A Landmark Agreement in Tokyo
Indonesia has taken a decisive step toward joining the global nuclear energy club after decades of hesitation, signing a five-year cooperation agreement with Japan that aims to bring the archipelago’s first commercial nuclear power online by 2033. Energy and Mineral Resources Minister Bahlil Lahadalia and Japanese Economy, Trade, and Industry Minister Ryosei Akazawa formalized the memorandum in Tokyo on March 15, 2026, on the sidelines of the Indo-Pacific Energy Security Ministerial and Business Forum. The pact represents Jakarta’s most concrete move yet to diversify away from coal, which currently generates roughly 80 percent of the nation’s electricity, while leveraging Japanese expertise in reactor safety and small modular reactor technology.
The agreement specifically targets collaboration on nuclear technology development with what both governments describe as high safety standards. It opens financing channels through Japanese export credit agencies including the Japan Bank for International Cooperation and Nippon Export and Investment Insurance, though these remain subject to due diligence and project milestones. Tokyo has emphasized the need for a competitive and transparent technology selection process, positioning Japanese firms to participate in what could become one of Southeast Asia’s most significant energy transitions.
Energy Security in an Era of Global Crisis
The partnership emerges against a backdrop of acute global energy insecurity, with Minister Akazawa explicitly citing the Israel-Iran war as a catalyst for strengthened bilateral cooperation. During the signing ceremony, Akazawa stressed that amid worldwide supply disruptions, maintaining energy security requires deeper collaboration between trusted partners. Japan itself has accelerated its return to nuclear power fifteen years after the Fukushima disaster, with atomic energy now comprising approximately 40 percent of domestic production as of 2024, the largest share in the national supply mix according to the International Energy Agency.
Indonesia’s vulnerability to fossil fuel volatility has become increasingly apparent as the nation of 280 million struggles with frequent blackouts despite achieving 99.8 percent electrification rates. The country’s per capita electricity consumption has nearly doubled since 2000, reaching approximately 10,100 kWh in 2023, while state utility PT PLN projects consumption will hit 457 terawatt-hours by 2025. With coal dominating both domestic power generation and export revenues, Jakarta faces the dual challenge of maintaining economic growth while honoring its commitment to achieve carbon neutrality by 2060.
Amidst today’s global crises, it is important for us to beef up collaboration to maintain energy security.
Japan’s strategic energy reserves and advanced nuclear infrastructure offer Indonesia a model for reducing import dependency. The cooperation extends beyond reactor technology to include critical minerals supply chains, with Bahlil highlighting Indonesia’s 43 percent share of global nickel reserves and substantial deposits of bauxite, tin, copper, and rare earth elements essential for clean energy technologies.
Small Modular Reactors Take Center Stage
The immediate focus of Indonesia’s nuclear program centers on small modular reactors rather than conventional large-scale plants. These SMRs, typically generating 300 megawatts or less compared to the 1,000 megawatts of traditional facilities, offer particular advantages for Indonesia’s archipelagic geography where grid connectivity between islands remains limited. The technology allows for prefabricated units that can be manufactured, transported, and installed on-site, reducing both construction timelines and initial capital requirements.
The most advanced project sits in West Kalimantan on the island of Borneo, where PLN Indonesia Power has partnered with Oregon-based NuScale Power to develop a 462 MWe facility using NuScale’s VOYGR technology. Japanese engineering firm JGC Corporation is collaborating on this initiative alongside a subsidiary of Fluor Corporation, representing a trilateral effort that also involves the United States through the State Department’s Foundational Infrastructure for Responsible Use of Small Modular Reactor Technology program. Indonesia became the first beneficiary of the FIRST program in 2019, establishing a framework for American support in workforce development, regulatory frameworks, and safety protocols.
