Indonesia - Second Sustainable Least-Cost Electrification-2 (ISLE-2) Program for Results, as Phase 4 of the Accelerating Sustainable Energy Transition Program using the Multiphase Programmatic Approach

Overview & Synopsis

This program appraisal document presents phase 4 of the Accelerating Sustainable Energy Transition Program under the Multiphase Programmatic Approach (MPA). Phase 1 of the MPA was approved by the World Bank’s Executive Directors on September 24, 2024 (P181555, Report No. PAD 5623) with an overall financing envelope of 2.5 billion dollars for the six East Asia and Pacific (EAP) countries listed under the MPA. The Program was declared effective on October 29, 2024. Phases 2 and 3 of the MPA Program were approved by the Regional Vice President (RVP) on November 13, 2024, and March 21, 2025, respectively. Phase 4 is proposed to benefit Indonesia. The proposed IBRD loan of 600 million dollars for Phase 4 does not exceed the approved MPA envelope. The ISLE-2 Operation is consistent with the country’s revised NDC, the Long-Term Strategy for Low Carbon and Climate Resilience, the National Adaptation Plan on Climate Change Adaptation, and other supporting government strategies. These strategies define the acceleration of RE as one of the key requirements to achieve this goal. The government’s conditional reduction of GHG emissions will largely be supported by the deployment of RE. As noted in the Indonesia Country Climate and Development Report (CCDR), heat waves will be more frequent in Indonesia and access to modern electricity will be critical for households to power cooling appliances. Aligning with the CCDR, the ISLE-2 Operation will support Indonesia in promoting RE, reduce the use of coal as the primary energy supply, and also reduce the emissions from the electricity sector. The ISLE TA supports PLN in developing a technical guideline to increase resilience of the distribution network to extreme weather events and climate change, which is consistent with the CCDR’s recommendation to improve standards and practices for more resilient infrastructure.