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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Indonesia’s recurring wildfires have once again spiraled into a crisis that reaches far beyond its forests and peatlands. As dense haze shuts down schools, endangers public health, and chokes local economies at home, smoke from fires across Sumatra and Kalimantan has drifted across national borders, blanketing parts of Singapore, Malaysia, Brunei, and the Philippines. What has long been treated as an unfortunate, seasonal environmental headache is morphing into a thorny test of governance, and an escalating diplomatic liability for Jakarta.
The scale of this year’s burn is staggering. Data from Nusantara Atlas shows a dramatic surge in cumulative hotspots in late August, leaping from 190,571 on Aug. 22 to 294,699 just a day later. By Sept. 10, that tally had topped 301,990, with Kalimantan recording the highest density of active blazes. The emissions tell an equally grim story. According to the European Union’s Copernicus Climate Change Service, Indonesia’s wildfires released an estimated 19.7 million metric tonnes of carbon dioxide between Sept. 1 and 7 alone, accounting for more than a third of all wildfire emissions worldwide during that period.
By July, roughly 202,000 hectares had already burned, according to data cited by Reuters. That damage expanded sharply through August, with total burned area estimated to have reached 600,000 ha, concentrated largely in Kalimantan, Sumatra, and South Papua. A potent El Niño has undoubtedly exacerbated conditions, ushering in parched, blistering weather that allows fires to ignite and spread with ease. Yet weather alone cannot shoulder the blame for a disaster that returns like clockwork.
Forestry Minister Raja Juli Antoni has openly acknowledged that many of these fires were set intentionally by individuals and corporations. Slashing and burning remains the cheapest, easiest method for clearing land in rural Indonesia, particularly where peatlands and native forests are systematically converted into oil palm and pulp plantations. This reality shifts the underlying debate: The issue is not simply whether Indonesia can respond to extreme weather, but whether it possesses the political will to stop illegal burning and hold perpetrators accountable.
Authorities have started taking legal steps. The Forestry Ministry recently handed down administrative sanctions to six Forest Utilization Business Permit holders after fires scorched 1,511.55 ha across their concessions in West, Central, and East Kalimantan. Five of these companies received government-enforced compliance orders. A sixth, PT MPK, had its operating permit suspended alongside an enforcement order after investigators discovered extensive, recurring burns across its land.
Yet enforcement remains the ultimate bottleneck: identifying the actual culprits behind the blazes and imposing penalties severe enough to serve as a genuine deterrent.
At home, the toll is devastating. More than 1.4 million students have been forced back into remote learning due to toxic, hazardous air. In Palembang, South Sumatra, the closures disrupted around 250,000 students across 1,030 schools. Meanwhile, health authorities recorded more than 50,000 cases of acute respiratory infections across seven provinces between July and August alone.
A recent assessment by the Center of Economic and Law Studies (CELIOS) estimated the combined economic and healthcare losses from the January–August fires at Rp 39.3 trillion (US$2.25 billion) to Rp 123.1 trillion. The upper end of that estimate represents nearly half, 49.1 percent, of Central Kalimantan’s projected 2026 regional GDP.
The fallout, however, does not stop there. Malaysia has felt the brunt of the drifting plume. On Sept. 4, authorities declared an emergency in Serian, Sarawak, as air quality deteriorated to hazardous levels, shuttering schools across the state. The haze has even reached the Philippines, pushing air quality readings in Manila into unhealthy territory. Faced with fouled air, Malaysia and Brunei have moved to escalate the matter through regional channels, reviving diplomatic frictions that have simmered for decades.
On paper, ASEAN possesses a tailored mechanism for precisely this challenge: the ASEAN Agreement on Transboundary Haze Pollution (AATHP), adopted in 2002 and ratified by Indonesia in 2014. The pact outlines clear protocols for monitoring, prevention, emergency response, and joint mitigation. Yet the treaty cannot supplant domestic law enforcement. Pinpointing who lit a blaze, proving whether a concession holder failed to safeguard its perimeter, and meting out punishment remain sovereign duties.
Herein lies the regional framework’s greatest limitation. ASEAN can streamline satellite data and coordinate disaster teams, but it cannot march into an Indonesian concession to enforce the law. A regional accord can mitigate the fallout from a haze crisis; it cannot dismantle the economic incentives that ignite the fires in the first place. Regional coordination is underway. In late August, the ASEAN Specialised Meteorological Centre triggered a Level 3 alert for the southern ASEAN region, signaling intense fire activity and an imminent risk of severe transboundary haze.
Indonesia has navigated major haze crises before, yet the skies continue to darken every dry season. For a public weary of choking on smoke and increasingly skeptical of official assurances, deploying more water-bombing helicopters is no longer enough. Meaningful progress requires naming names, prosecuting offenders, and ensuring corporate negligence carries real, biting costs. The most urgent test ultimately rests with Jakarta: proving it can stop the next fire before it turns into yet another national emergency and regional embarrassment.
