PARIS ALIGNMENT OF POWER SECTOR FINANCE FLOWS IN INDONESIA

The document analyzes power sector financing in Indonesia from 2015 to 2020, revealing a significant investment gap in renewables and a continued reliance on fossil fuels. While international finance for coal dropped sharply after 2018, domestic finance remains heavily skewed toward fossil fuels. To meet the 2060 Net Zero target, Indonesia requires USD 16.1 billion in annual renewable energy investment, far exceeding the tracked average of USD 2.7 billion. The report highlights solar energy as having the largest investment gap and suggests leveraging blended finance, green sukuks, and the Energy Transition Mechanism to accelerate the transition.

• Between 2015 and 2020, total tracked power sector finance commitments averaged USD 5.3 billion per annum, with fossil fuel-based projects accounting for 46 percent of these commitments.
• Coal-fired projects dominated fossil fuel finance, receiving 84 percent of total fossil fuel-based commitments between 2015 and 2020, with annual financing averaging USD 2.5 billion.
• International sources provided approximately 65 percent of total tracked finance to the electricity sector from 2015 to 2020, though international finance for fossil fuels (primarily coal) fell by 68 percent between 2018 and 2020.
• There is a substantial annual underinvestment in renewable energy of USD 13.4 billion to meet the MEMR's NZE 2060 Scenario, as required annual investment is USD 16.1 billion while tracked investment averaged only USD 2.7 billion.
• Solar power exhibits the widest investment gap, requiring an additional USD 4.6 billion annually to achieve 2060 targets, as current annual investment is only USD 0.04 billion.
• Indonesia faces an annual overinvestment in fossil fuels of USD 0.2 billion, with current trends projecting USD 4.3 billion in annual investment against a required USD 4.1 billion to meet 2060 targets.
• The Energy Transition Mechanism (ETM), announced by the Asian Development Bank at COP26, aims to retire 5.5 GW of coal-fired power plants in Indonesia by 2040, requiring an estimated USD 25-30 billion in funding.
• Innovative financing tools like the SDG Indonesia One platform and Green Sukuk have successfully mobilized capital; Green Sukuk issuances have raised a total of USD 3.2 billion, contributing to 7.35 GW of renewable energy capacity.

APA

Mafira, T., Larasati, L., & Siagian, A. (2022). PARIS ALIGNMENT OF POWER SECTOR FINANCE FLOWS IN INDONESIA. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2022/03/Paris-Alignment-of-Power-Sector-Finance-Flows-in-Indonesia.pdf

Chicago

Mafira, Tiza, Luthfyana Larasati, and Albertus Siagian. PARIS ALIGNMENT OF POWER SECTOR FINANCE FLOWS IN INDONESIA. Climate Policy Initiative, 2022. https://www.climatepolicyinitiative.org/wp-content/uploads/2022/03/Paris-Alignment-of-Power-Sector-Finance-Flows-in-Indonesia.pdf.

Wikipedia

{{cite report |last1=Mafira |first1=Tiza |last2=Larasati |first2=Luthfyana |last3=Siagian |first3=Albertus |title=PARIS ALIGNMENT OF POWER SECTOR FINANCE FLOWS IN INDONESIA |publisher=Climate Policy Initiative |date=March 2022 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2022/03/Paris-Alignment-of-Power-Sector-Finance-Flows-in-Indonesia.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{mafira2022paris, author = {Mafira, Tiza and Larasati, Luthfyana and Siagian, Albertus}, title = {{PARIS ALIGNMENT OF POWER SECTOR FINANCE FLOWS IN INDONESIA}}, institution = {Climate Policy Initiative}, year = {2022}, month = mar, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2022/03/Paris-Alignment-of-Power-Sector-Finance-Flows-in-Indonesia.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }