Economist urges use of community-based energy to support energy self-sufficiency

Jakarta (ANTARA) - Dr Hayu Prabowo, an academic in Islamic economics and finance, has said that community-based energy innovation can drive energy independence and curb the use of fossil fuels that harm environmental sustainability.

Hayu Prabowo said the use of coal-based fossil energy, which is highly centralised, does not match Indonesia’s archipelagic geography, making a community-based energy innovation approach more relevant because it can explore regional energy potential suited to local natural conditions.

“Essentially, communities need to be empowered so they can produce energy independently in line with local potential,” he said at a discussion on Islamic finance investment for the benefit of the Earth and society, held in Jakarta on Wednesday.

He said that in Indonesia, which has more than 17,000 islands, each region has different energy potential that needs to be developed according to local characteristics rather than relying solely on coal.

According to him, energy sources that communities can produce themselves include processing organic waste into biogas, very small-scale hydropower using river flows, known as nanohydro, or harnessing solar energy with simple technology rather than conventional solar panels.

He noted that coal resources are currently concentrated on the islands of Java, Sumatra, Kalimantan and parts of Sulawesi. Meanwhile, many regions in eastern Indonesia still rely on diesel or fuel oil for power generation.

He urged a transition from coal towards cleaner energy sources, as the impact of coal on the environment and quality of life is becoming increasingly evident.

However, this transition also requires innovation in financing models, namely combining commercial financing with social financing so that clean energy projects can develop sustainably through long-term funding and help empower communities from the outset.

“On the financing side, we are also developing the concept of blended finance. This concept is needed because energy transition projects generally carry high-risk, low-profit characteristics, making them unattractive to commercial financing. Therefore, philanthropic funds are needed as initial capital, such as zakat and wakaf,” he said.

Through this mechanism, it is hoped that investors will be attracted, enabling commercial funds to flow into renewable energy investments beyond coal.