Energy in Indonesia

In 2019, the total energy production in Indonesia is 450.79 million tonnes of oil equivalent, with a total primary energy supply of 231.14 million tonnes of oil equivalent and electricity final consumption of 263.32 terawatt-hours. From 2000 to 2021, Indonesia's total energy supply increased by nearly 60%.
Energy use in Indonesia has been long dominated by fossil resources. Once a major oil exporter that joined OPEC in 1962, the country has since become a net oil importer despite still being in OPEC until 2008 and for a short time in 2016, making it the only net oil importer member in the organization. Indonesia is also the fourth-largest coal producer and one of the biggest coal exporters in the world, with 24,910 million tons of proven coal reserves as of 2016, making it the 11th country with the most coal reserves in the world. In addition, Indonesia has abundant renewable energy potential, reaching almost 417,8 gigawatt (GW) which consisted of solar, wind, hydro, geothermal energy, ocean current, and bioenergy, although only 2,5% have been utilized. Furthermore, Indonesia along with Malaysia, have two-thirds of ASEAN's gas reserves with a total annual gas production of more than 200 billion cubic meters in 2016.
The Government of Indonesia has outlined several commitments to increase clean energy use and reduce greenhouse gas emissions, among others by issuing the National Energy General Plan (RUEN) in 2017 and joining the Paris Agreement. In the RUEN, Indonesia targets New and Renewable Energy to reach 23% of the total energy mix by 2025 and 31% by 2050. The country also commits to reduce its greenhouse gas emissions by 29% by 2030 against a business-as-usual baseline scenario, and up to 41% by international support. It also has committed to phasing out coal power by 2040s, although numerous challenges remain
Indonesia has several high-profile renewable projects, such as the wind farm 75 MW in Sidenreng Rappang Regency, another wind farm 72 MW in Jeneponto Regency, and Cirata Floating Solar Power Plant in West Java with a capacity of 145 MW which will become the largest Floating Solar Power Plant in Southeast Asia.
According to the IEA, energy production increased 34% and export 76% from 2004 to 2008 in Indonesia. In 2017, Indonesia had 52,859 MW of installed electrical capacity, 36,892 MW of which were on the Java–Bali grid. In 2022, Indonesia had an electrical capacity of 81.2 GW with a projected capacity of 85.1 GW for 2023.
In 2021, Indonesia's total energy supply (TES) comprised 30.3% coal, 28.9% oil, and 14.4% natural gas. Renewable energy sources also added to the mix, with biofuels and waste accounting for 13.8%, wind and solar providing 11.6%, and hydro contributing 0.9%.
Indonesia, recognized as the world's largest exporter of thermal coal since surpassing Australia in 2018, plays a significant role in the global coal market, primarily serving Asian countries such as China, India, Japan, and others. As of 2019, Indonesia exported 506 million short tons of coal, making up 32% of the world's coal exports. The country's coal production surged to a record 679 million short tons in 2019, a 12% increase from the previous year. This spike in production led to a drop in prices, prompting the government to set a production cap of 606 million short tons in 2020.
Domestically, Indonesia implemented a Domestic Market Obligation (DMO), requiring mining companies to allocate 25% of their production for local use at a fixed price of $70 per ton. However, due to a reduction in domestic demand in 2020, the Indonesian Coal Mining Association requested a temporary suspension of the DMO.
Indonesia's coal reserves are substantial, estimated to last over 80 years, with significant deposits located in South Sumatra, East Kalimantan, and South Kalimantan. The country has been focusing on increasing exploration and production, which grew by approximately 105% from 2010 to 2020, driven by robust demand in Asia.
In terms of environmental goals, Perusahaan Listrik Negara (PLN), the state electricity company, has plans to phase out coal-powered plants by 2056 to achieve carbon neutrality. Before ceasing new coal power plant constructions after 2023, PLN will complete an additional 42 GW of coal-fired capacity. Furthermore, PLN has started co-firing biomass with coal in 17 power plants to reduce carbon emissions.
