Trillions Needed as Indonesia Maps a Clean Power Future

Why Indonesia’s grid overhaul carries a trillion rupiah price tag

Indonesia’s energy planners now put a price on the country’s clean electricity shift. The Energy and Mineral Resources Ministry estimates Indonesia will need about Rp 3,000 trillion (around 179 billion dollars) to move the power system to renewable sources. That figure spans a nationwide buildout of generation and the wires that carry it. It covers new power plants, substations, thousands of kilometers of high voltage lines, distribution networks within cities and towns, and control and storage systems that keep the grid stable. The scale reflects both the challenge and the opportunity. Indonesia sits on an estimated 3,500 gigawatts of renewable potential across solar, wind, hydropower, geothermal and marine energy. Turning that potential into reliable electricity requires coordinated investment in hardware, planning and people.

State utility PLN’s Electricity Supply Business Plan for 2025 to 2034 sets the direction. The plan calls for 69.5 gigawatts of new generation capacity, 47,758 circuit kilometers of transmission, and 107,950 megavolt amperes of substations. Clean power is set to dominate the additions. About 61 percent of the capacity increase, or 42.6 gigawatts, would come from renewable energy. A further 10.3 gigawatts would come from energy storage, which is essential to smooth the output of solar and wind and to maintain frequency and voltage on the grid. The remaining 24 percent, or 16.6 gigawatts, would be fossil fueled plants that help meet demand while renewables and storage scale up. The threading together of new generators, storage and grid reinforcements is what sits behind the trillion rupiah price tag.

Are current targets and funding flows aligned with 2030 goals?

In 2024 Indonesia launched a national Energy Compact that sets measurable, near term steps toward affordable and reliable clean energy. It aims to raise the share of renewables in total primary energy from 12.3 percent in 2022 to 23 percent by 2029, expand solar and wind from 0.4 gigawatts to 5.3 gigawatts by 2029, reduce energy intensity, and cap annual emissions at 446 million tonnes of carbon dioxide equivalent by 2030. Delivering that pathway, according to Sustainable Energy for All (SEforALL), will take about IDR 4,000 trillion in cumulative finance by 2030. The Energy Compact Action Network, working with Indonesian agencies such as the national development planning ministry (BAPPENAS) and the energy ministry, has been convening public and private actors to match projects with capital and to track progress.

Finance flows need to scale quickly. Recent assessments indicate public institutions in Indonesia provide roughly 3.5 billion dollars per year for climate aligned investments, while private institutions provide about 3.4 billion dollars. Only a small fraction of private finance, about 3 percent, reaches climate sectors. To meet 2030 targets, Indonesia would need to increase climate finance flows by more than four times, and to channel a larger share into small and medium scale renewables, storage and grid upgrades. Platforms that can de risk projects and standardize documentation are intended to help move more private money into shovel ready investments.

Who will pay, and what tools can unlock capital?

International and domestic mechanisms are beginning to line up, but the totals still fall short of the need. The Just Energy Transition Partnership (JETP) seeks to mobilize 20 billion dollars from public and private partners to accelerate power sector decarbonization. Indonesia’s Comprehensive Investment and Policy Plan under JETP outlines about 97.3 billion dollars of investments by 2030, including almost 67 billion dollars for 400 priority projects that must start by that date. The plan also sets a 2030 emissions cap of 250 million tonnes for the on grid power fleet. Financing will mix public funds and private capital, with a significant share expected to be commercial loans and equity. That mix can kick start projects, yet it also raises concerns over debt costs and currency risk if repayment terms are not carefully structured.