Alternative technologies are also under consideration. PT ThorCon Power Indonesia, a subsidiary of the U.S.-based company, has submitted licensing documents to Indonesia’s Nuclear Energy Regulatory Agency for a 500 MWe thorium molten salt reactor planned for Kelasa Island in Central Bangka, with potential construction starting in 2027. Separately, four Danish companies signed a memorandum of understanding with state-owned Pupuk Kalimantan Timur and Pertamina New & Renewable Energy to potentially build a $4 billion thorium SMR facility in Bontang, East Kalimantan, targeting ammonia production for fertilizer.
The Regulatory Bottleneck
Despite the flurry of international agreements and feasibility studies, Indonesia’s nuclear ambitions remain constrained by the absence of a dedicated domestic watchdog. The Nuclear Energy Program Implementation Organization, to be chaired directly by President Prabowo Subianto, awaits a presidential regulation before it can formally assume authority over reactor planning and development. Senda Hurmuzan Kanam, a senior Energy Ministry official, confirmed that no technology bids can proceed until the NEPIO is established, though the necessary regulation is reportedly awaiting only the president’s signature.
This regulatory gap has not deterred international competitors from positioning themselves. Russia’s Rosatom has maintained its offer to supply various technologies including floating small modular reactors well-suited for Indonesia’s maritime geography, as well as the larger VVER-1200 reactors that could help meet targets exceeding 7 gigawatts by 2040. Chinese, South Korean, and Canadian firms have also approached Jakarta with proposals, leaving Indonesia in the position of evaluating multiple technologies while awaiting the institutional framework necessary to make binding decisions.
We are open to all technologies, but we have not made any decision yet.
The IAEA has conducted integrated nuclear infrastructure review missions to Indonesia, identifying the country as at the first milestone of readiness to make a knowledgeable commitment. Indonesia’s safeguards agreement under the Nuclear Non-Proliferation Treaty has been in force since 1980, with an Additional Protocol active since 1999, providing the international verification framework necessary for technology transfers.
Japan’s Post-Fukushima Pivot
The Indonesian partnership coincides with Japan’s own complex nuclear revival. On March 11, 2026, Japan marked the fifteenth anniversary of the magnitude 9.0 earthquake and tsunami that triggered the Fukushima Daiichi disaster, causing meltdowns in three reactors and forcing 160,000 people to evacuate. Prime Minister Sanae Takaichi, who assumed office following the previous administration, has pushed to accelerate reactor restarts and bolster nuclear power as a stable energy source, reversing the decade-long phase-out plan that followed 2011.
However, structural challenges persist. Of the 54 reactors Japan operated before Fukushima, only 15 are currently generating electricity, with 22 having entered decommissioning. Safety upgrades mandated after 2013 have driven costs from an initial 1 trillion yen estimate to over 2.4 trillion yen, while legal challenges continue to delay restarts. The government’s target of generating 20 percent of electricity from nuclear sources by 2040, revised from the previous 2030 goal, remains ambitious given current output levels of roughly 8.3 percent.
These domestic constraints have amplified Japan’s interest in nuclear exports. Japanese firms including Mitsubishi Heavy Industries, Toshiba, and IHI are positioning to participate in international projects, with the United States and Japan recently coordinating roles for potential joint ventures involving Westinghouse technology. The Indonesia deal offers Japanese industry a pathway to maintain engineering expertise and supply chain viability even as domestic construction remains stalled.
Financing the Nuclear Transition
The economic architecture of Indonesia’s nuclear program involves multiple layers of international financing. Beyond the Japanese export credit agencies mentioned in the bilateral agreement, the U.S. Trade and Development Agency has provided grants to PLN Indonesia Power for technical assistance on the West Kalimantan SMR project. The U.S. Export-Import Bank has separately advanced up to $4.2 billion in financing letters to support Japanese and South Korean nuclear operators, demonstrating the integrated nature of Indo-Pacific nuclear supply chains.
