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How to provide access to electricity to remote areas in a
sustainable way ?
IBEKA, Indonesia, November 2010
INTRODUCTION
November 2010, in between business
trips to Tanzania, Zürich, South Korea,
and lectures at Cornell University or
MIT, Tri Mumpuni, founder of IBEKA
(Institut
Bisnis
Dan
Ekonomi
Kerakyatan), received us in her house
(also the headquarter of the organization) in Jakarta. Even if she is now asked
to give conferences all around the world
to spread her model, she found the time
to discuss with us about the genesis,
history and success of the communitybased
Micro-Hydro
Power-plant
(MHP) system she set up.
Two days later she organized for us a
visit of a MHP chosen by the United
Nations Economic Commission for Asia
and the Pacific, UNESCAP, as a Public
Private Partnership model in the Asia
Pacific region. A few-hour drive from
Jakarta, in a delightful environment, we
had a thrilling lesson and discovered
how a MHP works.
IBEKA can then be considered as an
innovative community-based social
business. Tri Mumpuni has developed a
Pro-Poor Public Private Partnership
model for rural electrification.
ISSUE
42% of the Indonesian population
(around 105 million people) lives without electricity. These people are mainly
found in the poorest and most remote
areas of the country.
While it has not been able to solve the
challenge of bringing electricity to these
areas (yet it has tried to create mega
hydropower supply infrastructures, the
projects have failed and only resulted in
high costs and environmental damages),
the government still gives huge subsidies to the 58% having electricity (USD
4.3bn in 2008).
On the other hand, some off-grid systems using MHP technology have tried
to face the problem but often had to
close down once the state-owned power
companies enter the market and undersell the electricity: it became impossible
to remain sustainable under such an unfair competition from state-subsidized
electricity.
Tri Mumpuni has set up a model to tackle the issue of electricity access but also
tries to answer a far more global question: how to create more sustainable
wealfare for all human beings, starting
with the poorest Indonesians.
GENESIS
As en agricultural engineer, Tri
Mumpuni has very quickly turned into
rural development issues. She was working on systems that could outreaches and
includes even the poorest people in the
process.
She soon reckoned that energy is a powerful tool. Though electricity is not development, economic development
needs electricity. Not only energy contributes to development, it is also and
foremost a good way to make the community believe. And, as we have heard
many social entrepreneurs say so, selfconfidence is the most powerful tool to
make development happen.
Tri Mumpuni first wanted to connect the
huge part of Indonesian population still
out of any grid. And she then started to
think of electricity for additional activities and as a source of additional income
for the villagers. The first goal of the
construction of a plant is the electrification the whole village; and then to produce excess capacity to generate profits
and make the model sustainable.
With the help of her husband and his
company, Hidropiranti, which designed
the MHP technology, she decided to set
up some small micro-hydro power plants
in remote and off-grid areas.
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STRATEGY
Following Tri’s belief, IBEKA’s model
relies upon two major principles:
 The full transfer of ownership of
the MHP to the communities: the
community should take part in the
design of the plant and then own and
run the operations;
 The possibility for the MHP to sell
electricity at a good price to the national grid.
The first principle is the only way to
keep the system sustainable and running in the long-term. The communities
need to be prepared how to use the electricity: one should make sure that a better economic productivity can be generated. But once the community has been
trained to run a plant and use the benefits to maximize its development, it
should decide everything based on a
consensus at a
village level. A
community based
system is the insurance of sustainability
(contrary of government
based
projects).
Any
extra
money
would first be
secured
for
maintenance and
A canal to the plant depreciation.
The second is the only way to bring
together public and private partners
and for the community to generate extrarevenues. Both allow the villages to develop rural programs and get out of the
poverty trap thanks to access to electricity and income generation.
Today the total installed capacity is
2,8MW and IBEKA has already
launched 60 MHP. Only two are not
100% community-based.
Business model and financing
Some of the MHP are co-managed with
private investors, while others have become fully owned by the community
itself. IBEKA empowers the communities, which fully run and manage the
system.
At the beginning, IBEKA helps the village to fund the construction, build the
plant and organize the management and
the maintenance. First an engineer
checks the field and context to make it
sure there is enough potential. He then
designs and budgets the MHP.IBEKA
and the communities receive land for
free from villagers to set up the plants.
developing the rural entrepreneurship
that results from rural electrification.
Use of the money by the community
and social development
The money generated by the running of
the MHP has a triple use:
 Operation and maintenance
 Depreciation
 Social development
IBEKA then helps the community to
structure itself and to elect some representatives to monitor the income generation and use.
