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

November 3, 2026

The government’s decision to further reduce natural gas exports to Singapore may strengthen domestic energy supplies, but it risks undermining the country's credibility as a reliable trading partner. The move, justified on energy security grounds, could unsettle investors, strain relations with Singapore and weaken ASEAN's efforts to build an integrated regional energy market.

Following a plenary cabinet meeting in Jakarta on Oct. 1, the government announced that it would reduce Indonesia’s natural gas exports to Singapore over energy security concerns during crises. President Prabowo Subianto pointed out that many countries prioritized their own needs in times of crisis and described the prevailing geopolitical environment as one lacking international order in which only strong countries would survive.

Prabowo has taken a more direct role in defining Indonesia's foreign policy goals and their implementation, which reflects his broader domestic policy orientation toward greater centralization under presidential control. One consequence of this centralized, personality-driven approach is that foreign policy decisions increasingly rest with him.

Given Prabowo's worldview that the nation is being exploited by domestic and global elites, along with his emphasis on survival during crises, it is hardly surprising that some within the government have adopted a more confrontational stance in international relations. After all, the Prabowo administration has a track record of attributing setbacks and dissent to “antek-antek asing” (foreign stooges). Indonesia's recent moves regarding Singapore appear to follow a similar pattern.

The two countries are already embroiled in a diplomatic dispute over the wildfires in Kalimantan, both sides blaming companies linked to the other for the fires. Adding to the tension is Jakarta’s allegation that Singapore was behind MSCI's latest announcement on possibly downgrading the Indonesia Stock Exchange to “standalone” status over market transparency concerns.

Even if energy security concerns are driving the government’s decision to reduce gas exports to the island nation, political factors cannot be ruled out. And the move could have far-reaching consequences beyond Indonesia's immediate relationship with Singapore.

Indonesia previously reduced gas exports to Singapore last year, also citing domestic energy needs as the primary concern. Afterward, Energy and Mineral Resources Minister Bahlil Lahadalia reassured gas exporters that there would be no further reductions to export quotas in 2026, whether for existing contracts or spot agreements. Local gas exporters were therefore caught off guard when Bahlil suddenly announced another cut in quotas to Singapore.

After all, gas processing is a highly capital-intensive business that involves advance planning for production capacity and facilities based on expected commercial returns, which can take decades to materialize. Any unexpected change to sales commitments can significantly affect producers' financial positions.

Beyond existing contracts, the government’s sudden move could also undermine Indonesia's future credibility as a trading partner, particularly in the gas sector. The country’s natural gas industry has benefited substantially from participation in international trade, since access to foreign markets has improved the financial viability of new production facilities.

Existing gas agreements have underpinned the production decisions of local gas contractors, which have allocated output to international markets while reserving supplies to meet their domestic market obligation (DMO). A sudden change in the country’s gas export policy could trigger a cascading effect, as any uncertainty is likely to drive foreign buyers away. Gas producers could then find it increasingly difficult to develop new facilities as access to export markets diminishes.

The timing of the announcement also makes it difficult to restore confidence. Indonesia is currently drafting new oil and gas legislation that includes a proposal to change the DMO requirement from a maximum 25 percent to a minimum 25 percent. If the bill pursues this policy direction, future efforts to restore confidence among foreign buyers could be undermined by a provision that allows the government to increase domestic supply requirements at any time.

More broadly, this development also reflects this administration’s foreign policy direction, which increasingly appears to emphasize relations with major powers at the expense of regional cooperation. While a more active role for Indonesia in international affairs is welcome, the country cannot afford disputes within ASEAN, which it helped establish in 1967.

Energy security, the stated reason to justify reducing gas exports, is also critical to strengthen regional cooperation. ASEAN is developing an interconnected regional power grid aimed at facilitating electricity trade among member states: The initiative requires sustained cooperation and mutual trust among member states, and disputes such as the one with Singapore could undermine its progress.

The government cannot claim to strengthen energy security while undermining the credibility of the national energy industry and antagonizing the very partners with whom it must work to build ASEAN’s energy security. It must therefore complement its more assertive global engagement with stronger regional cooperation, particularly in developing a more secure and integrated energy system for Southeast Asia.

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