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International Conference: Post Pandemic Cities: A Paradigm Shift? (CITIES 2021) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1015 (2022) 012017 doi:10.1088/1755-1315/1015/1/012017

Rural renewable energy development: lessons learned from

community-based renewable energy business model in East
Sumba, Indonesia

N Prilandita 1*, S Sagala1, D Azhari2 and A H Habib1

1
School of Architecture, Planning and Policy Development, Institut Teknologi Bandung,
Bandung 40132, Indonesia
2
Resilience Development Initiative, Bandung 40135, Indonesia

E-mails: niken@itb.ac.id; saut.sagala@sappk.itb.ac.id; dazhardana@gmail.com;

alamhasnanhabib@gmail.com

Abstract. Sumba Island is a remote region with great potential for renewable energy sources, as
the Iconic Island of Renewable Energy designated through the Minister of Energy and Mineral
Resources Decree No. 3051 K / 30 / MEM / 2015 is targeted to reach 100% of renewable energy
usage with 95% of electrification by 2025. To reach this target, the participation of the
community as the subject of every renewable energy project is essential. This paper aims to
identify the lessons learned to enhance the community's capacity in implementing the rural
community-based renewable energy business model in Indonesia, with the case of the renewable
energy business in Luku Wingir and Waimbidi Village - East Sumba. The result indicates that
the Rural Community-based Renewable Energy Business Model in the case study need to be
developed based on the fundamental strategies of building community capacity: (1) leadership
development of the village community in East Sumba, (2) business organizational development
in managing the renewable energy, (3) developing a significant role for the community in
organizing renewable energy, and (4) adapting collaborative relations among multiple
stakeholders in East Sumba.

Keywords: renewable energy, rural, community, Sumba, business model

1. Introduction
East Nusa Tenggara is one of the regions in Indonesia that still have a low number of electrifications
ratio with 61.06% [1]. Considering that it is a region with great potential for renewable energy sources,
an entirely different strategy is needed to increase the renewable energy system within East Nusa
Tenggara. Because of the apparent disparity between electrification of urban and rural areas then.
Renewable energy decentralized networks are usually more effective in remote areas [2]. Sumba, an
island located within the province of East Nusa Tenggara, is an excellent example of a remote region
with great potential for renewable energy development. Therefore, Sumba Island has been designated
as an Iconic Island of Renewable Energy through the Minister of Energy and Mineral Resources Decree
No. 3051 K / 30 / MEM / 2015 along with Hivos to reach 100% of renewable energy usage with 95%
of electrification by 2025 through the Sumba Iconic Island project. The renewable energy capacity has
reached 9.8 MW of renewable energy in 2018 and contributes to the overall electricity in Sumba about
20.9% [3]. Furthermore, Lukuwingir and Waimbidi in East Sumba Regency are the appropriate
examples of rural areas with great potential and renewable energy implementation that continue to grow.

Content from this work may be used under the terms of the Creative Commons Attribution 3.0 licence. Any further distribution
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International Conference: Post Pandemic Cities: A Paradigm Shift? (CITIES 2021) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1015 (2022) 012017 doi:10.1088/1755-1315/1015/1/012017

