The Jakarta-based Institute for Essential Services Reform (IESR) says 2025 will be a crucial year for Indonesia’s energy transition as the country has fallen behind targets in recent years. It aims to shift subsidies from fossil fuels to renewable energy sources and urges the government to implement a clear, measurable plan for the next national energy policy.
Indonesia‘s energy transition must accelerate after limited progress in recent years, according to the latest report from the Jakarta-based IESR.
The think tank said in its “Energy transition prospects for Indonesia 2025” that renewable energy currently makes up 14% of Indonesia’s national energy mix, significantly lower than the 2025 target of 23%.
The report said renewable energy sources are struggling to grow due to the preference for using coal as an indigenous resource, adding that all industrial sectors in Indonesia remain significantly dependent on fossil fuels.
While President Prabowo Subianto has pledged Indonesia to end the use of coal-fired power stations by 2040, the report calls for urgent action.
“The government should gradually reduce fossil fuel subsidies and shift subsidies to the renewable energy sector,” said Raditya Wiranegara of IESR, one of the report’s authors. “In addition, President Prabowo’s statement on the early retirement of coal-fired power plants by 2040 should be implemented immediately, starting with the most inefficient coal-fired power plants, instead of equipping coal-fired power plants with CCS/CCUS technology.”
Alvin Putra Sisdwinugraha of IESR, one of the lead authors of the report, said pv magazine that 2025 will be crucial for the direction of Indonesia’s energy policy, with the ten-year National Energy Policy being adopted by the new government.
“Key objectives of this new policy include a renewable energy mix target of 19% to 21% of primary energy supply by 2030. Learning from the previous implementation of the National Energy Policy, which never met the targets for mix of renewable energy, a clear and measurable action plan from implementing bodies will be crucial in achieving this goal,” said Sisdwinugraha.
Sisdwinugraha added that PLN, Indonesia’s state-owned energy distribution company, has prepared 13.3 GW of new renewable energy projects in its upcoming electricity supply plan, in addition to what was included in the previous plan. Solar and wind projects represent 8.2 GW of the new capacity.
Other challenges to Indonesia’s energy transition identified in the report include financial shortfalls, regulatory uncertainty and infrastructure preparedness. The organization said both local and foreign investments are crucial to finance the transition and recommends regulatory reforms and risk-sharing mechanisms to enable green finance.
IESR’s latest report also notes that Indonesia has underutilized its vast solar potential. The country is said to have an average solar radiation of more than 4.8 kWh/m² per day, with a potential to generate between 7.7 TW and 20 TW of solar energy.
Indonesia’s installed solar capacity surpassed 700 MW earlier this year, according to IESR’s Solar Outlook report, published in October. The report notes that there are currently 16.92 GW of solar projects in the pipeline across the country.
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