Sector
Energy
Indonesia possesses vast, distributed, and diverse energy resources. The country’s energy subsectors include gas, clean water, and electricity, with demand projected to increase to 464 terawatt-hours (TWh) by 2024 and further increase to 1,885 TWh by 2060. The use of renewable energy is a top priority and the government has set ambitious goals in the General Planning for National Energy (RUEN) and General Planning for National Electricity (RKUN) to integrate 23 percent renewable energy into the national energy mix by 2025. At least US$41.8 billion of investments are needed to fully realize the goal.
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Energy
Indonesia possesses vast, distributed, and diverse energy resources. The country’s energy subsectors include gas, clean water, and electricity, with demand projected to increase to 464 terawatt-hours (TWh) by 2024 and further increase to 1,885 TWh by 2060. The use of renewable energy is a top priority and the government has set ambitious goals in the General Planning for National Energy (RUEN) and General Planning for National Electricity (RKUN) to integrate 23 percent renewable energy into the national energy mix by 2025. At least US$41.8 billion of investments are needed to fully realize the goal.
Despite having a renewable energy potential estimated at around 3,000 gigawatts (GW), current utilization is merely about 12.74 GW or 3 percent. This renewable energy potential includes solar energy, which is widely spread across Indonesia, especially in East Nusa Tenggara, West Kalimantan, and Riau, with a potential of approximately 3,294 GW and utilization of 323 megawatts (MW). Another renewable energy, hydro energy, with a potential of 95 GW, is primarily found in North Kalimantan, Aceh, West Sumatra, North Sumatra, and Papua, with utilization reaching 6,738 MW.
Additionally, bioenergy, encompassing biofuel, biomass, and biogas, is distributed throughout Indonesia with a total potential of 57 GW and utilization of 3,118 MW. Wind energy (>6 m/s) found in East Nusa Tenggara, South Kalimantan, West Java, South Sulawesi, Aceh, and Papua has a substantial potential of 155 GW, with utilization of 154 MW.
Furthermore, geothermal energy, strategically located in the “Ring of Fire” region covering Sumatra, Java, Bali, Nusa Tenggara, Sulawesi, and Yogyakarta has a potential of 23 GW and utilization of 2,373 MW. Meanwhile, marine energy, with a potential of 63 GW, especially in Yogyakarta, East Nusa Tenggara, West Nusa Tenggara, and Bali, remains untapped.
Among the renewable energy sources and their potential, these projects entail significant investments. According to the Electricity Supply Business Plan (RUPTL) of the State Electricity Company (PLN), from 2021 to 2030, geothermal power plants require an investment of US$17.35 billion, large-scale solar power plants necessitate US$3.2 billion, hydropower plants require US$25.63 billion, and base renewable energy power plants require US$5.49 billion. Additionally, bioenergy power plants require an investment of US$2.2 billion, wind power plants US$1.03 billion, peaker power plants US$0.28 billion, and rooftop solar power plants IS$3 billion.
As of 2022, hydro and geothermal are the primary drivers of growth. Private entities had enhanced the capacity of hydro power by adding 603.66 MW in mini, micro, and standard hydro facilities, reaching a total of 2,459.72 MW. Meanwhile, the geothermal sector experienced a 412 MW increase over the last five years from the private sector, bringing the total capacity to 1,782.8 MW by 2022. Aside from these two renewable energy, sources solar energy has also presented significant opportunities, particularly given Indonesia's potential for floating solar systems on reservoirs and dams.
Furthermore, the country’s other national energy subsector of gas underscores Indonesia’s wealth in natural gas. Indonesia’s natural gas reserves are predominantly methane (80-95 percent), which can be used directly or processed into Liquefied Natural Gas (LNG). However, demand has greatly increased over the past decade for Liquefied Petroleum Gas (LPG). From 2018 to 2022, domestic LPG production reached between 1.9 to 2 million tons, which is insufficient to meet national needs, leading to increasing imports that reached 6.74 million tons in 2022.
