Landscape of Indonesia Power Sector Finance

This report by the Climate Policy Initiative analyzes the financing landscape of Indonesia's power sector from 2015 to 2021. It highlights a significant gap between current investment trends and the funding required to meet the country's Net Zero Emission (NZE) 2060 targets, while detailing the shift from fossil fuel to renewable energy finance.

• Indonesia has set multiple renewable energy (RE) mix targets: 23% by 2025 (National Energy Policy/RUEN), 43% by 2050 (LTS-LCCR), and 87% by 2060 based on the Indonesia Net Zero Emission (NZE) Energy Sector Roadmap.
• There is a massive financing gap for renewable energy; while the NZE 2060 scenario requires an average of USD 16.1 billion in annual financing, tracked finance from 2015 to 2020 only reached USD 2.7 billion per annum, leaving an annual under-investment of USD 13.1 billion.
• Between 2015 and 2021, total tracked power sector finance was USD 35.6 billion, with 58% allocated to renewable energy and 42% to fossil fuels (primarily coal-fired power plants).
• International finance played a dominant role, constituting 65% of the tracked commitments from 2015 to 2021. International sources significantly reduced fossil fuel finance by 67% between 2017 and 2018, shifting toward gas and diesel with no new commitments for coal.
• Debt instruments were the primary financing mechanism, accounting for 78% of total tracked commitments. Of this debt, 55% was for fossil fuel generators (mostly 2015-2017) and 45% was for RE generators (increasing since 2018).
• Renewable energy finance saw a 30% increase in new commitments starting in 2016, though 2020 experienced a setback due to the Covid-19 pandemic and the 2020 Omnibus Law, which eased coal mining permit extensions.
• To meet the 2060 NZE target, solar power faces the widest investment gap, requiring an additional USD 4.6 billion annually. The required annual capacity addition for solar is 339 times higher than the current trend.

APA

Climate Policy Initiative (2023). Landscape of Indonesia Power Sector Finance. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/08/CPI-2023_Landscape-of-Indonesia-Power-Sector-Finance-FINAL.pdf

Chicago

Climate Policy Initiative. Landscape of Indonesia Power Sector Finance. 2023. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/08/CPI-2023_Landscape-of-Indonesia-Power-Sector-Finance-FINAL.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Landscape of Indonesia Power Sector Finance |date=August 2023 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2023/08/CPI-2023_Landscape-of-Indonesia-Power-Sector-Finance-FINAL.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2023landscape, author = {{Climate Policy Initiative}}, title = {{Landscape of Indonesia Power Sector Finance}}, institution = {Climate Policy Initiative}, year = {2023}, month = aug, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2023/08/CPI-2023_Landscape-of-Indonesia-Power-Sector-Finance-FINAL.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }