Alternative Financing Scheme for Renewable Energy Development for Electric Power Generation

Abstract

The importance of renewable energy development is beneficial to the society, not only to reduce the amount of pollution, but also for sustainable economic development. However, despite the efforts of the government of Indonesia in optimizing renewable energy technologies, there are some key barriers that cause insufficient access to financing and investing in renewable energy projects due to high initial costs, especially for remote areas. Therefore, the alternative financing for financing renewable energy projects through Islamic finance, namely with zakat and green sukuk. Badan Amil Zakat Nasional (BAZNAS), with the Bank of Jambi, financed the development project of micro-power plant in power plant in Jambi Province. Power plants will provide electricity for about 806 households, benefiting people and local businesses as well as public facilities. These projects demonstrate an alternative financing to finance renewable energy development projects as well as contributing to reducing development gaps in lagging regions in Indonesia.