Sharia Finance Seen as Alternative Funding for Community-Based Solar Power Plants

In an effort to accelerate the energy transition towards the 2060 net-zero target, sharia financial instruments are considered to have significant potential to support the funding of community-based solar power plants (PLTS). Director of MOSAIC Program Aldy Permana stated that while the need for renewable energy continues to increase, the biggest challenges lie in financing and support from various stakeholders. Based on MOSAIC research, there is an opportunity to utilise sharia financial instruments as an alternative financing scheme for community PLTS projects. Aldy outlined four financing models, including cash waqf linked sukuk (CWLS). According to him, this instrument is worth considering because it can ease operational costs and simultaneously reduce the risks borne by the community. The MOSAIC study estimates that a PLTS with a capacity of 1 megawatt can generate approximately 1.58 million kilowatt-hours (kWh) of electricity per year. With a tariff of around Rp500 per kWh, the project has the potential to generate an annual profit of approximately Rp780 million.