The World Bank Indonesia Sustainable Least-cost Electrification-2 (isle-2) Operation (P501217) Concept Environmental and Social Review Summary Concept Stage (ESRS Concept Stage) Public Disclosure Date Prepared/Updated: 01/14/2024 | Report No: ESRSC04043 Feb 07, 2025 Page 1 of 8 The World Bank Indonesia Sustainable Least-cost Electrification-2 (isle-2) Operation (P501217) I. BASIC INFORMATION A. Basic Operation Data Operation ID Product Operation Acronym Approval Fiscal Year P501217 Program-for-Results Financing (PforR) ISLE-2 2025 Operation Name Indonesia Sustainable Least-cost Electrification-2 (ISLE-2) Operation Country/Region Code Beneficiary country/countries Region Practice Area (Lead) (borrower, recipient) Indonesia Indonesia EAST ASIA AND PACIFIC Energy & Extractives Borrower(s) Implementing Agency(ies) Estimated Appraisal Date Estimated Board Date PT PLN PT PLN 24-Jun-2024 25-Mar-2025 Estimated Concept Total Project Cost Review Date Public Disclosure 05-Dec-2023 1,568,500,000.00 Proposed Development Objective to increase access to sustainable electricity in the Kalimantan and Sumatra Regions. B. Is the operation being prepared in a Situation of Urgent Need of Assistance or Capacity Constraints, as per Bank IPF Policy, para. 12? No C. Summary Description of Proposed Project Activities The ISLE-2 Operation encompasses a Program for Results component (the ISLE-2 Program, PforR) and an Investment Project Financing (IPF) Technical Assistance (TA) component (the ISLE-2 Project). The ISLE-2 Project, financed by a US$10 million GCF grant, will include: (i) Generation Plans with VRE Integration and Capacity Building (technical): supporting the purchase of software licenses for an energy generation planning tool (such as PLEXOS), their implementation and ongoing training on their usage (US$2.5 million); (ii) Transaction Advisory and Capacity Building (Procurement and Legal): providing transaction advisory support for the selection of independent power producers and hiring evaluation and monitoring consultants, including IVAs, to support IBRD/IDA financed operations, including the ISLE-1, ISLE-2 and I- ENET PforRs (US$2.5 million); (iii) RE Infrastructure and Resilience/Adaptation Studies: strengthening PLN’s E&S and Feb 07, 2025 Page 2 of 8 The World Bank Indonesia Sustainable Least-cost Electrification-2 (isle-2) Operation (P501217) gender management capacities, including through (a) consultants, training, and capacity building activities to support the implementation of PLN’s ESMS and strengthen PLN’s capacities to plan and design gender-sensitive energy policies, and (b) preparing technical assessments and E&S assessments and instruments necessary for the development and investments in transmission lines needed for RE deployment (Identified Investments) to be selected and agreed upon by PLN and the World Bank in accordance with the selection criteria and procedures set forth in the Project Operations Manual (US$5 million). D. Environmental and Social Overview D.1 Overview of Environmental and Social Project Settings This TA project forms the IPF component of the ISLE 2 PforR. The proposed project is focuses on financing technical assistant (TA) activities and there is no civil works activity envisaged. The ISLE-2 PforR will support the increase in access to electricity services, enhance PLN’s grid to improve integration of Variable Renewable Energy (VRE) and reduce generation cost. ISLE-2 PforR is a sub-set of the Government’s program – the generation and transmission plan, the RUPTL – focusing on grid reinforcements for VRE integration to integrate solar and wind generation without curtailment, and electrification in two regions, Sumatra and Kalimantan. This TA project will support procurement of IT tools and consultancy contracts, namely, (i) PLEXOS generation planning tool licenses and revisions on training material in particular for battery storage, VRE, and relay settings, training of trainers etc. (US$ 3.5million); (ii) transaction advisory and evaluation and monitoring consultants (US$ 2million); and (iii) E&S consultants to strengthen PLN's internal capacity for implementing its ESMS, and feasibility studies and E&S instruments for unidentified transmission lines which may include some that will be financed under the GreFI project Public Disclosure under preparation (US$ 4.5million). The PLN ESMS will be applied to ISLE-1 and ISLE-2 PforRs. The ISLE-1 and ISLE-2 PforR locations are home to rich biodiversity, diverse natural habitats and ecosystems, and cultural diversity. The Regions have Indigenous People (IP) communities. The sensitivity of both environmental and social receptors may intensify the potential adverse impacts when implemented without adequate mitigation measures. While the studies and E&S instruments for transmission lines financed under the GreFi Project are not identified at this stage but most likely will be located in Sumatra region, the same region with ISLE-2 PforR. D.2 Overview of Borrower’s Institutional Capacity for Managing Environmental and Social Risks and Impacts PLN has implemented several Bank funded IPF projects and PforR in the recent past. PLN implemented Indonesia Power Transmission Development (IPTD) Project Phase I (P117323) and II (P123994), that include preparation of FS Stage ESIA, CIA, and LARAP for Pokko Hydropower Plant, extension, rehabilitation of 150 kV and 70 kV substations, and new construction of 150 kV substations. PLN implemented Pumped Storage TA project (P112158) and the Development of Pumped Storage Hydropower Jawa Bali System project (P172256) to prepare ESIA for Upper Cisokan Pumped Storage (UCPS) and Matenggeng Pumped Storage (MPS). Preparation of the ESIA UCPS has been completed while ESIA MPS is on hold due to project administrative issue, with a draft ESIA report has been completed. PLN is also implementing ISLE TA (P169259) which include preparation of FS, preliminary E&S assessment, and relevant E&S instruments for four small- scale PLN-owned solar PV projects. PLN has considerable internal E&S capacity. PLN staff in HQ and 19 PLN staff from regional offices have taken the ESF roll-out training. All Regional Project Offices has dedicated E&S staff and last year PLN initiated the establishment of a Health, Safety, Security & Environment (HSSE) academy. However, most projects Feb 07, 2025 Page 3 of 8 The World Bank Indonesia Sustainable Least-cost Electrification-2 (isle-2) Operation (P501217) where PLN has demonstrated a satisfactory E&S performance required enhanced assistance and support by the World Bank. PLN is finalizing preparation of ESMS that is aligned with Bank Core Principles and supplemented by E&S Management Guidelines (MGs), based on, but further expanding the existing guidelines that were developed under ADB RBLs. PLN has experience in applying the MGs, however, communication and cooperation between divisions need to be strengthened, SOPs need to be reviewed and expanded, and the capacity of all relevant PLN staff need to be strengthened. Capacity development support that will be provided through this project will be supplemented by the ongoing ISLE TA, ISLE-1 and ISLE-2 PforRs and GreFi project. II. SCREENING OF POTENTIAL ENVIRONMENTAL AND SOCIAL RISKS AND IMPACTS A. Environmental and Social Risk Classification (ESRC) Substantial A.1 Environmental Risk Rating Substantial The Environmental Risk Rating is Substantial. The project will not finance civil works activities. The risk considers the significant downstream impacts and PLN’s capacity that require strengthening. The TA include preparation of FS and E&S instruments for 275kV and 500kV transmission lines supported by GreFi and support strengthening PLN’s capacity for implementation of its ESMS (to be applied to ISLE-1 and ISLE-2 PforRs). The downstream impacts include construction & operation of high voltage TLs under GreFi, and investments supported by ISLE-1 and ISLE-2 PforRs (distribution lines, 150kV TLs, substations, solar PV, wind power, BESS). The potential impacts are adverse impacts Public Disclosure from construction of infrastructure; impacts from operation of solar PV and BESS i.e. hazardous waste generation, soil & water contamination from leaching of solar modules, use of water resources, fire & explosion risk from faulty wiring; impacts to natural habitat and biodiversity from operation of the transmission lines, solar PV, and wind power i.e. natural habitat fragmentation/alteration, risk of fatality of birds and bats due to overhead risks and polarising effects of solar panels, electromagnetic field exposure to OHS and CHS risks, landscape and visual impacts, shadow flicker, aircraft safety, and blade throw effect. Impacts of the high voltage TLs to the biodiversity are considered lower compared to lower voltage transmission lines due to the high voltage and design of the towers, conductors and spacing of the electricity cables. These impacts are moderate to substantial significance, not complex or large scale, largely be site specific, and will unlikely cause significant, irreversible, and unprecedented E&S impacts. Some impacts can be avoided, minimized/mitigated by alternative project siting, adoption of state-of-art technologies, and good engineering design. PLN screening procedure also ensure avoidance of biodiversity sensitive areas as much as technically feasible. Substantial A.2 Social Risk Rating The social risk is estimated to be Substantial. This TA project will only support the installation of IT equipment and consultancy services, the latter including feasibility studies (FS) and E&S instruments preparation of transmission lines. Such TA activities will not cause direct social impacts, however, there are downstream risks related to land acquisition and resettlement that may occur when the FS and E&S instruments developed under the TA project are applied to support the TL construction and other physical works. Other potential downstream risks include impact on Indigenous Peoples (IP), health and safety risks for project workers and local communities; and stakeholder risks. Implementation capacity of the PLN in particular with regard to coordination between E&S and non-E&S divisions, Feb 07, 2025 Page 4 of 8 The World Bank Indonesia Sustainable Least-cost Electrification-2 (isle-2) Operation (P501217) and implementation capacity of PLN staff in the new ESMS and Management Guidelines including on