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green-mobility-opinion

More than plugs: unpacking Indonesia’s future of green mobility infrastructure

Published on January 22, 2024

green-mobility-opinion

Kenneth Darmansjah is the co-founder and CEO of Soul Parking, an Indonesian startup backed by AC Ventures specializing in efficient motorcycle parking solutions and electric vehicle charging points. Its mission is to improve urban mobility via technology, sustainable offline infrastructure, and a customer-centric approach.

Indonesia’s ambitious energy transition goals are set to transform the most populous country in Southeast Asia, as stakeholders from the public and private sectors recognize the environmental challenges the nation faces.

Currently, the transport sector is responsible for 15% of the country’s greenhouse gas emissions where about half are caused by road passenger transport – our cars and motorcycles. There are currently more than 120 million motorcycles on the streets today in the country. This is largely due to rapid urbanization rates across Indonesia which will only increase as the nation continues to prosper.

With this in mind, the decarbonization of this industry is a crucial factor in driving Indonesia toward its 2060 net-zero goal. A strong foundation to foster a transition to electric vehicles (EVs) is already underway, where the government has established incentives for both consumers and businesses, as well as other forms of regulatory support, to push things forward.

For instance, the Indonesian government plans to allocate Rp7 trillion (US$459 million) to support the sales of 800,000 new electric motorcycles and the conversion of 200,000 combustion engine motorcycles by 2024 (granted there is still much work to be done on the conversion front). On the business side, Indonesia extended the deadline for automakers to qualify for EV incentives by another two years – this relaxed investment rule requires automakers to produce at least 40% of EV components in the country to enjoy a plate of tax incentives.

However, electrification of fleets and EV manufacturing for consumers represent only parts of the green mobility value chain. The other equally important part is the infrastructure built to sustain the use of EVs on the road. The increased availability of a robust charging infrastructure network plays a critical role here.

For now, there are 439 general charging stations and 961 battery swap stations available for EVs in Indonesia but these figures are expected to increase as the EV changeover continues nationwide. To scale alongside EV adoption, PLN, the nation’s sole electricity provider, has already set a target to establish 6,316 general charging stations and 14,000 battery swap stations by 2025.

Charging ahead of the EV curve

These targets set by government entities like PLN illustrate that the country is more than determined to forge ahead in accelerating EV adoption and growth.

At Soul Parking, we are focused on bringing innovation to the urban mobility sector. As we transition into a green mobility era, it’s only right that we play a role in accelerating the sector’s growth.

Last year, the Ministry of Mineral Resources ambitiously said that it aims to convert 150,000 fuel-run motorcycles into electric ones in 2024. By the end of the decade, Indonesia looks to have 13 million electric two-wheelers on the roads.

We see this as an opportunity for us to double down on our mission of alleviating street-side congestion but with an EV twist. A few months ago, we started incorporating EV charging stations and storage facilities for both electric two- and four-wheelers on the parking lots we serve.

The passenger vehicle market will continue to increase as Indonesia’s megacities like Jakarta keep growing, so the challenge of finding space for parking and charging infrastructure remains – it’s a natural play for us to turn to supplying charging stations at our parking facilities.

We also decided to go one step further by implementing fully automated solar-powered ticketing machines at parking lots. This is because we understand the importance and relevance of tapping into other forms of renewable energy. As we work with landowners, government bodies, and property developers, we are confident that these things can help create a ripple effect that will help alleviate not just traffic woes but also carbon emissions across the nation.

Driving into an electrified future

While EVs for vehicle owners are a big part of Indonesia’s green mobility push, it’s not the end all be all. Optimizing public transportation is also something the Indonesian government is working on to ease traffic congestion and carbon emissions.

To this end, Jakarta’s JakLingko, the city’s public transport expansion project, has almost tripled the number of daily public transport commuters from 350,000 to 1 million. The initiative provides mobility-as-a-service by integrating various public transportation services from the first to the last mile and several payment methods into a unified platform. Commuters can plan, pay for, and book transportation for their entire journey via JakLingko.

Additionally, PT MRT Jakarta (Perseroda), the company that runs Jakarta’s metro system, saw a lot more people using their trains in 2023. About 33.5 million people rode the MRT that year, which is 14 million more than in 2022 when around 19.7 million people used it.

To get more people to use the MRT, the company is working with different groups, especially those in tourism like food businesses, event organizers, malls, and health and education players, and they’re offering special ticket deals at tourist spots. They’re also teaming up with other local transport services to make it easier for people to get to the MRT stations. A big help has been the Dukuh Atas Jakarta Transport Hub, Jakarta’s first area designed to make it easy to switch between different types of transport. This hub, along with its parking managed by Soul Parking, makes it simpler for people to use car-sharing services. These extra transport options have not only increased the number of MRT riders by about 22% but also encouraged more people to share rides instead of using their cars.

As a result, this helped reduce greenhouse gas emissions by 26% and at the same time reduced commuters’ monthly spending on public transport from 30% to 8%, said the city’s governor, adding the next step is to procure only electric buses for the city.

The success of JakLingko also highlights that there need to be parallel initiatives – in this case, the development of a unified transportation payment management platform and the electrification of buses – to further drive home the message that green mobility is the future and that commuters have nothing to lose while the country undergoes a major energy transition.

According to a recent ADB report, low-carbon mobility and clean power bear the potential to contribute US$90 billion to US$100 billion in new revenue across Southeast Asia by 2030. Indonesia as the largest country in the region would naturally benefit, especially when the country’s current 0.2% EV penetration rate is similar to China’s ten years ago, pointing to massive growth potential as we drive ahead with our clean energy transition.

The urgency and potential of a successful energy transition in Indonesia is evident. Startups that can innovate within the clean energy sectors could make a lasting impact on Indonesia’s energy transition journey.

However, Indonesia cannot do this alone and startups are only part of the equation. Capital financing from institutional investors is an essential component of the country’s journey to net zero.

In 2022’s G20 Summit, the government reinforced its commitment to its net-zero ambition, highlighting that a transition to zero-emission vehicles is one of its main agenda points. But beyond EV manufacturing, many adjacent verticals such as battery swapping, battery recycling, and EV aftermarket servicing require significant investment and partnerships from investors to spur growth. This could be done by partnering with strong local founders and investors to gain a deep understanding of the nuances and challenges of the industry.

It will be a long road for Indonesia to achieve such an energy paradigm shift but the participation of institutional investors will certainly accelerate its progress. For global capital allocators who want to play a pivotal role in the country’s green energy future, the time is now.

This story originally appeared on DealStreetAsia