SUSTAINABILITY

REPORT
SUPPLEMENT

TASK FORCE ON
CLIMATE-RELATED FINANCIAL
DISCLOSURES (TCFD)
REPORT 2022
TABLE OF CONTENTS
TCFD REFERENCE INDEX

DIRECTOR STATEMENT

EXECUTIVE SUMMARY

BACKGROUND............................ 1

GOVERNANCE............................ 4

STRATEGY................................. 11

RISK MANAGEMENT............... 20

METRICS & TARGETS............. 32

FUTURE PLAN........................... 39
TCFD REFERENCE LIST
DIRECTOR STATEMENT
EVY HARYADI TRANSMISSION & SYSTEM PLANNING DIRECTOR

I am pleased to present PLN’s first Task Sustainability is the responsibility of all

Force on Climate-related Financial management, employees, and business
Disclosures (TCFD) report. This TCFD report partners of PLN. PLN has rigorously committed to
provides climate-related financial implementing the Principles of Sustainable
disclosures covering governance, strategy, Business within all business activities. In addition,
risk management, as well as metrics and the ESG aspirations of PLN’s shareholders,
targets. We believe this publication is a investors and other stakeholders are duly
stepping stone in our commitment to considered in the Company’s integration of
provide more transparency in our climate sustainability. In view of the rising concerns on
risk disclosure. climate change and its potential impact to our
services and operations across the value chain,
PLN is on a journey to become a clean we take a step to enhance our climate resilience
power company. At COP 26, we confirmed in line with the TCFD recommendations. We see
our commitment to the renewable energy the values in it, and we aspire to pursue our Net
transition and the achievement of Net Zero Zero journey in tandem with building up our
Emissions (NZE) by 2060. Our commitment capabilities to manage the climate-related risks
not only stems from the Government of and opportunities accordingly. As climate
Indonesia’s own declaration to achieve Net change may impact our assets and operations
Zero by 2060 or sooner, but we also believe differently and due to the complexity of the
that it is our own responsibility to mitigate subject matter, it will take time to build up our
the impacts of climate change, in the capabilities in this area. This is our first TCFD
context of common but differentiated report and it outlines our current position, as well
responsibilities. as areas for further work. We look forward to
working with all our stakeholders and to
To meet our commitments, PLN will focus providing an update in future TCFD reports. We
on expanding power capacity using clean attribute our awareness towards sustainability
energy to support Indonesia’s economic and climate change as a positive value to all
and power demand growth. Under our NZE stakeholders as well as PLN’s performance and
scenarios, it is estimated that emissions will reputation.
peak in 2030 and then gradually decline
until they reach Net Zero by 2060. This will To conclude, on behalf of PLN, I would like to
reduce our greenhouse gas emissions convey our appreciation for the support received
(GHG) by 1,057 million tons in 2060, from all of our stakeholders in acknowledging
compared to the business as usual (BAU) climate change as a serious issue and
scenario. embracing the transformation of PLN’s business
strategy to become more sustainable. The
journey ahead will be steeped with both
opportunities and challenges, but together, let us
realise PLN’s aspiration for a sustainable future.

Jakarta, 11 September 2023

Transmission & System Planning Director
2022
Executive
Summary
Background
PT Perusahaan Listrik Negara (Persero) (PLN) is a state-owned
Indonesian electricity company and has committed to achieving
Net Zero by 2060. PLN has acknowledged the importance of
addressing and managing climate risks and providing information
to stakeholders on the actions it is taking. To provide more
thorough information regarding climate risk management for all its
stakeholders, PLN has committed to publishing a stand-alone Task
Force on Climate-Related Financial Disclosures (TCFD) report,
based on the TCFD recommendations.

Governance
In 2022, PLN responded to the risks and opportunities of climate
change by transforming its organisational structure related to
climate change. This includes the establishment of the Energy
Transition and Sustainability Division, which is responsible for
leading PLN’s energy transition agenda and reporting directly to the
Board of Directors (BOD). The detailed climate change
organisational structure can be seen in Figure 2 of this report.
"PLN believes that we will achieve zero emissions
in the electricity sector by 2060. We have
designed each stage clearly through various
studies and collaborations from various parties.
The challenge is big, but we are committed to
doing this because we do really care"
- Darmawan, 2023

Strategy
PLN has developed a comprehensive roadmap to help achieve its
Net Zero goal by 2060. The roadmap is divided into short-term
(2021-2030) and long-term (2031-2060) initiatives. PLN plans to
reduce CO₂e emissions from 2030 to 2060 by gradually reducing
the portion of fossil energy used in generating electricity and
increasing the quantity of low carbon generation capacity. By 2060,
PLN aims to have 69% of its electricity generated from renewable
energy sources, 15% from gas, 8% from coal, equipped with carbon
capture storage facilities and/or co-firing with hydrogen and
ammonia, and 7% from new energy.

