Indonesia’s net zero goal depends on a major build-out of renewable power. Reaching 74% renewable electricity by 2060 will require around USD 30.3 billion in investment every year. Yet clean power investment averaged only USD 1.2 billion a year between 2019 and 2023.

The gap is widest in rural and island communities, where small projects struggle to attract private investors, tariffs must stay affordable for low-income households, and public budgets are limited. With the national 100-GW Solar PV Acceleration Program under way and off-grid solar expected to add 4.36 GWp of new demand, the opportunity to bring clean energy to these communities is significant, but so is the need for financing that lasts.

This discussion paper proposes a Just Energy Transition Fund (JETF) to help close that gap. Building on the principles of the Just Energy Transition Partnership, the fund would pool public, private, and philanthropic capital to deliver affordable renewable electricity to rural communities and turn it into lasting local benefits, through three focus areas:

• Viability gap funding to lower the capital cost of renewable energy projects and keep electricity tariffs affordable
• Upskilling and reskilling funding to build the local technical capacity needed to operate and maintain renewable energy systems
• Productive use of energy funding to power village enterprises, create green jobs, and raise local incomes

Written as a starting point for dialogue with the Government of Indonesia and stakeholders, the paper offers practical recommendations for establishing a fund that reaches the communities most in need. It examines potential funding sources, governance arrangements, financing instruments, and enabling conditions, while outlining a phased approach to its development, from initial capitalization and pilot deployment to scaling up and institutionalization.

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