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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.

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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

October 28, 2026

Special climate and energy envoy Hashim Djojohadikusumo, President Prabowo Subianto’s younger brother, has revealed a proposal to distribute free smartphones to social assistance (Bansos) recipients, but Coordinating Economy Minister Airlangga Hartarto has denied its existence. The conflicting statements have raised questions about how the initiative came to be announced, particularly as the government pursues a separate program to open bank accounts for 200 million people.

Hashim announced the free smartphone plan on Oct. 13, presenting it as a way to help Bansos recipients access digital banking services and receive government transfers. He linked the proposal to the government’s broader financial inclusion agenda, suggesting that smartphones would bridge the gap between opening bank accounts and enabling recipients to use them.

Following the announcement, Airlangga clarified that the government’s current plan involved opening bank accounts for up to 200 million people, with an initial deposit of Rp 50,000 (US$2.76) per account.

The rollout is expected to begin in the fourth quarter of 2026, supported by a budget of around Rp 3.8 trillion. The program will be implemented through state-owned lenders Bank Rakyat Indonesia (BRI) and Bank Syariah Indonesia (BSI).

Airlangga’s denial leaves the status of the free smartphone proposal unclear and raises questions about whether it was properly coordinated with the government’s existing plans.

Hashim’s proposal initially seemed plausible because it addressed a practical challenge left unanswered by the mass account opening program: how recipients would access and use their new accounts. Providing smartphones alongside bank accounts could give recipients a direct channel for managing their finances and receiving social assistance, potentially reducing their reliance on intermediaries.

This apparent synergy, however, does not necessarily mean that distributing devices is the most effective or economical way to achieve financial inclusion.

Bundling smartphones and mobile data plans or phone credit with social assistance would introduce substantial logistical and financial costs. Large-scale distribution would require additional procurement, delivery and maintenance arrangements. Meanwhile, ensuring that recipients used the devices for their intended purpose would be difficult.

Compared with providing cash or enabling access through existing devices and banking channels, the proposal could impose significant additional costs without guaranteeing better outcomes.

There is also a risk that recipients could pawn or resell the phones to meet more immediate financial needs, undermining the program’s intended benefits. Similarly, phone numbers distributed alongside the devices could be transferred or sold to third parties.

These possibilities raise a broader question: whether providing hardware is necessary to expand digital access, particularly when the government could instead focus on ensuring that recipients can use existing devices to access banking services securely.

The risks extend beyond the devices’ potential resale. Mobile phone numbers have become valuable gateways to financial accounts and digital services, as they are widely used for identity verification and account registration. Distributing SIM cards or registered phone numbers on a large scale could therefore create opportunities for misuse, including the transfer of registered numbers to third parties or their exploitation in fraudulent activities.

This concern is particularly relevant to Indonesia’s efforts to combat online gambling, which is illegal along with all forms of gambling. Operators have circumvented restrictions by exploiting bank accounts and phone numbers registered under third-party identities.

A large-scale distribution program could expand the pool of accounts and numbers available for resale or misuse, potentially making enforcement more difficult. Without adequate safeguards, an initiative intended to promote financial inclusion could inadvertently create new vulnerabilities in the digital financial system.

Ultimately, both the mass account opening program and the free smartphone proposal reflect the government’s focus on populist policies. But the recent mix-up further amplifies concerns about policy coordination and consideration of potential risks and impacts.

The episode also invites scrutiny of the political motivations behind the government’s increasingly ambitious promises, particularly amid concerns over public approval ratings. If the administration is seeking to rebuild public support through programs that offer immediate, visible benefits, it risks political urgency taking precedence over planning.

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