1. Bank aus Verantwortung Financing PV/Solar Energy Projects in Indonesia Paul Heinemann – Director DEG Office Jakarta Thorsten Schneider – Senior Project Manager KfW Office Jakarta May 2014

2. 2 KfW Group - A promotional bank with a wide array of functions 2 Developing and emerging-market countries Financial Cooperation (Gov. to Gov.) Public Sector International Financing We promote Germany Promotion construction of new housing and modernisation as well as education Promotion SMEs, business founders, start-ups Financing municipal infrastructure projects and global loans Germany agency business for Federal Government Domestic Promotion We ensure internationalisation International project and export finance worldwide Public & Private Sector Business area Mittelstandsbank Business area Privatkundenbank Business area Kommunalbank KfW IPEX-Bank KfW Entwicklungsbank Developing and emerging-market countries Private Sector Promotion DEG Promotion of environmental and climate protection We promote development

3. 3 DEG - Activities in Renewable Energy 3 Renewable financing since to date: - USD 750 million in total - more than 40 projects globally  Financing of private sector investments with a positive development impact  30 % of annual commitments in climate protection projects including renewables  In depth-expertise in renewable energy built-up from a long track-record of projects globally, comprising hydro, wind, solar, biomass and geothermal

4. 4 DEG criteria for financing renewable energy/ grid-connected solar/PV (private sector) Financing › Equity ratio of appr. 30% with adequate cash- flow oriented structure Promoter/Sponsor › Sector experienced, being at risk › Corporate governance, transparency Construction › Implementation complexity relatively low, but EPC contract with completion and performance guarantees preferred › Arrangements to cover cost-overrun risks Operation › Experienced operator, long-term O&M contract › Proven technologies from well established manufacturers/suppliers with warranties/power output guarantees (insurance-backed) Sales/Off-take › Solar still highly relying on subsidies › Regulatory Framework/Incentives (?): Feed-in tariff (obligatory dispatch) and/or long- term PPA (bankable, take-or-pay) › Creditworthiness of off-taker (commercial attractiveness to use solar) › Grid connection (who is responsible), grid management impacts Energy Resource › Power generation estimation (solar radiation, planned losses etc.) to be confirmed by independent technical engineer same as adequacy of equipment Permits/Licenses › All required permits, rights, licenses etc. in place including land 4

5. 5 Solar/PV in Indonesia Challenges: › Initialized first tender of 140 MW very scattered › Small-scale projects due to size difficult to be financed stand-alone as project finance › Lack of solar-experienced players in Indonesia (e.g. JV local (permit) developer and int. experienced solar developer/investor) Possible approaches: › Bundling of projects with funding via holding (scaling potential), debt or equity › Initially on corporate balance sheet 5 What we know: › Government targets to increase renewable proportion (however, not mandatory), other interests: increase electrification rate, substitute expensive diesel › Announced solar tariff (max. 0,25 USD/kWh, reverse auction), 20-y PPA › First tender of around 150 MW in pre-defined regions was initialized What we still need to understand: › Current status? › Bankability of template PPA (e.g. take-or- pay?, curtailment risks) › Specific tender criteria/new concept (which/when)?

6. 6 KfW Development Bank - Financing Structures for the public sector Tailor-made implementation structures for different investment volumes UtilityFinancial Intermediary Government (usually) big investments (usually) many small investments PLN (usually) big investments

7. 7 1,000 Islands RE for Electrification Program, Indonesia Increase Electricity Access through RETs and Grid Expansion › Situation at the Outset › Low electrification rate, particularly beyond Java-Bali grid structure › Remote areas with electricity access relying primarily on diesel generation sets, despite abundant renewable energy resources › Government priorities: a) increase electrification rate, b) increase RE share › Approach › Support governmental efforts in expanding electricity access through least cost RE technologies and grid expansion › Objectives/ Impacts (pilot phase) › Electricity access for 20,000 households › Reduced GHG emissions and reliance on diesel › Contribution of FC (pilot phase) › KfW funds: EUR 65 mil. promotional loan › Total costs: EUR 85 mil.

8. 8 Search KfW Tenders on Germany Trade and Invest http://www.gtai.de/GTAI/Navigation/EN/Trade/search-kfw-tenders.html

9. Bank aus Verantwortung Contact Thorsten Schneider Senior Project Manager KfW (Energy) Thorsten.Schneider@KfW.de Address: Menara BCA, 46th floor Jalan M. H. Thamrin No. 1 Jakarta 10310 Indonesia Phone: +62 21 23 58 74 31/41 Fax: +62 21 23 58 74 40 Jochen Saleth Director KfW Office Jakarta Jochen.Saleth@KfW.de Paul Heinemann Director DEG Office Jakarta Paul.Heinemann@deginvest.de