Renewable Energy Transition, Macroeconomic Stability, Corporate Financial Risk, and Financial Sustainability: Evidence from Indonesia’s National Electricity Utility

Indonesia’s state-owned electricity utility, PT PLN (Persero), must absorb volatile fuel costs, a changing generation structure and macroeconomic uncertainty while selling power at regulated tariffs. This study examines how fuel prices and macroeconomic conditions are associated with electricity demand, fuel use, the generation mix, corporate financial risk and financial sustainability at the utility during the renewable energy transition. Annual data for 2004–2024 from Statistics PLN, PLN Annual Reports, Bank Indonesia and the World Bank were analyzed with partial least squares structural equation modeling, supported by PLSpredict, unit-root and autocorrelation diagnostics, and re-estimation on detrended, deflated and first-differenced data. Fuel prices were positively associated with corporate financial risk (β = 0.738) and with the scale of operating revenue, cost and income (β = 0.761), and both associations held after common trends were removed. Corporate financial risk was negatively associated with financial sustainability (β = −0.170). Seven of thirteen hypotheses were supported at the 5% level. Several macroeconomic and operational paths, including the fuel price–demand link, lost significance once trends were removed, and fuel prices were unrelated to the operating margin, indicating that fuel costs change the scale of PLN’s operations more than its profitability. The study offers an exploratory, utility-level account of how fuel price and macroeconomic pressures reach the balance sheet of a state-owned utility in an emerging economy and identifies which of these associations reflect shared long-run trends.