The Indonesian coal industry is rather fragmented. Output is supplied by a few large producers and a large number of small firms. Top 10 Coal Companies in Indonesia in the industry include the following:
Coal production poses risks for deforestation in Kalimantan. According to one Greenpeace report, a coal plant in Indonesia has decreased the fishing catches and increased the respiratory-related diseases. Indonesia vies with Australia and Russia for the position as the world's largest coal exporter. Due to the energy transition and political split between Russia and the West over Ukraine, Russia is increasingly orienting its exports towards Asia, providing stiffer competition for Indonesia.
Oil is a major sector in the Indonesian economy. During the 1980s, Indonesia was a significant oil-exporting country. Since 2000, domestic consumption has continued to rise while production has been falling, so in recent years Indonesia has begun importing increasing amounts of oil. Within Indonesia, there are considerable amounts of oil in Sumatra, Borneo, Java, and West Papua Province. There are said to be around 60 basins across the country, only 22 of which have been explored and exploited. Main oil fields in Indonesia include the following:
Indonesia's proved natural gas reserves stood at 49.7 trillion cubic feet in 2021. There is growing recognition in Indonesia that the gas sector has considerable development potential. The Indonesian government is increasingly prioritizing investment in natural gas. However, in practice, investors, especially foreign investors, have been reluctant to invest because many of the problems that are holding back investment in the oil sector also affect investment in gas.
As of mid-2013, the main potential gas fields in Indonesia were believed to include the following:
There is potential for tight oil and shale gas in northern Sumatra and eastern Kalimantan. There is an estimated 46 trillion cu ft (1.3 trillion m) of shale gas and 7.9 billion barrels (1.26×10 m) of shale oil which could be recovered with existing technologies. Pertamina has taken the lead in using hydraulic fracturing to explore for shale gas in northern Sumatra. Chevron Pacific Indonesia and NuEnergy Gas are also pioneers in using fracking in existing oil fields and in new exploration. Environmental concerns and a government-imposed cap on oil prices present barriers to full development of the substantial shale deposits in the country. Sulawesi, Seram, Buru, Papua in eastern Indonesia have shales that were deposited in marine environments which may be more brittle and thus more suitable for fracking than the source rocks in western Indonesia which have higher clay content.
With 453 trillion cu ft (12.8 trillion m) of coal bed methane (CBM) reserve mainly in Kalimantan and Sumatra, Indonesia has potential to redraft its energy charts as United States with its shale gas. With low enthusiasm to develop CBM project, partly in relation to environmental concern regarding emissions of greenhouse gases and contamination of water in the extraction process, the government targeted 8.9 million cu ft (250 thousand m) per day at standard pressure for 2015.
Indonesia aims to get 23% and 31% of its energy from renewable sources by 2025 and 2050 respectively. In 2020, renewables has a 11.2% share of the national energy mix, with hydro and geothermal power making up most of this. Despite its renewable energy potential, Indonesia is struggling to reach its renewable target. The lack of adequate regulation supports to attract the private sector and the regulation inconsistency are often cited among the main reasons for the lack of progress. One policy requires private investors to transfer their projects to PLN (the sole electricity off-taker in the country) at the end of agreement periods, which, combined with the fact that the Minister for Energy and Mineral Resources sets the consumer price of energy, has led to concern about return on investment.
Another issue is related to financing, as to achieve the 23% renewable energy target, it has been estimated that Indonesia needs to invest US$154 billion. The state is unable to raise so much capital, while there is reluctance from both potential investors and lending banks to get involved. There is also a critical challenge related to cost. Renewable energy projects is still require large up-front investment and as the electricity price has to be below the Region Generation Cost (BPP) (which is already low enough in some major areas), it renders projects economically unattractive. Indonesia also has large coal reserves and is one of the world's largest net exporters of coal, making it less urgent to develop renewable-based power plants compared to countries that depend on coal imports.
The country has been recommended to remove subsidies for fossil fuels, establish a ministry of renewable energy, improve grid management, mobilize domestic resources to support renewable energy, and facilitate entry for international investors. Continued reliance on fossil fuels by Indonesia may leave its coal assets stranded and result in significant investments lost as renewable energy is rapidly becoming cost-efficient worldwide.
In February 2020, it was announced that the People's Consultative Assembly is preparing its first renewable energy bill.
An estimated 55% of Indonesia's population, 128 million people, primarily rely upon traditional biomass (mainly wood) for cooking. Reliance on this source of energy has the disadvantage that poor people in rural areas have little alternative but to collect timber from forests, and often cut down trees, to collect wood for cooking.
