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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President Prabowo Subianto wants Indonesians to enjoy free education from kindergarten through university. Few would dispute the objective of making education more accessible. The harder question is how the government will pay for it. The state has yet to fully fund a Constitutional Court order to extend free compulsory basic education to private schools, even as Prabowo adds free university tuition to a budget already carrying increasingly expensive signature programs.
Prabowo reaffirmed his commitment at a limited cabinet meeting at the State Palace on Sept. 23, calling for free education at state institutions from kindergarten through university. The proposal followed his statement five days earlier that education at state schools and universities should be free, with funding potentially coming from money recovered from corruption.
At the school level, however, much of that promise already exists. Basic and Secondary Education Minister Abdul Mu'ti has said that state schools from kindergarten through senior high school are effectively free through the School Operational Assistance (BOS) program, complemented by the Smart Indonesia Program (PIP) for students from poorer families.
The more pressing unfinished obligation lies elsewhere.
In May 2025, the Constitutional Court ruled that limiting free compulsory basic education to public schools created unequal access because limited capacity at public schools forces some children to attend private schools. It ordered the government and regional administrations to guarantee compulsory basic education without charging fees at both public and private, or community-run, schools.
More than a year later, that ruling has yet to be fully implemented. The estimated cost is around Rp 181 trillion (US$10.3 billion), while roughly Rp 71 trillion has been approved for 2026, requiring implementation to be phased according to the government's fiscal capacity.
Before completing that obligation, however, Prabowo is ordering another, potentially larger commitment: making tuition free at state universities.
The Higher Education, Science and Technology Ministry told House of Representatives Commission X in September that abolishing tuition for 2.83 million undergraduate and diploma students at state universities would require Rp 93.74 trillion a year, excluding postgraduate students. That works out to roughly Rp 33.1 million per student annually.
The figure is so large partly because state universities have become increasingly dependent on tuition revenue. For the country's 20 autonomous state universities, or PTN-BH, government support reportedly fell from around 19-20 percent of operating costs in 2015 to just 5-6 percent in 2024, with tuition increasingly filling the gap.
Free tuition therefore raises a question beyond simply eliminating what students pay: Who replaces the revenue on which universities now depend?
The Rp 93.74 trillion estimate could also be only the beginning. Some lawmakers have argued that eliminating tuition alone would not remove financial barriers because students still need money for housing and other living expenses. Lecturers have pointed out that tuition helps finance teaching staff, laboratories, libraries and research. Private universities could also face competitive pressure if state universities became free while they continued charging tuition.
These are legitimate concerns. But they also illustrate how quickly an apparently straightforward promise of free tuition can become a much larger fiscal commitment. And fiscal space is precisely what Indonesia lacks.
The 2026 state budget already allocates Rp 769 trillion to education. But that figure includes spending on Prabowo's free nutritious meal program, which has an allocation of Rp 335 trillion this year.
The Constitutional Court ruled in July that free meals program spending that is not a core component of education must eventually be separated from the constitutionally mandated education budget, no later than for the 2028 budget. According to calculations cited in the draft, education spending without the program would amount to only 14.2 percent of the budget, leaving a gap of nearly six percentage points, equivalent to around Rp 240 trillion, from the constitutional 20 percent allocation.
Meanwhile, the state budget deficit widened from Rp 164.4 trillion in April to Rp 240.1 trillion by August. The latter amounted to 0.93 percent of gross domestic product, with state spending already exceeding revenue by around Rp 240 trillion during the first eight months of the year.
This does not mean Indonesia should abandon the goal of affordable higher education. The question is whether free universal tuition is the most efficient use of scarce public money when the state has not yet fully financed its existing constitutional obligation at the basic education level.
The university proposal, as currently discussed, would subsidize all 2.83 million students regardless of their families' ability to pay. A more targeted scheme could concentrate assistance on students who cannot afford tuition, costing a fraction of Rp 93.74 trillion while preserving fiscal room to implement the Constitutional Court's ruling on basic education.
Free education from kindergarten to university is an appealing ambition. But every promise ultimately has to fit within the same state budget. With the free meals program, the Red and White cooperatives and other priorities already making large claims on public resources, the government needs to establish not only what education it wants to make free, but also which obligations should come first and who genuinely needs state support.
