The World Bank has approved a project worth over $1 billion project to expand access to cleaner electricity in eastern Indonesia.
The bank is providing $500 million in financial support to the overall cost, estimated at $1.1 billion.
The programme will connect about 2 million people to the electrical grid, increase solar power investment and help Indonesia’s state utility Perusahaan Listrik Negara (PLN) to improve its capacity to manage energy transition, the World Bank said in a statement.
It will be co-funded by the World Bank, the private sector and PLN and includes funding from Canada Clean Energy and Forest Climate Facility and the Clean Technology Fund.
The project “will mobilise private sector finance for Indonesia’s energy transition and help communities adapt to climate change,” World Bank Vice President for East Asia and the Pacific, Manuela V. Ferro, said in a statement.
Indonesia set a goal last year to achieve net-zero emissions by 2060 and pledged alongside dozens of other countries to phase down coal use to help limit global warming to less than 1.5 degrees Celsius above pre-industrial levels.
Authorities in Indonesia have been instructed to create a plan for early retirement of some coal power plants and the government could help absorb any losses incurred, according to the regulation issued this week.
Plans to get rid of 15 Gigawatts of coal power generation over the next three decades will require some $600 billion of capital support, according to the government.
The regulation states no new coal power plants can be built, but those that are already in the pipeline and those that are integrated with the natural resources processing industry will be allowed to go ahead as planned.