Government Supports Energy Transition Steps By Preparing Blended Finance

Minister of Finance Sri Mulyani. (Photo: PLN Doc)

JAKARTA - The government supports the plan of PT PLN (Persero) in retiring the Steam Power Plant (PLTU) as one way to achieve the Carbon Neutral target in 2060.

As a form of support to PLN, the government has designed an Energy Transition Mechanism (ETM) which is a form of blended finance scheme to accelerate the early retirement of steam power plants and open investment for clean energy.

The Minister of Finance of the Republic of Indonesia Sri Mulyani Indrawati explained that the ETM financing scheme aims to improve energy infrastructure and accelerate the clean energy transition towards Net Zero Emission (NZE) 2060 in a fair and affordable manner.

Sri Mulyani emphasized that the energy transition project is unavoidable considering that climate change has become a serious threat to the world.

However, this transition, in addition to ensuring the future, must also maintain the national economy and the purchasing power of the people, especially the poor.

For this reason, Sri Mulyani invites all G20 members to give their commitments and initiatives in financing the energy transition through ETM.

"This is what we call blended finance as a shared commitment and determination to finance a fair and affordable energy transition," Sri Mulyani explained to the media, Friday, July 15.

He also reminded, as one of the largest coal producers in the world, the energy transition has a big impact for Indonesia.

Especially for PLN to retire coal-based power plants early.

However, relying entirely on NRE-based generators is also quite expensive and risky.

Whereas on the other hand, PLN must ensure that it can provide a reliable and affordable electricity supply for the community.

"Our efforts to reduce carbon emissions play an important role in reducing global emissions. For that we from the government will also create a policy framework that ensures this process is credible and benefits all parties," said Sri Mulyani.

Meanwhile, the President Director of PLN, Darmawan Prasodjo welcomed the government's efforts in establishing the ETM platform.

He considered that the blended finance scheme in the ETM could be a solution for funding the PLTU retirement plan.

"PLN also admits that it cannot do all this alone. Therefore, the solution is to collaborate together, both in terms of funding, policy, technology and others," said Darmawan.