Indonesia's fresh 10-year power acquisition scheme signals a positive shift towards reinforcing renewable energy: as perceived by investors and the JETP office.
Indonesia is facing a significant challenge in meeting its growing energy demands sustainably, requiring a substantial integration of renewable energy and infrastructure upgrades. The 2021 Renewable Energy and Energy Transition Plan (RUPTL) has been dubbed the "green RUPTL" for its ambitious renewable targets, but much of the renewable buildout has been backloaded to later years, with nearly three-quarters of projected renewable additions only expected between 2025 and 2030.
Experts highlight that Indonesia needs urgent policy reforms, particularly the New and Renewable Energy Bill (EBET Bill) and the Electricity Bill, as legal frameworks to accelerate clean energy investments and the energy transition. These reforms should address challenges in clean energy development by creating clearer regulations that reduce uncertainty for investors, strengthen national energy security, and support expanding access to affordable green electricity for industries and communities.
To unlock private capital, the government needs to implement supportive financial mechanisms, including public fund disbursements that de-risk renewable projects and leverage private funding. The government should also foster domestic industry while balancing affordable renewable energy prices so that investments also benefit local manufacturing and supply chains. Strengthening local content requirements (TKDN) for renewable energy technology is essential to boost local clean energy manufacturing and supply chain resilience.
Indonesia’s current regulatory environment is insufficient to attract private investment, as many renewable projects are not yet commercially viable without incentives such as concessional loans, guarantees, or blended finance mechanisms. To address this, the government needs to adopt more ambitious climate and energy targets, aligned with the Paris Agreement’s 1.5°C goal, through updated Nationally Determined Contributions (NDC) and support for a broad net-zero by 2050 vision.
The RUPTL aims to expand renewable energy capacity by 69.5 gigawatts (GW) by 2034, with 76% expected to come from renewable sources. The plan targets 42.6 GW of new renewable capacity, with solar accounting for the largest share at 17.1 GW, followed by hydropower, wind, geothermal, bioenergy, and nuclear. Energy storage, including pumped-storage hydropower and batteries, is also planned to support grid reliability.
However, experts caution that enabling policy reforms are urgently needed to implement the accelerated build-out of new renewable power plants. Providing reliable and affordable electricity to rural and remote communities should be a core component of Indonesia's just energy transition. The government's commitment to policy reforms and the implementation of the RUPTL will play a crucial role in unlocking the estimated USD 80 billion funding needed over the next decade for Indonesia’s clean energy projects, balancing private and public finance, domestic industrial growth, and regulatory certainty to accelerate a just and inclusive energy transition.
References
- Indonesia needs urgent policy reforms to accelerate clean energy transition
- Indonesia's energy transition: A roadmap to a sustainable future
- Indonesia's energy transition: A roadmap to a sustainable future
- Indonesia's energy transition: A roadmap to a sustainable future
- Indonesia's energy transition: A roadmap to a sustainable future
