Heaptalk, Jakarta — State Electricity Company (PLN) has secured $581.5 million in funding from the World Bank, Canada Clean Energy & Forest Climate Facility, and Clean Technology Fund to expedite electrification access in Indonesia.
PLN, in its proactive stance towards energy transition and digitalization, has secured this funding to support its initiatives. The collaboration was formalized through a grant scheme and a direct loan agreement with a Sovereign Guarantee under the Indonesia Sustainable Least-cost Electrification-1 (ISLE-1) program.
The ISLE-1 program, a program-based loan supported by the World Bank and Development Partners, is specifically designed to enhance electrification access, strengthen grid readiness for new renewable energy (NRE) integration, and boost PLN’s operational IT capacity. The program’s development has also received technical assistance and funding from the Sustainable Renewables Risk Mitigation Initiative (SRMI) managed by the Energy Sector Management Assistance Program (ESMAP).
NRE resources in Maluku and Nusa Tenggara
PLN President Director Darmawan Prasodjo emphasized the importance of the World Bank’s funding collaboration through the ISLE-1 program to finance distribution, transmission, and power generation plans to achieve 100% electrification in Indonesia. The program will also finance the corporation to increase the NRE mix, reduce generation costs, and strengthen PLN’s financial and operational capacity. “ISLE-1 focuses on two regions, namely Maluku and Nusa Tenggara, since these regions have low electrification levels and high average power generation costs,” said Darmawan.
Furthermore, PLN recognizes that energy transition is a collective effort. As the driving force of this transition, PLN is actively fostering collaboration with various stakeholders to address the existing challenges. Darmawan elaborated, “Energy transition is not a solitary endeavor, as it involves technical, strategic, operational, and funding challenges. PLN has meticulously identified these challenges to ensure they are effectively addressed, mitigated, and managed, thereby propelling us towards our energy transition mission.”
Meanwhile, Carolyn Turk, the World Bank Director for Indonesia and Timor-Leste, said, “The World Bank is ready to support the Indonesian Government’s commitment to achieve 100% electrification. Greater household electrification rates, especially in the Eastern Islands, will provide additional economic opportunities, particularly for women.”
Turk hopes the funding will balance the required network investment and high electricity demand, particularly in the Eastern Islands. In addition to electrification, Turk also mentioned that the ISLE-1 program funding is intended to support NRE development in Indonesia. “Investment in renewable energy is crucial to making this sector more efficient and sustainable while increasing affordability and reliability,” she concluded.