Risk Management
PLN acknowledges the importance of identifying and assessing the
impact of climate risks and opportunities on its businesses,
strategy and financial planning. These risks are mapped,
measured, mitigated, and managed to ensure the achievement of
climate targets that PLN has set. In addition, PLN has also
undertaken vulnerability and energy transition studies to identify
the climate-related physical and transition risks to which PLN
assets are exposed.
"PLN believes that we will achieve zero emissions
in the electricity sector by 2060. We have
designed each stage clearly through various
studies and collaborations from various parties.
The challenge is big, but we are committed to
doing this because we do really care"
- Darmawan, 2023

Metrics and Targets

PLN uses the following metrics to monitor and measure its climate
related risks and progress to achieve its Net Zero targets:
greenhouse gas (GHG) emissions; renewable energy contribution;
and infrastructure reliability. In the short to medium term,
emissions intensity across all 3 scopes is targeted to decrease by
15.7% by 2030 based on the projections in the Rencana Usaha
Penyediaan Tenaga Listrik (RUPTL). In addition, absolute GHG
emissions for Scope 1, 2, and 3 are targeted to decrease by an
additional 98 million tons of CO₂e by 2030 compared to the
Business as Usual (BAU) scenario. These targets are aligned with
the national emissions reduction targets outlined in the Nationally
Determined Contribution (NDC). In the long term, absolute GHG
emissions for Scope 1, 2, and 3 are targeted to reach zero by 2060
- a decrease of 1,057 million tons of CO₂e compared to the BAU
scenario.
Background
Being the largest archipelagic country, Indonesia is
highly vulnerable to the effects of climate change, with
approximately 42 million civilians living in low-lying
areas. Further, Indonesia is one of the world’s fastest
developing countries, with the Government of Indonesia
(GoI) promoting an average of 5% economic growth per
annum to reduce the poverty rate below 4% by 2025.
With this economic development, it is expected that
demand for electricity will continue to increase over the
next decades.

With regards to the country’s sustainability stance,

Indonesia confirmed the ratification of the Paris
Agreement to the United Nations Framework
Convention on Climate Change (UNFCCC) through Law
no. 16/2016. In September 2022, Indonesia submitted an
Enhanced Nationally Determined Contribution (NDC)
with an unconditional target to reduce emissions by
31.89% by 2030 compared to the Business as Usual
(BAU) scenario and a conditional target of a 43.20%
reduction with international assistance. This Enhanced
NDC will align with the Long-Term Strategies for Low
Carbon and Climate Resilience (LTS-LCCR) 2050 with
the vision to achieve Net Zero Emissions (NZE) by 2060
or sooner.

With the energy sector being the largest contributor to

Indonesia’s total carbon emissions in 2021, Indonesia's
state electricity company PT Perusahaan Listrik Negara
(PLN) plays a significant role in contributing to the
achievement of the national NZE target while keeping
up with the growing electricity demand. In line with its
vision and mission, PLN is committed to carrying out
business activities that are socially, financially, and
environmentally sustainable. PLN’s long-term strategy
emphasises the need to incorporate environmental and
social impacts and sustainability into its planning,
investments, and operations, and to align its financing
with this transformation.
Page 1
PLN is on a journey to become a clean power company.
PLN is ranked 28th on the World Benchmarking Alliance
(WBA) Climate and Energy Benchmark, among 50 of the
world’s most influential electricity companies on low
carbon economic transitions. PLN is focusing on
expanding power generation capacity using clean
energy to support Indonesia’s economic and power
demand growth. At COP 26, PLN confirmed its
commitment to the energy transition to support the
achievement of NZE. Under NZE scenarios, emissions will
peak in 2030 and then gradually decline until they
reach Net Zero by 2060. This will result in a reduction of
1,057 million tons of greenhouse gas (GHG) emission by
2060, compared to the BAU scenario. Efforts to achieve
this commitment are guided by a decarbonisation
program that includes not pursuing new coal-fired
power plant development and increasing the
construction of new and renewable energy (NRE) power
plants.

As part of this, PLN has initiated biomass co-firing

initiatives on 40 coal plants and delivered emission
reductions as reported in their Sustainability Reports
(SR). PLN intends to continue to roll out biomass co-
firing to 52 of PLN’s existing plants by 2025. In line with
the RUPTL, PLN is committed to increasing its NRE power
generation capacity to 20.9 GW along with the
implementation of other short-term strategic initiatives
until 2030. Between 2030 to 2060, coal-fired power
plants will be replaced with low-carbon technology in
phases alongside other emission reduction initiatives.

