Indonesia’s Ambitious Shift Towards Renewable Energy and Its Challenges

Indonesia has long depended on coal for its energy needs. Now, it’s making a major move towards clean energy, with a new strategy called the Comprehensive Investment and Policy Plan (CIPP). Backed by a whopping $20 billion from international banks, the CIPP is at the forefront of Indonesia’s shift to greener power sources. As part of the Just Energy Transition Partnership (JETP) guided by the US and Japan, Indonesia is set to cut down its power grid emissions to 250 million tons of CO2 by 2030. That’s a big drop from their current output of over 350 million tons.

  • Indonesia’s current energy mix is heavily dependent on coal, accounting for about 60% of the country’s electricity.
  • The CIPP seeks to increase renewable energy’s share to 44% by 2030, up from 12% in 2022.
  • Despite commitments to halt new coal plants, exemptions exist for projects already in the pipeline or linked to national development.

Challenges in Energy Transition

Indonesia’s transition to renewable energy is not without challenges. The state utility, Perusahaan Listrik Negara (PLN), estimates a need for approximately $172 billion by 2040 to add 60GW of new renewable capacity and enhance the grid. This includes a $5 billion investment for a smart grid to support variable green energy like wind and solar power.

  • “There is no transition without transmission,” says Evy Haryadi, PLN’s director, highlighting the importance of developing efficient transmission systems.
  • Darmawan Prasodjo, CEO of PLN, emphasizes that 75% of new generation capacity will be renewable, with the remaining 25% being gas-based.

While the $20 billion investment marks a significant step, it falls short of enabling a complete transformation. The CIPP has faced criticism for offering market-rate loans rather than special financing, potentially leading to high costs and discouraging similar initiatives in other countries.

Indonesia’s Renewable Energy Potential and International Support

Indonesia guzzles more energy than any other country in the Association of Southeast Asian NationsASEAN) and is a big deal in the worldwide switch to greener energy sources. The International Renewable Energy Agency (IRENA) put out this report called the Indonesia Energy Transition Outlook to pull in dollars for Indonesia’s eco-friendly makeover. With its wealth of renewable energy sources, Indonesia’s got a shot at being a leading provider of clean energy around the neighborhood.

Local Environmental Impact and Social Challenges

The transformation has a direct impact on local communities. For instance, the fishermen in Kanci village near Cirebon have witnessed a decline in their catch and an increase in respiratory illnesses, attributed to a nearby coal-fired power plant. Although plans are underway to retire older plants, the introduction of new, larger coal plants like Cirebon 2 raises questions about Indonesia’s commitment to its net-zero goal by 2060.

  • The early retirement of two coal plants by 2037 is a part of Indonesia’s effort to reduce carbon emissions.
  • Transitioning to cleaner energy sources is a complex and costly process, especially in a country where millions live below the poverty line.
  • Indonesia plans to significantly increase its solar power capacity, including the development of Southeast Asia’s largest floating solar farm on Cirata Dam.

Strategic Importance of Indonesia’s Energy Shift

Indonesia is turning to renewable energy not just to lower its greenhouse gas output, but also to take advantage of economic benefits. Using more renewable energy could mean Indonesia relies less on imported fossil fuels, sees more stable energy prices, and grows new sectors with fresh job opportunities. Besides, moving away from coal power like in Kanci village can lessen the damage to the environment and people’s health that we often see around these plants.

International Collaboration and Funding

The international community’s role in Indonesia’s energy transition is pivotal. The $20 billion funding from global lenders under the CIPP is just the starting point. Continued financial and technological support from developed nations and international organizations is essential for Indonesia to meet its ambitious renewable energy targets. Collaborations like these not only facilitate the sharing of best practices but also reinforce the global commitment to a sustainable future.


Indonesia’s journey towards renewable energy is a balancing act between environmental commitments and socio-economic realities. The CIPP provides a foundational step in this direction, but realizing the full potential of Indonesia’s renewable resources requires overcoming significant challenges. The transition not only involves substantial financial investments but also necessitates careful consideration of local environmental and social impacts.

For more details on Indonesia’s energy sector and renewable initiatives, visit the International Renewable Energy Agency (IRENA) website.

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