Multilateral banks are supporting policy reform and early projects. The Asian Development Bank approved a 500 million dollar policy based loan to back energy sector reforms and a long term clean energy investment plan aligned with JETP. Additional ADB financing is flowing to geothermal, including 92.6 million dollars for an expansion at Muara Laboh and 180 million dollars for two plants on Java. A program approved by ADB for PLN, at about 470 million dollars plus partner funds, will strengthen grids in Java, Sumatra and Sulawesi, help develop utility scale solar and wind, and is expected to mobilize more than 1 billion dollars of private investment for around 1,800 megawatts of projects. Work led by the Organisation for Economic Co operation and Development supports blended finance, a domestic sustainable taxonomy, an energy savings insurance scheme, and technical steps toward an emissions trading system, all of which are designed to lower risk and draw in private capital.

What keeps investors on the sidelines?

Indonesia has vast renewable resources, but renewable investment has lagged regional peers for years. Analysts point to several barriers that raise costs or uncertainty for developers and lenders. Local content rules can be rigid, which limits access to cost effective equipment and slows deployment. Mandatory local partner structures and restrictions on transfer of ownership can add complexity without necessarily improving project quality. Procurement processes are often complex and not fully transparent, and the state utility PLN remains the single buyer of power in most cases, which concentrates counterparty risk. Renewable tariffs can be uncompetitive relative to risk, while power purchase agreements are sometimes not bankable by international standards. These issues reduce the pool of interested investors and push up the cost of capital.

Indonesia can change that picture with a clear, investor friendly rulebook. Transparent auctions with pre qualified sites, standardized and balanced contracts, clear curtailment rules, and payment guarantees would help. Foreign exchange hedging facilities, flexible local content pathways that grow domestic industry over time, faster permitting, and predictable interconnection processes are equally important. PLN’s credit profile and balance sheet health matter for confidence, so regulatory support that reduces legacy costs, including capacity payments for under used coal plants, would also improve risk perception and pricing.

Can coal retirements make room for renewables?

Coal still supplies a large share of Indonesia’s electricity, and many plants are locked into long contracts. At the same time, coal costs have risen since 2020, even with domestic price caps, and oversupply in several regions has forced PLN to pay for power capacity it does not need. Continuing to operate aging coal units risks higher maintenance costs, payments for unused electricity, and expensive life extension refurbishments. New rules now allow early retirement in some cases, yet turning that option into practical deals requires clarity on asset data, environmental liabilities, and compensation structures.

A portfolio approach can help. For PLN owned assets, models such as asset divestment and public private partnerships can be used to shift plants into managed wind down and repurposing. For plants owned by independent power producers, blended finance from development banks and private investors can support early closure in exchange for transition credits tied to avoided emissions. Indonesia’s sovereign wealth fund can act as a catalyst by standardizing retirement pathways, consolidating deals, and lowering transaction costs. Justice must sit at the center of any closure plan. Frameworks that map recognition, restorative, distributive, and procedural justice help quantify the spending needed for worker reskilling, community development, and pollution clean up, and help sequence preventative actions that reduce harm before it occurs.

What the economic payoff looks like

The case for clean energy is not only about emissions. It is also about growth, jobs, and resilience. In 2024, Indonesia had about 15.1 gigawatts of renewable power installed. Modeling by researchers shows that a clean power buildout paired with efficiency can both meet fast rising electricity demand and cut pollution. Under a scenario aligned with JETP, Indonesia could add more than 52 gigawatts of on grid renewable power and transmission by 2030. That buildout would create hundreds of thousands of jobs this decade, including roles for solar installers, wind technicians, grid engineers, and construction workers.

Over a longer horizon, cumulative job gains are even larger. Studies project close to 1 million jobs in renewable construction and about 1.8 million jobs in power generation by 2050 as solar, wind, hydro, geothermal and later nuclear and green hydrogen scale. Clean energy also strengthens energy security. Indonesia has become more reliant on imported oil since the late 1990s. A shift to domestic renewables and electrified transport would cut that dependence. One scenario estimates oil imports could fall by about 1.23 million barrels per day by 2050, reducing exposure to price shocks and freeing public funds for infrastructure and social programs.

