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.
View moreOther Sectors
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
In the quest to decarbonize the electric power industry, the private sector can play a major role in accelerating the transition to renewable energy, says Royal Golden Eagle (RGE) Managing Director Anderson Tanoto.
Speaking at a panel discussion on the electrification of the power sector at the Indonesia International Sustainability Forum 2024 on Sep. 5, 2024, Anderson revealed that a factory owned by Riau province’s largest pulp and paper producer APRIL Group, part of RGE, is powered 88 percent by biomass from renewable sources.
With an aim to reach a rate of 90 percent, the process began with the installation of solar panels at closed landfills three years ago at a rate of US$ 1 million per megawatt (MW). With coal prices hitting record highs in 2022 and solar panel costs coming down, he continued, the investment became a compelling economic reason on its own.
“It wasn't about going green, it was about saving money. The payback for the solar panel at that point in time, by generating power from the solar panel of 1 MW, was about six and a half years. Fast forward five years later, we've installed almost 26 MW of solar panels across all our landfill permits, and we were able to actually generate good return on investment on these projects,” he said, adding that Indonesia’s large surface area can be potentially used to generate approximately 3,000 gigawatts (GW) of electricity annually.
According to Anderson, for the transition to renewable energy to happen in the near future, the private sector must be willing to take the plunge, whether for sustainability or economic reasons.
“With this kind of lower prices of solar panels, as the private sector, the time to seize the opportunity is now.”
On a larger scale, he acknowledged the industry’s energy trilemma, in which stakeholders want energy to be simultaneously cheap, clean and secure. At the same time, he also highlighted the need for lower battery prices, noting that the main challenge in increasing the renewable energy capacity is the high battery and energy storage costs.
“What needs to happen in order for us to accelerate further is to have what has happened in the photovoltaic business also occur on the battery side, so that battery costs can continue to come down,” he explained.
With the energy transition’s capital intensive nature, Anderson also called for further support in financing through competitive rates, which will encourage more companies to turn towards renewables when coupled with a move towards a free market.
“The opportunities are immense from the private sector, and we're happy to be able to participate,” he concluded.
Anderson’s remarks today coincided with the announcement from RGE and Total Energies. Their joint venture, Singa Renewables, has received conditional approval from Singapore’s Energy Market Authority to import 1 GW of solar photovoltaic energy from Indonesia to Singapore.
