The role of mid-size business in Indonesia's energy transition

Indonesia is at a critical juncture in its energy and sustainability journey. The nation faces the dual challenge of meeting rising energy demands while transitioning to a more sustainable future. Mid-size business in the service industry can play a pivotal role in this transformation. By harnessing their potential, we can address energy loss, promote sustainable practices, and support the middle-income class, which is increasingly at risk of collapse.

Eco-lodge in Indonesia equipped with renewable energy

Mid-size businesses are often more agile and innovative than large corporations. They can adapt quickly to market changes, develop niche services, and implement sustainable practices tailored to local needs. In Indonesia, where mid-size businesses make up a significant portion of the economy, their involvement in the energy transition is not just beneficial; it's essential.

1. Green Services and Renewable Energy Solutions

One concrete example of mid-size businesses contributing to the energy transition is through the provision of green services. Companies specializing in the installation and maintenance of solar panels, for instance, can help households and businesses reduce their reliance on fossil fuels.

Solar mid-size business: Firms like BTI energy, SolarKita are leading the way by offering affordable solar panel installations to both urban and rural areas. Their model not only promotes renewable energy but also creates job opportunities and empowers local communities.

2. Energy Efficiency Consulting

Another area where mid-size businesses can excel is in energy efficiency consulting. Mid-sized businesses can provide tailored asses mid-size businessnts and solutions for energy consumption in various sectors, from hospitality to manufacturing.

Eco-Consulting Firms: Companies such as GreenConsult offer energy audits and propose measures to optimize energy use. These services can help businesses lower their energy costs while contributing to national sustainability goals.

3. Sustainable Tourism Initiatives

The service industry, particularly tourism, is a vital sector for Indonesia. Mid-size businesses in this area can lead the charge toward more sustainable practices, which can reduce energy consumption and environmental impact.

Eco-Lodges: Small hotels and lodges that prioritize eco-friendly practices, such as solar energy, waste reduction, and water conservation, can attract eco-conscious travelers. Bali Eco Stay is a great example, using renewable energy sources and promoting local culture. Justtransition.id is currently promoting the similar innovation in several key upcoming tourism spots across Indonesia

Rammang-Rammang in Maros Sulawesi transitioning from Karst Mining into ecotourism

4. Waste Management and Recycling Services

As Indonesia grapples with waste management issues, mid-size businesses can step up by providing innovative waste management solutions. 

- Recycling Startups: Initiatives like Waste4Change and SungaiDesign focus on creating a circular economy by providing waste management and recycling services to businesses. These mid-size businesses not only help reduce energy loss associated with waste but also educate communities on sustainable practices.

Waste4Change's waste collection

Addressing the Collapse of the Middle-Income Class

The importance of empowering mid-size businesses in this energy transition cannot be overstated, especially in light of the worrying trends facing Indonesia's middle-income class (UN, n.d). The middle income in Indonesia decreased from 60 million people in 2018 to 52 million people in 2023 (CELIOS, 2024) Economic pressures, inflation, and job losses threaten to erode this vital segment of society. By fostering a vibrant mid-size business sector, we can create employment opportunities and stabilize incomes, which are crucial for maintaining middle-class standards of living.

Economic Resilience

Mid-size businesses contribute significantly to job creation. By supporting these enterprises, Indonesia can build a more resilient economy that can withstand global economic shocks. For instance, investments in renewable energy initiatives can lead to new job opportunities in solar panel installation, maintenance, and energy auditing, directly benefiting the middle class.

Sustainable Growth

Promoting sustainable practices among mid-size business ensures that economic growth does not come at the expense of the environment. As businesses adopt green technologies, they not only reduce operational costs but also attract environmentally conscious consumers. This shift is essential for the long-term sustainability of the middle class, as it fosters a healthier economy and environment.

Empowering Local Communities

Mid-size businesses are often deeply embedded in their local communities. By supporting these businesses, we empower communities to take charge of their economic futures. This local empowerment is vital for reducing inequality and ensuring that the benefits of economic growth are widely shared, helping to prevent the further decline of the middle class.

The Path Forward

To leverage the potential of mid-size businesses in Indonesia, several steps must be taken:

1. Government Support: Policies that provide financial incentives, grants, or low-interest loans and waived tax grants for businesses operating at IKN, can be also applied for mid-size businesses engaging in sustainable practices that can drive growth in this sector.

2. Training and Education: Equipping entrepreneurs with knowledge about renewable energy technologies and sustainable practices can enhance their capabilities and encourage innovation. Providing scholarships for certain schools like SMAN 2 Purwakarta focusing on renewable energy can accelerate the creation of green mid-size business development in Indonesia

3. Public-Private Partnerships: Collaborations between government, large corporations, and mid-size businesses can create synergies that promote sustainable development on a larger scale.

4. Awareness Campaigns: Raising awareness about the importance of sustainability can stimulate demand for green services, empowering mid-size businesses to thrive.

The energy transition in Indonesia is not solely the responsibility of large corporations or the government. Mid-size businesses in the service sector are vital players in this journey. By embracing their potential and providing the necessary support, we can fill the gaps left by larger entities, create sustainable jobs, and build a greener future for Indonesia. Most importantly, this approach can help stabilize and uplift the middle-income class, ensuring that economic growth benefits all segments of society. The time to act is now, and the mid-size businesses are ready to lead the way.