The Electricity Supply Business Plan (RUPTL) 2025–2034, developed by state utility PT Perusahaan Listrik Negara (PLN), outlines a goal of 69.5 gigawatts (GW) in new power generation capacity by 2034, with 76 per cent expected to come from renewables, including solar, hydro, wind, and geothermal sources.
John Colombo, Indonesia country manager at Clime Capital, an early-stage clean energy fund manager, said the new plan sets a clear tone for the market and can incentivise the private sector to begin planning renewable projects. At the same time, he shared his observations that there are now stronger “demand signals” from both conventional and emerging industrial customers like data centres that are looking to use renewable energy to power their operations.
He urged the Indonesian government to continue providing strong support for an accelerated energy transition, and go beyond initiatives to boost power generation. “For example, [support] for energy efficiency, which increasingly is recognised as the low hanging fruit for Indonesia to achieve its decarbonisation goals,” he said.
The RUPTL, released in late May, targets 42.6 GW of new renewable capacity. Solar will account for the largest share at 17.1 GW, followed by hydropower (11.7 GW), wind (7.2 GW), geothermal (5.2 GW), bioenergy (0.9 GW), and nuclear (0.5 GW). An additional 10.3 GW of energy storage, including pumped-storage hydropower and batteries, is also planned to support grid reliability.
Despite what has been described as an “ambitious development plan”, experts cautioned that enabling policy reforms are urgently needed to implement the accelerated build-out of new renewable power plants.
Paul Butarbutar, head of the Just Energy Transition Partnership (JETP) secretariat, said Indonesia has historically been hesitant to embrace renewables, often reverting to coal when its prices fall, causing delays in renewable energy deployment and creating policy uncertainty.
Even with its bold new update, the “big question is how and where [clean energy] projects can be developed quickly so that Indonesia’s 2060 net zero targets can be met”, he said.
Putra Adhiguna, managing director of independent think tank, the Energy Shift Institute, suggested that the plan, which outlines short-term targets for renewable energy capacity, will create more certainty for investors. Otherwise “the country seems to feel that investors will hang around forever,” he said, adding that the RUPTL demonstrates that Indonesia is approaching an “inflection point” in its energy transition.
The country is beginning to realise that financing new coal power is becoming increasing difficult, as global financiers are shifting away from funding fossil fuel projects, yet it is also not able to move forward quickly with renewables, he said.
He noted that for a country like Indonesia which is one of the largest importers of oil and gas in Southeast Asia, the ongoing global energy crisis should serve as a wake-up call that relying on volatile, imported fossil fuels is no longer a sustainable strategy to meet its growing energy demand.
“While the transition has not been easy, this moment is a clear reminder that fossil fuels are not our best bet going forward,” he said.
The RUPTL is widely seen as a key milestone in the country’s energy transition and serves as the main planning document guiding electricity development. However, implementation gaps and misalignment with Indonesia’s climate goals remain major concerns.
Last month, Dody Setiawan, senior analyst at energy think tank Ember, noted that the RUPTL used to be updated annually before the Covid-19 pandemic. After the 2021 release, a three-year delay followed, creating uncertainty for developers and investors.
Since most capital investment in power generation comes from the private sector, regular updates are critical. Without predictability in planning documents like the RUPTL, investor confidence wanes, and further delays can lead to doubts about Indonesia’s climate commitment as well.
While the 2021 version was dubbed the “green RUPTL” for its strong renewable targets, Setiawan warned that much of the renewable buildout was backloaded to later years. Between 2021 and 2024, fossil fuel capacity grew by 14 GW, compared to just 5 GW of renewables. Nearly three-quarters of projected renewable additions are only expected between 2025 and 2030.
He also highlighted significant shortfalls in solar and wind deployment. For instance, despite a cumulative target of 4 GW of solar by 2024, installed capacity remains below 1 GW, with annual additions averaging just 174 MW, far behind target.
Challenges for an equitable transition
While financing is often seen as the main barrier to Indonesia’s renewable energy expansion, experts at the forum argued that the real issue lies in the country’s rigid procurement process.
Butarbutar explained that prior to 2017, project developers with renewable energy potential could approach PLN directly. If PLN saw a demand, they could proceed with early-stage agreements such as memorandums of understanding (MOUs). Large-scale projects would often involve negotiations with PLN, where financiers were also brought in early. This process made renewable energy projects more bankable and attractive to investors.
“However, this older approach resulted in very strong power purchase agreements (PPAs), especially for fossil fuel-based projects,” he said.
These contracts often include a government force majeure clause, which allows independent power producers (IPPs) to pass additional operating costs, such as those resulting from new government policies, back to PLN.
In turn, PLN passes these costs to the government, increasing the subsidy burden. As a result, PLN is reluctant to renegotiate these contracts, even when policies like carbon pricing are introduced to transition away from fossil fuels.
Indonesia’s electricity demand is projected to grow significantly, with an anticipated increase of 4.9 per cent annually, driven by population and economic expansion. According to the RUPTL, its energy demand is expected to reach 445 terawatt hours (TWh), with a 100 per cent electrification ratio and 94.1 million customers by 2030.
Meeting this demand sustainably will require significant renewable energy integration and infrastructure upgrades.
Adhiguna stressed that policy reform is essential not only to phase out coal-fired power plants but also to expand electrification across the archipelago. Unlike many Southeast Asian countries, Indonesia faces a unique geographic challenge to extend electricity access to remote island communities while also upgrading existing grids in Java, Bali, and Madura to uptake more renewable energy.
Butarbutar agreed that geography is a major contributor to unequal energy access and electrifying remote islands comes at a high cost, which directly affects the price of electricity in those areas.
He said in a village near Jambi without grid access, households are paying around 5,000 rupiah (US$0.31) per kilowatt-hour, plus a connection fee of 600,000 rupiah (US$37) and a monthly charge of 16,000 rupiah (US$0.98). By comparison, urban residents in Sumatra and Java only pay around 1,500 to 1,600 rupiah (US$0.09-0.01) per kilowatt-hour of electricity.
Both Butarbutar and fellow panellist Luthfyana Kartika Larasati, manager of non-profit research group Climate Policy Initiative, highlighted the importance of just elements in the energy transition. Butarbutar added that providing reliable and affordable electricity to rural and remote communities should be a core component of Indonesia’s just energy transition.
While large-scale renewable projects on-grid may benefit from current tariff and policy frameworks, small-scale off-grid systems – those under 1 megawatt (MW) – often struggle to attract investment and require additional policy support.
“These are the projects most urgently needed by communities outside Java. If we are serious about a just transition, the government must design policies that support small-scale renewable energy in these underserved regions,” he said.
Adhiguna expressed cautious optimism, noting that think tanks and policy advocates are continuing to push the government for the expansion of renewables.
“There is a widespread impression that financing is not available, but I’ve had meetings with big investor groups with some saying they are ready to deploy [at least] US$500 million here. The bigger concern is whether there are enough bankable projects ready for investment,” he said.
“We risk a situation where unlocked capital has nowhere to go.”
Eco-Business’ flagship sustainable finance and business forum Unlocking capital for sustainability will next be in Kuala Lumpur, Malaysia. The event is held in partnership with UNEP Finance Initiative (UNEP FI) and Capital Markets Malaysia. Join us on 28 July.
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