Currently, the Energy and Mineral Resources Ministry is working to attract new investments for LPG refineries through a cluster-based business scheme for the construction or future development of new LPF refineries. The ministry has identified the potential of rich gas to produce an additional 1.2 million tons of LPG cylinders domestically.
Latest News
The administration of President Prabowo Subianto has issued Presidential Regulation (Perpres) No. 26/2026, which expands the role of public service agencies (BLU) in energy imports, blurring the traditional boundaries between government agencies, state-owned enterprises (SOEs) and private sector players. While the new regulation appears intended to strengthen Indonesia’s energy security amid growing global uncertainties, it could create overlapping responsibilities, increase operational risks and expose the country to greater geopolitical pressures.
Article 2 of the Perpres states that the regulation’s aim is to maintain good governance in the procurement of crude oil, fuel oil (BBM) and liquefied petroleum gas (LPG), whether sourced domestically or imported. It also seeks to improve the continuity, reliability and resilience of the national energy supply.
Under Article 4, imports of oil and gas products, including gasoline and LPG, may be conducted through agreements between Indonesia and foreign governments, cooperation between the government and foreign energy producers or partnerships between domestic energy companies and overseas suppliers, subject to certain restrictions.
Article 4 further stipulates that imports under bilateral cooperation schemes may be executed either by energy SOEs such as Pertamina or by the Oil and Gas Testing Center (Lemigas) of the Energy and Mineral Resources Ministry. It also authorizes the government to direct Lemigas to import oil and gas products to support strategic energy reserves and operational stockpiles.
During emergencies, Article 5 allows Lemigas and energy SOEs to independently procure oil and gas if domestic supplies are disrupted by geopolitical developments, price surges due to supply fluctuations or domestic reserves fall below established thresholds. The article also permits import contracts to include price differences based on volume, product type, country of origin and delivery schedules.
Meanwhile, Article 9 allows Lemigas, energy SOEs and private energy companies to import oil and gas products for storing in Free Trade and Free Port Zones (KPBPB) such as Batam or at bonded logistics centers (PLB). These facilities provide logistics and storage services while allowing deferred payment of selected duties, taxes and excise.
Granting Lemigas the authority to import oil and gas products marks a significant departure from the center’s traditional role. Historically, Lemigas has focused on research, certification, consulting, field surveys and testing services for the oil and gas industry.
The energy ministry says this expanded authority is intended to facilitate government-to-government (G2G) energy transactions, including potential agreements with Russia that could involve as much as 150 million barrels of crude oil.
Economists have argued that the new regulation risks creating overlapping procurement responsibilities between Pertamina and Lemigas, now designated as a public service agency. Assigning a commercial function outside the center’s core expertise could increase the risk of execution failures, complicate coordination in oil and gas procurement and distract Lemigas from its primary functions of research and testing.
Industry players have also suggested that granting import authority to Lemigas may serve as a way to bypass certain procurement restrictions Pertamina faces. The state-owned energy giant previously issued global bonds in the United States that restrict its involvement in illicit oil transactions, including purchases from countries such as Russia that are subject to sanctions by the US and its allies.
The energy ministry has acknowledged that facilitating such transactions is among the considerations behind the policy.
Meanwhile, National Energy Council (DEN) member Muhammad Kholid said the oil and gas that Lemigas imported could be stored at SOE-owned facilities, including those operated by Pertamina subsidiary PT Pertamina Patra Niaga or private energy companies. However, Kholid encouraged Lemigas to prioritize facilities run by SOEs, arguing that storage costs could be minimized through adjustments to asset use arrangements approved by the Finance Ministry.
Allowing Lemigas to import oil and gas products reflects the government’s concern over potential energy supply disruptions amid the country’s continuing dependence on fossil fuels. However, this policy should have been introduced earlier and tested through Pertamina before actually authorizing an institution with limited experience in commercial procurement.
Moreover, facilitating transactions involving sanctioned producers risks drawing needless scrutiny from Washington and its allies. It may also create a perception of foreign policy inconsistency following the significant concessions in Indonesia recently extended to the US.
