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 plan to merge national flag carrier PT Garuda Indonesia with PT Pelita Air Service, a subsidiary of energy holding state-owned enterprise (SOE) PT Pertamina, has reached a new stage. State asset fund Danantara has brought Garuda and Pertamina together to assess share structures and other corporate aspects. The move aligns with broader efforts to streamline SOEs. However, critics argue that the merger primarily serves as an effort to rescue the financially distressed Garuda.
Danantara stated that the proposed merger aims to reduce market cannibalization between the airlines while advancing its mandate to streamline and consolidate SOEs. Under this plan, the airlines would operate with clearer segmentation while sharing best practices. Danantara targets a reduction of holding SOEs to one per industry, and a cut in the overall SOE ecosystem from roughly 1,000 companies to 200.
The Garuda and Pelita merger was first proposed by the former SOEs Ministry, now the SOEs Regulatory Agency, in 2023 while Garuda was on the brink of bankruptcy with Rp 142 trillion (US$8.5 billion) in debt. At the time, Garuda, Pelita and Garuda's subsidiary PT Citilink Indonesia were envisioned to serve the full-service carrier (FSC), "medium-to-premium" carrier, and low-cost carrier (LCC) market segments, respectively, under a holding company.
A House of Representatives Commission VI member opposed the merger, citing risks to Pelita Air's management quality and corporate culture. Several experts have argued that consolidation alone will not solve Garuda's problems. Garuda posted US$142.8 million in losses in the first half of 2025. Pelita, while recording US$5.9 million of profit in 2024, only had US$101.5 million in assets. It also had Rp 519 billion in equity and Rp 1.1 trillion in liabilities.
Indonesia's high import duties on aircraft spare parts at 37.9 percent drove maintenance expenses from 13 percent of Garuda’s operating expenses in the first quarter (Q1) 2023 to 21.7 percent in Q1 2025. Suppliers also require upfront payments due to Garuda’s financial state, tightening cash flow and forcing the temporary grounding of 15 Citilink aircraft.
By the third quarter of 2025, Garuda's net loss widened to US$182.53 million, with liabilities reaching US$8.28 billion. In response, shareholders approved the issuance of 315.6 billion series D shares at Rp 75 per share, raising Rp 23.67 trillion consisting of Rp 17.02 trillion in capital deposits and Rp 6.65 trillion in shareholder loan conversions. Garuda allocated Rp 14.9 trillion to support Citilink's operations and help repay its Rp 3.7 trillion jet fuel debt to Pertamina, while Rp 8.7 trillion will fund Garuda's working capital and maintenance.
Danantara aims to restore Garuda to profitability by 2026 through four key pillars. First, financial overhaul, including the planned transfer of airport SOE Injourney Airports' land assets to Garuda's maintenance unit GMF AeroAsia. Second, service transformation across all customer touchpoints. Third, business transformation by prioritizing strategic and profitable routes. Fourth, operational and technological improvements to raise efficiency and performance. A key component of this turnaround is the reactivation of Garuda's grounded aircrafts. They continue to incur maintenance costs while generating no revenue, worsening Garuda's financial pressures.
However, political dynamics may pose new issues. Gen. (ret) Glenny H. Kairupan was recently appointed as CEO of Garuda as Prabowo reportedly looked for someone he personally trusted to resolve his dissatisfactions with the airline. Glenny, who has been in Prabowo's circle since their military cadet days and a member of the ruling Gerindra Party's board of trustees for 2020–2025, has no experience in both managing large corporations and working in the aviation industry.
To address concerns about management quality and preserve Pelita’s good performance, the merger should result in a holding company that allows each carrier to maintain its culture and operational identity. Cargo services could be consolidated into a separate unit. Segmentation should extend beyond service standards under Law No. 1/2009 on Aviation to align with national priorities by distinguishing airlines serving major international and domestic routes from those serving secondary cities and underserved areas.