Page 2
The impacts of climate change pose both risks and
opportunities to PLN, and it acknowledges the
importance of addressing and managing climate risks
and providing information to stakeholders on the
actions it is taking. Since 2014, PLN has included climate
change management and mitigation actions in its SR.
Moving forward, PLN seeks a more strategic approach
to implement better climate risk management as well
as provide more thorough information to stakeholders,
including investors and lenders. Therefore, PLN has
committed to publishing a stand-alone Task Force on
Climate-Related Financial Disclosures (TCFD) report,
based on the TCFD recommendations.

As seen in Figure 1, the TCFD recommendations are

structured around 4 pillars: Governance, Strategy, Risk
Management, and Metrics and Targets.

Figure 1: TCFD framework

Governance:
The organisation’s governance around
climate-related and opportunities.

Strategy:
The actual and potential impacts of
climate-related risks and opportunities
on the organisation’s businesses,
strategy, and financial planning.

Risk Management:
The processed used by the
organisation to identify, assess, and
manage climate-related risks.

Metrics and targets:

The metrics and targets used to
assess and manage

Page 3
Governance
Page 4
Effective climate change management requires leadership commitment and
clear direction that can be communicated to all employees of PLN. PLN’s BOD
recognises that strong governance is an integral part of ensuring that the
sustainability performance of PLN remains resilient and enables long-term
value creation while reflecting the interests of stakeholders. Hence, PLN has
developed a climate change governance framework, directly overseen by
the BOD. This is developed into an organisational function involving multiple
divisions and implemented jointly across all PLN Group business processes.
Figure 2 outlines PLN’s current climate change governance framework.

Figure 2 outlines PLN’s current climate change governance framework.

Page 5
The Board of Commissioners (BOC) has an important role in overseeing
energy transition and climate change management. The BOD reports to the
BOC on the progress of PLN’s energy transition implementation and consults
on key decisions.

As a member of the BOD, the President Director provides guidance, actively

participates, and makes decisions on energy transition programs to address
climate change challenges and opportunities. For instance, the President
Director is directly engaged in the development of the Just Energy Transition
Partnership (JETP)1. The President Director actively provides guidance to the
PLN executive team in preparing for the operationalisation of JETP.

The BOD’s directions are conveyed through various forums, including the
ESG Cash War Room held every two weeks, and the Performance Business
2
Review held every month and attended by all executive ranks of PLN Group
BOD-1. PLN’s executive ranks play a role in developing strategies that are in
line with BOD aspirations, implementing strategies and managing climate-
related risks and opportunities, and ensuring the provision of sustainable
electricity.

1 JETP is a strategic collaboration between the Government of Indonesia and the International Partners
Group, led by the United States and Japan. JETP is an agreement to mobilise an initial USD 20 billion in public
and private financing to decarbonise Indonesia’s energy sector.

2 Cash War Room is a forum supervised by the Director of Finance which aims to monitor performance
management of 6 streams including liquidity, budget control, centralised planning, ESG, financial risk, and
asset management.

Page 6
PLN has a strong risk management function from the holding and sub-
holding company to all PLN Group business units. The Risk Management Unit
and Internal Audit Unit are led by unit heads who are directly responsible to
the President Director. Decisions related to sustainability, including climate
change management, must go through a consultation process with, and
include recommendations from, the Risk Management Unit. As a check and
balance, the Internal Audit Unit conducts audits of the sustainability
implementation carried out by each division and business unit.

The Sustainability Committee has been established for several years and
reinforced in 2022. It comprises members from various work units to oversee
the implementation of PLN's Corporate Social Responsibility (CSR) and the
achievement of the Sustainable Development Goals (SDGs). The
Committee's organisational structure is outlined in Figure 3. It operates
under the supervision of the BOD and is led by the Executive Vice President
(EVP) of Energy Transition and Sustainability Division (DIVTEK). The core
workstreams of the Committee include environmental (non-energy
transition activities), climate change management (related to energy
transition), social, and governance initiatives.

Page 7
To bolster the efforts of the core workstreams, the Committee has
implemented enabler workstreams. Specifically, the communication and
external relations workstream ensures transparent communication with
stakeholders. The learning and capability building assists in providing
employees with the required skills to perform relevant initiatives.
Additionally, IT enablement provides technological support, breakthrough
monitoring tracks progress on key initiatives, and finance, risk, and
commercial workstream offers financial support and integrate sustainability
into financial planning and risk management processes.

Figure 3: PLN Sustainability Committee Structure

Page 8
In 2022, DIVTEK was established to reinforce PLN's dedication to energy
transition and sustainability. DIVTEK holds the responsibility for leading,
planning, executing, monitoring, assessing, and nurturing the energy
transition agenda. DIVTEK is composed of 2 main subdivisions, namely
Energy Transition and Climate Change Management (TE-PPI) and ESG
and Safeguard Management (ESG-SG).

The TE-PPI sub-division is responsible for spearheading, nurturing, and

overseeing activities related to the NZE transition agenda and climate
change. This includes various responsibilities such as formulating and
managing the Electricity Supply Business Plan (RUPTL), ensuring
compliance with climate change regulations, conducting load
forecasting, designing generation and transmission systems, and
devising electricity system planning concepts to expedite the energy
transition in alignment with the latest technology roadmap.

Page 9
On the other hand, the ESG-SG subdivision encompasses planning,
management, and nurturing of ESG-SG aspects across all electricity-
related activities within the PLN Group. The primary aim is to ensure the
successful implementation of ESG-SG practices and to drive ongoing
improvement endeavours in accordance with the organisation's
targets and objectives. Both subdivisions collaborate closely with other
group functions and business units to achieve their respective goals.
Each subdivision is headed by a Vice President (VP), who reports
directly to the EVP of DIVTEK.

To monitor the attainment of the NZE roadmap milestones, PLN has

established Corporate Key Performance Indicators (KPIs) including
KPIs related to energy transition and climate risk. KPIs have been set
for GHG emission reductions, the addition of renewable energy
generation capacity, the conversion of oil-fired power plants to
renewable energy sources (de-dieselisation), and the development of
electric vehicle (EV) infrastructure. These corporate KPIs are cascaded
down to relevant divisions and business units, and their progress is
monitored. The Board conducts weekly checkpoint meetings to
monitor the progress of these KPIs. Further details of the KPIs are
provided in the Metrics and Targets section of this report.

Page 10
Strategy
Page 11
Strategy

In alignment with the drive to decarbonise Indonesia's

energy sector, a significant advancement has been
made through the establishment of the JETP. The JETP is
an agreement to mobilise an initial USD 20 billion in
public and private financing to decarbonise Indonesia’s
energy sector. Its primary aim is to provide funding for
decarbonisation initiatives over a 3 to 5 year period, all
aligned to the overarching objectives of the Paris
Agreement, especially efforts to limit the escalation of
the global average temperature increase to 1.5 degrees
Celsius.

Page 12
Due to growing efforts by the GoI to decarbonise
the energy sector, PLN has developed a
comprehensive roadmap to reach Net Zero by
2060. This is outlined in the PLN 2022 Sustainability
Report, section ‘PLN Sustainability Strategy’ page
54-59. Figure 4 maps PLN’s plan to reduce CO₂e
emissions from 2030 to 2060 by reducing the use
of fossil energy in generating electricity and
increasing the quantity of low carbon generation
capacity. By 2060, PLN aims to have 69% of its
electricity generated from renewable energy
sources, 15% from gas, 8% from coal and gas
plants equipped with carbon capture storage
(CCS) facilities, and 7% from new energy 3.

Figure 4: PLN’s energy mix roadmap to 2060

3 Based on the Law of the Republic of Indonesia No. 30/2007 regarding energy, new energy refers to
energy derived from new energy sources, namely energy sources that can be generated by new
technologies, whether they come from renewable or non-renewable energy sources, including
nuclear, hydrogen, coal bed methane, liquefied coal, and gasified coal.

Page 13
Figure 5 illustrates the short-term and long-term
initiatives that PLN has planned to deliver its Net
Zero target. In the short term (until 2030), PLN has
identified several strategic initiatives, including:
the development of new and renewable
energy-based power plants,
the conversion of diesel power plants to
renewable energy,
the retirement of coal power plants,
biomass co-firing at coal power plants,
energy efficiency and grid loss improvement,
the expansion of gas plants, and
the use of more efficient coal technology in the
existing pipeline.

Figure 5: PLN’s short-term and long-term initiatives

Page 14
In tandem with increased deployment of renewable
energy, PLN also implements energy efficiency
improvements, reduction of network losses, and the
utilisation of more efficient coal technology. PLN is
also considering the early retirement of fossil fuel-
based generation, taking into account the impacts
on the security of supply, energy affordability and
financial implications.

Emissions intensity across Scope 1, 2 and 3 is

targeted to decrease by 15.7% by 2030 based on the
projections in the RUPTL. In addition, absolute GHG
emissions for Scope 1, 2, and 3 are targeted to
decrease by 98 million tons of CO₂e by 2030
compared to the BAU scenario. These targets are
aligned with the emissions reduction targets
outlined in Indonesia’s NDC.

