Indonesia has set ambitious targets to increase renewables in its energy mix and achieve a 1% annual reduction in energy intensity (OECD, 2024). The country requires an estimated USD 97 billion to achieve its 2030 climate targets (Climate Policy Initiative, 2025). Another study suggests that USD 10 billion worth of energy efficiency investment is required annually by 2030 (IEA, 2022). However, energy efficiency investments face persistent barriers: high financing costs, high risk perception, and information asymmetry.
Energy Savings Insurance (ESI) has emerged as a proven mechanism to address these barriers. Developed by the Inter-American Development Bank (IDB) in partnership with the Danish Government, ESI combines standardised contracts, independent technical validation, and insurance coverage to guarantee energy savings (IDB, 2021).
This report provides Indonesian financial institutions, insurers, and project owners with a comprehensive framework for evaluating energy efficiency (EE) projects ESI model. The specific objectives are to:
- Demonstrate financial viability through detailed cost-benefit analysis and key financial metrics;
- Explain how ESI mitigates performance risk and enhances loan security;
- Provide sensitivity analysis demonstrating project resilience; and
- Present an Excel-based financial tool enabling stakeholders to conduct their own project assessments.