Reaching the Target of 23% Renewable Energy Mix by 2025

Jakarta, January 16, 2024 – The Ministry of Energy and Mineral Resources (ESDM) reported that the realization of the new and renewable energy mix (NRE) was around 13.1% in 2023, up only 0.8% from the realization in 2022 of around 12.30%. The slow growth of NRE in Indonesia is in line with the ongoing fossil subsidies. Based on a World Bank report entitled Detox Development, Repurposing Environmentally Harmful Subsidies (June 2023), Indonesia is the largest fossil energy subsidizer in ASEAN, as well as the 8th largest on a global scale in 2021.

The Executive Director of the Institute for Essential Services Reform (IESR), Fabby Tumiwa, explained that there are systemic problems in achieving the renewable energy mix target in 2025. This is reflected in the development of renewable energy which is not so significant every year. One of these systemic problems, said Fabby, is fossil energy subsidies. 


“This fossil energy subsidy provides an incentive for PT Perusahaan Listrik Negara (PLN) to maintain the operation of the coal fired power plant (CFPP) therefore the cost of electricity becomes cheap. The existence of fossil energy subsidies makes the price of PLTU electricity not reflect the real price. On the other hand, the price of NRE is getting more competitive, but it cannot enter the PLN system because there are still many subsidized coal fired power plant (CFPP) fuels,” said Fabby Tumiwa at CNBC Indonesia’s Energy Corner event program entitled “Fossil Energy is Still Subsidized, 23% NRE Mix in 2025 is Difficult to Achieve?” on Tuesday (16/1/2024).

In addition, Fabby emphasized that the thing that affects the development of renewable energy is the procurement of renewable energy plants at PLN. Fabby assessed that PLN has never been by what has been planned based on the Electricity Supply Business Plan (RUPTL). According to Fabby, corrections regarding this matter have also never been made. 

“The existence of power plant auctions that are late or not carried out, makes renewable energy plants unprepared at this time. Several factors affect the auction such as regulations, where we have changes from Permen ESDM No 50 of 2017, which then revised for quite a long time, which resulted in Perpres No 112 of 2022. Then, there is an overcapacity condition in the Java-Bali electricity system. There is also the factor of PLN’s internal capacity that affects this,” said Fabby Tumiwa.

Draft CIPP Targets 44 Percent Renewable Energy Mix by 2030

Jakarta, November 2, 2023 – The government has released the draft of the Comprehensive Investment and Policy Plan (CIPP) in the Just Energy Transition Partnership (JETP) for public consultation on Wednesday (1/11/2023). 

The Institute for Essential Services Reform (IESR) has acknowledged some changes in the CIPP document, particularly the significant increase in the renewable energy mix target to around 44% by 2030, up from 34% in the JETP joint statement last year. However, the CIPP includes establishing a net zero emissions (NZE) target in the electricity sector by 2050. This does not align with the Paris Agreement, which calls for phasing out fossil generation by 2040.

Furthermore, the emission reduction target was focused solely on power plant emissions within the PLN grid, rather than addressing emissions from the overall power sector, to 250 million tons of carbon dioxide equivalent in 2030. This figure does not include the emission reduction target from captive power. If combined, the total peak emission target is much higher than projected during the JETP negotiation last year. Furthermore, the previous draft had a plan to end the operation of coal-fired power plants with a total capacity of 5 GW, but it was removed due to unclear funding sources from the IPG.

IESR assesses that eliminating the plan of early retirement of coal power plants will make it difficult for Indonesia to achieve its net-zero target in 2050 and increase the renewable energy mix after 2030. In the current JETP scenario, emission reductions are achieved by reducing the utilization of coal power plants. Therefore, to achieve the new target of 44% renewable energy mix in 2030, there should be an increase in the flexibility of PLN’s coal power plant operations, and a review of private coal power plant contracts, as well as regulatory support for accelerating the development of renewable energy in Indonesia. The renewable energy development plan, which gives a large portion to geothermal power plant (PLTP) and hydropower (PLTA) and adjusts PLN’s priorities, can pose a risk in achieving this target, considering the development period of geothermal power plant (PLTP) projects, which takes 8 to 12 years and hydropower, which can take 6 to 10 years.

