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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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.
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As Indonesia continues to grapple with spreading wildfires and recurring haze, scrutiny has increasingly shifted toward corporate culpability, driven by investigative reports linking vast networks of foreign investors and multinational firms to the blazes. With Jakarta’s domestic response perceived as largely muted, neighboring ASEAN member states have begun mounting diplomatic pressure and pursuing independent investigations into the entities allegedly responsible for the transboundary haze choking the region.
Much of the recent attention stems from an investigation published by the Indonesian Forum for the Environment (Walhi), which identified nine corporations directly tied to major wildfire hot spots: PT Kayung Agro Lestari, PT Panca Surya Agrindo, PT Arjuna Utama Sawit, PT Sumber Mardhika Graha, PT Finnantara Intiga, PT Hutan Ketapang Industri, PT Mayawana Persada, PT Hermes Sugar Indonesia and PT Globalindo Alam Perkasa.
Walhi’s findings reveal that all nine maintain parent companies or principal shareholders based primarily in Singapore, Malaysia and Hong Kong, alongside additional financial links to the British Virgin Islands, Samoa and India. Given that Singapore and Malaysia bear the brunt of the cross-border haze outside Indonesia, these commercial ties are especially consequential.
Beyond these nine entities, an estimated 93 companies affiliated with Malaysian and Singaporean palm oil conglomerates have been implicated in the fires. Of these, 66 are linked to Singapore-headquartered giants - most notably Sinar Mas and Wilmar, which account for the largest shares - while the remaining 27 trace back to Malaysian conglomerates, specifically Sime Darby and Genting Group. These complex, cross-border ownership structures significantly complicate efforts to hold individual firms accountable, deepening regional frustration with Indonesia’s management of the perennial crisis.
Singapore, for its part, has escalated unilateral enforcement. Authorities have identified seven companies operating in Indonesia suspected of responsibility for the blazes, including PT Bumi Andalas Permai, PT Bumi Mekar Hijau and PT Paramitra Mulia Langgeng. The Singaporean government announced that these firms will receive preventive measures notices requiring them to deploy firefighting teams, halt all burning, refrain from igniting new fires, and submit formal action plans to Singapore’s National Environment Agency (NEA).
Domestically, amid persistent criticism over strategic shortcomings, the Forestry Ministry announced administrative sanctions against 32 companies accused of igniting concession fires. The penalties range from operational suspensions to outright license revocations and mandatory ecosystem restoration within affected concessions. However, transparency remains a hurdle, as the government has yet to release the names of the penalized firms.
Beyond immediate enforcement, the deeper structural drivers demand scrutiny. Today’s fires and resultant haze are the cumulative legacy of decades of peatland drainage and forest conversion - practices, as Walhi Executive Director Boy Jerry Even Sembiring emphasized, systematically enabled by state-issued concession permits.
Successive administrations have confronted this recurring crisis with varying degrees of resolve. During the presidency of Susilo Bambang Yudhoyono (2004–2014), massive fires in 2006 blanketed Malaysia and Singapore in severe haze and cost the country three million hectares of forest cover. A subsequent outbreak in 2013 prompted Indonesia to finally ratify the ASEAN Agreement on Transboundary Haze Pollution (AATHP) in 2014, following a rare public apology from Yudhoyono to neighboring nations.
Joko “Jokowi” Widodo’s tenure (2014–2024) saw catastrophic fires in 2015 that consumed roughly 2.6 million hectares - predominantly across Central Kalimantan - blanketing the region in toxic haze for months, followed by another severe outbreak in 2019 that burned 850,000 hectares. In response, Jokowi institutionalized a more centralized prevention framework, establishing the Peatland Restoration Agency and issuing Presidential Instruction No. 5/2019, which enacted a permanent moratorium on new concession permits across primary natural forests and peatlands.
Under President Prabowo Subianto, crisis management has thus far leaned heavily on operational interventions, such as mobilizing joint ground and aerial task forces and conducting cloud-seeding weather modification operations. Prabowo has also authorized the acceptance of foreign technical assistance, though the timeline and operational parameters of that deployment remain undefined.
Long-term resolution hinges on confronting the structural governance issues driving deforestation, particularly the entrenched link between concession fires and commercial plantation expansion. Between 2004 and 2017 under Yudhoyono, approximately 2.4 million ha of state forest land were released for commercial estate development, dominated overwhelmingly by oil palm. Under Jokowi, nearly 700,000 hectares of land were converted to oil palm cultivation.
While definitive conversion figures have yet to be established for the Prabowo administration, concerns over policy direction have already surfaced. Special Envoy for Climate and Energy Hashim Djojohadikusumo, who is Prabowo’s brother, recently proposed utilizing 12.7 million ha of "degraded forest" for expanded oil palm cultivation to meet the administration's aggressive B50 and B100 biodiesel mandates - a strategy that critics warn could further exacerbate concession-driven fire risks.