A pilot project of Palm Oil Mill Effluent (POME) Power Generator with the capacity of 1 Megawatt has been inaugurated in September 2014.
Indonesia has 75 GW of hydro potential, although only around 5 GW has been utilized. Currently, only 34GW of Indonesia's total hydro potential can feasibly be utilized due to high development costs in certain areas. Indonesia also set a target of 2 GW installed capacity in hydroelectricity, including 0.43 GW micro-hydro, by 2025. Indonesia has a potential of around 459.91 MW for micro hydropower developments, with only 4.54% of it being currently exploited.
Indonesia uses some geothermal energy. According to the Renewable Energy Policy Network's Renewables 2013 Global Status Report, Indonesia has the third largest installed generating capacity in the world. With 1.3 GW installed capacity, Indonesia trails only the United States (3.4 GW) and the Philippines (1.9 GW), ahead of Mexico (1.0 GW), Italy (0.9 GW), New Zealand (0.8 GW), Iceland (0.7 GW), and Japan (0.5 GW). The current official policy is to encourage the increased use of geothermal energy for electricity production. Geothermal sites in Indonesia include the Wayang Windu Geothermal Power Station and the Kamojang plant, both in West Java.
The development of the sector has been proceeding rather more slowly than hoped. Expansion appears to be held up by a range of technical, economic, and policy issues which have attracted considerable comment in Indonesia. However, it has proved difficult to formulate policies to respond to the problems.
Two new plants are slated to open in 2020, at Dieng Volcanic Complex in Central Java and at Mount Patuha in West Java.
On average, low wind speeds mean that for many locations there is limited scope for large-scale energy generation from wind in Indonesia. Only small (<10 kW) and medium (<100 kW) generators are feasible. For Sumba Island in East Nusa Tengarra (NTT), according to NREL, three separate technical assessments have found that "Sumba's wind resources could be strong enough to be economically viable, with the highest estimated wind speeds ranging from 6.5 m/s to 8.2 m/s on an annual average basis." A very small amount of (off-grid) electricity is generated using wind power. For example, a small plant was established at Pandanmino, a small village on the south coast of Java in Bantul Regency, Yogyakarta Province, in 2011. However, it was established as an experimental plant and it is not clear whether funding for long-term maintenance will be available.
In 2018, Indonesia installed its first wind farm, the 75 MW Sidrap, in Sidenreng Rappang Regency, South Sulawesi, which is the biggest wind farm in Southeast Asia. In 2019, Indonesia installed another wind farm with a capacity of 72 MW, in Jeneponto Regency, South Sulawesi.
The Indonesian solar PV sector is relatively underdeveloped but has significant potential, up to 207 GW with utilization in the country is less than 1%. However, a lack of consistent and supportive policies, the absence of attractive tariff and incentives, as well as concerns about on-grid readiness pose barriers to the rapid installation of solar power in Indonesia, including in rural areas.
As of early 2023, Indonesia has an installed capacity of 322 MW, and the country has a target of 5 GW by 2030.
The country's largest solar plant is the floating solar system at the Cirata Reservoir, with a capacity of 145 MW, inaugurated in November 2023.
With over 17,000 islands, Indonesia has great potential for tidal power development. The Alas Strait, a 50km stretch of ocean between Lombok and Sumbawa Island, alone could potentially yield 640 GWh of energy annually from tidal power. As of 2023, despite evidence of great potential, no Indonesian tidal power facilities have been developed.
Much of the energy in Indonesia is used for domestic transportation. The dominance of private vehicles - mostly cars and motorbikes - in Indonesia has led to an enormous demand for fuel. Energy consumption in the transport sector is growing by about 4.5% every year. There is therefore an urgent need for policy reform and infrastructure investment to enhance the energy efficiency of transport, particularly in urban areas.
There are large opportunities to reduce both the energy consumption from the transport sector, for example through the adoption of higher energy efficiency standards for private cars/motorbikes and expanding mass transit networks. Many of these measures would be more cost-effective than the current transport systems. There is also scope to reduce the carbon intensity of transport energy, particularly through replacing diesel with biodiesel or through electrification. Both would require comprehensive supply chain analysis to ensure that the biofuels and power plants are not having wider environmental impacts such as deforestation or air pollution.