To achieve the long-term NZE target by 2060, PLN’s

absolute GHG emissions for Scope 1, 2, and 3 will
need to decrease by 1,057 million tons of CO₂e
compared to the BAU scenario. From 2030 onwards,
PLN will focus on 4 additional strategic initiatives:
the addition of large-scale renewable energy
complemented with batteries and grid
interconnection,
hydrogen-based co-firing,
the adoption of carbon capture and storage
(CCS), and
the additional retirement of coal power plants.

Page 15
PLN has implemented the following initiatives to abate
emissions arising from its power plants:
Cancellation of the planning for 13.3 GW coal-fired
power plants from its business plan,
Replacement of 1.8 GW of coal with renewable
energy and 0.8 GW of coal capacity with natural
gas,
Conversion of biomass to electricity by adding
biomass as a partial substitute fuel at 40 coal-
fired power plants and 52 plants to be co-fired
with biomass by 2025, and
Installation of 21 GW of renewable energy plants
under the 2021-2030 RUPTL, comprising 0.7 GW that
has been commissioned, 4.55 GW under
construction and on-going Power Purchase
Agreements (PPA) process, 3.38 GW in
procurement, 3.68 GW in feasibility study, and 8.19
GW in the planning stage.

The long-term success of the identified initiatives is

contingent on the availability of new green
technologies and ecosystems. PLN aspires to
enable stakeholders’ participation in green energy
consumption and development of green energy
as-a-service. Amongst the products offered under
PLN’s green energy
4 as-a-service includes the
opportunity for customers to purchase Renewable
Energy Certificates (RECs). This enables PLN to help
its customers decarbonise. In 2021-2022, PLN has
sold approximately 1.5 TWh of green energy to
more than 230 stakeholders. PLN is also providing
both public EV charging stations and battery
exchange stations to catalyse the EV ecosystem in
Indonesia.
4 PLN’s green energy refers to the consumption of electricity that is bundled with RECs, which ensures
100% green energy consumption

Page 16
The short and long-term initiatives are outlined in PLN’s
8 lighthouse initiatives, as illustrated in Figure 6. These
initiatives intend to build the foundation of PLN’s Net
Zero strategy whilst building internal capabilities to
embrace new technologies. For more information on
the lighthouse initiatives please see: PLN website,
section ‘Climate change management’.

Figure 6: PLN’s 8 lighthouse initiatives

Page 17
Climate Scenario Analysis

PLN has considered 2 climate change projections

namely the Representative Concentration Pathway
5 6
(RCP) 4.5 and RCP 8.5 (adapted from the
Intergovernmental Panel on Climate Change (IPCC)
5th Assessment Report) and considered their impact
on aspects of PLN’s operations.

The 2020 study ‘Seeking for a climate change

mitigation and adaptation nexus: Analysis of a long-
term power system expansion’ uses the Java-Bali
power system as its case study to explore the potential
climate change impact under different climate
scenarios. The Long-range Energy Alternative System
(LEAP) was used to conduct long-term expansion
simulation for the Java-Bali power system. This model
was chosen due to its ability to accommodate the
technological complexity of the power system, its
support for alternative scenario projections, and its
ability to calculate CO₂e emissions from various power
generation technologies.

Namely, the study simulated 2 climate scenarios for the period 2018-2050:

5 RCP 4.5 refers to a medium baseline emissions scenario assuming a stable radiation intensity of 4.5 W/m² or
equivalent to 650 ppm CO₂e after 2100
6 RCP 8.5 refers to a very high baseline emissions scenario assuming an increase in radiation intensity of 8.5
W/m² (more than 1,370 ppm CO₂e) in 2100

Page 18
The study evaluated the potential impacts each of the climate scenario has
on several factors listed below:

7 The study projects the impacts of higher temperatures (due to climate change) on electricity demand using
BAU scenario as the baseline
8. The study projects the impacts of changes in precipitation and temperature on HEPPs. Namely, the two largest
HEPPs in Indonesia, Saguling and Cirata, were used to simulate the HEPP’s average annual capacity
9 The efficiency of CFPPs can be impacted by sea surface water temperature since greater cooling water
temperatures lead to increased condenser pressure, which lowers the condenser's energy efficiency.
10 The power output of NGPPs can be impacted by ambient air temperatures. The open cycle gas turbine
(OCGT)'s output is reduced by 0.6% for every 1 degrees C increase in ambient air temperature above 16 degrees
C, according to field data gathered at Muara Karang NGPP.
11 The performance of solar PVs may be adversely impacted by rising air temperatures.
12 Total costs were calculated based on the net present value of the total costs over the entire study, which
included capital costs, operation, maintenance costs, and fuel costs.

