The Net Zero Alignment of Indonesia’s Power Sector Finance

This report by the Climate Policy Initiative analyzes the alignment of Indonesia's power sector finance with its Net Zero Emission (NZE) 2060 roadmap. It identifies a significant financing and capacity gap for renewable energy, noting that while renewable finance has grown, it remains far below the USD 16 billion annual investment required to meet national targets.

• Indonesia's Net Zero Emission (NZE) Roadmap for the energy sector, launched in September 2022, aims to eliminate coal-fired power as a national energy source by 2030 and reach an 87% renewable energy mix by 2060, with nuclear providing the remaining 13%. Achieving these goals requires annual renewable energy investments of approximately USD 16 billion.
• Between 2015 and 2021, total tracked finance for Indonesia's power sector was USD 35.6 billion, averaging USD 5 billion per year. Renewable energy accounted for 58% of this finance, but annual levels reached only USD 3 billion, meaning investments must increase more than five-fold to align with the NZE 2060 scenario.
• There is a projected annual financing gap of USD 13 billion for renewable energy generation, with solar and hydro each representing a USD 4.6 billion annual gap. Solar energy requires the most significant scale-up, needing 10,196 MW of annual growth to reach a 2060 target of 398 GW, compared to an average growth of only 30 MW per year from 2010 to 2021.
• Several factors hinder renewable energy investment, including uncompetitive feed-in tariffs, locked-in coal investments, and fossil fuel subsidies that have averaged USD 135 million annually since 2015. Additionally, solar adoption is limited by system quotas for residential and industrial customers (10-15%) and grid overcapacity.
• The Just Energy Transition Partnership (JETP) is identified as a critical mechanism, expected to mobilize at least USD 10 billion in public finance from the International Partners Group (IPG) and USD 10 billion in private capital via the Glasgow Financial Alliance for Net Zero (GFANZ).

APA

Climate Policy Initiative (2023). The Net Zero Alignment of Indonesia’s Power Sector Finance. https://www.climatepolicyinitiative.org/publication/the-net-zero-alignment-of-indonesias-power-sector-finance/

Chicago

Climate Policy Initiative. The Net Zero Alignment of Indonesia’s Power Sector Finance. 2023. https://www.climatepolicyinitiative.org/publication/the-net-zero-alignment-of-indonesias-power-sector-finance/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=The Net Zero Alignment of Indonesia’s Power Sector Finance |date=14 August 2023 |url=https://www.climatepolicyinitiative.org/publication/the-net-zero-alignment-of-indonesias-power-sector-finance/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2023net, author = {{Climate Policy Initiative}}, title = {{The Net Zero Alignment of Indonesia’s Power Sector Finance}}, institution = {Climate Policy Initiative}, year = {2023}, month = aug, url = {https://www.climatepolicyinitiative.org/publication/the-net-zero-alignment-of-indonesias-power-sector-finance/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }