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
The Red and White Cooperative (KDMP) initiative is rapidly transforming from a flagship economic program into a mandate that must succeed at any cost. In its wake, the program is now cannibalizing the Village Fund, the very backbone of rural development and a decade-long symbol of local empowerment.
Earlier this month, Finance Ministry Regulation No. 7/2026 on Village Fund Management issued a startling directive requiring that 58 percent of all Village Funds be diverted to the KDMP. This mandate drastically strangles the budgetary autonomy of local leaders across the archipelago.
With the 2026 Village Fund ceiling set at Rp 60.6 trillion (US$3.6 billion) for distribution to 75,260 villages, each community receives an average of Rp 805 million. Under these new provisions, villages are left with a meager Rp 332 million to address locally determined needs.
For the nearly 60 percent of Indonesian villages that generate zero internal revenue, the Village Fund is not a supplementary "bonus", it is their entire lifeline for survival and growth.
Since 2015, fiscal decentralization has allowed villages to evolve from passive recipients of aid into autonomous planners. The results were measurable, as the number of self-sufficient villages skyrocketed from a mere 173 in 2015 to over 20,500 by 2025. This progress was built on the principle that local people know their needs better than the central government.
By mandating how over half of these funds are spent, the government risks reverting villages into mere branch offices of a central bureaucracy. The friction is already visible in regions like Kediri and Lamongan, both in East Java, where public outcry erupted over plans to pave over village soccer fields to make room for cooperative offices. These local landmarks have become symbols of a top-down approach that prioritizes national quotas over social cohesion.
This shift creates a glaring political contradiction. During the 2024 campaign, the Prabowo-Gibran ticket pledged to quintuple the Village Fund to Rp 5 billion per village. Instead, the current reallocation feels like a "policy paradox" to critics who supported that vision.
The financial logistics further complicate the narrative. While the KDMP was initially framed as a low-impact Rp 40 trillion loan scheme backed by state-owned banks, recent contracts to import 105,000 pickup trucks from India—valued at approximately Rp 24.66 trillion—have raised eyebrows in the House of Representatives. Critics question how a program built on the narrative of "national sovereignty" justifies such a massive reliance on foreign industrial imports.
Perhaps the most concerning dimension is the expanding role of the Indonesian Military (TNI) in the KDMP’s rollout. While the military is legally permitted to assist in operations other than war, the construction of cooperatives is neither a humanitarian crisis nor an emergency response.
While proponents cite the military’s territorial efficiency, the normalization of military involvement in civilian economic projects blurs a vital line. In a healthy democracy, civilian authorities—not the military—should manage the wheels of commerce and rural development. This encroachment risks creating a "command and control" economy in the countryside, which is often at odds with the collaborative spirit of traditional cooperatives.
The broader question is not whether cooperatives are a valid tool for rural growth; they certainly can be. The question is whether the state is willing to dismantle a decade of successful decentralization to build them.
By diverting local funds and expanding military participation in grassroots economics, the government risks sacrificing the very principles of local empowerment that have underpinned Indonesia’s rural transformation for the past decade.
If the KDMP is to succeed, it should be an addition to the village's strength, not a replacement for its autonomy.
