The Government of Japan has approved loans of up to USD500 million to expand renewables and grid network capacity in Indonesia as a part of a public-private decarbonisation initiative. This is part of Government of Japan’s Asia Zero Emission Community (AZEC) initiative which aims to transition Indonesia to sustainable sources of energy including solar, wind, hydrogen and ammonia. Additionally, Japan-based companies will also be able to export related technologies to the country.

The funds will be released to Perusahaan Listrik Negara (PLN), a state-owned utility firm, with Nippon Export and Investment Insurance (NEXI) serving as the insurer. Around USD200 million of the total is expected to be assembled by March 2023.

Majority of the funds will be used to finance feasibility studies as well as purchasing equipment. PMN, NEXI and Japan External Trade Organization (JETRO) will jointly set up a framework to introduce environment-related technologies owned by Japan-based companies and start-ups.

This loan is key in supporting PLN’s goal to cease construction of new thermal power plants and replace these with renewable energy facilities starting 2025.