IPP, also add downstream social risks. A detailed risk assessment will be conducted as part of the ESSA, and exclusion criteria will be established so that TA activities will not support the preparation of potentially high social risk investments. B. Relevance of Standards and Policies at Concept Stage B.1 Relevance of Environmental and Social Standards ESS1 - Assessment and Management of Environmental and Social Risks and Impacts Relevant ESS 1 is relevant. The project is not envisaged to cause direct adverse environmental and social risks and impacts and expected to generate positive environmental benefits by reducing GHG emission and pollution from investments in renewable energy. The downstream impacts include construction & operation of high voltage TLs under GreFi and investments supported by ISLE-1 & ISLE-2 PforRs (distribution lines, 150kV TLs, substations, solar PV, wind power, BESS). Same as ISLE-1,ISLE-2 PforRs will apply exclusion criteria to ensure activities that are judged to have significant adverse E&S impacts that are sensitive, diverse, or unprecedented on the environment and/or affected people are excluded. PLN ESMS will be applied to manage the E&S risks and impacts of investments under ISLE-1 and ISLE-2 PforRs. The Project is expected to influence project design & siting selection of TLs supported by GreFi through FS and E&S assessment, while the E&S instruments will formulate mitigation measures. ESS10 - Stakeholder Engagement and Information Disclosure Relevant Public Disclosure A Stakeholder Engagement Framework (SEF) will be prepared prior Appraisal to guide the development of the Stakeholder Engagement Plan (SEP) at the investment level to be applied for GreFi supported TLs. Stakeholders including local population will be engaged meaningfully as part of the FS preparation process. Each TLs supported by the Project will include E&S assessment and instruments, including a project-specific SEP based on the SEF as stand alone document or attached to the identified investment ESMP. PLN ESMS will be applied to ISLE-1 and ISLE-2 PforRs and is aligned with World Bank Core Principles and ESF, including provisions for stakeholder engagement and information disclosure. ESS2 - Labor and Working Conditions Relevant The FS, E&S assessment and E&S instruments prepared by the project for the high voltage TLs will consider risks and impacts of construction & operation of the infrastructure on labor and working conditions). Preparation of the ToR for the studies should include any necessary measures with regard to forms of labor to be deployed under the investments including management procedures or Labor Management Plan (LMP), and EHSGs for potential use of local contractors or voluntary community labor. The PLN ESMS will be applied to ISLE-1 and ISLE-2 PforRs and is aligned with World Bank Core Principles and ESF, including provisions on OHS requirements, equal opportunity treatment, a grievance mechanism specifically for workers, and prohibitions on harmful child and forced labor. ESS3 - Resource Efficiency and Pollution Prevention and Management Relevant The Project will promote renewable energy related investments which will contribute to GHG emissions reduction. The project activities are not expected to have direct material risks and impacts on resources nor create pollution. However, the future development of investment supported by GreFi and ISLE-1 and ISLE-2 PforRs may result Feb 07, 2025 Page 5 of 8 The World Bank Indonesia Sustainable Least-cost Electrification-2 (isle-2) Operation (P501217) environmental degradation due to air, soil, and water pollution mainly from construction activities. The E&S assessment and instruments will provide measures for management of air and water pollution, solid waste, wastewater, and hazardous waste as appropriate to the type of subproject that will be guided by the national regulations, the Bank’s ESF, the World Bank Group EHS Guidelines and GIIP. PLN ESMS will be applied to ISLE-1 and ISLE-2 PforRs and is aligned with World Bank Core Principles and ESF, including provisions on resource efficiency and pollution prevention and management. ESS4 - Community Health and Safety Relevant The Project will finance FS, E&S assessment, and instruments that should assess the possible impacts and risks on community health and safety from TL’s construction activities, interactions between contractors and the remote local beneficiaries and affected communities, electromagnetic fields from transmission line (if any) and possible impacts related to ecosystem services and dam safety. The assessment should take into account gender and vulnerability including any disproportionate impacts and risk on certain groups. PLN ESMS will be applied to ISLE-1 and ISLE-2 PforRs and is aligned with World Bank Core Principles and ESF, including provisions on measures to minimize and mitigate community health and safety risks. ESS5 - Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant This TA Project will support the preparation of FS and E&S assessments of transmission line (TL) investments which will not directly cause land acquisition and resettlement. The outputs of the TA activities will be used to support