Indonesia’s long-term planning documents envision an eventual nuclear capacity of 35 to 54 gigawatts by 2060, a scale comparable to Japan’s entire pre-Fukushima fleet. This would require substantial capital investment in a nation where current power generation capacity stands at only 93 gigawatts total. The National Energy Council has identified 29 potential sites across the archipelago for nuclear facilities, with Bangka Island, West Kalimantan, and Muria Peninsula among the most frequently mentioned locations.
The Danish proposal for Borneo illustrates alternative financing models, targeting private industrial offtake rather than pure utility sales, while the ThorCon initiative emphasizes shipyard construction techniques that could leverage Indonesia’s existing maritime manufacturing capabilities at PT PAL Indonesia.
Regional Implications and Competition
Indonesia’s nuclear progress positions it as the likely first mover in Southeast Asian SMR deployment, ahead of the Philippines and Thailand which have also identified SMR targets but lack equivalent regulatory preparation or site selection progress. The Philippines aims for 1.2 gigawatts from nuclear power using American SMR technology by 2032, while Thailand’s draft power development plan envisions two 300 MW SMR units.
The competitive dynamics reflect broader geopolitical alignments. The Indonesia-Japan-US trilateral cooperation framework explicitly aims to uphold the highest standards for nuclear safety, security, and non-proliferation, contrasting with alternative suppliers like Russia and China. A conference held in Jakarta from March 3-5, 2026, brought together officials from all three nations to discuss SMR regulatory frameworks, workforce development, and stakeholder engagement, reinforcing the multilateral nature of Indonesia’s nuclear preparation.
Public opinion in Indonesia has trended favorably toward nuclear energy, with surveys conducted by the National Atomic Energy Agency showing support exceeding 70 percent from 2014 onward, attributed to widespread recognition of the urgent need for stable electricity. This contrasts with lingering anti-nuclear sentiment in Japan, where communities near proposed restart sites continue to resist, and decommissioning work at Fukushima remains delayed until 2037 or later due to radiation concerns.
The Path to 2033
With the five-year clock now running on the Japanese cooperation agreement, Indonesia faces the immediate task of establishing the NEPIO to unlock formal technology bidding. The agreement itself creates no legally binding obligations and can be extended for an additional five years, providing flexibility as Jakarta evaluates the competing SMR designs from American, Japanese, Danish, Russian, and other suppliers.
The West Kalimantan project remains the most tangible near-term prospect, with NuScale’s design already approved by the U.S. Nuclear Regulatory Commission, providing a regulatory reference point for Indonesian authorities. If site licensing and construction proceed on schedule, the 2033 target for initial 500 megawatt generation could establish Indonesia as the first ASEAN nation with operational commercial nuclear power, fundamentally altering the region’s energy architecture and providing a test case for advanced reactor deployment in developing economies.
For Japan, the partnership represents both an economic opportunity and a strategic imperative, securing supply chains for critical minerals while exporting safety expertise honed through the Fukushima recovery. As Minister Bahlil noted when welcoming the agreement, Indonesia remains open to all technologies, but the Japanese deal has established the framework within which those technologies will ultimately be judged and deployed.
Key Points
- Indonesia and Japan signed a five-year nuclear cooperation memorandum on March 15, 2026, targeting technology transfer and safety standards
- Jakarta aims to generate 500 megawatts from nuclear power by 2033, with a long-term goal of 35-54 gigawatts by 2060
- Small modular reactors are the immediate priority, with a 462 MWe NuScale project planned for West Kalimantan involving Japanese firm JGC
- The Nuclear Energy Program Implementation Organization, to be chaired by President Prabowo, awaits formal establishment via presidential regulation before bidding can proceed
- Japan cites the Israel-Iran war and global supply disruptions as motivation for strengthening energy security partnerships
- Alternative proposals include Russian floating reactors, Danish thorium SMRs in Borneo, and an American thorium molten salt design for Bangka
- Trilateral cooperation with the United States includes the FIRST program for regulatory development and workforce training
- Financing involves Japanese export credit agencies, U.S. grants and loans, and potential private investment models
