November 12, 2024, Indonesia - The Institute for Essential Services Reform (IESR) has urged the government to reform electricity policies to accelerate the transition to clean energy.
IESR Executive Director Fabby Tumiwa emphasized that hydropower (PLTA) and geothermal power (PLTP) require substantial investments, often funded by foreign investment. However, the utilization of other renewable energy sources such as biogas, biomass, solar, and wind is on the rise.
Many domestic companies are now developing small-scale renewable energy plants, including solar, micro-hydro, mini-hydro, biogas, and biomass. Significant investments in large-scale renewable energy projects are also being made through both banking financing and capital markets.
Fabby noted the varying levels of capital and funding in renewable energy companies, with many domestic firms acting as independent power producers (IPP).
To address funding challenges in green energy, companies can consider initial public offerings (IPOs) in the capital market. However, strict requirements must be met, limiting access for some firms.
Companies aiming for IPOs must present attractive prospectuses, showcasing operational and financial performance. Key factors include having multiple projects, investment return rates (IRR), long-term contracts, and a solid track record.
According to Ernst and Young (EY) Indonesia, interest in renewable energy IPOs is increasing. Over the past five years, several successful IPOs have occurred in this sector, including PT Kencana Energi Lestari Tbk (KEEN), PT Arkora Hydro Tbk (ARKO), PT Pertamina Geothermal Energy Tbk (PGEO), and PT Barito Renewables Energy Tbk (BREN), with share prices rising at least 30% since their initial offerings.
Fabby concluded that companies seeking IPOs must have a strong portfolio, project pipeline, business outlook, organized management, and good corporate governance (GCG) to attract investor confidence.