Indonesia’s investment management agency, Badan Pengelola Investasi (BPI) Daya Anagata Nusantara (Danantara), has signed a Memorandum of Understanding (MoU) with Saudi Arabia’s energy firm ACWA Power.

The agreement, valued at 162 trilion rupiah (US$10 billion), focuses on developing renewable energy utilities in Indonesia.

The MoU was signed by ACWA Power’s Vice Chairman and Managing Director, Raad Al Saady.

The collaboration aims to strengthen strategic ties between Indonesia and Saudi Arabia.

It also promotes investments in the renewable energy sector.

🔗 Source: CNBC Indonesia

🧠 Food for thought

1️⃣ ACWA Power deepens Indonesia presence amid challenging renewable targets

The $10 billion MoU with Indonesia’s Danantara represents a significant escalation of ACWA Power’s commitment to Indonesia, building on previous engagements in the country.

In 2022, ACWA Power already signed a similar agreement with Indonesia’s state power company PLN focusing on energy storage and green hydrogen projects during the G20 summit 1.

This expanded investment comes at a critical time when Indonesia is struggling to meet its renewable energy targets, with only 12.3% of installed capacity being renewable against a 23% target for 2025 2.

The partnership could help address Indonesia’s persistent challenges in attracting sufficient renewable investment, as the government has been forced to revise renewable targets downward due to financing difficulties 3.

Most recently, ACWA Power collaborated with PLN Indonesia Power on the Saguling floating solar PV plant in West Java, which mobilized $60 million as part of Indonesia’s Just Energy Transition Partnership 4.

2️⃣ Strategic alignment between Saudi and Indonesian sovereign investment priorities

The MoU between Danantara and ACWA Power represents a coordinated approach to energy transition financing between two resource-rich economies seeking diversification.

Indonesia’s sovereign wealth fund has been strategically focusing on renewable energy investments, particularly in electric vehicle battery supply chains, solar energy, and grid modernization 5.