Need Investment 700 Billion US Dollars, PLN Explores Financing Strategies To Create Clean Energy

PLN President Director Darmawan Prasodjo (left six). (Photo: Doc. PLN)

JAKARTA - PT PLN (Persero) continues to carry out a number of strategic steps to finance environmentally friendly projects.

In a Climate Change Conference (COP 27) held in Sharm El Sheikh, Egypt, PLN Finance Director Sinthya Roesly said, PLN already has a large roadmap for net zero emissions in 2060.

The NZE 2060 roadmap goes through three phases, namely short, medium and long-term.

In the short term in the 2021-2030 period, PLN will no longer build new coal plants to generate electricity.

In the medium term, in the 2031-2060 period, PLN took several steps, such as preparing battery storage to support more environmentally friendly plants.

As for the long term, PLN builds technology and ecosystems to support clean energy such as the use of electric vehicles, or the provision of renewable energy certificates or Renewable Energy Certificates.

"So basically there are several aspects, short-term, long-term and we are also developing ecosystems and building new capabilities. Also supporting technology. And we need investments of more than 700 billion US dollars to achieve net zero emission by 2060," he said in a statement to the media, Monday, November 7.

In terms of financing, PLN has won the trust of financial institutions to secure the sustainability of energy transition programs.

However, the budget requirement is quite large, so PLN still needs additional support to achieve net zero emission.

PLN has issued a statement of appreciation for the Sustainable Financing Framework or Statement of Intent on the Sustainable Financing Framework, as one of the company's strategies to obtain Green Financing.

Through the Energy Transition Mechanism (ETM) scheme, PLN together with the Indonesian government offer an inclusive investment scheme to achieve the decarbonization target.

PLN has also received financial support of USD 500 million from international banks by obtaining guarantees from the Multilateral Investment Guarantee Agency (MIGA) which is a member of the World Bank Group.

PLN also received financing from the Sustainable and Reliable Energy Access Program program from the Asian Development Bank (ADB) amounting to 600 million US dollars.

Then PLN also received loan funds of US$610 million from the World Bank for the PLTA pump storage project of 1,040 MW.

This project is a PLN pilot project in the development of PLTA pump storage in Indonesia.

PLN has also completed its green financial framework for a green loan facility of US$ 750 million with several international banks.

Next, PLN will prepare ESG Framework and ESG Linked Financing.

Sinthya added that support is also needed in the early retirement of PLTU as an effort to accelerate emission reduction.

In addition to cost support, a policy framework that regulates the early retirement of PLTU, energy security guarantees, and the implementation of carbon trading mechanisms or carbon markets is also needed.

"We are always open to opportunities for cooperation, both investment schemes and technology development to accelerate the achievement of NZE targets. We continue to open discussions with all business partners with the full support of the Indonesian government as Indonesia's real commitment to reducing global carbon emissions," concluded Sinthya.