“The elimination of the plan to early retire the operation of 5 GW of coal-fired power plants before 2030 due to the lack of funding support is regrettable. This makes Indonesia’s JETP even further away from the Paris Agreement target. Based on the results of the IESR study, to achieve the previous peak emission target of 290 million tons of carbon dioxide, it is necessary to end 8.6 GW of coal-fired power plants in PLN’s electricity network by 2030. For this reason, it is necessary to conduct further dialog with IPG to explore blended finance with a matching fund scheme where funding for early retirement of CFPP comes from additional funds above IPG’s commitment and is equalized with funds from State Budget and other sources,” explained Executive Director of IESR, Fabby Tumiwa.

IESR also highlighted the CIPP document that has not considered the termination of captive CFPP operations operated by utility companies outside PLN.

“The challenges of captive power plants vary depending on the industry they supply. However, there is already a basis for Presidential Regulation 112/2022, which requires a 35% reduction in emissions and an end of operations by 2050. Therefore, emission reduction strategies and early termination of operations for captive power plants and other business areas need to be reviewed immediately,” said Deon Arinaldo, Program Manager of Energy Transformation, IESR.

Policy reforms and increased commitment from policymakers and stakeholders are crucial in implementing CIPP, which aims for a 44% renewable energy mix by 2030. Indonesia’s renewable energy capacity of 12.6 GW needs to be increased by 62 GW to reach around 75 GW of renewable energy capacity in 2030.

“The procurement process of existing renewable energy plants is still constrained in several ways. Often, this is due to project preparation, including grid connectivity studies, land acquisition, and the completion of relevant permits before the auction process. In Indonesia, this is still a burden on developers, making renewable investment prospects accessible only to certain ‘players’. Policy reforms that emphasize efficiency and ease in the renewable energy plant procurement process are necessary if the capacity expansion target is to be achieved,” said Raditya Wiranegara, Senior Analyst IESR.

Emission reduction efforts listed in this CIPP document also need to emphasize justice aspects by including community participation. Based on IESR’s various studies on mitigating the impact of energy transition in coal-producing areas, the government needs to increase the capacity of national and local government institutions in implementing energy transition and diversifying the economy to a more sustainable economy.

Nationwide Synergy and Investment for Indonesia’s Renewable Energy

Jakarta, 6 February 2023 – Indonesia’s journey to net zero emission is still a long and winding road. One of the government’s actions in realizing this target is to make regulations to encourage the implementation of renewable energy. In reality, targets, regulations and implementation are often unaligned.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), in the Market Review segment on the IDX channel (24/01/2023), stated that in 2022, Indonesia’s target for renewable energy development of 1000 MW has not been fully realized.

“There are several factors why this target was not fully realized, the first is the economic weakening which has caused unoptimized growth of electricity demand. Another factor is the pandemic, which caused delays on several renewable energy projects,” explained Fabby.

Furthermore, Fabby explained that Government Regulation no. 79/2014, which was more thoroughly mandated in Presidential Decree 22/2017, has set a target of a national renewable energy mix of 23% by 2025. To achieve this target, Fabby estimates that there needs to be a renewable energy growth of 3-4 Gigawatts per year. In fact, since the Government Regulation in 2014 was enacted, the average renewable energy increase rate is only 15% from 3-4 GW, which is around 400-500 MW.

This problem is also rooted in the country’s energy infrastructure itself. Indonesia’s energy source still depends on fossil energy, which accounts for 86%. To change this structure, it is also important to consider the growth in energy demand in Indonesia. Indonesia must then strive to use renewable energy to tackle this increasing energy demand. According to IESR calculations, energy transition efforts in Indonesia require around 1.4 billion dollars in funding. This fund covers renewable energy and energy infrastructure upgrades.

Regarding people’s economic perceptions, Fabby assesses that fossil energy is still seen as more economic because currently coal is still subsidized by the government. The Domestic Market Obligation Act in 2017 capped coal prices at $70/ton even if global prices are higher. This kind of incentive should also be given to the development of renewable energy. However, the incentive was also hampered by the Domestic Component Policy Level (TKDN).

