State electricity company PT PLN is exploring opportunities for a new financing scheme, coined the term transition financing, to accelerate investments in gas power plants and fossil fuel efficiency.
Director of Transmission and System Planning at PLN, Evy Haryadi, said that several Asian banks have shown interest in participating in this transition taxonomy financing. This financing model aims to provide additional funding options for PLN, supplementing the previous green financing scheme, which was established through partnerships, like the Just Energy Transition Partnership (JETP) focusing on financing renewable energy projects.
“Green financing is suitable for renewable energy projects, while transition financing is more apt for gas power plant projects,” Evy said on March 5, 2024.
Several banks associated with the Glasgow Financial Alliance for Net Zero (GFANZ), including Bank of America, Citi, Deutsche Bank, HSBC, Macquarie, MUFG, and Standard Chartered, are considering this financing scheme.
The need for intensive financing for gas power plants is justified amid the revision of the Electricity Supply Business Plan (RUPTL) for this year. PLN plans to reduce the capacity factor (CF) of coal-fired power plants while increasing investments in renewable energy and gas.
This plan, known as the Accelerated Renewable Energy with Coal Phase Down (ACCEL RE Coal Phase Down), envisions a significant increase in renewable energy capacity by 2040, with gas power plants contributing substantially to the national capacity.
