Bappenas: Project Readiness Key to Accelerating Hydropower Investment

The Ministry of National Development Planning (PPN)/National Development Planning Agency (Bappenas) has stated that project readiness is key to securing financing for hydropower plants (PLTA) and moving them to the construction phase. Abdul Malik Sadat, Deputy for Infrastructure at the Ministry of PPN/Bappenas, noted that hydropower projects have a long development cycle, requiring technical, environmental, social, regulatory, institutional, and financial aspects to be prepared from the outset. “It is important from the beginning that we apply HydroSelect and the Hydropower Sustainability Standard to increase bankability,” Abdul said at the Indonesia Hydropower Summit 2026 in Jakarta on Wednesday. He explained that HydroSelect is an initial screening instrument to identify 12 environmental, social, and governance (ESG) risks at the concept and pre-feasibility stages of a project. Meanwhile, the Hydropower Sustainability Standard (HSS) is a standard for assessing the sustainability performance of hydropower projects during the preparation, construction, and operation phases. According to Abdul, implementing these two instruments can improve project quality and feasibility, making it easier to secure support from financial institutions, investors, contractors, and international supply chains. Under the 2025-2034 Electricity Supply Business Plan (RUPTL), the government is targeting an additional power generation capacity of 69.5 gigawatts (GW). Of this additional capacity, 76 percent will come from new and renewable energy sources and energy storage systems, including the development of 11.7 GW of hydropower. The implementation of the RUPTL 2025-2034 is estimated to open up investment opportunities worth Rp2,967 trillion for the construction of power plants, transmission and distribution networks, and electrification programmes. Abdul said several international financial institutions, such as the World Bank, Japan International Cooperation Agency (JICA), KfW, and the Asian Development Bank (ADB), are offering sovereign loans to support infrastructure projects. However, he noted that the availability of funds must be matched with projects that meet technical, institutional, environmental, social, and governance requirements. He cited the Peusangan, Asahan III, and Upper Cisokan pumped storage hydropower projects as examples of on-lending schemes to PLN. Discussions and preparations for Upper Cisokan have been ongoing for about 15 years, demonstrating the importance of aligning engineering and financial aspects from the early stages of project development. “Many owners, even state-owned companies, do not necessarily have strong financial support. Therefore, we encourage the diversification of blended financing,” he said. According to the ministry’s presentation, the 174 MW Asahan III hydropower plant became the first hydropower project in Indonesia to receive HSS certification in 2026. Abdul assessed that this achievement could serve as an example for other hydropower projects to conduct self-assessments or participate in assessments to improve sustainability standards and financing feasibility.