There are four models of operation & maintenance that are being practised in Sumba Island (Prilandita,
et al., 2019). These models are differentiated based on the existing responsible stakeholders including:
(1) the local community; (2) locally organized cooperative (3); The State Electricity Company; (4) and
private sector/developer model. In Sumba Island, currently, there is no mutually agreed policy or
structure governing the maintenance process for the disparate models. Thus, it results in different types
of maintenance and operations based on the existing stakeholders. The different capabilities and qualities
that each stakeholder possesses highly affect the sustainability of renewable energy systems. The first
models that solely rely on the local community in Lukuwingir and Waimbidi village (end-user and
appointed local technician) find it particularly difficult to maintain the system due to the lack of capacity,
financial issues, and security issues.
One of the ways to understand the development of a renewable energy system is by understanding
the existing business model. Various aspects could be studied from the business model where one of the
aspects is the operation & maintenance. A business model will help to understand and map out how the
business can create, deliver and capture value from the offers [4]. In addition, community involvement
is required to develop the renewable energy sector [5]. Hence, community-based renewable energy
could be the alternative to enhance community involvement, and capacity is an essential element in
optimizing the development of renewable energy and its business, especially in East Sumba.
This research aims to identify the lessons learned from renewable energy projects in order to enhance
the community's capacity in implementing the rural community-based renewable energy business model
in Indonesia. Three cases are investigated, namely the Micro Hydro Power Plant (MHPP), the small-
scale biogas and the solar water pump business in Luku Wingir and Waimbidi Village - East Sumba,
which are the main sources of electricity in both villages. In order to reach the aim of this research, these
are the objectives that offer the step of this research:
1. Identification of the characteristics of the community-based renewable energy business in East
Sumba
2. Identification of characteristics of community capacity in supporting community-based
Renewable Energy business development in East Sumba.
3. Formulation of the recommendation to enhance the community's capacity in developing its
business model in East Sumba
The following section will address the theoretical context, which will begin this study's methodology.
Next, a short overview of renewable energy from East Sumba accompanied by the results and a summary
of the findings is discussed. Lastly, this study offers lessons learned from rural renewable energy
projects in order to enhance the community's capacity in implementing the rural community-based
renewable energy business model in Indonesia.

2. Literature Review

2.1 Rural Energy Business Model

It is common for villagers in Indonesia to rely on wood fuel for their daily cooking and heating needs
since they do not have access to modern forms of energy. Due to limited access to modern forms of
energy such as electricity, rural areas' social and economic development is minimal, or there is no
significant change in various living conditions [6]. Therefore, both traditional and modern energy will
be needed to encourage rural development and create prosperity for the rural population through energy
sources access. However, over time, there has been an awareness that providing access to energy is vital
for realizing sustainable development.
There are various challenges, including providing electricity to rural areas is often considered more
expensive than supplying in urban areas, which causes electricity service providers not to be interested
in doing business in villages or rural areas [6], low consumption of electricity for productive economic
activities [7], and the benefits of rural electrification are sometimes enjoyed by non-indigent people [8].
In the Indonesian context, the villages that are underserved by electricity in Eastern Indonesia are located
on remote islands or isolated mountainous areas. Moreover, off-grid electricity sources (using renewable

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International Conference: Post Pandemic Cities: A Paradigm Shift? (CITIES 2021) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1015 (2022) 012017 doi:10.1088/1755-1315/1015/1/012017

energy) are often found to be an alternative to power generation technology. Looking at these
characteristics, Utomo [9] argued that analyzing the costs and benefits of currently existing alternatives
for providing electrification services may not be sufficient to produce appropriate recommendations. In
addition, other aspects must be considered, such as sustainability and the capacity of the accompanying
institutions.
The Rural Renewable Energy Business Model in question is a business model of providing electricity
by businesses in selected rural areas that use renewable energy plants. The use of a business model for
a business helps identify sustainability for business; besides, it can practically be used to help explain
the running of the business to be the research purpose, the author uses a method which divides it into
three main components to consider Among others:
● Value Proposition
Related with the interaction between companies and consumers and how the products or
services offered can have a selling value to the consumers and generate profits.
● Value Creation & Delivery
Creating value/profits by penetrating new business areas and markets so that sources of income
for the company can be increased. In addition, an explanation of logistics function, production,
assets, and cooperation is also explained in this section.
● Value Capture
Financial sustainability of the company, this section describes the costs incurred to create value
and the benefits obtained by selling the company's value to consumers.

2.1.1 Community-Based Renewable Energy Development

The community-based renewable energy development must have been created from the successful
community-based renewable energy project. The community comes through two kinds of necessities,
either; energy demands or energy transition targets [10]. The community plays an important role in the
sustainability of the program. In some regions, rural areas or local indigenous were selected because of
their electricity needs, then continued to build decentralized renewable energy plants, which escalated
the net percentage of electrification. However, the increasing deployment of decentralized renewables
suffers from premature failures such as a lack of capable human resources, which is followed by
minimum maintenance [11]. Prior studies have stated several determinants affecting implementation in
Figure 1 [11–13].

