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

Indonesia is recognised as a strategic market for the development of clean energy and low-carbon solutions within the regional landscape. As the largest economy and a growing energy market in Southeast Asia, Indonesia faces a long-term demand for energy solutions that are cleaner, more efficient, reliable, and affordable, particularly amidst rising energy demand and decarbonisation needs.

To support the growth of these solutions, Schneider Electric, through the Schneider Electric Energy Access Asia Fund II (SEEable II), is working to address one of the primary challenges in emerging markets: the early-stage funding gap for startups developing clean energy and climate solutions. In South Asia and Southeast Asia, including Indonesia, various innovations have emerged, ranging from clean cooking and distributed solar to circular economy solutions. However, many companies still face challenges in transitioning from the pilot stage to commercial scale.

“This phase is often referred to as the ‘valley of death,’ where companies are too early to attract institutional investors, too capital-intensive for traditional venture capital models, and lack adequate access to technical expertise. Consequently, many high-impact solutions are unable to reach the communities that need them most,” said Gilles Vermot Desroches, SVP Corporate Citizenship & Institutional Affairs at Schneider Electric, in a written statement.

Furthermore, Gilles explained that this challenge relates not only to capital but also to the limited operational and technical support required for companies to grow sustainably and produce measurable environmental and social impacts. To address this, SEEAA II employs three main approaches: first, providing patient capital or long-term capital tailored to the characteristics of clean energy and climate businesses; second, supporting companies through technical, operational, and strategic expertise; and third, using a blended finance structure to mobilise more capital into sectors with high impact potential that are still perceived as high-risk by investors.

This model is considered vital because the energy transition requires not only 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 crucial in attracting private capital to markets like Indonesia, where many opportunities have a significant impact but are perceived as high-risk. This structure helps create space for public or concessional capital to play a catalytic role, allowing private capital to participate more confidently,” explained Gilles.

Furthermore, Indonesia is viewed as a strategic market within the regional SEEAA portfolio. Commercially, Indonesia has rising energy demand driven by economic growth. Geographically, Indonesia’s 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.

While national electricity access has increased significantly, challenges remain regarding reliability, affordability, and access to clean energy, particularly in remote areas. Simultaneously, approximately 80% of Indonesia’s electricity still comes from fossil fuels, leaving vast room for decarbonisation. The Indonesian government also targets a significant increase in renewable energy capacity, aiming for 23 GW of renewable capacity by 2030, with 8 GW of that coming from solar power. This aligns with the target to increase the renewable energy mix to 34.3% by 2034.

Given 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 business models are approaching commercial scale in Indonesia. One such model is distributed and rooftop solar, which is increasingly popular in the commercial and industrial sectors as it helps stabilise energy costs while supporting emission reduction targets.

Additionally, electric mobility, particularly two-wheelers, holds great potential. With over 120 million motorcycles operating in Indonesia, the electrification of 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 present significant opportunities, given that Indonesia’s renewable energy resources have yet to be optimally utilised.

However, for these sectors to attract larger-scale follow-on funding, several supporting factors are required. Investors need 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 address these needs, SEEAA II provides early-stage funding support.