ITC: A Constitutionally Compatible Model for Financing Indonesia’s Grid

Indonesia's net-zero ambitions hinge on a major grid expansion to integrate its rapidly growing renewable energy capacity. The country's Electricity Supply Business Plan (RUPTL) 2025–2034 calls for roughly USD 24 billion in transmission investment, yet only 5.5% has been secured through MDB loans — leaving a USD 22.7 billion financing gap. With state utility PLN's balance sheet already overleveraged, unlocking private finance will be essential to delivering the RUPTL's targets.

Mobilizing private finance for transmission, however, must align with Indonesia’s constitutional requirement for state control of the electricity sector. The Constitutional Court (MK) has consistently affirmed this principle, upholding PLN’s central role in system planning and grid operation while striking down past attempts to unbundle the sector or introduce power wheeling.

Building on the precedent of the court-tested Independent Power Producer (IPP) structure in power generation, this brief examines the potential of — and policy prerequisites for — the Independent Transmission Company (ITC) model as a solution that can navigate those constitutional constraints while unlocking private capital for grid expansion. It also points to alternative non-PLN project finance schemes (see CPI's Indonesia Transmission Finance Report (opens in a new window)) that could be deployed on a constitutionally and financially viable basis to help close Indonesia's grid financing gap.

Read the full brief