JAKARTA, Dec 18 (Reuters) – Indonesia needs an estimated $31 billion of investment by 2030, and a total of $92 billion by 2050, to finance its switch to greener energy in the captive power sector, the Just Energy Transition Partnership (JETP) said in a report.
The captive power sector, which covers electricity generation developed by industries for their own utilisation, has grown rapidly in recent years in the Southeast Asian country, particularly in nickel industrial estates.
The Indonesian JETP Secretariat estimated that captive power capacity reached 25.9 GW in 2024, with over 75% powered by coal, according to the report. Almost 11 GW of capacity is currently in various stages of development, and most of those projects will use coal as well.
The estimated investments to 2030 are focused on deployment of renewable power and battery storage, led by solar PV and hydropower, the report said. It also recommended switching to gas as a fuel in some cases, making systems more efficient and improving the integration of renewables.
“As a result, by 2030, renewable power is projected to comprise 34% of captive generation, from 9% in 2024, with this share rising to 55% by 2040 and over 80% by 2050,” the report said, adding that such adoption would achieve 75% lower carbon emissions in 2030 compared with a baseline scenario.
The captive sector was initially excluded from Indonesia’s 2023 decarbonisation policy plan under JETP, which was set up as a G7-backed funding initiative to help developing nations cut carbon emissions. Earlier this year, the U.S. withdrew from its JETP deals with Indonesia, South Africa and Vietnam.
The JETP Captive Scenario report is not a binding document, but it is typically produced in coordination with government officials.
Indonesia, one of the world’s top producers of coal, has secured over $20 billion in financing pledges under the JETP scheme, but deployment has been slow.
“As the JETP funds represent only a fraction of the total investment needs, realising the outlook depends on mobilizing much greater funding from diverse sources of capital,” the report said.
Separately, the JETP Secretariat has estimated $97 billion of investment is needed to clean up Indonesia’s main, on-grid electricity sector by 2030.
(Reporting by Fransiska Nangoy, Gayatri Suroyo; Editing by John Mair)
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