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
Indonesia and Japan have agreed through the signing of the Letter of Intent (LOI) in Implementing the Kayan Hydropower Project on Feb. 28, 2025, to encourage sustainability in the development of the Kayan Hydropower Plant in Peso District, North Kalimantan Province in support of Indonesia's clean energy transition.
The signing of the LOI was carried out by the Coordinating Ministry for Economic Affairs Economic Cooperation and Investment Deputy II Edi Prio Pambudi and the Japanese Ministry of Economy, Trade, and Industry (METI) Deputy Commissioner for International Affairs Masanori Tsuruda.
Edi said that the Kayan HPP project is one of several initiatives which are being or will be implemented by Indonesia to support the achievement of its net zero emission (NZE) commitment by 2060.
"For Indonesia, the Kayan HPP is not just an infrastructure project within the AZEC (Asia Zero Emission Community) framework. This project is [also] a strategic investment for Indonesia's energy security and decarbonization efforts," he said through a written statement on Mar. 4, 2025.
Edi also emphasized the importance of Japan's role as a strategic partner in implementing energy transition policies and projects in Indonesia. The Indonesian government encourages Japan to strengthen cooperation in implementing practical, scalable, and inclusive energy transition projects.
Meanwhile, Masanori said that the milestone that is the signing of the Kayan HPP LOI needs to be followed-up by Indonesia and Japan to realize the HPP's construction.
"The challenges to build the Kayan HPP are not easy [to overcome], but we are confident that the good bilateral relationship between Japan and Indonesia is a strong foundation for the Kayan hydropower project," he elaborated.
The Kayan HPP project is one of several projects in the AZEC framework, a platform for cooperation towards carbon neutrality or NZE in the Asian region.
At the 2024 Expert Group Meeting, the Kayan HPP was designated as a category II project, or a potential project that is ready to be commercialized but is still in the feasibility study stage, along with the peatland management project and the Java-Sumatra transmission network.