Page 19
Risk Management
Page 20
Risk Management
PLN acknowledges the importance of
identifying and assessing the impact of
climate risks and opportunities on its
businesses, strategy, and financial
planning. These risks are mapped,
measured, mitigated, and managed to
ensure the achievement of climate
targets that PLN has set. In addition,
climate change is integrated into PLN’s
overall risk management framework.

Figure 7: PLN Risk Management Process

PLN's risk management framework and

process refer to ISO 31000. According
to directors’ regulations on integrated
risk management, the risk
management process is implemented
through the steps of identification,
measurement, treatment, recording,
monitoring, evaluation and reporting
of risk (as seen in Figure 7). It is
supported by a risk management
information system. This process is
integrated into all risk typologies and
taxonomies, including climate-related
risks (Figure 8).

Page 21
Figure 8: PLN Risk Taxonomy

Results from the risk assessment process are mainly

incorporated into PLN’s risk profile, risk study, and/or
risk rating. PLN’s risk profile describes the main risks
that have the potential to hinder the Company’s
long-term targets set forth in its RUPTL and Company
Long-Term Plans (RJPP), as well as its short-term
targets contained in the Company Work Plan and
Budget (RKAP). While risk study describes the risks
that affect the planned activities, projects, initiatives,
and decision plans. PLN has identified the impacts of
climate change to infrastructure susceptibility as one
of the strategic risk profiles and has incorporated this
risk profile into the risk management framework.

Page 22
For its risk rating, PLN conducts assessment on its power plant and
substations. Risk rating assessments for its power plants allows PLN to
recognise the respective risk conditions of each plant. To ensure the
overall performance and operability of its assets, climate-related risks are
also considered in the assessment. The assessment is based on 3
activities: observations made within the assessed power plant; supporting
documents; and results from interviews with process owners to clarify any
data and/or findings from observations. The risk assessment evaluates
several aspects of a power plant, including: natural and allied perils,
design and layout of the power plant, utility hazard, process control, loss
prevention, business interruption exposure, and aspects in management
that ranges from operations to future-proofing our assets in view of
climate change. The natural and allied perils evaluation supports the
assessment of climate risks to PLN. This includes examining the potential
impacts of natural disasters (earthquakes, extreme weather, and floods)
on PLN’s assets.

Based on the findings and score of this risk assessment, the designated
risk assessment team develops recommendations on how the plant can
improve its score. Recommendations that do not require extensive
modification to the plant’s infrastructure and non-physical modifications
(i.e. improvements in the plant’s Standard of Procedures documents and
policies) can be addressed directly by the Unit and subsidiaries.
Recommendations that require significant physical modifications (i.e.
changes in the power plant’s infrastructure building) need to be included
in the annual budget plan after following PLN’s Verification and Validation
Team (Tim Verifikasi Validasi (TVV) procedure and approved by BOD.

In addition, risk rating Gardu Induk Tegangan Ekstra Tinggi (GITET) is

conducted with the purpose of ensuring continuous improvement in PLN’s
management of its substations. Its criteria are based on 4 main aspects,
namely preventive action, corrective action, natural hazard and inherent
risk. Specifically, natural hazard evaluates the potential impacts caused by
environmental conditions that are beyond management’s control. The
evaluation of this aspect includes: conditions around the
Generator/Substation (GI), earthquake, volcanic eruption, flood, tsunamis,
landslide, liquefaction, storm and lightning and forest fire.

Page 23
The results of the natural hazard risk rating will be added to the results of
the assessment of other criteria (preventive action, corrective action and
inherent risk). The total score for all assessment criteria is determined as a
risk rating score with the provisions of the score range as follows:

Good Score Range : 0-0.80

Above average Score Range : 0.81-1.60
Average Score Range : 1.61-2.40
Below average Score Range : 24.1-3.20
Critical Score Range : 3.21-4

As of 2022, 30 out of 61 risk rating GITET has been conducted. PLN has
developed a comprehensive business contingency plan aimed at
mitigating the risks of loss events from incidents related to substations.
These includes policies and documents related to: the management of
critical activities related to contingency and resilience plans for disruption
of operational indicators; the management of critical activities related to
contingency and resilience plans for natural disasters, fires, floods, riots,
and sabotage; the management of critical activities of extraordinary
events; communication procedures; and guidelines for the prevention and
control of COVID-19.

