The World Bank has recently approved a $628 million Investment Project loan (from a total project volume of $2.1 billion which includes a Program for Results and Technical Assistance) for the Indonesia Sustainable Least-Cost Electrification Project-2 (ISLE-2). The project is managed by Indonesia’s state-owned electricity utility, Perusahaan Listrik Negara. It has been designed to expand access to renewable energy by deploying 540 MW of solar and wind power capacity, as well as extending electricity infrastructure to 3.5 million people, particularly in underserved regions such as Kalimantan and Sumatra. The project’s goals are to reduce generation costs, decrease greenhouse gas emissions, and foster inclusive economic growth through the expansion of clean energy value chains.

ISLE-2 should be implemented in a way that takes into consideration the design and implementation of ISLE-1 to better achieve climate and energy objectives. Both projects aim to improve electrification and promote renewable energy in underserved regions of the country. BIC and partners urge the bank to implement measures to prevent funding from being used to expand fossil infrastructure and to better align with Indonesia’s just energy transition goals. 

Bank officials in Indonesia have so far been reluctant to engage in dialogue with BIC and Trend Asia to discuss the project’s risks and better understand how the projects fit within the country’s energy transition commitments.