World Bank Approves $500M Program to Modernize Indonesia’s Power Grid

The World Bank has approved the Indonesia Electricity Network Transformation (I-ENET) Program, a US$500 million initiative to modernize and digitalize the country’s electricity distribution system in Java, Madura, and Bali. The program is designed to enhance reliability, expand renewable energy integration, and accelerate Indonesia’s transition to a low-carbon energy future.

Responding to Rising Energy Demand

Indonesia’s economy has expanded rapidly over the past two decades, powered largely by fossil fuels and widespread electrification. But as the nation works toward achieving high-income status by 2045 and meeting its net-zero emissions goal by 2060, electricity demand is projected to rise sharply. This requires an urgent shift toward more sustainable, resilient, and efficient energy systems.

“To meet the growing electricity demand from renewable energy sources, PLN’s already reliable electricity network needs to be strengthened and modernized,” said Darmawan Prasodjo, CEO of PT PLN (Persero), Indonesia’s state-owned electricity provider. “This collaborative program will enhance our distribution networks while simultaneously supporting Indonesia’s goal to achieve net-zero emissions by 2060.”

Scale and Financing of the I-ENET Program

The program, aligned with PLN’s National Electricity Business Plan (RUPTL), will run from 2025 to 2032. Its financing structure includes:

• US$500 million from the World Bank.

• US$491 million in counterpart funding from PLN.

• US$342 million expected from private capital mobilization, particularly for customer-owned rooftop solar installations and electric vehicle (EV) charging infrastructure.

This blend of public and private financing is expected to accelerate investment in green technologies while strengthening the backbone of Indonesia’s power sector.

Direct Benefits for Millions of People

The I-ENET Program is expected to deliver substantial benefits, including:

• New or improved electricity services for approximately 20 million people.

• Integration of 300 megawatts (MW) of customer-owned rooftop solar capacity into the grid.

• Expansion of digital technologies in grid management, enabling faster responses to outages and more efficient distribution.

“Reliable and sustainable electricity access is a key enabler for clean water, health services, and job creation, especially for underserved communities,” said Carolyn Turk, the World Bank’s Country Director for Indonesia and Timor-Leste.

Innovative Financing Mechanism

The program will benefit from the World Bank’s step-up loan product, which provides lower interest rates during project implementation. Once completed, refinancing opportunities may reduce loan costs further, offering Indonesia a more sustainable financing model. This is only the second project in Indonesia to leverage this product, following the Sustainable Least Cost Electrification-2 Project, approved in June 2025.

A Broader Push for Energy Transition

The I-ENET Program forms part of the World Bank’s Multiphase Programmatic Approach (MPA), a US$2.5 billion initiative to accelerate renewable energy scale-up and integration in East Asia and the Pacific. In Indonesia, this support extends beyond transmission and distribution upgrades to include renewable generation investments, policy reforms, and last-mile electrification efforts for remote communities.

Energy and infrastructure have also been identified by the World Bank as one of the five sectors with the greatest potential for local job creation. These industries are seen as comparatively resilient to global economic shifts and critical for sustaining inclusive growth.

Looking Ahead

By strengthening electricity networks and expanding renewable energy adoption, the I-ENET Program is expected to reduce Indonesia’s dependence on fossil fuels, cut greenhouse gas emissions, and position the country as a leader in the region’s clean energy transition.

With its scale and emphasis on sustainability, the program represents not only a critical investment in Indonesia’s energy future but also a model for other developing economies seeking to modernize their electricity systems while pursuing climate goals.