the constructions of the TL under GreFi project and ISLE-1 and ISLE-2 PforRs, which will cause land acquisition and Public Disclosure resettlement impacts. To manage such downstream risks, TOR of the TA activities to be supported under the project will be prepared and reviewed by the Bank, before Appraisal, consistent with the ESS5; and continuing capacity development and hands-on implementation support will be provided within the framework of the GriFi project, ISLE- 1 and 2 PforRs so the outputs of the TA activities will be implemented adequately, meeting the objective of the ESS5. ESS6 - Biodiversity Conservation and Sustainable Management of Living Natural Relevant Resources The potential indirect impacts are related to characteristics of the location of infrastructure supported by GreFi and ISLE-1 and ISLE-2 PforRs that are home to rich biodiversity with diverse natural habitats and ecosystems. The potential indirect impacts and risks are disturbance to terrestrial and aquatic biodiversity from land clearing for construction of and operation of TLs, distribution lines, substations, solar PV, wind power, and BESS. The E&S assessment and instruments for the high voltage TLs will include assessment on impacts to modified, natural, and critical habitats and will avoid poor design risk and poor siting choices. PLN ESMS will be applied to ISLE-1 and ISLE-2 PforRs and is aligned with World Bank Core Principles and ESF, provisions on measures to avoid, minimize and mitigate impacts to biodiversity and natural habitat. ESMS also include screening procedure to avoid biodiversity sensitive areas as much as technically feasible and guidance for biodiversity offset. ESS7 - Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Relevant Local Communities This TA Project will support the preparation of FS and E&S assessments of transmission line (TL) investments which will not directly impact IP communities. The outputs of the TA activities will be used to support the constructions of Feb 07, 2025 Page 6 of 8 The World Bank Indonesia Sustainable Least-cost Electrification-2 (isle-2) Operation (P501217) the TL under GreFi project and ISLE-1 and ISLE-2 PforRs in regions where IP communities are present and such constructions can cause material impacts on local IP communities. To manage such downstream risks, TOR of the TA activities to be supported under the project will be prepared and reviewed by the Bank, before Appraisal, consistent with the ESS7; and continuing capacity development and hands-on implementation support will be provided within the framework of the GriFi project, ISLE-1 and 2 PforRs so the outputs of the TA activities will be implemented adequately, meeting the objective of the ESS7. Land acquisition of IP's customary territories without FPIC, their physical relocation, and significant impacts on their cultural heritage, will be excluded. ESS8 - Cultural Heritage Relevant This TA Project will support the preparation of FS and E&S assessments of transmission line (TL) investments which will not directly impact cultural heritage. The outputs of the TA activities will be used to support the constructions of the TL under GreFi project and ISLE-1 and ISLE-2 PforRs that may cause impacts on cultural heritage. To manage such downstream risks, TOR of the TA activities to be supported under the project will be prepared and reviewed by the Bank, before Appraisal, consistent with the ESS8; and continuing capacity development and hands-on implementation support will be provided within the framework of the GriFi project, ISLE-1 and 2 PforRs so the outputs of the TA activities will be implemented adequately, meeting the objective of the ESS8. ESS9 - Financial Intermediaries Not Currently Relevant This ESS is not currently relevant. Public Disclosure B.2 Legal Operational Policies that Apply OP 7.50 Operations on International Waterways No OP 7.60 Operations in Disputed Areas No B.3 Other Salient Features Use of Borrower Framework TBD The Bank and the Borrower do not consider the use of the borrower environmental and social framework as defined in ESF for the purpose of the project . Use of Common Approach No C. Overview of Required Environmental and Social Risk Management Activities C.1 What Borrower environmental and social analyses, instruments, plans and/or frameworks are planned or required by Appraisal? ToR for preparation of FS, E&S assessment, and E&S instruments as well as LARPF, IPPF, LMP and SEF will be prepared before Appraisal, based on the PLN's ESMS that is satisfactory to the Bank. Feb 07, 2025 Page 7 of 8 The World Bank Indonesia Sustainable Least-cost Electrification-2 (isle-2) Operation (P501217) III. CONTACT POINT World Bank Task Team Leader: Sabine Mathilde Isabelle Cornieti Title: Senior Energy Specialist Email: scornieti@worldbank.org TTL Contact: Muchsin Chasani Abdul Qadir Job Title: Energy Specialist Email: mqadir@worldbank.org IV. FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects Public Disclosure V. APPROVAL Task Team Leader(s): Sabine Mathilde Isabelle Cornieti, Muchsin Chasani Abdul Qadir ADM Environmental Specialist: Suryaputrianita Satyanugraha ADM Social Specialist: Satoshi Ishihara Feb 07, 2025 Page 8 of 8