Indonesia’s Renewables Landscape: A Silver Lining Amidst the Challenge

  • Indonesia is grappling with the challenges of formulating renewable and new energy (RNE) policies due to an electricity oversupply. As of Jun 2023, the oversupply in Java-Bali and Kalimantan still exceeds the ideal reserve margin.
  • The country has set an ambitious target of achieving 708 gigawatts (GW) of installed capacity from renewable energy sources by 2060. This goal will be primarily supported by solar, wind, and hydropower plants, with hydropower being a significant focus in the 2021-2030 development plan.
  • Indonesia plans to establish a supergrid starting in 2025, connecting regions such as Sumatera-Bangka, Sumatera-Malaysia, Kalimantan, and North and South Sulawesi. The Just Energy Transition Partnership (JETP) potentially supports this initiative.
  • Local conglomerates are actively pursuing opportunities in renewable power plant projects, driven by the government's strong support for new industrial and special economic zones and the potential for electricity exports. This indicates a promising outlook for increased electricity demand, including green energy sources.
  • While several regulations offer possibilities for utilizing fossil energy, particularly coal, fossil fuel companies in Indonesia have already invested in green energy projects. Some companies allocate over 30 percent of their capital expenditure (capex) toward those investments.

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