Figure 1. Community-Based Renewable Energy Development Determinants [adapted from 11–13]

● Community Awareness
Related to the community's interest in the program, the awareness acts as a general attitude
toward energy issues [10]. The community's acceptance is shown by the receptiveness of
governments' policy as for human capital. Public awareness and acceptance were then
prosecuted differently through different performances of human capital in each local area.

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International Conference: Post Pandemic Cities: A Paradigm Shift? (CITIES 2021) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1015 (2022) 012017 doi:10.1088/1755-1315/1015/1/012017

● Local Human Capital

Local human capital or indicated as three pillars of health and primary education; higher
education and training; and labour market efficiency. It was then defined as a set of institutions,
policies, and factors that determine the level of productivity of an economy, which in turn sets
the level of prosperity in the area [13].
● Capacity Building
It is essential to provide stakeholders specific information from their points-of-view regarding
the impact of energy strategies from their interest and to implement better renewable energy
[14]. Though the project shows the community's acceptance, the responsibility to educate locals
was somehow forgotten, as its result in the lack of maintenance throughout the works or the
failure of decentralized renewables. The absence of post-construction capacity building for the
communities forms a great deal of maintenance failure and unsustainability to the program.
● Multistakeholder Collaboration
There are several key stakeholders necessary to make community-based renewable energy,
which consist of developers, utility companies, and local, municipal, and federal policymakers
[12]. The collaboration between works will eventually accelerate and keep together the
programs. Through this approach, the community will be sure enough about the program.

2.2 Community Involvement and Community Capacity

In recent years, community involvement has grown in popularity among policymakers, particularly in
development sectors. In a broader sense, community involvement can be defined as community
participation in local governance: developing local strategies, monitoring how they are implemented,
and managing local resources. The capacity of the community has an impact on community
involvement. Community capacity is reflected in its internal aspects, such as individual skill, knowledge,
and experience. The capacity itself has a significant impact on people's willingness to be involved in
related projects [15].
Furthermore, Chaskin [16] tries to explain the four fundamental characteristics of community
capacity. The first characteristic is a sense of community. Sense of community reflects the connection
and mutuality among members, including the threshold of collectively held values. This characteristic
can be supported by having stability and better mechanisms of social control. The second characteristic
is the level of commitment which is divided into two essential aspects: (1) the existence of community
members who see themselves as stakeholders in the collective well-being of the neighbourhoods and (2)
the willingness of these communities to participate actively in that role. The third characteristic is the
ability to solve problems. There are different ways to look at this ability, such as individual and
organizational action or through relationships and interactions. The fourth and final characteristic is
access to resources. Resources can be economical, human, physical, and political. As part of broader
society, challenges in community development often exist more structurally and beyond the capacity of
the community alone, hence why garnering resources and having policy influence can better ensure
stability and well-being of the community.
To enhance the involvement of the community in various innovations. It required good community
capacity. Several strategies are required to increase community capacity. According to Chaskin, there is
a combination of four major strategies in community-building efforts.
1. Leadership development, organizational development, community organizing, and fostering
collaborative relationships among organizations are the four strategies (Chaskin et al. 2001).
Leadership development focuses primarily on individuals. It typically seeks to elicit the
participation and commitment of current and potential leaders by providing opportunities for
skill development, connecting them to new information and resources, broadening their
perspectives on their community and how it might change, and assisting them in the formation
of new relationships.

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International Conference: Post Pandemic Cities: A Paradigm Shift? (CITIES 2021) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1015 (2022) 012017 doi:10.1088/1755-1315/1015/1/012017

2. Organizational development focuses on assisting organizations in performing their existing

functions better or more effectively, assisting organizations in taking on new functions or
playing new roles in the community and establishing new community organizations.
3. Community organizing is the process of bringing people together to solve community problems
and address collective goals. The goals of a community-organizing endeavour might range from
the acquisition of resources and power to the redefining of collective identity.
4. And the strategy of fostering inter-organizational relations works through organizations and
organizational networks to create a collective capacity for problem-solving, resource allocation,
and connectivity to resources outside the community, as well as specific result goals [16].
A combination of those major strategies resulting in a community-building effort focusing on
programmatic or more procedural approaches. Job training and placement and structuring access to
financial opportunities are examples of programmatic approaches. It may also concentrate on informal
social processes, organized, community-based processes and formal, targeted efforts [16].

3. Methodology
The qualitative approach is employed for formulating the lesson learned from rural community based
renewable energy by firstly identifying the community-based renewable energy business model that is
currently being carried out in Waimbidi and Luku Wingir village. The identification of the lessons
learned is carried out through identifying the characteristics of the community-based renewable energy
business in East Sumba based on the business model canvas characteristic by Bocken et al. (2014). Then,
the recommendation to enhance the community's capacity in developing its business model is
established based on Chaskin, (2001) building community capacity framework by identifying
characteristics of community capacity in supporting community-based Renewable Energy business
development in East Sumba.
Besides that, the data was obtained through primary surveys, including in-depth interviews and
secondary data surveys. Previously, a desk study was also conducted to obtain data/information on the
characteristics of renewable energy and community capacity through various legal documents, planning,
and previous research. The in-depth interviewees were the focus of semi-structured interviews and
conversations, with questions that were presented to understand their experience and to allow them to
draw on additional knowledge that they considered being relevant. The key informants include all
stakeholders in the community based renewable energy in Waimbidi and Lukuwingir. Village heads
provide direct information about renewable energy power plants built in their village based on their
experiences, observations, or correspondence with the community. The Regional Planning and
Development Agency (Bappeda) and the State Electricity Company (PLN) were interviewed to obtain
information about the workings of managing renewable energy power plants and whether there are
regulations or laws that regulate or limit these activities.

4. Result and Discussion

4.1 Rural Community-based Renewable Energy Business Model Characteristic in Sumba

Lukuwingir and Waimbidi villages manage a Micro Hydro Power Plant (MHPP), which was built close
to a waterfall in Waimbidi village. This plant serves the electricity needs of households around the plant,
with a service radius of 2.5 km. There are 135 households served by this plant, with 63 households are
Lukuwingir village's residents and the remaining 72 are households living in Waimbidi village area.
MHPP is capable of producing electrical power until 22 kWatt/hour. Villagers also use biogas for
household needs (household-scale used) and solar water pumps (located in Lukuwingir village).
However, it is not for providing electricity services & neither on a large scale serving for both villages
[17]. RE Business Model with O&M by Local Communities takes case studies in Lukuwingir and
Waimbidi Villages. The explanation will be described in three main components that make up the
business model.

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International Conference: Post Pandemic Cities: A Paradigm Shift? (CITIES 2021) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1015 (2022) 012017 doi:10.1088/1755-1315/1015/1/012017

Figure 2. Business Model Canvas with O&M by Local Communities

The electricity from the MHPP is used by Lukuwingir and Waimbidi villages' residents to support
their daily activities. Phone credits, carpentry tools, producing of tenun ikat (weaving string) by women
are examples of microeconomic activities that are helped by electricity presence. Government activities,
education and health services, as well as social-cultural activities for the community, also get the benefit
from electricity generated by the MHPP [18].
In managing MHPP, it is divided into two cases, financing management and physical management.
In terms of financing management, Lukuwingir Village and Waimbidi Village appointed four people
from the two villages. These people oversee managing bills from residents of the two villages. This
contribution will be used to pay expenses during the operation of the MHPP. These people consist of
four people from Waimbidi village and one from Lukuwingir village. The physical management
(maintenance) of the MHPP itself is carried out by Waimbidi Village. Moreover, these two villages have
networks with PT RESCO Sumba Terang, MCI, and Hivos to assist the two villages in carrying out
maintenance and technical repairs when MHPP is having a problem [19].
During the operation of the MHPP management, Lukuwingir Village and Waimbidi Village held a
public communication room through village development forums, weekly and monthly meetings, as
well as socialization for discussions and information dissemination related to village problems,
including providing electricity services problem through MHPP [17]. Currently, the community's
acceptance of electricity services from MHPP is considered quite well [20].
On the financing side, these two villages' communities agree on a joint bill to be paid every month.
Every resident who receives electricity services pays a bill of IDR 20,000 / month through an appointed
resident [21]. This bill is smaller than it should be because it also should be able to support operational
sustainability. This decision should be taken to create social acceptance of the community towards
electricity services [19]. From these contributions, Waimbidi Village gets a gross income of around Rp.
1,000,000 / month, with a net income of around Rp. 700,000. Meanwhile, the gross income in
Lukuwingir Village is around Rp. 800,000, with a net income of about Rp. 369,000 per month [22].
Unfortunately, village heads found that the community was not disciplined in paying the bills. The
community's indiscipline in paying the bill is because people's income is not constant, and the electricity
network system will not be cut off if the community is unable or unwilling to pay dues. Other payment
alternatives have been attempted, namely that the community can pay for several months of electricity
services at the beginning of the harvest seasons (back pay), and the community can also pay
contributions through the harvested product they have. Waimbidi Village also uses village funds to pay
for MHPP operators [19].

