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.

Indonesia’s Electricity Challenges, How to Overcome Excess Electricity Supply?

Fabby Tumiwa di Kompas Bisnis dengan topik ‘PLN Kelebihan Listrik, Negara Jangan Sampai Rugi’ pada Rabu (11/10/2023)

Jakarta, 11 October 2023 – Indonesia, one of the world’s largest developing countries, faces challenges in its electricity sector. The State Electricity Company (PLN), responsible for electricity supply, is now struggling with an oversupply. Several factors have contributed, including announcing the 35-gigawatt coal-fired power plant (CFPP) megaproject 2015. During the Kompas Bisnis program on Wednesday (11/10/2023), Fabby Tumiwa, the Executive Director of the Institute for Essential Services Reform (IESR), emphasized this issue with the topic ‘PLN having excess electricity, the country should not suffer losses.’ 

Fabby Tumiwa mentioned that PLN, the Indonesian state-owned electricity company, has a 10-year plan that includes electricity projections and generating capacity that must be built. Looking back at the electricity supply in Indonesia, Fabby noted that before 2014, there was a deficit in the electricity supply due to the growth rate outpacing the development of electricity infrastructure. To address this, a 35 thousand gigawatts (GW) program was initiated in 2015 with a target of economic demand reaching 7% based on the national medium-term development plan (RPJMN). As a result, electricity demand is projected to grow by around 8%.

“Since 2015, our economy has experienced an average growth of around 5%, failing to reach 7%. Similarly, the growth in electricity generation did not exceed 5% annually until 2019. This is a cause for concern because even though the 35 GW program has been implemented, the projections for its success are not very precise,” said Fabby Tumiwa.

Fabby emphasized that the oversupply of electricity in Indonesia is a burden for PLN due to the take-or-pay scheme in their contracts. This means that PLN has to pay for electricity regardless of whether it is used by independent power producers (IPPs). However, the supply side of the issue is being resolved by cutting more than 13 GW of generating capacity in the 2021-2030 general plan for electricity supply (RUPTL). To prevent similar cases, IESR has recommended halting the development of around 3 GW of capacity currently in the pipeline.

Fabby Tumiwa
Fabby Tumiwa on Kompas Bisnis with topic ‘PLN Kelebihan Listrik, Negara Jangan Sampai Rugi’ on Wednesday (11/10/2023)

“According to PLN, every 1 GW PLN can lose around Rp 3 trillion. However, each power plant has a different contract. Unfortunately, there is no other way to absorb excess electricity; we must increase electricity demand. The demand for electricity increase in 2022 seems to have started to be high, around 5.5%. However, we need to catch up with growth above 7% through electricity demand from households and industries,” said Fabby. 

Fabby explained that the excess electricity is largest in Sumatra and Java, absorbing more than 90% of electricity consumption nationally. Mainly in Java, the electrification ratio averages 100%. However, there is a gap in the electrification ratio in eastern parts of Indonesia, such as NTT, NTB, and Papua.

“Currently, the electrification ratio outside Java is not 100%, while there is excess electricity in Java. The main problem is the cost of generating capacity and constructing electricity networks in remote areas. For instance, providing electricity access to a single house in the 3T area costs Rp10 million to Rp100 million. However, the purchasing power of households in these areas is quite low,” Fabby said.

Eight Recommendations of IETD 2023

press release

Jakarta, September 20, 2023 – Transforming the electricity sector with renewable energy development and accelerating the coal-fired power plants requires significant financing. The availability of energy transition financing will help the government, utility companies, and community groups to increase the number of renewable energy projects, thereby further reducing the price of renewable energy generation. The Institute for Essential Services Reform (IESR) stated that Indonesia must create innovative sustainable financing schemes to meet renewable energy investment needs.

“Ideas for financing schemes and innovations need to continue to be explored considering the unique structure of the electricity market in Indonesia. Indonesia can use the Just Energy Transition Partnership (JETP) or Energy Transition Mechanism (ETM) process to explore this scheme. In the end, a scheme that can be implemented will require input from all stakeholders, PT PLN, power plant utilities, and financial institutions,” explained Deon Arinaldo, Program Manager of Energy Transformation, IESR.

