Indonesia: cooperation in action 1,000 Islands: rural electrification through renewable energy

KfW is supporting Indonesia in building a climate-smart and sustainable energy system. In the first phase of the programme, finance is being provided to expand the power supply with solar PV systems in remote regions of East Nusa Tenggara province. These systems feed into small, self-contained island supply networks (mini-grids). KfW has granted a promotional loan of 65 million euros to Indonesia’s state energy provider PLN for this. The initiative will give around 20,000 homes access to a reliable power supply for the first time.

Another aim is to exploit the considerable potential for hydropower in Indonesia. To this end, a loan agreement with PLN in the amount of 115 million euros was signed. This low-interest development loan is intended to finance up to nine smaller hydropower plants of between 1 megawatt and 20 megawatts on the islands of Sulawesi, Papua and Kalimantan (Borneo). Thanks to the additional installed capacity of at least 35 megawatts from these hydropower plants, further homes in remote regions can be connected to the grid.

These measures are being supported with infrastructure investments. The island grids are being expanded at the mid- and low-voltage levels, access roads are being built and additional grid connections established.

Climate-friendly solar and hydropower plant projects can significantly reduce the use of the existing power supply, which is based on inefficient diesel generators. This will contribute to reducing average electricity generation costs and carbon emissions. It is expected that 125,000 tonnes of carbon emissions per year will be saved through the programme once the construction phases are completed.