State electricity company PT PLN has secured a lending facility from a consortium of the World Bank, Canada Clean Energy & Forest Climate Facility and Clean Technology Fund amounting to US$581.5 million for increased access to electrification in the country, energy transition programs and the company’s digitization.
The loan is marked by the signing of a grant scheme and direct loan agreement with Sovereign Guarantee, entitled the Indonesia Sustainable Least-cost Electrification-1 (ISLE-1) Program. The ISLE-1 program is a program-based loan in order to support the World Bank and Development Partners to increase access to electrification, increase grid readiness for the integration of renewable energy (EBT) and increase PLN’s information technology operational capacity.
The program also receives technical assistance and funding from the Sustainable Renewables Risk Mitigation Initiative (SRMI) managed by the Energy Sector Management Assistance Program (ESMAP).
PLN President Director Darmawan Prasodjo said the ISLE-1 program is essential in financing distribution, transmission and power generation plans towards 100 percent electrification in Indonesia. The program will also finance corporations to increase the renewable energy mix, reduce generation costs, and strengthen PLN’s financial and operational capacity.
“ISLE-1 focuses on two regions, Maluku and Nusa Tenggara, because both regions have low electrification rates and high average power generation costs,” Darmawan said on Thursday June 13, 2024.
“The energy transition cannot be carried out in an atmosphere of solitude, because there are technical, strategic, operational, and funding challenges. PLN has mapped all these challenges so that each challenge can be overcome, mitigated, and managed in order to move forward and achieve the energy transition mission,” he added.
World Bank Director for Indonesia and Timor-Leste Carolyn Turk said the World Bank is ready to support the Indonesian Government’s commitment to achieve 100 percent electrification and accelerate renewable energy.
“This funding is expected to create a balance between the network investment needed and the large demand for electricity, especially in the Eastern Islands. A greater level of household electrification, especially in the Eastern Islands, will provide additional economic opportunities, especially for women,” Turk said.
Not only electrification, Turk also said that the ISLE-1 program funding is also intended to support the development of renewable energy in Indonesia.
