevant stakeholders, which will lead to a more
attractive risk-return trade-off perception in the market”

7. Component 2.2: Development of ESCOs
financing structure ESCOs in Indonesia are primarily small
engineering companies that provide industry
and building services, and they struggle to
obtain third-party financing due to their weak
balance sheets and lack of collateral (ACE
Study)
Outcome-guaranteed Contract (ESCO-financed) model
• Provide advisory services for the ESCOs to
achieve better financing structures and obtain
knowledge sharing from advanced institutions
with expertise in ESCOs financing.
• Develop a customised ESCO financing scheme
and a standard contract through knowledge
sharing and workshops (through ACE and KEA
• The project will build capacity and help create
awareness of advanced energy efficiency
financing (EEF mechanisms) to ESCOs, such
as consumer outcome-guaranteed contracts
Component 2.2 Expected Output
ESCOs guarantee the savings from outcome-guarantee
financing.

8. FINANCING COMPONENT
✓ Backstopping
credit risk of industry players
with GCF credit guarantee provision
(USD100M)
TA (Technical Assitance)
COMPONENT
✓ New De-risking Mechanisms Development
✓ Capacity Building Activities
(USD5M)

9. Conclusion and Potential Collaboration on ESI
development in Indonesia
• Developing the de-risking mechanism of an energy saving insurance
model and scheme that would help lower a high level of perceived risk
perception, and would establish credibility and comfort amongst key
relevant actors in assessing priority energy efficiency technologies to be
de-risked through leveraging the market assessment conducted by
the CEFIM programme
• Three credit lines would be extended by KDB under the ESI pilot
program, offering a total amount of USD 100 million (partially
dedicated for ESI projects, while the two remaining credit lines were
open to energy efficiency projects in general) of long-term credit to
industry through a network of the selected intermediary banks.
• The grant component of GCF funding is also can be used to provide
additional incentives to investors and technology providers, to increase
confident on energy efficiency investment

10. Matchmaking clinic
THANK YOU