One opportunity to finance the energy transition with limited public funding, according to Iliad Lubis, South Asia Utility Transition Manager, Rocky Mountain Institute, on the third day of the Indonesia Energy Transition Dialogue (IETD) 2023 (20/9), is carbon credits. Illiad said carbon credits could increase funding from coal transition agreements, generate higher-quality carbon credits in the carbon market, and accelerate the energy transition.

“Even though there are currently various requirements for monetizing carbon credits, in the future, the opportunity to utilize carbon financing will become increasingly attractive with the carbon market predicted to grow significantly,” said Illiad.

Meanwhile, from the business community, financing needs such as concessional loans and financial institutions’ credit support will help businesses switch to the renewable energy sector.

“We need a clear energy transition roadmap for the initial stage to know the financing needed. Second, due to the limited availability of public funding, we need financing support from multilateral and philanthropists to secure concessional financing that can be combined with commercial banks. It will provide the appropriate right credit risk for the project, ensuring investors receive adequate returns,” said Ekha Yudha Pratama, Head and Advisory Services, PT. SMI.

To achieve significant emission reduction targets, the Indonesia Clean Energy Forum (ICEF) and IESR in IETD 2023 have presented eight recommendations to accelerate the energy transformation in the Indonesian electricity sector. These recommendations aim to expedite the process and achieve quick results.

First of all, proposing an energy transition linked to social and economic development. IESR and ICEF emphasized the need for clear targets across ministries.

Second, the availability of strong support for renewable energy development in the next five years. The commitment of the G20 leaders, including Indonesia, to triple their renewable energy capacity should be taken seriously. This can be achieved by providing incentives for the renewable energy market and industry.

Third, the increase of transparency and accessibility of renewable energy data through joint collaboration. Comprehensive and accurate data on renewable energy can benefit all stakeholders by reducing uncertainty in project development for Independent Power Producers (IPPs), financial institutions, and supporting system operators. This can lead to more efficient planning in utilizing renewable energy and its resources.

Fourth, establish a research center for renewable energy, focusing on solar and wind, to operate a flexible and reliable system amidst supply variations and demand uncertainty.

Fifth, it is essential to encourage and support local governments, businesses, and communities in identifying renewable energy potential and developing local energy transition plans. The energy transition process should involve all parties, and the first step towards achieving this goal is to identify different groups of actors and hold dialogues with them.


Sixth, reviewing and merging policies and regulations to facilitate renewable energy projects to find competitive tariffs. These policies should aim for more ambitious renewable energy targets, transparent and regular scheduling of renewable energy project procurement processes, and mitigation of various risks that may arise from renewable energy development.

Seventh, exploring and testing financing structures, including coal-to-renewable energy projects with private developers and financial institutions, and utilizing them through a just energy transition cooperation scheme (Just Energy Transition Partnership/JETP) and the Energy Transition Mechanism (ETM).

Eighth, prioritizing the energy transition as a central issue in the political manifestos of national and provincial leadership candidates ahead of the election is of utmost importance. The energy transition will impact society in various ways, such as energy affordability and security in the short term and the long-term effects of climate change on people’s livelihoods. Therefore, Indonesia needs strong leadership to ensure a smooth transition towards sustainable energy sources. The Institute for Essential Technology and Development (IETD) strongly encourages the energy transition to be one of the main agendas discussed during the campaign period, as it will significantly impact the country’s future.

The Indonesia Clean Energy Forum (ICEF) and the Institute for Essential Services Reform (IESR), in collaboration with the Ministry of Energy and Mineral Resources (MEMR), held the 2023 Indonesia Energy Transition Dialogue (IETD) on 18-20 September 2023.

Integration of Larger Renewable Energy Capacities Requires Energy System Reform

press release

Jakarta, September 19, 2023 – The Indonesia Clean Energy Forum (ICEF) and the Institute for Essential Services Reform (IESR) are urging Indonesia to reform its electricity system to accommodate the integration of larger capacities of renewable energy, particularly solar and wind, also known as variable renewable energy (VRE). This would involve flexible operation of the electricity system, strengthening VRE forecasting capabilities, and revitalizing the network infrastructure.

