Alternative Models for Transmission Financing in Indonesia

The report assesses how Indonesia can move from corporate-level financing to project finance to meet a USD 24 billion investment requirement for transmission lines and substations. It analyzes five models: leasing, joint ventures (JVs), public-private partnerships (PPPs), infrastructure investment trusts (InvITs), and collective investment schemes for infrastructure (CIS-DINFRA). While leasing and JVs are easier to implement, InvITs and CIS-DINFRA offer the highest scalability and liquidity. The report emphasizes that success depends on three policy enablers: a dedicated transmission fee, off-balance sheet accounting treatment, and targeted fiscal support.

• Indonesia's Electricity Supply Business Plan (RUPTL) 2025–2034 requires an estimated total investment of USD 24 billion to develop approximately 47.76 thousand circuit kilometers of transmission lines and substations.
• The current corporate finance model, where the state-owned utility PLN owns and operates assets, limits scalability and risks overleveraging PLN's balance sheet.
• Shifting to project finance using Special Purpose Vehicles (SPVs) and non- or limited-recourse debt can reduce pressure on PLN's balance sheet by tying returns to the asset rather than corporate debt.
• A dedicated transmission fee is essential to provide predictable revenue streams for private investors, as current costs are bundled into overall electricity tariffs.
• Off-balance sheet treatment, similar to the precedent set by the Financial Services Authority (OJK) for power purchase agreements (PPAs), is recommended to prevent transmission assets from being recognized as liabilities on PLN's balance sheet.
• Leasing and Joint Venture (JV) models are identified as the most practical for near-term implementation due to lower complexity, though they offer limited scalability and liquidity.
• Public-Private Partnerships (PPPs) provide a balanced risk allocation through government-backed availability payments, but involve high transaction costs and long lead times.
• Infrastructure Investment Trusts (InvITs) and Collective Investment Schemes for Infrastructure (CIS-DINFRA) are the most scalable and liquid options, enabling the monetization of assets and access to institutional capital markets.
• Fiscal support, such as viability gap funding or subsidies under Finance Minister Regulation PMK 20/2025, is necessary to bridge the gap between regulated tariffs and the higher returns required by private investors.

APA

Putri, L. L. T., & Akbar, T. M. 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, and Tiza Mafira 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=Akbar |first2=Tiza Mafira 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 Akbar, Tiza Mafira 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} }