How Credit Unions Are Closing the Solar Finance Gap — and What It Means for Clean Energy Lending Globally
By Minahil Amin, Chief of Staff, Capital for Sustainability
Capital for Sustainability (C4S) is a philanthropic initiative whose mission is to align private capital with climate action in low- and middle-income countries (LMICs). C4S’s theory of change is that by visibly deploying grant capital across two strategic levers – (1) climate investments and (2) organizations shaping climate finance policy incentives – we can catalyze a cultural shift in the financial system that leads to significantly more private capital flowing to the Global South. C4S’s ultimate goal is to double LMIC private climate finance in five years. The following article is the second in a three-part series examining the role of credit unions as climate finance intermediaries, a question that sits at the center of C4S’s strategic work.
Part 3: Koperasi Kredit and Indonesia’s solar opportunity
Indonesia is among the world’s largest GHG emitters and one of the most consequential countries for the global climate transition. Its government has committed to net-zero by 2060, and a 2022 Just Energy Transition Partnership commitment mobilized an initial USD 20 billion for the energy transition.[1] A USD 240 billion financing gap to meet the country’s climate commitments nonetheless persists.[2] The shortfall reflects a structural problem familiar from other large emerging markets: national-level commitments and international capital flows do not necessarily translate into access at the household or enterprise level, particularly outside the main islands.
Solar energy illustrates this. Indonesia’s total installed solar capacity reached approximately 1.49 GW by end of 2025,[3] against a theoretical solar potential of 3,294 GW[4] – less than 0.05% of what the country’s geography and solar resources make possible.[5] The government has set a quota to add 5.75 GW of rooftop solar capacity between 2024 and 2028.[6] High upfront costs and limited access to affordable financing are the primary barriers, particularly across Indonesia’s outer islands, where poverty rates are higher and formal credit is harder to access. The gap between ambition and installation is not primarily a technology problem; it is a financing and distribution problem.
Indonesia’s Koperasi Kredit movement comprises roughly 970 credit unions serving 3.3 million members, organized nationally through INKOPDIT and PUSKOPCUINA.[7] These institutions reach the smallholder farmers, rural households, and informal workers that commercial banks do not. Agriculture employs close to one third of Indonesia’s workforce, with 93% of producers operating as small family enterprises.[8] In provinces like East Nusa Tenggara, where dry seasons can last up to eight months,[9] and Central Sulawesi, where shifting rainfall patterns and flood risks compound existing economic vulnerability, the case for climate-adapted financial products is both pressing and unmet.[10] A small number of Koperasi Kredit have begun offering solar and EV loan products, but the sector broadly lacks climate lending expertise, concessional capital, and the digital tools to originate and report on green portfolios at scale. One of C4S’s goals is to support Indonesia’s Koperasi Kredit to expand lending for climate solutions, including solar plus storage and climate-smart agriculture.
What makes Indonesia worth close attention is the scale of what a working model could mean. A robust credit union sector – one that serves millions of smallholder farmers and rural households across one of the world’s largest archipelagos – represents a distribution network for climate finance that commercial institutions, with their stricter credit requirements and urban concentration, have not been able to match. Getting the model right here would have implications well beyond Indonesia.
C4S is working with credit unions across the Global South to deploy catalytic capital and technical assistance programs needed to channel climate capital to underserved communities. Clean Energy Credit Union, a fossil-free credit union, is an example of this model in the United States. This April, Clean Energy Credit Union is directing a portion of every loan funded during the month toward Capital for Sustainability as part of its Earth Month campaign. To learn more about C4S’s work, visit https://capitalforsustainability.com/.