There are at least three key considerations. Firstly, incentives for players involved in operating a flexible electricity system. Secondly, transparency in the procurement processes for renewable energy generation and network infrastructure. Thirdly, regulatory reforms to accommodate flexible electricity system operation and encourage greater adoption of renewable energy.

The opportunity to reform Indonesia’s electricity system with a larger share of renewable energy capacity requires substantial investment support. Hasyim Daeng Barang, Director of Mineral and Coal Downstream at the Ministry of Investment and BKPM RI, stated that investor interest in renewable energy development in Indonesia is growing. The ministry is committed to facilitating investor needs, especially regarding the initiation of new renewable energy projects, by coordinating and connecting investors with relevant stakeholders.

“The Ministry of Investment/BKPM is also working to provide comprehensive information to investors through the preparation of Investment Projects Ready to Offer, including pre-feasibility study documents for strategic projects in various regions,” explained Hasyim during the second day of the Indonesia Energy Transition Dialogue 2023 on Tuesday (9/19/23).

Furthermore, BKPM emphasizes that alongside promoting investment in potential/priority sectors, sustainability remains the responsibility of the entire economy.

In his presentation, Michael Waldron, Senior Advisor Program Manager at the International Energy Agency (IEA), introduced six stages of VRE integration into the electricity system. According to Michael, Indonesia, with its current VRE mix still below 1%, is in the first stage of VRE integration. This means that VRE operation has a very minor impact on the electricity system. However, future planning should significantly consider a higher VRE mix as the cost of VRE generation has been declining over the past decade.

Regarding the electricity system’s prices and investment costs in Indonesia, Michael believes they are still above international market rates. This makes renewable energy development economically less attractive in Indonesia. He encourages Indonesia to reduce costs through contract and operational reforms within the electricity system to attract more investments. Inter-island electricity network integration connects renewable energy sources with demand centers. He added that contract and operational reforms should also target conventional power plants, such as coal-fired, which can play a role in flexible electricity system operation.

He believes that progress in interconnection within ASEAN and flexible energy system operation in Indonesia will accelerate emissions reduction and cost savings.

“Indonesia’s energy system can prepare for a larger share of renewable energy through new contracts, providing incentives for investments in the electricity network, developing system flexibility strategies, and adapting network planning and operation to maximize the share of variable renewable energy and establish a vision for a smart grid,” Waldron expressed.

Munawwar Furqan, General Manager of PLN Unit Induk Pusat Pengatur Beban Jawa, Madura, and Bali (PLN UIP2B Jamali), mentioned that renewable energy generation with variable energy variations is currently located in Sulawesi, consisting of 5 renewable energy generators with a total capacity of 170 MW, including Likupang SPP (15 MW), Sumulata SPP (2 MW), Sidrap WPP (77 MW), and Tolo (Jeneponto) (66 MW). However, Munawwar pointed out that they have identified several challenges in operating an energy system accommodating variable renewable energy, including the intermittent nature of renewable energy affecting the system, changing reliability, and frequency.

“Several strategies are being implemented to control the intermittency of variable renewable energy, such as revising the grid code for network users, forecasting and load curtailment for system stability, and installing battery energy storage systems. Forecasting capacity is essential for operating generators with variable renewable energy to manage variability and anticipate it,” he explained.

Deon Arinaldo, Energy Transformation Program Manager at IESR, suggested that relevant parties should inventory weather forecast data to make more accurate forecasting and more efficient renewable energy generation investment planning.


“Collaboration with other parties like BMKG for weather forecasts is important and potential. Actual weather conditions in each location must be considered. The availability of weather forecast data on solar radiation for the public is crucial as it will benefit many parties. Accurate data forms the basis for system flexibility, allowing us to assess battery needs, variable renewable energy variations, and more,” Deon stated.

Highlighting energy storage to support renewable energy integration, Indonesia, through the Indonesia Battery Corporation (IBC), is increasingly concerned about Battery Energy Storage System (BESS) plans or technology for storing electrical energy using specialized batteries. BESS will store excess energy from renewable energy systems to supply loads when renewable energy sources cannot generate power.

“Several factors contribute to the success of BESS projects, including technology, competitiveness, price, innovation, and market growth. Battery prices continue to decline and are expected to fall below $200/kWh, so we are optimistic that BESS development is the right moment for Indonesia’s future,” said Bayu Yudhi Hermawan, VP Business Development at Indonesia Battery Corporation (IBC).

IBC is building an integrated industry from upstream to downstream to produce battery cells for electric vehicles, including cars and motorcycles. Indonesia has significant potential as the world’s largest nickel producer, the primary raw material for electric vehicle batteries.

“Therefore, IBC is currently working on nickel-based projects, primarily for the downstream ecosystem of electric vehicles and batteries. Concerning capability investments, we believe we can compete with other countries. Our resources are number one globally regarding reserves and nickel production,” Bayu stated.

Solar Energy Plays Key Role in Energy Transition of Power System


Jakarta, April 15, 2023 –  A careful planning strategy is essential to encourage the use of solar energy in the electricity system.  The Government of Indonesia and PLN (the national power utility) released the new Electricity Business Plan (RUPTL) 2021-2030, which sets out Indonesia’s future power capacity by increasing the number of New Renewable Energy (EBT) generators. The target of the EBT mix in the National Electricity General Plan (RUKN) is around 23% in 2025. It was stated by Alvin Putra Sisdwinugraha, Researcher of Electricity Systems and Renewable Energy at the Institute for Essential Services Reform (IESR), in the Solar Energy Talk #3 events, the results of collaboration between Solar Scholars Indonesia (SSI), IESR, PPI Australia, Korean Indonesian Research Association (APIK), Insygnia, and Solarin.

“Referring to the RUPTL, solar energy will play an important role in Indonesia’s electricity to achieve net zero emission (NZE), while the utility-scale is still the biggest contributor. However, this is not enough for Indonesia to pursue its 2050 decarbonization target,” Alvin Putra Sisdwinugraha stated.

Several potential clusters within the RUPTL are the mining sector, the tourism sector, the fisheries sector, Solar Power Plants (rooftop solar PV), floating solar PV, and other sectors with a total capacity of up to 2.1 Giga Watt (GW). Regarding floating solar PV, Alvin said the issuance of Minister of Public Works Regulation No. 6 of 2020 is a breath of fresh air for developing renewable energy in Indonesia because it allows the use of space in reservoir/dam areas of around 5% at normal water levels. Regarding these regulations, The Ministry of Energy and Mineral Resources (ESDM) has mapped out the potential for floating PLTS of 28.4 GW, with 4.8 GW of existing hydropower.

“Although the potential is quite large, unfortunately, there are no specific technical regulations regarding the safety of the dam/reservoir. This can be reflected in the development of a floating Solar PV in Cirata, West Java, which a private developer is carrying out,” he explained.

On the other hand, to encourage the use of solar energy, the government has signed Presidential Regulation (Perpres) Number 112 of 2022 concerning accelerating the development of renewable energy for electricity supply. This regulation strengthens the government’s commitment to energy transition in achieving the NZE. One of the things discussed in the Presidential Decree, said Alvin, is that the price for electricity from PLTS is based on the highest benchmark price.

“Although it depends on the bidding scheme that will be implemented by the Government and PLN, pricing for PLTS based on the highest price benchmark is expected to provide room for more small-capacity PLTS to develop,” he remarked.

Emission Reduction in Transportation

Kendaraan Listrik

Jakarta, February 20, 2023 – Decarbonizing the transportation sector is one of the key agendas to achieve Indonesia’s net zero emission target by 2060. The transportation sector is the second largest GHG emitter (23%), which road transport contributing 90% of the sector’s emissions, with total emissions in the energy sector closing to 600 MtCO2eq in 2021 (IESR, IEVO 2023).

In a low carbon scenario compatible with the Paris Agreement target (LCCP), emissions from transportation in Indonesia must decline to 100 MtCO2eq in 2050. Meanwhile, in the IESR’s calculation the entire energy sector, including transportation, must be near zero by 2050 to keep the global temperature rise below 1.5 °C. To achieve that, the electrification of transportation and utilization of other sustainable fuels should be prioritized.

