Schneider Electric's Strategy to Boost Clean Energy Growth in Indonesia

Indonesia is recognised as a strategic market for clean energy and low-carbon solutions in the region. As the largest economy and one of the continuously growing energy markets in Southeast Asia, Indonesia has a high long-term need for cleaner, more efficient, reliable, and affordable energy solutions, particularly as energy demand and decarbonisation requirements increase. To support the growth of these solutions, Schneider Electric, through the Schneider Electric Energy Access Asia Fund II (SEEAA II), seeks to address a key challenge in emerging markets: the early-stage funding gap for startups developing clean energy and climate solutions. In South and Southeast Asia, including Indonesia, various innovations have emerged, from clean cooking and distributed solar to circular economy solutions. However, many companies still face challenges in moving from the pilot phase to commercial scale. “This phase is often referred to as the ‘valley of death’, when a company is still too early to attract institutional investors, too capital-intensive for traditional venture capital models, and lacks adequate access to technical expertise. As a result, many high-impact solutions have yet to reach the communities that need them most,” said Gilles Vermot Desroches, SVP Corporate Citizenship & Institutional Affairs at Schneider Electric. Gilles explained that this challenge is not only about capital but also the limited operational and technical support needed for companies to grow sustainably and generate measurable environmental and social impact. For this reason, SEEAA II was launched with three main approaches. First, providing patient capital, or long-term financing tailored to the characteristics of clean energy and climate solution businesses. Second, supporting companies not only through funding but also through technical, operational, and strategic expertise. Third, using a blended finance structure to mobilise more capital into sectors with high impact potential but still perceived as high-risk by investors. This model is considered crucial because the energy transition requires not just technology, but also financing structures capable of bridging market needs with investor risk profiles. In this context, blended finance plays a catalytic role by combining concessional and commercial capital to improve the risk-return profile of investments. “Blended finance is important in attracting private capital to markets like Indonesia, where many opportunities have significant impact but are also perceived as high-risk. This structure helps create space for public or concessional capital to play a catalytic role, allowing private capital to participate with greater confidence,” Gilles stated. Furthermore, Indonesia is viewed as a strategic market within SEEAA’s regional portfolio. From a commercial perspective, Indonesia’s energy demand continues to rise alongside economic growth. Geographically, its character as an archipelagic nation with over 17,000 islands creates a structural need for decentralised energy solutions, such as mini-grids, off-grid solar, and decentralised energy systems. Although national electricity access has improved significantly, challenges remain regarding reliability, affordability, and access to clean energy, especially in remote areas. At the same time, around 80% of Indonesia’s electricity still comes from fossil fuels, leaving substantial room for decarbonisation. The Indonesian government is also targeting a significant increase in renewable energy capacity, including a goal of reaching 23 GW by 2030, with 8 GW coming from solar power. This effort aligns with the target of increasing the renewable energy mix to 34.3% by 2034. Based on these conditions, clean energy solutions in Indonesia are relevant not only for reducing emissions but also for improving energy affordability, strengthening energy system resilience, and supporting local economic growth in underserved areas. In terms of market readiness, several technology-based clean energy and climate solution business models are approaching commercial scale in Indonesia. One is distributed solar and rooftop solar, which are increasingly sought after by the commercial and industrial sectors for helping stabilise energy costs while supporting emission reduction targets. Additionally, electric mobility, particularly two-wheelers, holds significant potential. With over 120 million motorcycles operating in Indonesia, electrifying two-wheelers could be one of the largest technology-based climate solution opportunities, driven by cost efficiency, policy incentives, and the growth of logistics and ride-hailing services. Other renewable energy sectors such as solar, geothermal, and biogas also have great opportunities, given Indonesia’s largely untapped renewable energy resource potential. However, for these sectors to attract larger-scale follow-on funding, several supporting factors are still needed. Investors require regulatory certainty, consistent policy frameworks, bankable project structures, strong corporate governance, and supporting infrastructure such as electric vehicle charging networks and adequate grid capacity. To meet these needs, SEEAA II positions early-stage funding support.