Indonesia’s recent decision to join the New Development Bank (NDB) may not have dominated international headlines, yet it marks a turning point in the world’s fourth-most-populous country’s energy future.
This partnership could decide how Indonesia finances, builds and implements its ambitious clean energy transformation plan while presenting a model for the Global South to emulate.
President Prabowo Subianto has set a bold, green target: 100% of the nation’s electricity to come from renewable energy sources within a decade or sooner. The vision is inspiring but also daunting.
Coal and gas currently account for around 80% of Indonesia’s electricity generation. Replacing these fossil fuels with solar, wind, hydro and geothermal power will demand not only decisive policy but also access to affordable financing. The NDB offers precisely that opportunity.
Created by the BRICS nations — Brazil, Russia, India, China and South Africa — the NDB was designed to serve as a development bank for the Global South. Its purpose is simple but profound: to fund infrastructure and sustainable development in emerging economies on fairer, more flexible terms than those offered by traditional Western-led, multilateral lending institutions.
For Indonesia, this could be transformative. Low-interest, long-term loans can support projects that commercial banks typically eschew. Such favorable financing is critical for a vast archipelago like Indonesia, where connecting renewable energy across thousands of islands requires not only power plants but also transmission lines, smart grids and storage systems. A modern grid is the backbone of any successful energy transition.
Sharing technology, spreading progress
The NDB’s greatest strength lies in the potential for South-South cooperation – a model where developing countries exchange knowledge, technology and experience. Indonesia can benefit immensely from this partnership, particularly from China’s and India’s recent rapid clean energy progress.
China’s solar photovoltaic (PV) revolution offers valuable lessons. Massive investment and innovation have driven down global solar costs, making renewable energy more affordable than ever.
Through the NDB, Indonesia can not only access Chinese financing but also its technology and expertise – from manufacturing solar panels to building resilient energy supply chains. Partnerships like these could help Indonesia develop its own clean energy industries, creating jobs and boosting local economies.
India, another NDB founding member, has its own experience to share in how to manage renewable integration within a sprawling, diverse electricity grid. These insights are directly relevant for Indonesia, where energy systems must balance reliability, affordability and sustainability across regions with vastly different needs.
The success of NDB financing in Indonesia will depend on close collaboration with domestic institutions. Partnerships with PLN, the state-owned utility, and Indonesia’s sovereign wealth fund, Danantara, can ensure that projects align with national goals. Cooperation with Indonesian banks will also be crucial, as many possess valuable local insight but often lack access to long-term, low-cost capital.
Blended financing – combining NDB loans with local funds – can amplify impact. It also encourages private sector participation, spreads risk and builds stronger domestic ownership of the clean energy transition. In this model, the NDB acts as both financier and catalyst, unlocking broader economic transformation.
Indonesia’s RUPTL 2025–2034 energy plan still includes plans for 6.3 gigawatts of new coal power and 10.3 gigawatts of gas plants. If realized, these projects would entrench the country in fossil fuel dependency for decades, undermining both climate goals and economic competitiveness.
The NDB should make a firm commitment not to support fossil fuel projects, whether directly or indirectly. Financing should instead target early retirement of existing coal plants, expansion of renewable generation and modernization of power grids. Every loan should move Indonesia closer to a decarbonized energy system, not deeper into an outdated one.
A strong safeguard policy will be key. Transparency in project selection, public access to environmental impact assessments and active engagement with affected communities can ensure that development is not only rapid but also responsible.
Climate finance failures
Global climate finance has been plagued by broken promises. Wealthy nations have repeatedly failed to deliver the funding they pledged to help developing countries transition away from fossil fuels. In this context, the NDB offers a credible alternative — a lending institution led by emerging economies that understands the Global South’s challenges firsthand.
For Indonesia, this partnership represents more than money. It symbolizes a shift toward greater self-reliance, technological empowerment and shared progress among equals. A successful collaboration with the NDB could position Indonesia as a Global South leader in clean energy development, demonstrating that growth and sustainability can go hand in hand.
Every solar panel built, every kilometer of transmission line installed and every coal plant retired will tell the story of how a new financial alliance reshaped a nation’s clean energy destiny.
Indonesia’s entry into the NDB is not just another diplomatic milestone. It is a statement of intent and commitment to power its future with sunlight, wind and innovation rather than smoke and ash. The choice is clear and the tools are at hand. What remains is the resolve to use them wisely.
Bhima Yudhistira Adhinegara is executive director of the Jakarta-based Center of Economic and Law Studies (CELIOS) independent research institute. Muhammad Zulfikar Rakhmat is director of CELIOS’ China-Indonesia desk.
