The World Bank has approved a blended finance package of $2.128 billion to support the development of 540 MW of solar and wind power generation in Indonesia and to boost the country’s economic growth and create jobs.
Out of the total package, $628 million will back this clean generation capacity under the Sustainable Least-Cost Electrification-2 (ISLE-2) program, which aims to enable energy access for 3.5 million people. The 540 MW solar and wind capacity is expected to reduce power generation costs by at least 8%, and GHG emissions by 10%, in the Kalimantan and Sumatra regions.
This capacity will be implemented by the state agency PT PERUSAHAAN LISTRIK NEGARA (PERSERO) (PLN). It comprises a $600 million IBRD loan, $12 million in grants from the IBRD Surplus-Funded Livable Planet Fund, and $16 million in grants from partners mobilized under the Sustainable Renewables Risk Mitigation Initiative (SRMI).
“Through blended finance instruments, the World Bank and partners will also help mobilize an additional US$345 million in private investments to finance solar and wind project, as part of a World Bank Regional Energy program to create national and regional resilient and interconnected energy grids,” said World Bank Vice President, East Asia and the Pacific, Manuela V. Ferro.
The remaining $1.5 billion policy reform program under the Indonesia Productive and Sustainable Investment Development Policy Loan will also help remove obstacles to procuring renewable energy technologies by reducing local content requirements, it added.
It aligns with the Indonesian government’s goal of reaching high-income status by 2045, according to a World Bank statement.
Under the ISLE-1 Program for Results (PforR), the investment focused on the Nusa Tenggara and Maluku regions. ISLE-2 builds upon ISLE-1 to promote affordable and sustainable electrification to the Sumatra and Kalimantan islands.
Indonesia recently ratified its Electricity Supply Business Plan (RUPTL) 2025-2034 to expand its renewable energy capacity from 14.3 GW at the end of 2024 to 42.6 GW, comprising 17.1 GW of solar PV (see Indonesia To Add 42.6 GW Renewables By 2034 Under RUPTL).