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International Conference: Post Pandemic Cities: A Paradigm Shift? (CITIES 2021) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1015 (2022) 012017 doi:10.1088/1755-1315/1015/1/012017

4.2 Lesson learned from Rural Community-based Renewable Energy Business Model in Sumba
This research tried to dissect the characteristics of community capacity in the management of MHPP in
Lukuwingir and Waimbidi villages through the perspective of Chaskin [16]. The first component in
looking at the characteristics of the community's capacity in the management of MHPP is through a
sense of community. This sense of community explains the level of the interrelationship between its
members, which is reflected in the similarity of values, norms, and similarities in the circumstances. It
could also be that the sense of community is reflected through the common interest in something that
has an influence on its members. The sense of community found in the context of MHPP management
in Lukuwingir Village and Waimbidi Village as the second example, where this sense of community
was created based on shared interests to gain access to electricity through the MHPP management.
The second component is commitment. This can be seen from the ability of the community to see
themselves as stakeholders who are responsible for collective welfare and the willingness of the
community to actively participate as stakeholders. In the context of MHPP management in Lukuwingir
Village and Waimbidi Village, this ability and willingness are reflected in institutionalized stakeholders,
namely representatives of the two villages who are responsible for the management and collecting bills
for MHPP operations. It's just that the ability and willingness are not reflected in the people of the two
villages in general. The level of community commitment in the two villages can be seen in the case of
paying for electricity services, where the community is reluctant to pay dues even though there is mutual
agreement on the bills.
Then, the ability in solving problems is an essential aspect in the development of community
capacity. In this case, if we look at these two villages have instruments to solve problems in the form of
village development forums & regular meetings both weekly and monthly to discuss common problems
and socialization for information dissemination. Although governance and decision-making for
problem-solving have been carried out through existing instruments, of course, not all the existing
problems can be resolved immediately and require time, for example, the problem of community non-
compliance with contributions.
The last component is access to resources. People of Waimbidi village and Lukuwingir village
mainly depend on negotiated bills in carrying out MHPP management. In MHPP management by these
two villages, several findings related to access to the funding can be shown, including the community's
non-compliance in paying dues and the value of the contributions being smaller than they should be.
However, it should be noted that there are no authentic cases in the management of MHPP by Waimbidi
and Lukuwingir Villages where there are significant obstacles caused by financing. Waimbidi Village,
in its operation, also uses village funds to pay for the services of the MHPP operator. Regarding technical
needs, these two villages have networks with parties outside the village, such as PT Resco Sumba
Terang, MCI, and Hivos, to assist the two villages in carrying out maintenance and technical repairs in
case of damage to MHPP.

5. Conclusion: Enhancing Community Capacity in Community-based Renewable Energy

Business Model in Sumba
The implementation and management of MHPP renewable energy in the Lukuwingir and Waimbidi
villages of Sumba already involve the local community of each village. The community was directly
involved in the funding or budgeting management of the MHPP project, where there are five
representatives of the community that were trusted to collect dues from the community of both villages
that will be used to fund the MHPP project. Both villages also regularly hold public communication
events through the village development forum, weekly and monthly meetings, and socialization to
disseminate information to the community regarding the problems in both villages, including the issue
of electrification using the MHPP project. These efforts have resulted in a relatively good response and
acceptance by the community towards the renewable energy implementation in Lukuwingir and
Waimbidi villages.
It has also been explained that the electricity generated from the MHPP project has brought many
benefits to the community to support their daily lives. The availability of electricity helped them in doing

