Jakarta (23 February 2022) — New Energy Nexus Indonesia (NEX Indonesia) hosted its second Fireside Chat with Faela Sufa, New Energy Nexus Country Engagement Manager. Pandu Patria Sjahrir, the Vice President Director of PT TBS Energy Utama Tbk, and Devin Wirawan, the Investment Director of PT Saratoga Investama Sedaya Tbk, appeared as the speakers for the second edition of Fireside Chat.
Fireside Chat is part of NEX Indonesia’s effort to inform, excite and energize clean energy stakeholders on matters related to the development of and investing in clean energy and climate solutions start-ups. The theme of the second Fireside Chat is “The Next Unicorn: Climate Solutions Startups” which focuses on the commercial potential of clean energy and climate solutions start-ups and the prospect of mobilizing investment to early-stage clean energy and climate solutions businesses in Indonesia.
From 2016 to 2021, the global climate solutions investment has skyrocketed five times to US$32bn. However, while clean energy and climate solutions start-ups in Indonesia have incredible potential to revolutionize the energy sector, investment in climate solutions is still lacking.
Faela Sufa asked Pandu Patria Sjahrir about the business perspective on clean energy, EV, and climate solutions investment, as well as if Indonesia’s next unicorn will be coming from the clean energy and climate solutions start-ups. At the event, the speakers also addressed several reasons why funders should invest in clean energy and climate solution start-ups.
“There are five themes to drive energy transitions, which are transition to renewable energy, early retirement of existing coal-fired power plants (CFPP), implement carbon capture & storage solutions, regulate carbon trading, and decarbonized transport. Given the view and where things are going, we also think it makes economic sense.”
“Therefore, investing in innovation is equally important (to drive energy transition). Globally, we are now seeing a significant investment towards innovation in clean energy and energy storage, sustainable agriculture, transportation, green materials, carbon credit, and trading. We believe it is such a big market, and Indonesia potentially can play a significant part in this industry. Thus, I believe that the next unicorn should be addressing the main questions on sustainability regarding how we grow our food, how we commute, and how we generate our electricity,” Pandu replied.
Faela Sufa also asked Devin Wirawan why now is the right time to invest in Solar PV start-ups.
Devin explained that the best time to invest in the PV industry was yesterday, and the second-best is now. Devin added, “if you look at the slideshow presentation, the government of Indonesia is gradually moving toward phasing out its electricity subsidy. In the past seven years alone, the total subsidy has declined by 67 percent, which results in an increase of PLN tariff on the Compound Annual Growth Rate (CAGR) of 5% in the last eight years alone. If we are looking at the generation cost of PLN, it is now at Rp1,348/KWh, and at the moment, the Levelized Cost of Energy (LCOE) for solar companies like Xurya is Rp924/KWh. So you can see that there is still this big gap, and the gap will continue to get bigger. So for companies like Xurya, I think this is an exciting time where the economic dynamics will continue to improve,”
“According to Swanson’s Law, the price tends to decrease by 20% for every doubling of worldwide solar panel shipment, which translates to a 90% decline over the last ten years. Now, suppose we assume that the current price will decline by another 20%. You can see that the gap between the generation cost of PLN and the solar rooftop cost energy now will continue to become wider, which makes it more profitable for a solar company,” Added Devin.
More than 70 invitees, mainly investors, from various backgrounds joined the discussion through the question and answer session.
Nurrahman from AFD participated in the discussion and asked Pandu about what impactful moment shaped TBS shifting its business to sustainable energy and becoming an aspiring green company.
“First, to be very honest, aside from it being the right thing to do, I think it is a good business and also economically makes sense,” Pandu replied.
“Second, I will give you an example, if you are doing renewable energy (business), people are willing to pay for a lower yield, which translates to a higher EBITDA multiple. If you are able to develop a large-scale power plant that is renewable, people are willing to pay ‘premium’ for it because of the scarcity value. If you look at the EV side of the business, I think we know the multiples of it, a lot of it is on the EV revenue basis. What is good about this and why people are willing to pay for that multiple is because the market is still so vast, untapped, and still being largely developed (still very much a growth market). So, we’re moving from a well-established, developed, low multiple EBITDA business into something very different, like a high-growth type of business. And if you are familiar with the investment environment in Indonesia, if we have to choose between high growth and dividend, people always look up for growth,” Pandu explained.
Lastly, Pandu has a personal reason to invest more in a sustainable business aside from the economical reasons. Since he has a 5-year-old daughter, he wants her daughter to live in Jakarta in much better condition than it is today in terms of quality of life, air quality, and its surrounding areas. Pandu explain and closed his QnA Session.
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