Indonesia’s National Energy Policy outlines a bold ambition to transition towards a cleaner energy future. By 2060, the country aims to achieve near-zero emissions in electricity generation through a significant expansion of renewable energy sources. This commitment aligns with Indonesia’s pledge under the Paris Agreement to reduce emissions by 31.89% (or 43.20% with international support) by 2030.
The electricity sector, responsible for 43% of energy sector emissions in 2019, plays a pivotal role in achieving these targets. PLN, Indonesia’s state-owned electricity company, is at the forefront of this transition. While PLN generates a significant portion of its power, it also purchases from independent power producers (IPPs).
To accelerate renewable energy adoption, PLN has set a target to increase the share of renewables in its total generation to 24.8% by 2030. However, this ambitious goal requires substantial investment, estimated at around $3.1 billion per year.
To support PLN’s clean energy transition, a results-based lending (RBL) program has been established. This program prioritizes safeguards and a just transition while encouraging a shift towards large-scale clean energy development. By fostering competition and scaling up the market, the RBL program aims to drive down the cost of renewable energy sources like solar PV and wind power.