Additional Physical Risks Analyses and Assessments

In addition to the annual risk rating assessments, PLN has also conducted
2 studies to identify climate-related physical risks to its assets, both on the
supply and demand side. Namely, the ‘The Vulnerability of the Power
Sector to Climate Variability and Change: Evidence from Indonesia’ report
identifies physical risks based on fieldwork studies conducted in 2018,
including through interviews, focus group discussions, and reviews of
utilities' internal report and published energy sector information. Primary
data collection for this study was obtained from 10 of13PLN’s power plants .

13 The PLN power plants covered includes Saguling, Cirata, Tanjung Priok, Muara Karang, Tambak Lorok,
Pesanggaran, Suralaya, Tanjung Jati B, PJB Paiton, and Paiton #9

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14
The second study is a climate risk assessment that provides a risk analysis
15
on selected PLN NRE assets located in 8 Indonesian provinces . The
assessment uses a climate risk analysis model that covers 8 major climate
hazards: coastal flood, river flood, heat stress & heatwave, cold stress, wildfire,
land erosion, drought and water stress. The model scores the risks for each
climate hazard based on how severe the impact will be in the particular area
and the sensitivity of the economic activity in the particular area to the
hazard. Figure 9 illustrates a sample of the climate risk analysis undertaken.
For the complete climate risk analysis of PLN’s NRE assets on 8 Indonesian
provinces, please refer to Appendix A.

Figure 9: Example of the climate risk analysis conducted

14 The study was internally shared by PLN

15. Climate risk analysis is done on several projects (ranging from solar, wind, and coal and diesel power plants)
within the West Java, Central Java, East Java, Lampung, Southeast Sulawesi, Maluku, West Kalimantan, and
Central Sulawesi province. This study was conducted in March 2023 and engaged by the consortium including
KfW, AFD and ADB in the context of Accelerating Indonesia’s Clean Energy Transition - A Result Based Lending
Program (AICET-RBL)

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From these 2 studies, the identified physical risks has been summarised in
the table below:

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Transition Risk
PLN’s Risk Unit periodically submits a risk profile report to the BOD. This
includes details on strategic, financial, operational and project risk
management, and transition risk, as well as an assessment of risk control
and management improvements. The table below details the transition
risks that are considered.

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Financial Risk
Coal capacity is currently contributing 50% of PLN’s installed capacity.
Figure 4 illustrates the projected energy capacity mix over the years until
reaching Net Zero by 2060. PLN recognises that the transition towards a low
carbon energy system in Indonesia will be capital intensive. PLN expects
that the allocated investment from the JETP initiatives will potentially
provide the needed momentum to decarbonise its generation fleet. This
financial support is critical to ensuring PLN is able to deliver the projected
energy capacity mix by 2060.

In view of this, PLN has identified several key financial impacts that it needs
to navigate alongside mitigation measures that it will implement to help
manage these risks:

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We are currently setting the foundations for our comprehensive climate
risks assessments for the next reporting cycle, as this report already reflects
the current state of PLN’s climate risks analysis, and will be published soon.
We intend to enhance our climate scenarios and climate-related risk
assessments (both physical and transition risks) to cover analysis on all
geographical boundaries of PLN assets.

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Metrics & Targets

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Metrics
PLN demonstrates its Metrics
commitment to achieving
emissions reduction through the establishment of
short-term and long-term targets outlined in the
roadmap towards NZE. These targets can be seen in
PLN’s 2022 Sustainability Report section ‘PLN
Sustainability Strategy’ page 56 and 59. The targets
set within the energy transition program extend
beyond technical aspects and encompass legal,
financial, human resources, and information
technology dimensions. Collaborative efforts across
PLN's various business lines are being undertaken to
accelerate the achievement of the NDC by 2030 and
NZE by 2060.

PLN uses the following metrics to monitor and measure its climate related risks
and progress to achieve its NZE targets. These are disclosed in our SR:

- GHG Emissions
GHG emissions measurement serves as a fundamental metric for PLN to gauge
the quantity of GHG emissions originating from its operational activities, including
both direct emissions (Scope 1) and indirect emissions (Scope 2 and 3). PLN’s
2020-2022 emissions performance is outlined in the next section ‘Scope 1, Scope
2, and Scope 3 emissions’

- Renewable Energy Contribution

The measurement of the percentage of energy generated from renewable
sources, for instance, solar energy, wind power, or biomass, serves as a
sustainability performance indicator. By increasing the contribution of renewable
energy, PLN can mitigate the risks associated with fossil fuel dependency and
seize opportunities in the development of clean energy sources.

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2020-2022 performances for metrics related to renewable energy
contribution are outlined below:

-Infrastructure Reliability
The evaluation of the reliability and resilience of the power infrastructure
against various disturbances, including those resulting from the impacts
of climate change, is crucial. PLN utilises the System Average Interruption
Duration Index (SAIDI) and System Average Interruption Frequency Index
(SAIFI) as metrics to monitor performance.