“Solar PV has become the most efficient source of renewable energy, but in Indonesia it has become expensive. Compared to 10 years ago, the price of solar PV has decreased by 90%. The TKDN policy is actually a disincentive that can prevent investors from investing and make solar PV more affordable,” concluded Fabby.

Indonesia’s Energy Transition from Journalist’s Perspective

Peneliti Senior IESR,

The energy transition towards renewable energy is roaring in the momentum of the G20 2022. It’s because the Indonesian Government places the energy transition as one of the priority issues under its leadership at the G20. Furthermore, its coverage in the mass media, using the keyword “energy transition” on, increased from 346 in 2017 to more than 79.000 in 2022.

The Institute for Essential Services Reform (IESR) continually strives to contribute to popularizing the energy transition with various studies and advocacy activities. One of them published its main report, which encourages and measures the energy transition process in Indonesia, entitled Indonesia Energy Transition Outlook (IETO). Published annually since 2017, IETO 2023 is the 6th volume. Previously, this report was titled Indonesia Clean Energy Outlook in 2017 but changed its name to Indonesia Energy Transition Outlook in 2020.

The launch of the IETO was welcomed by various parties, including journalists in the mass media, who have a significant role to play: collecting and distributing the correct information.

Sugiharto, an ANTARA journalist, said that the IETO is a critical report that is getting better from year to year and has become a reference in journalistic writing because it contains various data and information about Indonesia’s energy transition program.

“With the IETO report with complete data, we as journalists quite often use it as a writing reference, especially regarding the diversity of data outside the government,” explained Sugiharto.

On the other hand, Sugiharto assessed that Indonesia’s energy transition development has been moderate. Even though Indonesia has a lot of renewable energy potential, that is exceptionally qualified to meet domestic energy needs. Regulatory and funding barriers are challenges for developing the energy transition in Indonesia that need to be overcome.

“Based on the low renewable energy mix, the government needs to be aggressive in realizing Indonesia’s energy transition ambitions,” said Sugiharto.

Aditya Putra, a journalist for Kompas Daily, explained the IETO, which outlines the challenges of the energy transition in Indonesia and the strategic steps in the future. Moreover, Aditya stated that these topics are interesting to be known by the public.

Researcher on Indonesia Energy Transition Outlook 2023
Researcher on Indonesia Energy Transition Outlook 2023

“The data presented in the IETO can earn attention on energy transition, including those that journalists may have missed or not disclosed regularly to the public by the Government, for example, regarding the declining mix of renewable energy in primary energy. Getting further away from the target that has been set, “explained Aditya.

In this regard, Aditya hopes that the existence of reports such as IETO 2023 can oversee the commitment and implementation of the Government’s energy transition agenda and plans. In line with Aditya, Vindry Florentin, a journalist for Koran Tempo, stated the integration of comprehensive data discussing the energy transition in the IETO report became a reference for the media. Moreover, said Vindry, the data shared by the Government needed to be completed and integrated.

Efri Ritonga, a senior journalist for Koran Tempo, also said that the development of energy transition in Indonesia continues currently, although it is still slow. Moreover, there are some community initiatives to initiate an energy transition. Such as the use of rooftop solar in residential areas, as well as the development of large-scale renewable energy, are still constrained. In addition, using fossil fuels is still dominant because of price, availability, and affordability. Some people are unfamiliar with the issue of the energy transition.

“There are several reasons the issue of the energy transition is not well known in the broad community. First, there is not much information about energy transition practices that people can start themselves with, for example, by using an electric stove, installing a rooftop PLTS, reducing the use of private vehicles made of fossil fuels, or switching to electric vehicles. Second, in terms of practicality and cost. For example, in the transportation sector, the price of electric cars is still prohibitive, and the availability of charging stations is still minimal,” said Efri and Vindry.