Economic returns can be attractive as well. Researchers estimate that for every 1 billion dollars invested in renewable energy in Indonesia, expected returns total about 1.41 billion dollars through new value chains in equipment, installation, and services. Health benefits are large. Fossil fuel plants emit fine particulate matter and other pollutants that drive respiratory and cardiovascular disease. Meeting Indonesia’s clean energy goals could avoid tens of thousands of premature deaths each year, lower healthcare costs, and boost productivity through fewer lost workdays. These are concrete development gains that sit alongside emission cuts.

China, supply chains, and the next wave of investment

China is emerging as a key partner in Indonesia’s transition, both as an investor and as a technology supplier. Jakarta based think tanks have outlined how redirecting current energy related financing from China fully into renewables over the 2025 to 2034 planning period could mobilize as much as IDR 144 trillion, or roughly 9 billion dollars. That level of capital would be enough to fund dozens of large solar projects on the scale of the Cirata floating solar plant in West Java, which was commissioned in 2023 by a Chinese contractor and raised Indonesia’s solar generation capacity. Such a pipeline would support thousands of jobs and help lower technology costs through economies of scale.

Partnerships must go beyond money. To maximize local benefits, Indonesia needs a stronger ecosystem for engineering, component manufacturing, and vocational training. Clear and stable rules for green investment, greater transparency in procurement, and flexible local content strategies would help Chinese and other foreign investors build deeper roots in Indonesia while strengthening domestic industry. China’s overseas finance is shifting from coal to greener, smaller projects, and public finance has declined since the middle of the last decade. Private commercial flows are likely to continue, especially where policy clarity, bankable contracts, and modern grids are in place.

What success could look like by 2034

Success by the mid 2030s would be visible in both megawatts and miles of wire. PLN’s plan would deliver more than 50 gigawatts of new renewable capacity, more than 10 gigawatts of storage, and a strengthened grid that links major islands with cleaner power and better reliability. Java, Sumatra, and Sulawesi would see significant grid upgrades, with more robust substations and smarter control systems that integrate variable generation. Remote islands and villages would swap expensive diesel for solar, mini hydro, and batteries, improving service and cutting costs.

Regulatory milestones would be equally clear. Competitive auctions would award projects quickly, standard contracts would lower risk, and payment performance would be strong. Early retirements of the most inefficient coal units would be under way, with communities supported by reskilling programs and targeted local investment. A growing domestic supply chain for clean energy technologies and electric vehicles would support quality jobs. Gender inclusive recruitment and training would bring more women into technical and leadership roles. Monitoring platforms would track progress openly and help keep projects on schedule.

What to Know

• Indonesia’s energy ministry estimates about Rp 3,000 trillion is needed to shift electricity fully to renewables.
• PLN’s 2025 to 2034 plan adds 69.5 gigawatts of generation, 47,758 circuit kilometers of transmission, and 107,950 MVA of substations.
• About 61 percent of new capacity is set to be renewable energy, plus 10.3 gigawatts of storage, with 24 percent coming from fossil plants.
• The national Energy Compact targets 23 percent renewables in primary energy by 2029 and a 2030 emissions cap of 446 million tonnes.
• SEforALL estimates IDR 4,000 trillion of climate aligned finance is needed by 2030, with private flows needing a four fold increase.
• JETP aims to mobilize 20 billion dollars and a policy plan lists 97.3 billion dollars of priority investments through 2030.
• ADB financing supports sector reforms, geothermal expansions, and grid upgrades, and is expected to mobilize over 1 billion dollars of private capital.
• Investment barriers include rigid local content rules, complex procurement, tariff and contract bankability concerns, and PLN single buyer risk.
• Early coal retirements with blended finance and transition credits can free space for renewables, with just transition spending guided by justice frameworks.
• Clean energy delivers jobs, health gains, and energy security, with scenarios showing large job creation and lower oil imports by 2050.
• Redirecting Chinese finance toward renewables and building domestic supply chains can accelerate deployment while growing local industry.