| Project Detail |
The proposed TA on Building Capacity for Low Carbon Power Infrastructure Development will support Indonesias State Electricity Corporation (Perusahaan Listrik Negara, or PLN) in improving processes, practices, workforce competencies and skills to shift the power system from fossil fuel to low-carbon electricity supply. The TA will complement a proposed results-based lending program (RBL) to PLN on Accelerating Indonesias Clean Energy Transition to advance capacity development for RBL program timely implementation as soon as possible.
Project Name Building Capacity for Low-Carbon Power Infrastructure Development
Project Number 57229-001
Country / Economy Indonesia
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
In the Paris Agreement, Indonesia has pledged to reduce emissions by 31.89% by 2030, or 43.20% with international support, compared to a business-as-usual scenario. Electricity generation accounts for 43% of energy sector emissions and 15% of Indonesias total greenhouse gas emissions. The electricity sector, therefore, has a key role in helping Indonesia meet its targets for emissions reduction. The share of renewable energy in total generation was 13.4% in 2021 and the share of coal was 66.3%.
A number of complementary financing initiatives aim at helping Indonesia shift from a predominantly fossil fuel-based system to one with renewable energy sources. The Just Energy Transition Partnership (JETP) is a multinational climate finance package valued at $20 billion, wherein Indonesia has committed to: (i) peaking power-sector emissions by 2030 at no more than 290 MTCO2e from the baseline value of 375 MTCO2e; (ii) reaching net-zero emissions in the power sector by 2050; (iii) accelerating renewable energy deployment to reach 34% share in power generation by 2030; (iv) freezing the existing pipeline of on-grid and off-grid CFPPs, including captive coal power plants; and (v) accelerating early coal retirement. ADBs Energy Transition Mechanism (ETM) activities in Indonesia which includes a series of results-based and policy-based lending programs will contribute to the JETP objectives.
Shifting a power system which relies on electricity produced from fossil fuels to one which produces electricity from sustainable low carbon energy sources requires improvements and adjustments in processes, practices, workforce competencies and skills. During conducted assessments, including for the preparation of the forthcoming RBL to PLN on Accelerating Indonesias Clean Energy Transition, PLNs institutional capacity shortcomings that need to be addressed to help achieve the JETP objectives sustainably were identified, and correspondent actions include the following:
(i)Involve the private sector. The governments reforms to expand private sector investments in renewable energy are hindered, among other, by (a) inefficient planning, whereby solar (PV) and wind projects are developed one-by-one rather than through a large-scale program; and (b) limited tenders with invitations to prequalify issued only periodically.
(ii)Strengthen grid operation. The growth of variable renewable energy, such as solar PV and wind, is characterized by bidirectional flows and intermittency, which requires PLN to equip and operate control centers with new features and functionalities to ensure system availability and network security.
(iii)Strengthen safeguards. Despite progress, PLN still needs to enhance and institutionalize processes that are aligned with international environment and social safeguard practices.
(iv)Improve gender equality. The accelerating expansion of renewable energy capacity represents an opportunity to involve more women. Participation of female employees in PLNs education and training programs is only 19.4%.
(v)Build capacity for coal retirement. Retirement of coal assets will require institutional capacity including support to just energy transition corporate policies and frameworks. |
