Jakarta, March 25, 2025 – The existence of a domestic supply chain for renewable energy components is believed to be able to cut production costs and increase the competitiveness of Indonesia’s renewable energy. However, until now Indonesia still does not have a capable manufacturing supply chain. Several things are still challenges in the development of renewable energy component manufacturing.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), at the Dissemination & Launch of the Indonesia Manufacturing Industry for Renewable Energy Market Assessment Study organized by IESR said that Indonesia is experiencing a number of challenges in terms of developing renewable energy manufacturing including high initial investment costs, an underdeveloped local manufacturing ecosystem supply, limited skilled labor and weak research relations with energy policies, and a fragmented regulatory framework.

“Indonesia has a unique opportunity to turn challenges into opportunities. With the right policies and strong collaboration, the renewable energy manufacturing sector can become a significant economic driver and make Indonesia a major player in the global energy transition,” said Fabby.

Andriah Feby Misna, Director of Various New and Renewable Energy of the Ministry of Energy and Mineral Resources said that green development and sustainability aspects are shared targets that are concretely stated in the emission reduction target for each sector of the government office. In the energy sector, one of the strategies carried out is the massive use of renewable energy up to 443 GW (National Electricity General Plan).

“The government is strengthening policies to ensure this target is achieved, one of which is the policy related to manufacturing. By developing manufacturing, we will build a domestic supply chain, which will encourage economic growth and job growth,” she said.

Solehan, Director of the Agricultural Machinery and Machinery Industry, Ministry of Industry stated that his party continues to encourage investment in technology-supporting industries, such as the solar cell and solar module industries, as part of the development of the latest domestic industries and supporting the net zero emission (NZE) program.

“We are also trying to make the renewable energy sector more attractive for investment. To that end, through the Increased Use of Domestic Products (P3DN) policy, we will always encourage domestic products to be used in the procurement of renewables infrastructure, especially in solar PV,” he said.

Abyan Hilmy Yafi, IESR Data Analyst stated that the development of the domestic renewable energy manufacturing industry is an integral need of a sustainable renewable energy ecosystem.

“To ensure the readiness of the supply chain, it is necessary to consider the availability of raw materials and diversification of the supply chain. To create a sustainable industry, it is necessary to improve data management and assessments related to LCR policies,” said Hilmy.

Hilmy also highlighted the absence of standardization for workers in the renewable energy manufacturing sector. In fact, this is important to do considering the potential for job creation from the renewable energy sector reaching 5.7 million jobs for the solar industry, and 1.7 million jobs for the wind turbine industry.

Toni Susandy, ESDM Engineering Coordinator, said that the latest study from IESR describes the dynamics of the current renewable energy manufacturing market.

“We see this study as providing insight into market dynamics and most importantly for us there are policy recommendations and strategic steps that we need to take,” he said.

Dwiantara Hadi Pratama, Young Expert Investment Management, BKPM stated that in addition to pioneering the renewable energy manufacturing sector, it is also necessary to increase energy demand.

“The Downstream Task Force and the Coordinating Ministry for Economic Affairs are expected to encourage demand and provide assurance to investors that demand already exists domestically,” he said.

Budiman Setiawan, Director of PT Surya Utama Putra explained the challenges of developing domestic solar panels from the business actor’s perspective, including competition with foreign manufacturers who are able to make solar panels with high production scales and cheaper prices.

“We see that focusing on the production of small-sized solar panels is a reliable solution for local companies. The greater the power of the solar panels, the larger the size and shipping needs will be, making it more difficult to do,” said Budiman.

Lucila Ismoyo Rukmi, Secretary General of the Indonesian Wind Energy Association (AEAI), stated that currently the manufacturing components are still dominated by Chinese manufacturers, so opportunities for local industries are actually open in the small-scale manufacturing segment.

“We see that perhaps the opportunity for domestic developers is in small-scale wind turbines that are widely used in Indonesia. Because for utility scale, there are only two projects in Indonesia, namely Jeneponto and Sidrap,” she said.

Ismoyo hopes that domestic production capacity is not just potential but a real economic opportunity for entrepreneurs.