By creating economic incentives and financing programs to unlock the power of hydro, Tri Mumpuni is helping rural Indonesia realize its best option for a reliable power supply.
The New Idea
For Mumpuni, the key to bringing about rural electrification is keeping the system community-based. The sustainability of the project depends heavily upon the community ownership of the system. It allows the community to have equity in funding the system, make decisions for its design and operation, and develop the rural programs that will benefit from the generated revenue. All of these endeavors are made possible through the local cooperative mechanism Mumpuni has introduced. Aside from local ownership of the off-grid system, the sustainability of the system is very much influenced by market forces. Most local micro-hydropower operations fold once the state-owned and subsidized electricity company, PLN, enters the market. Mumpuni has been able to connect the community-based off-grid system to PLN’s grid. This link is crucial because the community is now able to sell their power supply to the PLN and gain revenue from the deal. This business model has attracted private investment as well. Along with her organization, People Centered Economic & Business Institute (IBEKA), Mumpuni facilitated a local business partner and the community of Cinta Mekar of West Java to pilot a public-private partnership model where both provide equity funding for the system. The provision of rural micro-hydropower (MHP) plants has now become an economic investment activity. The United Nations Economic Commission for Asia and the Pacific (UNESCAP) adopted it as a Public Private Partnership model in the Asia Pacific region. Slowly, the financial barriers to develop the MHP system are being removed. A legal framework, however, must be in place to facilitate the spread of the model. Mumpuni has also been working on lobbying the government to establish a rural electricity finance institution.
Around 105 million people in Indonesia still live without electricity. Small-scale, or “micro”, hydropower generation has been proposed and experimented with for many years. Although the technology works well, financial and regulatory obstacles have always limited its potential as a large-scale solution. Despite the capacity of natural resources for hydro power, half of Indonesia’s population, found mostly in rural areas, still lives without electricity. To feed the demand, the government has tried to create mega hydropower supply infrastructures at high social costs. The projects result in major environmental damage and human rights violations due to corrupt land compensation and resettlement programs. The government has also tried to provide the power supply by constructing MHP plants. Unfortunately very few of these operations succeed. The government-constructed MHP plants suffer from poor construction and maintenance, as well as a lack of involvement from the communities. So far out of 56 government projects, forty-five have failed and 11 are partially successful. In remote areas, there are other local initiatives to set up off-grid systems using MHP technology. In many cases, however, these businesses close down once the state-owned power companies enter the market and undersell the electricity. Under such competition from state-subsidized electricity, it becomes impossible for local MHP plants to attract private investments. The Indonesian government still faces the financial and logistical challenge of bringing electricity to remote rural areas. The government, under the Ministry of Energy and Mineral Resources, initiated a policy for renewable energy development in December 2003. However, the policy has yet to be fully implemented. There is no major public institution playing a significant role in working with the private sector to scale up alternative forms of power generation for rural areas.
In order to build a community ownership model, Mumpuni applies a few principles to ensure the technical and social sustainability of the system. Through the establishment of a community cooperative, many of the systems she helped construct are still up and running. Some are co-managed with private investors, while others have become fully owned by the community itself. Mumpuni empowered the community to be able to manage the system technically and financially. Long before the community gains any profits from the power system, Mumpuni helps them plan the funding of the system, organize construction and maintenance, and set prioritized beneficiaries for the generated revenue. In Cinta Mekar, a public meeting was set to identify the poorest group in the community. The people with no land, capital, employment, and education were prioritized for assistance. After the MHP system was built, the community began to receive a gross monthly income of approximately RP 31 million (US$3,300). This revenue was divided equally with the business partner after deducting for the cost of system operation and maintenance. The remaining funds were then used for scholarships, an emergency health fund, a health facility, and seed money for farmers. Using this same model, Mumpuni has now been able to facilitate more than 60 rural communities across Indonesia to gain access to and control of their electricity. According to Mumpuni, all regulatory barriers must to be removed in order to successfully develop the micro-hydro power plant as a local business. She learned from other countries that a co-generation system was possible. In 1999, she was finally able to make an off-grid/on-grid inter-connection system. However, the agreement with the state power company was only limited to off-grid systems facilitated by IBEKA. In 2002, following continuous lobbying, Mumpuni successfully helped enact a government degree on interconnection. The regulation made it mandatory for the state-owned utility to buy all small-scale power. In 2004, they were mandated to buy all medium-voltage co-generated power as well. Mumpuni sees a vast demand for rural electrification throughout Indonesia. She developed the Pro-Poor Public Private Partnership model for rural electrification and made the UNESCAP provide the equity funding for the community. With this model she has made joint ventures between community cooperatives and private investors feasible. Mumpuni and her allies also strive to ensure that there are laws and institutions to support the MHP electrification model. She sits on commissions to set tariff policies and pushes PLN for transparency. She has been lobbying different ministries for the establishment of a public finance institution to assist in spreading the model. A US$30 million investment has already been made available by the Japan Overseas Development Agency. The process, however, is still pending approval from Indonesia’s Ministry of Finance. Mumpuni also established a center of excellence for people to learn about MHP systems for rural development. Through her training programs, she helps to educate many local government officials as well as other interested institutions from the Asia Pacific region. Once the MHP model spreads, Mumpuni hopes to focus on developing the rural entrepreneurship that results from these rural electrification programs.
For more than ten years, Mumpuni has dedicated her life to bringing about change for rural communities. Her will to dedicate her life to helping marginalized groups was nurtured since childhood. Her mother always had the young Mumpuni accompany her when she went to different villages to care for the sick. Their house was always used as the center for a wide range of community activities, from literacy programs to primary health care services. Mumpuni spent some of her teenage years with the family of Soepardjo Rustam, the former Minister of Internal Affairs. She was very much influenced by the family. She said that it was from them that she learned how to work directly with the poor people in rural areas. After winning a scientific paper competition in 1982, she was offered to study in the Institute of Agriculture Bogor by the former rector of the institute. Her wish was actually to become a doctor but she failed in the selection process and decided upon studying agriculture instead. In her final year of university she was given an opportunity by USAID to work with fish farmer families in North Sumatra on income generation. She then went on to work for rural communities in an integrated rural women and the environment program. After university, she joined UNDP and became the manager of a low-cost housing program for the urban poor. All of these experiences helped her develop a clear understanding of how to create community-based models. It was her husband, an activist in the micro hydro power movement, who persuaded her to return to the rural region and develop rural electrification. They both shared expertise in the technical, social, and economic aspects of the system. In 1996, Mumpuni was moved by a farmer who died of a heart attack when his micro hydro power business collapsed after the state power company entered his village and offered subsidized rates as part of a political program. She realized that co-generation (the combined use of heat and power) would be crucial to a sustainable rural electricity movement. For the next three years, she lobbied tirelessly with three successive energy ministers to allow small electricity producers to sell back into the grid. She also focused her efforts on developing small hydro projects. When she finally won her first concession in the co-generation campaign in 1999, she continued to support IBEKA and devoted herself full-time to developing the micro hydro industry.