5.Small-scale renewable energy (RE) projects are good examples of environmentally protective activities which also present tangible benefits to participating communities. In Indonesia, there are more than 20 million un-electrified households – most of which are found in poor and remote rural areas. Current plans for expanding Indonesia’s national power grid do not include the connection of many rural communities within the next decade. Therefore, many communities are eager to explore alternative energy sources in order to meet their development goals.

Micro-Hydro Power (MHP) technology is relatively well-established in Indonesia and holds significant potential for communities choosing to invest in RE schemes. Over the past 25 years, the MHP sector has developed significantly; local service providers have proven their capacity to develop successful ‘stand-alone’ rural electrification and ‘grid-connected’ MHP schemes within a specific size range (typically less than 100 kW). Unfortunately, many MHPs operate mainly after sunset and therefore the main benefit is in lighting and entertainment, such as TV & radio. However, MHP schemes should and need to be able as a minimum – in a long-run perspective – to generate sufficient income for upkeep in order to continue to deliver tangible benefits. So-called “productive use” of the electricity made available is often much slower to develop than recreational and convenience use. Productive use is taken to mean application of power from an MHP that adds value to an existing economic process or allows new processes to materialize such as micro and small-enterprises in agri-business, as well as to social service institutions such as schools and health clinics.

Since the 1990s, GIZ directed its attention towards systematic support of rural electrification through micro-hydro power (MHP) in Indonesia. Since 2006, the GIZ has been implementing the Energizing Development (EnDev) programme in Indonesia, following the previous MHP support interventions. During the first phase of the Energizing Development (EnDev I), from 2006 to 2009, the expertise and management competency of actors engaged in constructing and operating mini-hydropower schemes in rural areas was supported. EnDev facilitated contacts between service providers and users, transferring the necessary know-how to various actors, such as: operators, political authorities and user groups. Under EnDev II, starting in May 2009, the program split into two complementary components: (1) The Green PNPM Micro Hydro Power Technical Support Unit (MHP-TSU) to directly support the access to energy through MHP in rural areas, and (2) The Mini Hydro Power Project (MHPP2) as a capacity development component to institutionalize know-how and learning from experiences for a sustainable MHP sector development in Indonesia. While the MHP-TSU project partner is the Ministry of Home Affairs (MoHA), MHPP2 works closely with the Directorate General for New and Renewable Energy and Energy Conservation (NREEC) under the Ministry of Energy and Mineral Resources (MEMR). One strategy towards achieving the sustainability of MHP sites is to encourage productive use of energy (PUE). Within MHPP2, PUE is defined as a small-scale activity, using a renewable energy-based electric energy source for providing a service or adding value to a product in order to sell the product and/or service to a willing market. MHPP2 has compiled a database of PUE options possible at rural MHP sites in Indonesia and seeks to test the appropriateness, acceptability and financial feasibility of some of these options.

Operation Wallacea Trust (OWT) is a Civil Society Organization (CSO) working to empower community on natural resource conservation and management. In this project, OWT is acting as GIZ contractor for the establishing and monitoring of a PUE pilot project in selected villages in Mamasa and Luwu Utara District. The contract run from 18 May to 31 November 2012. The total amount of contract is 202 million.

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