PLN prepares energy transition financing strategy to support energy self-sufficiency
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Tempo.co - PLN siapkan strategi pembiayaan transisi energi untuk dukung swasembada energi
15 November 2024
Tempo.co, Jakarta – PT Perusahaan Listrik Negara (Persero) stated its commitment to supporting the energy self-sufficiency programme envisioned by President Prabowo Subianto using clean energy. PLN mentioned various green funding initiatives to support projects related to energy transition in Indonesia.
The Special Envoy of the President for International Trade and Multilateral Cooperation, Mari Elka Pangestu, said that the Indonesian government has initiated the Global Blended Finance Alliance (GBFA). It aims to engage various developing countries in collaboration on energy transition financing. "The estimated [funding] for climate action alone ranges between US$1 to US$2 trillion. Including the SDGs efforts, the amount will reach around US$6 trillion," said Mari during the Indonesian Pavilion Talkshow "Fostering and Enabling Innovative Climate Finance Mechanism" at COP29 in Baku, Azerbaijan, as quoted from an official statement on Thursday, 14 November 2024.
Mari mentioned that developing countries, including Indonesia, must devise strategies to bridge this funding gap. According to the Finance Ministry’s calculations, Indonesia needs approximately US$280 billion to support all climate actions until 2030. Of this amount, only about 30 percent can be covered by the state budget, leaving the remainder to be sourced from the private sector and other funding sources. "The new administration will continue the previous administration's commitments, and this [GBFA] is one of the commitments we hope will be continued," said Mari.
Meanwhile, PLN Finance Director Sinthya Roesly claimed that PLN has been consistent in managing green investment funds to support the vision of energy self-sufficiency. Therefore, PLN continues to raise green financing from public, bilateral, multilateral, and private institutions.
To achieve this vision, according to her, PLN has devised the Sustainable Linked Financing Framework (SLFF) and the Green Financing Framework (GFF). PLN has also designed funding strategy by developing 75 percent of its power plants based on renewable energy. To reach this target, an estimated funding of more than US$100 billion is needed by 2033.
"To obtain energy transition financing, one of the key factors, from PLN's perspective, is to prepare the appropriate projects. We have hundreds of project lists ranging from generation, transmission, and distribution, including smart grids," explained Sinthya.
Sinthya also stated that PLN will continue to seek various funding options, including cooperating with international lenders and utilising local resources, to ensure the energy transition proceeds as planned. Several financial institutions supporting PLN’s energy transition include the World Bank, the Asian Development Bank (ADB), and the Just Energy Transition Partnership (JETP).
“In the past two years, we have secured around US$2.9 billion, and currently, we are in discussions with ADB for funding of approximately US$4.8 billion. We are also in talks with several other investors, and the total potential funding we currently have is US$46.9 billion," said Sinthya.
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