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 Indonesian stock market experienced a modest but meaningful recovery this week, buoyed by an announcement from United States President Donald Trump that the implementation of his import tariffs would be delayed for the next 90 days for most countries, excluding China, Mexico and Canada. This pause offered global markets a reprieve from an escalation in trade tensions, and Indonesia was no exception.
Just before Trump’s announcement on April 9, the Jakarta Composite Index (JCI) dropped to a low of 5,967. As news of the tariff pause broke and market sentiment began to shift, the JCI had rebounded by the following Monday (April 14) to 6,445 up 8 percent. Improved investor outlook was also reflected in trading volumes that surged to 15 billion shares on April 21, up from 11.8 billion recorded on April 11 and 12.2 billion at the end of March.
This upward trend in market confidence is largely attributed to growing optimism that Washington might recalibrate its tariff policy during the 90-day pause. The US is currently facing significant economic strain, not just in its financial markets but also in the real economy. Trump's tariff policy, which aims to revitalize domestic industries and bring jobs back to the country, has run into practical roadblocks. While its objective is to redirect US capital away from foreign investments and back into domestic production, the reality is that many sectors of the US industrial base are ill-equipped to absorb this influx of capital efficiently, potentially leading to significant waste.
Building the US’ industrial capacity is not something that can be accomplished overnight. Recognizing this, many analysts believe that Trump's current approach of exempting select countries while maintaining pressure on key competitor China and major trade partners like Canada is a compromise strategy, allowing the US to maintain some continuity in international trade as it attempts to reconfigure the economic architecture. Unless there is a sudden shift in the condition of the US economy, this blanket tariff policy is widely expected to undergo some revision in the months ahead.
From Indonesia’s standpoint, the current situation presents a valuable opening. As the US has become increasingly entangled in trade spats, particularly with China and the European Union, its export options have narrowed. Retaliatory tariffs from these major trading partners have restricted US access to some of its largest markets and opened a window for countries like Indonesia to fill the gap.
In response, the government is preparing a strategic proposal to increase its imports of US energy commodities, particularly crude oil and liquefied petroleum gas (LPG). According to Energy and Mineral Resources Minister Bahlil Lahadalia, Indonesia is looking to import up to US$10 billion worth of these commodities, or roughly Rp 168 trillion. According to the ESDM's estimates, they expect to increase the portion of US crude oil from 4 percent of total crude oil imports to 40 percent.
The government is currently evaluating the logistical and financial implications of such a significant change. As a basis for comparison, Indonesia's imports from the US throughout 2024 were only $430.87 million for crude oil and $3.79 billion for LPG. Currently, the US supplies around 54 percent of Indonesia's LPG imports, so the new import increase policy would be primarily for crude oil.
Bahlil noted that US crude oil prices were comparable with those in the Middle East. Nevertheless, Jakarta sees this energy import initiative as a bargaining chip in broader trade discussions. Given that the US exports large volumes of crude oil to the Netherlands and LPG to China, there is reason to believe that surplus inventory would allow Indonesia to negotiate more favorable prices.
Whether or not this new policy will come to pass is still up in the air, especially as China has recently begun lobbying against Indonesia's plans for concessive trade negotiations with the US. On April 21, Chinese officials met with representatives of the Defense Ministry and Foreign Ministry to discuss a possible coalition against the US' tariffs.
Chinese Foreign Minister Wang Yi said the US' tariffs are an unprovoked aggression that disrupted the flow of international trade. There is little guarantee that attempts to placate the US would prevent similar abuses in the future, which is why other countries need to come together instead to stand against the US' policies.