The Increase of Emission Reduction Targets in Indonesia’s NDC is Still a Long Way to Mitigating a Climate Crisis

Jakarta, 6 December 2022- Indonesia has submitted Enhanced Nationally Determined Contributions (ENDCs) documents by increasing the target of reducing greenhouse gas (GHG) emissions by only around 2%. The Institute for Essential Services Reform (IESR), which is a member of the Climate Action Tracker (CAT), a consortium of three think tanks that conducts monitoring and assessment of climate change policies in 39 countries and the European Union, found that the slight increase in Indonesia’s NDC target was still insufficient to prevent a global temperature rise of 1.5°C.

In Enhanced NDC, the target of reducing emissions by own efforts (unconditional) increases from 29% in the Updated NDC document to 31.89% in 2030, and with international assistance (conditional) increases from 41% to 43.2%. IESR and CAT view that Indonesia should be able to set even more ambitious targets, especially after the issuance of Presidential Regulation (Perpres) No 112 of 2022 concerning the Acceleration of Renewable Energy Development for the Provision of Electricity.

“Indonesia is still hesitant to set ambitious emission reduction targets and play in the safe zone. The reduction target set in the Enhanced NDC (E-NDC) is too easy to achieve because the reference is the business-as-usual emission increase projection in 2030. The emission reduction target should be based on the absolute emission level based on a certain year. To be in line with the 1.5°C ambition, emissions from the energy sector in 2030 must be equivalent to the level of emissions from the energy sector in 2010,” said Fabby Tumiwa, Executive Director of IESR, at the launch of the results of the CAT assessment of Indonesia’s climate action and policies.

To achieve significant emission reductions, Indonesia needs to carry out more ambitious mitigation in the sectors with dominant emitters, such as the energy sector, and the forest and land sector. Having abundant renewable energy potential, even up to more than 7 TW, Indonesia can utilize it as a source of energy with minimal emissions.

However, until 2021, the renewable energy mix in the energy system in Indonesia is still 11.5%. IESR views that several developments in international support and the government’s commitment to early retirement coal power plants will provide free space for the development of renewable energy so that it can achieve the target of 23% renewable energy in 2025, even reaching 40% in 2030. In the Deep Decarbonization of Indonesia Energy System study (2021), IESR concludes that by 2050, 100% utilization of renewable energy in Indonesia’s energy system is technically and economically feasible.

“Indonesia’s climate action status can be enhanced by ensuring that climate policies in this decade are implemented to fulfil a fair contribution based on global efforts (fair share). The NDC target with international assistance must also be consistent, at least with the optimal path with the lowest cost for the ambition of 1.5°C (global least cost pathways),” explained Delima Ramadhani, Coordinator of Climate Action Tracker, IESR.

According to her, the dominance of coal-fired power plants, which are currently around 61% of Indonesia’s energy system, needs to be significantly reduced to only 10% of coal-fired power plants that do not use carbon capture and storage technology (unabated coal-fired power plan) in 2030 and terminate their operations gradually until stop completely by 2040. For that, Indonesia must increase its climate commitments, and international assistance plays a major role in the implementation of the coal phase-out per the Paris Agreement.

Several funding mechanisms for ending coal operations have also been discussed and agreed upon by Indonesia, such as the Energy Transition Mechanism scheme and the Just Energy Transition Partnerships (JETP). IESR considers that, although it is still not aligned with the 1.5°C targets, the JETP agreement is a step forward in the energy transition in Indonesia. The funding commitment of USD 20 billion is not enough to achieve decarbonization of the energy sector which requires at least a total investment of USD 135 billion by 2030.

“The portion of grants in JETP funding needs to be enlarged, which can be used to accelerate the strengthening of the energy transition ecosystem and project preparation. In addition, the next step after JETP has been agreed upon is the preparation of an investment plan that is carried out transparently and mainstreams the principles of justice in the energy transition by involving the participation of the community, local government and affected groups,” concluded Fabby.

Climate Action Tracker is an independent scientific analysis initiative that tracks countries’ climate actions and measures them against the globally agreed Paris Agreement goal of holding warming well below 2°C and pursuing efforts to limit warming to 1.5°C. CAT has provided an independent analysis of around 40 countries since 2009. CAT members include Climate Analytics, the New Climate Institute, and the Institute for Essential Services Reform (IESR), which joined as partners in 2022.