The electricity sector in Indonesia, managed primarily by the state-owned enterprise Perusahaan Listrik Negara (PLN), faces significant challenges due to the country's archipelagic nature, which includes over 17,000 islands. By 2020, Indonesia had installed approximately 63.3 gigawatts (GW) of electrical generation capacity, producing around 275 terawatt-hours (TWh) annually, predominantly from fossil fuels such as coal, natural gas, and oil, alongside contributions from renewable sources like hydroelectric and geothermal power to align with the Paris Climate Agreement's goal of increasing renewable energy to at least 23% by 2025. Despite substantial progress in electrification, with rates increasing from 67% in 2010 to over 99% in 2020, the country still grapples with issues of reliability and service quality, especially in remote and eastern regions where infrastructure challenges and logistical issues often result in frequent power outages and service disruptions.
Indonesia aims to achieve net zero emissions by 2060 or sooner as part of its development goal to become an advanced economy by 2045.
Carbon tax provisions are regulated in Article 13 of Law 7/2021 in which a carbon tax is to be imposed on entities producing carbon emissions that have a negative impact on the environment. Based on Law 7/2021, the imposition of the carbon tax is to be carried out by a combination of two schemes, a carbon tax (cap and tax) and carbon trade (cap and trade).
In the carbon trade scheme, individual or company ("entities") that produce emissions exceeding the cap are required to purchase emission permit certificates ("Sertifikat Izin Emisi"/SIE) from other entities that produce emissions below the cap.
In addition, entities can also purchase emission reduction certificates ("Sertifikat Penurunan Emisi"/SPE). However, if the entity is unable to purchase SIE or SPE in full for the resulting emissions, the cap and tax scheme will apply where entities producing residual emissions that exceed the cap will be subject to carbon tax.
Indonesia implemented a carbon tax in April 2022, initially targeting the power sector with intentions to expand to other sectors by 2025, based on readiness. This tax is part of a broader approach to decarbonization, regulated under the Law of the Harmonization of Tax Regulations. It complements a domestic emissions trading system (ETS) set to become mandatory by 2024. Non-compliant installations under the ETS will incur a carbon tax, linked to the domestic carbon market price.
In Indonesia's electricity supply plan for 2021-2030 (RUPTL), the state electricity company, Perusahaan Listrik Negara (PLN), targets substantial growth in renewable energy, aiming for renewables to account for over half of the capacity additions. The plan includes 10 gigawatts (GW) of hydro and about 3 GW from geothermal, with smaller additions from wind (0.4 GW) and solar photovoltaic (PV) (4.7 GW). Coal is expected to make up one-third of additions (about 14 GW), with no new coal capacity planned post-2030. Natural gas will contribute about 14% to new additions.
Indonesia's Ministry of Energy and Mineral Resources (MEMR) is advancing bioenergy utilization with initiatives like setting up waste-to-energy plants in 12 cities, implementing co-firing in coal generators, and increasing the use of liquid biofuels. The rise in palm oil production has led to a higher proportion of biofuel blending in diesel, supported by the National Energy Law of 2007, which established blending mandates and subsidy mechanisms. Since 2015, regulations have raised biodiesel's share in diesel consumption to 30% by January 2020, up from 20% in 2019. The goal for bioethanol blending is to reach 20% by 2025, starting from a 10% target in 2020. The government intends to further raise biodiesel blending to 40% (B40) and supports the construction of refineries to transform waste bioenergy into biofuels, including bio-based liquefied petroleum gas (LPG) and naphtha.
Indonesian firms
Foreign firms
The CO2 emissions of Indonesia were greater than those of Italy already in 2009. Indonesia's total greenhouse gas emissions including construction and deforestation in 2005 put Indonesia among the top four in the world after China, the US and Brazil. In 2022, Indonesia ranked 7th in the world in total fossil CO2 emissions, and 88th in per capita emissions. The carbon intensity of electricity generation, at over 600 gCO2/kWh, is higher than those most other countries. Energy sector emissions in 2021 were around 600 million tonnes, making Indonesia the ninth-largest emitter globally.