Alternative Models for Transmission Financing in Indonesia

The report analyzes five alternative project finance models—leasing, joint ventures, PPPs, InvITs, and CIS-DINFRA—to help Indonesia's state-owned utility PLN fund a USD 24 billion transmission expansion target for 2025–2034. It argues that shifting from corporate to project finance can reduce balance sheet pressure and attract private capital, provided that key policy enablers are implemented, including dedicated transmission fees, off-balance sheet accounting treatment, and government fiscal support.

• Indonesia's Electricity Supply Business Plan (RUPTL) 2025–2034 requires an estimated total investment of USD 24 billion (approximately IDR 420 trillion) to develop 47.76 thousand circuit kilometers of transmission lines and substations.
• The state-owned utility PLN currently relies on corporate finance for transmission, which is capital-intensive, offers limited financial attractiveness with single-digit returns, and risks overleveraging the company's balance sheet.
• The report proposes shifting from corporate finance to project finance structures using Special Purpose Vehicles (SPVs) and non- or limited-recourse debt to reduce pressure on PLN's balance sheet and attract private investors.
• Five alternative financing models are evaluated: Leasing and JVs are easier to implement for low-complexity projects but have limited scalability; PPPs offer balanced risk allocation but depend on government support; and InvITs and CIS-DINFRA provide the highest scalability and liquidity for long-term capital mobilization.
• Three foundational policy enablers are required for these models to succeed: the establishment of a dedicated transmission fee (fixed or variable) for predictable revenue, off-balance sheet accounting treatment to preserve PLN's financial capacity, and targeted fiscal support such as subsidies or guarantees.
• To enable off-balance sheet treatment, the report recommends that PLN engage with the Financial Services Authority (OJK), citing POJK 6/POJK.04/2017 as a precedent where power purchase agreements (PPAs) for generation are treated as regular sales transactions rather than liabilities.
• Fiscal support for these models is legally feasible under Finance Minister Regulation PMK 20/2025 on Electricity Subsidy Allocation, which allows for the reimbursement of Electricity Supply Cost (BPP) components.
• The report suggests that the proposed business models could be adapted for cross-border interconnections under the ASEAN Power Grid, provided there is harmonization of cost-sharing and regulatory frameworks.

APA

Putri, L. L. T., Mafira, T., & Akbar, K. (2026). Alternative Models for Transmission Financing in Indonesia. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2026/05/Alternative-Models-for-Transmission-Financing.pdf

Chicago

Putri, Luthfyana Larasati Tunjung, Tiza Mafira, and Khalifa Akbar. Alternative Models for Transmission Financing in Indonesia. Climate Policy Initiative, 2026. https://www.climatepolicyinitiative.org/wp-content/uploads/2026/05/Alternative-Models-for-Transmission-Financing.pdf.

Wikipedia

{{cite report |last1=Putri |first1=Luthfyana Larasati Tunjung |last2=Mafira |first2=Tiza |last3=Akbar |first3=Khalifa |title=Alternative Models for Transmission Financing in Indonesia |publisher=Climate Policy Initiative |date=May 2026 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2026/05/Alternative-Models-for-Transmission-Financing.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{putri2026alternative, author = {Putri, Luthfyana Larasati Tunjung and Mafira, Tiza and Akbar, Khalifa}, title = {{Alternative Models for Transmission Financing in Indonesia}}, institution = {Climate Policy Initiative}, year = {2026}, month = may, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2026/05/Alternative-Models-for-Transmission-Financing.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }