Road to ISS 2026: How Far Will the Revised POJK on Bank Business Plans Become a Tailwind for 100 GW Solar Investment?
Amidst a global energy crisis, Indonesia is ambitiously striving to reduce its dependence on energy imports and achieve national energy sovereignty. This effort is being pursued by optimising domestic energy potential, including renewable energy. Projections indicate that electricity generation needs will reach 443 GW by 2060. However, despite Indonesia’s technical renewable energy potential reaching 3,686 GW, only 15.2 GW has been realised to date, predominantly from hydro and solar power.
The primary challenge in harnessing renewable energy is the sheer scale of investment required. The projected investment cost to achieve 443 GW, complete with transmission networks and storage systems, reaches USD 1 trillion. Such funding cannot rely solely on grant schemes; it requires active efforts to unlock investment opportunities from both national and international financial institutions. As of 2024, the flow of bank credit or financing for renewable energy reached just 2.7% of all funds channelled towards Environmentally Sound Business Activities.
The low investment realisation is attributed to banks still viewing renewable energy investment as mere compliance-led activity or a minimum regulatory standard. For state-owned banks (Himbara), the motivation for sustainable financing is driven by government directives or OJK regulations, whilst for private banks, corporate actions related to Environmental, Social and Governance (ESG) remain voluntary. This underscores the importance of regulation serving as both a guide and a safeguard for the banking sector in expanding its renewable energy investment portfolios, particularly for flagship government programmes.
The Financial Services Authority (OJK) is planning to revise OJK Regulation Number 5/POJK.03/2016 concerning Bank Business Plans. Under the previous regulation, banks were not encouraged to allocate financing towards sustainable development, even though over the past decade the Indonesian Government has been quite progressive in updating climate commitment documents such as the Nationally Determined Contribution, the Long-Term Strategy for Low Carbon and Climate Resilience 2050, and the National Adaptation Plan to achieve the Net Zero Emission target by 2060 or sooner. To meet this target, efforts are needed to mobilise green funding, especially from national banks, so they can diversify their portfolios and gradually shift investment from fossil fuels to renewable energy. Furthermore, President Prabowo is seriously committed to realising the 100 GW solar power target, which is estimated to require an investment of IDR 1,772 trillion. With the revision of the POJK directed at enabling the financing of national priority projects, the banking sector holds a significant role in integrating the 100 GW solar power development ecosystem in Indonesia.
The primary function of banks as collectors and distributors of public funds is regulated under Law No. 10 of 1998, positioning them as strategic institutions for public infrastructure development. In raising funds, two or more banks can form a syndicate to obtain large-scale funding distribution for strategic projects. Given the substantial funding requirements of strategic programmes, particularly in the electricity sector, this banking syndication practice allows creditors to share risks in a structured manner. By applying the principle of prudence in lending, banks are currently quite selective in assessing project feasibility to mitigate the risk of funding failure. Therefore, central and regional governments must play a role in preparing investment-ready projects.
The Indonesia Solar Summit 2026, themed ‘From Ambition to Action: Scaling the 100-GW Solar Frontier for National Energy Sovereignty’, can serve as a means to strengthen government commitment and convey a message of collaboration in creating a solar energy development ecosystem in Indonesia. Held from 14-16 July 2026 in Sanur, Bali, ISS 2026 will be a platform for regional governments to promote their provinces’ investment potential. Ten provincial governments have already committed to attending to offer potential renewable energy projects. The Road to ISS 2026 is held as a discussion forum on the development of the renewable energy investment climate in Indonesia, which will also be a topic of discussion at the main ISS 2026 summit.