New Energy Nexus Indonesia reports that the growth of clean energy technology (cleantech) startups is fading due to funding constraints and an unfavorable regulatory climate.
New Energy Nexus is a global funding and accelerator ecosystem organization that supports clean energy entrepreneurs, from new technologies, to clean energy implementation and adoption. This organization aims to support the development of the clean energy sector ecosystem in Indonesia.
Pamela Simamora, Policy and Advocacy Manager for Nexus Indonesia explained, of the 50 cleantech startups surveyed, only 43 or 86% of them still rely on the founders’ personal savings with a survival rate of under 12 months. Meanwhile, from 35 respondents, only 11 were able to survive more than 12 months.
“Cleantech startups have experienced many financial problems for about 12 months, even just six months,” he said, on August 8, 2023.
The research also mentions the findings of a cleantech startup, Swap Energy, which has just received pre-series A funding. Meanwhile, 49 other startups are still trying to raise funds.
On the other hand, the results of the report also show that 4 out of 8 venture capital (VC) in Indonesia have a cleantech portfolio. Such as East Ventures, Alpha JWC Ventures, Kejora Kapital, and Saratoga Investama Sedaya.
Meanwhile, from the impact investing segment, the clean energy sector only gets a portion of around 1% of the total investment impact in 2013-2020.
Meanwhile, research shows that there are regulations in the energy sector that do not support cleantech startups, which is also a reluctance for investors to invest in cleantech startups.
One such regulation is the Regulation of the Minister of Energy and Mineral Resources (Permen ESDM) No. 26 of 2021 concerning Rooftop Solar Power Plants (PLTS) that are connected to the electric power network (with) holders of business licenses to provide electricity for public purposes (IUPTLU).
According to Pamela, this regulation makes investment in rooftop PLTS dim because it is not conducive and is considered to complicate the installation process for household-scale rooftop PLTS. As a result, business in this sector becomes economically unfeasible.
Because of that, Nexus Indonesia is trying to help cleantech startups and is ready to support providing a maximum grant funding of US$ 250,000 for cleantech startups that are able to accelerate the energy transition in Indonesia. This capital is expected to be able to increase the research and development power of cleantech startups.
“The most important thing for us is to make a profit, because we are investing in the hope of social impact from our investment, whether later cleantech startups can reduce emissions and access to clean electricity in areas, such as Sumba,” he concluded.