The 2020-2022 performance of infrastructure reliability metrics is

outlined in the table below:

Scope 1, Scope 2, and Scope 3 emissions

PLN is committed to calculating and transparently reporting GHG

emissions to monitor progress on decarbonisation and evaluate climate
change mitigation activities. In 2022, PLN issued an operational policy
concerning Standard Procedures for Greenhouse Gas Emission
Management (Board of Directors’ Circular No. 0025), which includes
organisation responsibilities, monitoring, GHG emission approval and
management procedures. The management procedures include 8
components that encompass the identification of GHG emission sources,
calculation methodologies, verification, and reporting systems.

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The scope of calculating GHG emissions consist of Scope 1, 2 and 3

The tables below illustrate the GHG absolute emissions from power
plants and non power plants, and emission intensity performance for
each scope from 2020 to 2022.

GHG Absolute Emission Performance from power plants and non-power

plants

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GHG Emission Intensity Performance from power generation

The tables below illustrate the GHG absolute emissions from power
plants and non power plants, and emission intensity performance for
each scope from 2020 to 2022.

GHG Absolute Emission Performance from power plants and non-power

plants

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GHG Emission Intensity Performance from power generation

In 2022, the total volume of GHG emissions from Scope 1, 2, and 3 was
270.337 million tons of CO₂e, representing a 20.43% increase compared to
in 2020 (224.470 million tons of CO₂e). Notably, the data gleaned from
both power plants and non-power plants over the period spanning 2020
to 2022, which underscores an increase in emissions’ trajectory. These
findings depicts the variations in emissions patterns between the 2
categories, thereby spotlighting the necessity for targeted mitigation
strategies and sustainable energy management. This rise in emissions
was driven by the increase in electricity production and consumption as
a result of the post-pandemic economic recovery. Emission intensity also
increased to approximately 0.005 tons/MWh, which can be attributed to
the inclusion of new coal-fired power plants (PLTU) that were still under
construction during the reporting period of SR 2021. These new PLTU
plants added to PLN's power grid were Independent Power Producer (IPP)
plants, with their construction contracts established well before 2022.

Targets
PLN aims to gradually decrease GHG emissions (Scope 1, 2 and 3) to
reach Net Zero emission by 2060. In the short to medium term, GHG
emissions intensity across all scopes is targeted to decrease by 15.7% by
2030 based on the projections in the RUPTL. In addition, absolute GHG
emissions (Scope 1, 2, and 3) are targeted to decrease by 98 million tons
of CO₂e by 2030 compared to the BAU scenario. These targets have been
aligned with the national emissions reduction targets outlined in the NDC.

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In the long term, PLN aims to achieve NZE by 2060, which entails a 100%
reduction in GHG emissions intensity (Scope 1, 2, and 3) from 0.892 tons
of CO₂e/MWh in 2021 to zero by 2060. Absolute GHG emissions (Scope 1, 2,
and 3) in the long term are targeted to reach zero by 2060 or decrease
by 1,057 million tons of CO₂e compared to the BAU scenario.

Absolute emission reduction targets are outlined based on Scope 1, 2 and

3 as can be seen in the following table:

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Future Plan
Significant changes lie ahead of PLN in the coming
financial year. Despite this, PLN remains committed to
continuing its transparent engagement on climate risk,
and its approach to reporting under the TCFD
framework will continue to evolve. As the energy sector
being Indonesia’s significant GHG emitter and PLN
being the largest electricity producer in Indonesia,
recognition of PLN’s role in the energy transition and
decarbonisation initiatives while maintaining reliable
and affordable energy will continue to be a core focus.
PLN intends to enhance its climate scenarios to
anticipate the potential future pathways and revise its
energy transition plan and climate-related risk
assessment (both physical and transition risk) in the
context of scenarios in the next reporting cycle.

Leveraging its strong governance and established risk management framework,

PLN will continue to assess climate-related risks and opportunities and pursue
strategic directions that are both responsive and resilient, and in the best
interests of stakeholders.

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Appendix A- Climate risk analysis
conducted on 8 provinces
Location: East Java; Sector: Onshore Wind

Location: East Java; Sector: Floating Solar

Location: Central Java; Sector: Floating Solar

Location: West Java; Sector: Ground Mounted Solar

Location: Lampung; Sector: Ground Mounted Solar

Location: West Borneo; Sector: Ground Mounted Solar

Location: Southeast Celebes; Sector: Ground Mounted Solar

Location: Central. Celebes; Sector: Ground Mounted Solar

Location: Maluku; Sector: Ground Mounted Solar