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International Conference: Post Pandemic Cities: A Paradigm Shift? (CITIES 2021) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1015 (2022) 012017 doi:10.1088/1755-1315/1015/1/012017

their micro-economy activities, such as selling top-up phone balances, carpentry tools, and the
production of weaving ties by the women of both villages. Electricity is also crucial for educational,
health, social-cultural, and governmental activities. These findings are in line with the theoretical
framework that has been explained by Cebotari, S., & Benedek, J., [23], who stated that the development
or implementation of renewable energy projects would result in the development of communities where
the projects are located. The direct involvement and acceptance from the community to the project are
also essential factors in the success of the project's implementation because they contributed directly to
managing the funds and providing a suitable environment for the implementation of the MHPP project
in both villages.
However, the findings also showed that the implementation of the MHPP project in Lukuwingir and
Waimbidi villages still faced several obstacles, especially in terms of the availability and sustainability
of the funding and the community's compliance towards the agreed amount of payment due to their
economic difficulties and the situation where the electricity that will not be cut off if they do not pay.
This problem needs to be solved by giving the community a clearer and continuous education and
socialization on the importance of compliance to the payment to support the successful implementation
of electrification using renewable energy. This correlates to the theory stated by Arepo Consult [24], the
community need to socialize properly about the offered benefit of the tax payments (in this case is the
due payment), with detailed information on the community-wide benefit of it, so that the community
can understand well and comply with the payment rules.
Along with the clearer and continuous education and socialization for and to the community, the four
significant strategies pointed out by Chaskin [16] in community-building efforts can help to enhance the
community participation in the MHPP project in Lukuwingir and Waimbidi village. The first strategy is
leadership development, which means that current political leaders in Lukuwingir and Waimbidi village
need to empower and equip themselves with more vital awareness on the importance of renewable
energy projects (especially to generate electricity), also to continuously update with the latest
information and resources on the project and broaden the knowledge and perspective on the needs and
problems of their community. The ideal situation is that the government of both villages be more active
in supporting the implementation of the MHPP project and help educate the community on its
importance. The second strategy is organizational development, which aims to assist organizations (in
this case, the local organization or community who are directly involved in the MHPP project) in
performing their existing functions more effectively. This can be done by empowering all the
stakeholders who are involved in organizing or managing the implementation of the MHPP project in
Lukuwingir and Waimbidi village. In this context, the government can have a significant role since the
government has the capacity to support the stakeholders, for example, by finding or providing alternative
sources of funding for the project.
The third strategy, community organizing, in this case, means bringing the community of Lukuwingir
and Waimbidi village together to solve community problems and address collective goals. The regular
public meetings that have already been done by both villages is one of the good examples to realize this
target because a public meeting means that all stakeholders, including the community itself, can gather
to discuss their common problems and find the best solution for it that everyone can agree to. This public
meeting needs to be sustained and improved, and involving the government can also be considered so
that the government can hear directly what the difficulties are faced by the community in implementing
the MHPP project. The last strategy is fostering inter-organizational relations to create a collective
capacity for problem-solving, resource allocation, and connectivity to resources outside the community.
To realize this strategy, again, the support and involvement of the government, investors or donor
agencies, and the community itself are important. The community organization that manages the MHPP
project can build more solid communication and cooperation with the government and investors or donor
agencies so that they can have more helping hands in solving the problems faced in the process of
implementing the MHPP project. Multi-sector cooperation and coordination are crucial in ensuring the
success of the project and the direct support and participation of the community.

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International Conference: Post Pandemic Cities: A Paradigm Shift? (CITIES 2021) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1015 (2022) 012017 doi:10.1088/1755-1315/1015/1/012017

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Acknowledgements
This research was a part of a research project entitled: Sustainable Business Model for Renewable
Energy Development in Rural Areas: The Case of East Sumba, which was funded by Asahi Foundation
research funding awarded to Dr. Niken Prilandita. Besides that, we also would like to thank our key
informants who generously donated their time when giving interviews and data collection, and we really
appreciated the assistance of RDI staff and interns who assisted us in providing data and analyzing the
results.

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