In the 1990s the Ministry of cooperatives subsidized a part of the project
before IBEKA financed itself through
socially responsible funds and individuals. The community needs some donations to set up and install the plants. But
then the users pay installment, connection and consumption fees which cover
the costs and even generate some profit.
Besides some of the plants can now sell
some electricity to the national grid and
generate some profits.
Training and income generation
IBEKA promotes a global model that
includes all the aspects in the community: a kind of integrated social model.
During the construction of the plant (i.e.
5 to 6 months), IBEKA organizes some
trainings for the villagers and teaches
them how to use and manage the system.
Sometimes an engineer of IBEKA stays
a few months to assist them.
IBEKA not only trains a villager to operate the plant, but basically trains the
villagers how to improve income and
productivity. They may for instance explain to the villagers how to increase
their productivity in thee patchouli oil
production. Trainings tend to focus on
Inside a Micro-Hydro Power Plant
Village committees are very cautious
and keep lot of money for depreciation
and replacement.
There may then be some plans to spend
more on social development if there is
some extra money. Some communities
have for instance been able to launch
some micro-credit programs or to organize other supportive actions for the poorest.
For all the social development projects
chosen and implemented by the committee of the community, the poverty criteria are defined by the community (in a
fully transparent way).
Legal barriers and connection to the
national grid
There is a big potential around the MHP:
excess capacities could and should be
sold to the national grid. From the instant the MHP generates some profit by
selling the excess capacities, it becomes
possible to involve private partners and
to contract some loans (and not only
depends on grants).
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But, the first hurdle that must be overcome is the Indonesian regulatory
framework. Until recently, no MHP
could remain sustainable and being run
as a business. Tri Mumpuni lobbied
ministers and governments to allow
small electricity producers to sell back
into the grid. Tri Mumpuni has been
able to force the government to vote a
new law: national utilities have obligation to buy any renewable energy. By
allowing MHP to sell their excess capacities, the new law has opened huge opportunities.
for instance).
hand and you give little to people. It’s
not sharing as the model she promotes.
SOCIAL IMPACT
IBEKA doesn’t regularly assess its social impact yet. It has only implemented
an operational follow-up. There have
also been some surveys with local
NGOs to know the differences in people’s lives before and after the project.
IBEKA’S PRIORITIES
IBEKA has two constant objectives:
 Connect all the MPH to the grid to
allow them to generate extrarevenues and attract new investor
 Increase the number of MHP and
give access to electricity to an always
higher number of people
At that point, the main barrier to
IBEKA’s expansion is still funding. Major funds come from big NGOs, Multilateral Institutions or big international
donors (Netherlands and Japanese Aid
Lobbying tirelessly, she is patiemment
overcoming any institutional barrier and
is changing all the energy Indonesian
regulatory framework. Proving to the
private investors her model is working
and sustainable, she is progressively
scaling up IBEKA’s activities and attracting new partners.
And before all, day after day her organization allows more and more people to
get access to electricity and to the confidence in their capacity to get out of poverty.
Public private partnership
The average investment for the construction of a MHP is around USD 500,000 –
a huge upfront lump sum without access
to any loan or private investment. But
IBEKA succeed in establishing a first
community pro-poor public private partnership with an Austrian company, Andritz Hydro. IBEKA then could contract
an important loan with Kontrol Bank, an
Austrian bank. She has made joint ventures between community cooperatives
and private investors feasible.
She strongly believes in communitybased programs.
A Micro-Hydro Power Plant
But IBEKA hasn’t time and resources to
dedicate to a more formal and detailed
assessment. Operational management is
here crucial. Tri Mumpuni prefers to
give access to electricity to more villages or to train more villagers to increase
their income, than spend some time and
money on measuring IBEKA’s social
impact.
ACKNOWLEDGMENT
We would like to warmly thank Tri
Mumpuni who gave us some of her precious time and welcomed us in her home
Jakarta. We also would like to thank
Adi Laksono Dwi Putranto who kindly
took a day to show us the MHP near
Jakarta. We finally would like to thank
all IBEKA’s staff.
But a single figure can give an idea of
the impact IBEKA has on Indonesia:
300,000 to 400,000 villagers now have
access to electricity thanks to IBEKA.
Even Tri says it is far from enough to
solve the issue, it is a good start!
CONCLUSION
Tri remains very critical of CSR, which
still means that everything is in your
CONTACTS
Planete d’Entrepreneurs
www.planetedentrepreneurs.com
[email protected]
IBEKA
www.ibekanetsains.com
trimumpuni.com
Adress: Madrasah II no 28 Sukabumi Utara 11540 Jakarta
Indonesia
Phone/Fax: +62 21 5492087