How Energy Transition Programmes Evolve Under Constraint

Using binding constraints to adapt technical assistance design

Many donor-funded technical assistance programmes do not lose momentum because the initial intervention is wrong. They lose momentum because the binding constraint shifts, while the programme continues to focus on the activity it started with.

While technical assistance can improve studies, policy advice can improve regulatory frameworks and capacity building can improve understanding across institutions; if the binding constraint has moved elsewhere, these activities will not necessarily produce adoption.

This note is based on a learning session delivered as part of the UK PACT Asia Energy Portfolio Learning Series in February 2026, where lessons from the MENTARI programme and other initiatives were discussed with FCDO teams, delivery partners, and regional fund managers.

It reconstructs and extends the discussion from that session, particularly around binding constraints, adaptive programming, and pathways to adoption. Its purpose is not to document programme delivery in full, but to extract how constraint-based adaptation shaped decision-making over time.

It is important to note that this case note interprets programme experience using a ‘binding constraint’ lens. This framing is analytical and does not reflect formal programme reporting language. The central observation is that the programme did not move because activities were completed. It moved because the diagnosis changed.

Starting point: a technical-commercial problem

The team initially approached the DRP as a technical-commercial preparation challenge. The task was to support PLN, Indonesia’s state-owned utility, in identifying and assessing off-grid diesel sites, designing hybrid systems, building technical and financial models, and structuring packages to make projects investable.

This initial framing was consistent with how similar programmes are typically approached. Diesel-to-renewable hybridisation is technically complex, and improving project preparation is often a necessary condition for delivery. The implicit assumption was that better-prepared projects would be enough to get procurement moving.

The first break: when “better projects” was not enough

The clearest signal that this assumption was incomplete came from the first market response.

The initial Phase 1 package covered approximately 200 sites. Despite improved preparation, the response from the market was weak. The package was later restructured to 94 sites. This was not just a marginal adjustment, but a structural signal to the both programme and the market. The weak market response showed that project quality alone was not enough to unlock procurement.

The first pivot: tariff and approval as the binding constraint

The weak market response forced a second round of diagnosis. What emerged from the restructuring process was that tariff uncertainty and approval processes were acting as binding constraints. Even well-prepared projects could not move if pricing logic was unclear or approvals did not happen.

The team shifted from project preparation toward system diagnosis. The focus expanded to include hybrid tariffs, pricing and approval pathways, engagement with Indonesia’s Ministry of Energy and Mineral Resources (MEMR) and the Financial and Development Supervisory Agency (BPKP), and regulatory interpretation and alignment.

One key aspect was that the technical and commercial advisory was not abandoned. But the programme also had to recognise that project preparation alone could not produce decisions.

The second break: policy alone was not sufficient

Addressing tariff and regulatory questions improved clarity, but it did not automatically produce adoption. A second constraint became visible through the fragmentation of the system across policy, procurement, and implementation. Even where regulation improved, rules still needed to be translated into procurement structures, contracts, internal routines, and decision processes within institutions. In other words, the system now had clearer rules but it still lacked the ability to use them.

The second pivot: from policy advice to a holistic policy bundle

Instead of treating policy, procurement, and delivery as separate interventions, the programme moved toward what became, in practice, an integrated response combining pricing and tariff inputs, procurement and contract support, modelling tools, operational guidance and templates, and engagement across PLN, MEMR, and associated actors.

This is better understood not as policy support alone, but as a holistic policy bundle plus the necessary implementation architecture. The objective was not to improve individual components in isolation, but to make the system more decision-ready.

The third constraint: capability and internalisation

A further constraint remained. Institutions needed the internal capability to do hybrid modelling, evaluate options consistently, and integrate technical and commercial decisions. Without that capability, improvements would remain advisory rather than operational and would not translate into adoption at the required scale.

The intervention therefore extended into different levels of training for PLN and MEMR, support for internal modelling routines, development of SOP-related work for tariff review, and embedding tools that could be used beyond the immediate intervention. This marked a shift from designing solutions to enabling their use.

Evidence of movement

The programme did not control final adoption outcomes, but it did improve the system’s readiness to make decisions.

Publicly defensible indicators include the restructuring of the initial 200-site package to 94 sites following market feedback; LOIs signed in late 2023 for the revised package; hybrid pricing submissions entering formal EBTKE/BPKP processes; provision of licences and training to PLN and MEMR; and development of tariff-review SOP concepts and supporting materials.

Limits

The intervention did not resolve all constraints since final tariff approvals and system-wide institutional adoption remained outside the programme’s control. Furthermore, several elements entered live institutional process without yet becoming fully formalised or permanently embedded. The transition from improved readiness to full-scale implementation depended on decisions by actors beyond MENTARI’s mandate.

This distinction matters because improving readiness is not the same as delivering scale.

What this reveals

Programmes move when the diagnosis changes, not when activities are completed. The most important shifts in the DRP were not the completion of planned outputs, but the recognition that the constraint had moved.

Technical quality is necessary but rarely sufficient. Well-prepared projects did not produce procurement without clarity on pricing and approvals.

Policy is necessary but still not sufficient. Improved rules had limited effect until they were translated into procurement structures, routines, and tools.

Adoption depends on usability inside institutions. Capability, modelling tools, and internal processes were required to turn guidance into decisions.

The unit of intervention is the constraint, not the activity. Funding more of the same activity after the constraint has shifted produces diminishing returns.

Implications for fund managers

The implication is relevant for fund managers and programme designers. Programmes should be steered not by activity completion, but by continuous diagnosis of the binding constraint.

This means regularly reassessing where decisions are actually blocked; shifting resources toward that constraint, even if it changes the original plan; distinguishing between outputs and adoption; investing in the translation layer between policy, procurement, and implementation; and recognising that improving readiness is often the main contribution a programme can make.

The central shift is from delivering planned activities to removing the constraint that is currently preventing adoption.