Indonesia’s 10 GW renewables goal at risk as PLN faces criticism over slow progress

Indonesia’s state utility PLN faces criticism for inefficiency that’s slowing the country’s energy transition. (Photo: PLN)

Indonesia’s energy transition is progressing slower than anticipated, with experts pointing to the inefficiency of state-owned utility PLN and fragmented policies that are limiting the number of bankable projects.

At the same time, the Prabowo administration is pushing forward with new renewable energy initiatives. Recently, government officials revealed that international companies such as Japan’s Inpex and U.S.-based Chevron have expressed interest in geothermal development.

PLN under fire for sluggish green power procurement

Paul Butarbutar, head of the Indonesia Secretariat for the Just Energy Transition Partnership (JETP), stated at a forum on June 24 that PLN continues to move slowly on renewable energy procurement, particularly for small-scale and off-grid projects.

While recent reforms around local content requirements and power purchase agreements (PPAs) have given the industry some optimism, actual implementation has been lacking. “We are still waiting for PLN to issue PPAs that reflect the new regulation,” Paul said, stressing that predictable, quota-based procurement rules would help boost developer confidence.

He also noted that, prior to 2017, developers could negotiate directly with PLN, significantly shortening project approval timelines. Today, projects must go through formal tenders, which are opaque and difficult to navigate. In addition, PLN remains bound by existing fossil fuel contracts, driving up transition costs and adding fiscal pressure on the government.

According to PLN’s roadmap, Indonesia aims to add 10 GW of new renewable capacity this year. However, this goal appears increasingly unrealistic. Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), a Jakarta-based think tank, projects that only around 2 GW of large-scale projects will reach commercial operation by year-end. Including rooftop solar, total additions may only reach a quarter of the target.

Putra Adhiguna, Managing Director of the Energy Shift Institute, a local nonprofit, said the main obstacle to Indonesia’s energy transition isn’t capital, but rather disjointed regulations and unclear policies. “Some investors have millions of dollars ready to deploy, but they are waiting for viable projects,” he said.

Dody Setiawan, Senior Climate and Energy Analyst at UK-based think tank Ember, echoed these concerns at a separate forum. He emphasized that PLN’s National Power Supply Plan (RUPTL) is supposed to be the backbone of the transition, but poor execution has created major gaps in solar and wind energy development.

Indonesia aims to add 10 GW of renewables in 2025, but the goal appears increasingly unrealistic. (Photo: Stock)

Indonesia kicks off clean energy projects across 15 provinces

To boost energy self-sufficiency, President Prabowo Subianto on June 26 launched renewable energy projects across 15 provinces, with total investments reaching IDR 25 trillion (USD 1.5 billion). These initiatives focus mainly on geothermal and solar power plants.

Indonesia aims to raise its installed geothermal capacity to 5.15 GW by 2030. Because geothermal development requires advanced drilling expertise, it has drawn strong interest from fossil fuel players. According to Eniya Listiani Dewi, a Director General at the Ministry of Energy and Mineral Resources, international oil companies such as Inpex and Chevron are eyeing the next round of tenders covering 10 geothermal working areas.

Dewi added that the government is preparing to ease regulatory constraints on geothermal projects, potentially raising internal rates of return (IRR) beyond 10%. This would make projects more attractive to investors and help unlock new momentum for Indonesia’s energy transition.

Source: Jakarta Post, Jakarta Globe, Indonesia Business Post(1), (2)