Jakarta, February 27, 2025 – The global trend of renewable energy use is increasing massively. This is supported by increasing innovation in renewable energy technology and falling battery prices. However, in the last five years, Indonesia has not shown significant progress in adding its renewable energy capacity. In 2024, the total renewable energy capacity was only around 15 GW, an increase of around 2 GW from the previous year.
One of the obstacles to renewable energy penetration is doubts about the ability of variable renewable energy (VREs) such as solar and wind to become the backbone supporting Indonesia’s energy system. The results of the Institute for Essential Services Reform (IESR) analysis show that with the right strategy and policy framework, the problem of intermittency can be overcome.
Fabby Tumiwa, Executive Director of IESR said that the decision to make new choices and exit the fossil-based economic system will be recorded in the history of Indonesia’s economy and development.
“We must be open and not trapped in a mindset that locks our insights and makes us trapped in a fossil-based economic system. But we must move towards a renewable energy system to achieve social and environmental benefits and increase economic growth,” said Fabby.
Fabby added that Indonesia has abundant technical potential of resources, the workforce to process, and a policy framework that can transform this situation. What is needed is the courage of policy makers to take the right and appropriate steps. Challenges such as the length of the renewable energy procurement process require strategies and collaboration from various parties to speed up the process.
The availability of initial data can be used as a guideline before compiling a pre-feasibility study, thereby helping to speed up the preparation process for renewable energy projects. Sodi Zakiy Muwafiq, IESR Geographic Information System Analyst, stated that IESR updated the study of the technical potential of renewable energy in Indonesia which was conducted in 2021 to find the optimal location for developing renewable energy projects.
“In this latest study, we added financial feasibility parameters to ensure that the potential of each location truly meets these criteria,” said Sodi at the launch of the Unlocking Indonesia’s Renewables Future: The Economic Case of 333 GW of Solar, Wind, and Hydro Projects study (27/2/2025).
Martha Jessica, IESR’s Social and Economic Research Coordinator, stated that by considering the capacity factor (CF) and high investment rate, the results showed that there were 333 GW from 632 utility-scale renewable energy project locations that were financially feasible. The details are the capacity of ground-mounted PLTS of 165.9 GW, onshore PLTB of 167.0 GW and PLTM of 0.7 GW.
“More than 60% of the selected technologies have an equity internal rate return (EIRR) above 10 percent, which means they are attractive in terms of financing investment,” said Marta.
Study as an initial Baseline for renewable energy development
EBTKE Coordinator of Bappenas, Dedi Rustandi, appreciated the results of the Unlocking Indonesia’s Renewables Future: The Economic Case of 333 GW of Solar, Wind, and Hydro Projects study. Especially the mapping of potential in outermost regions such as Papua.
“So far, regions like Papua, whenever we push for economic growth, are always constrained by energy supply. The location mapping that also covers the Papua region will help us work more efficiently,” said Dedi.
Delano Delo, Head of Public Financing Division-2, PT Sarana Multi Infrastruktur (SMI) explained that the methodology used in the IESR study was good.
“To be used as a basis for considering the provision of financing, of course there needs to be an examination of the assumptions used, but as a country platform this study is useful for us,” he said.
Pintoko Aji, Research Coordinator of the IESR Data and Modeling Group, explained the background of this study.
“We slightly changed the perspective in this study to the perspective of lenders or capital owners. What things must be there so that lenders are confident in financing a project,” said Pintoko.
Deden Nabudu, VP of Electrical Infrastructure Feasibility Management, PLN proposed that this study be collaborated with the PLN engineer division so that the use of assumptions and calculations that are in accordance with PLN and the results of the study can be ready for use.