One way to decarbonize road transport is by increasing the utilization of electric vehicles (EVs). The substitution of conventional internal combustion engine (ICE) vehicles with EVs is not only a solution to avoid direct GHG emissions from burning fossil fuels but will be a more economical choice given the high energy efficiency of EV technology. EVs are projected to represent more than 60% of vehicles sold globally by 2030. Hence, the supporting infrastructure for EVs in Indonesia, such as EV chargers, urgently needs to be prepared.

Despite the promises, people still doubt or even argue that EVs are not a truly GHG emission reduction solution. The reason is that the source of electricity for charging EVs still comes from fossil fuel power plants, particularly in Indonesia where about 67% of the electricity comes from coal-fired power plants (CFPPs). Moreover, EVs battery manufacturing processes are also highly energy-intensive and produce a high amount of GHG.

In this respect, the decarbonization of the transportation sector must be viewed from a long-term perspective with optimism. Concern regarding the source of electricity for EVs is indeed a great challenge to increasing EVs utilization. Therefore, EVs development plans should be integrated with the multi-sector decarbonization pathway because high EV adoption could potentially help another sector, namely the power sector.

The Bottleneck in Power Sector

One of the reasons for slow renewables development in Indonesia is the oversupply condition in the power system. Moreover, the system has a high reserve margin (power reserve), which is estimated to reach 56% in 2022 , while the typical reserve margin according to PLN’s RUPTL is in the range of 15-40%. The conditions are said due to the demand overestimation and the effect of the global pandemic. 

Unfortunately, most of the new operating power plants are CFPPs which cannot operate flexibly because they are constrained by take or pay agreements. Meanwhile, some CFPPs, especially older ones, are constrained to operate flexibly due to their limited technical abilities such as slow ramping rates, high minimum load, and long start-up time.

Based on these issues, there should be an increase in electricity demand or the retirement of fossil-fuel generators, with or without intervention, to allow higher renewables penetration. In this regard, EV utilization development, with the proper strategy, can be used as a tool that helps minimize problems in the power system. 

The high adoption rate of EVs could potentially absorb the excess electricity supply from the operating power generators. In IESR’s deep decarbonization scenario, the demand for transportation electrification will reach 136 by 2030 (approximately 28.6% of total electricity demand) [2]. In other words, the electrification of the transport sector can be a strategic approach to cut down the oversupply issue and make room for more renewables in the power system. Besides, electrification will significantly cut down the direct GHG emission and improve energy security through fuel import reduction.

Electric Vehicles Value in Power System

An electric vehicle is essentially a large battery connected to an electric motor and wheels. Simply, it is a moving energy storage asset. An EV car today has an average battery capacity of about 40 kWh which can be viewed as a valuable asset for the power grid. It is a fairly large capacity considering a home storage battery unit typically has a capacity of no more than half of the EVs’. Hence, any additional value of EVs should be enabled through vehicle-grid integration (VGI).

Various VGI schemes have been developed, namely, V1G (one-directional energy flow), V2G (bidirectional energy flow), V2B (vehicle to building), etc. Suitable integration strategies can benefit both EV owners and grid operators. Through V1G, for example, the grid operator may apply different charging tariffs at specific charging hours that would influence the charging behavior of EV owners. Grid operators can maintain the peak loads, avoiding additional operating costs or the need for capacity addition. In return, EV owners will get the incentive of low charging tariffs during off-peak hours.

In further implementations, VGI can be promoted to V2G. The EV fleets can collectively act like a stationary energy storage system (ESS) where the grid operator can buy electricity from EV’s battery to be supplied to the grid when needed. However, its implementation will require regulations related to interconnection.

In addition to regulations, VGI will require the development of supporting infrastructures relevant to the power sector development roadmap. Considering the penetration rate of renewables, the adoption rate of EVs, and today’s typical load profile, VGI may begin to be implemented through low tariff incentives at night so that EV owners do home charging overnight. However, once the power system has high solar PV penetration (as what the government plans for the future), there will be high electricity generation during the day. Don’t we need to prepare more public charging infrastructure? Or is there another strategy?