KEY STATISTICS and Targets
Indonesia’s power sector is dominated by coal, which was responsible for over 60% of power generation in 2021. Together with its second-largest power source — natural gas (18%) — and oil (2%), fossil fuels account for 82% of Indonesia’s electricity supply. Established renewable energy sources such as geothermal (8%), hydro (5%) and biofuels and waste (5%) also provide a relevant share of the country’s power, whereas wind and solar still hold negligible shares accounting for a combined 0.2% of power generated in 2021.
The largest share of electricity is used in households (45%), followed by industry (31%) and services (16%).
Power Sector Trends
Capacity and GenerationIn line with regional trends, Indonesia’s power sector has grown substantially in the past decade. Installed capacity has more than doubled since 2010 while generation has increased by 80%. While in the 2000s, coal and gas were jointly dominating the power system, coal has increasingly become the dominant source of electricity generation capacity since 2011. Between 2010 and 2021, Indonesia’s installed coal-fired power generation capacity almost tripled, and now accounts for almost two-thirds of the country’s total power generation.
Oil and hydro, as well as to a smaller extent geothermal have also always played a role in the system, all increasing at a slow but steady pace throughout the past two decades. Due to the archipelagic nature of the country, oil, mainly for off-grid diesel generation, still plays a small but important role in the country’s power supply.
Indonesia has had a steady 11% to 14% share of hydro and geothermal energy in the mix since 2010, down from 18% in 2002. The uptake of other renewables has, however, been much slower. In 2021, wind energy accounted for only 0.2% of the country’s capacity and solar to 0.3%. Indonesia has great natural resources for both technologies with high numbers of sunshine hours evenly distributed across the year. It is also well suited for large scale offshore wind power as three quarters of the country’s area are covered by water, amounting to a total area of almost 1.4 million km2.
All renewables combined generated 13% of Indonesia’s electricity in 2021. The country has set a target to increase the share of renewables to 23% of the primary energy supply by 2025 (incl. other sectors like transport and industry). The country must ramp up its deployment of renewable sources, wind and solar in particular if it wants to stand a chance to meet this target.
| POLICY | EXPLANATION |
|---|---|
| Renewable energy target | 23% of primary energy renewable by 2025 |
| Renewable energy auction | No |
| Net billing | No |
| Feed-in-Tariff | Discontinued (regulation 112/2022), replaced by ceiling tariffs which varying levels depending on the type of renewables and location |
| Import tax incentives | Exemption for machinery and capital for RE |
| VAT incentives | 2-year exemption for good to develop RE |
| Financial incentives | 100% discount on corporate income tax up to 20 years; financial mechanisms in place |
The abundance of domestic coal has underpinned the growth of coal-fired power over the past decades, more than doubling from 16 GW in 2011 to 37 GW in 2021. This growth is expected to continue with almost 14 GW of additional capacity in the pipeline until 2030. The Indonesian government has however issued a regulation in 2022 (112/2022) that includes early retirement plans for some coal power plants – specific policies for this phase-out are still being developed. This is important if the country wants to reach its targets to reduce greenhouse gas emissions to net zero by 2060.
Indonesia had the highest share of investments in the power sector of the four major economies in Southeast Asia between 2010 and 2021, with investments totaling at 44 billion USD. The shares for coal and other fossil fuels were substantially larger than those for renewable energy. In 2016 and 2017 alone, more than 18 billion USD were invested in fossil fuels, this was mainly due to the financing of more than 9 GW of coal power plants. Despite the small share of the overall investments, a total amount of almost 10 billion was invested in renewable energy between 2010 and 2021. These investments have however only led to small growth of renewable energy in total installed capacity.
Note: This is based on an own analysis of collected investment data, which is particularly untransparent in the region. To learn more about the methodology and sources used to derive this data click here.
From 2005 to 2012 all customers had subsidies on the electricity costs. By 2017, however, only 22% of all customers were subsidized. Typical household tariffs are between 1,350 and 1,700 Rp/kWh (0.08 to 0.1 EUR/kWh) and for commercial customers 1,450 Rp/kWh (0.09 EUR/kWh). While these tariffs are on par with the region, the costs of electricity are exceptionally high as a share of income, amounting to 3% to 7.2%. This is a consequence of lower wage levels and is particularly critical for low-income households, where electricity costs more than 7% of the available income.
Note: This is based on an own analysis. To learn more about the methodology and sources used to derive this data click here.
While not officially enshrined in law, Indonesia has set a target to reach net zero greenhouse gas emissions by 2060. The country has also submitted an NDC update in 2022 where it committed to slightly stronger targets than in previous submissions. The decarbonization of the power sector will be decisive to achieve these plans.
| Long-term strategy | Net-Zero GHG by 2060 |
| NDC commitment | 31.9% reduction below business as usual (BAU) by 2030 43.2% reduction below BAU by 2030 (with international support) |
Market Structure and Regulation Read more 
Power Market Structure and Market Participants
Indonesia has opened part of its generation segment to private capital and investment under tight control of the state. 60.7% of electricity generation is state-owned by PT Perusahaan Listrik Negara (PLN), 26.5% by Independent Power Producers (IPP), 7.7% by operating permit holders and 5.1% by private power utilities.
Indonesia’s power system operates through a partially-unbundled single buyer model, with PLN being the main distributor and owner of most of the transmission grid, including eight grids and around 600 isolated networks. Some smaller grids connecting remote areas are owned by IPPs, however frequent policy changes make private sector participation challenging.
| CATEGORY | KEY VALUES |
|---|---|
| Wholesale power market | No (--) |
| OWNERSHIP | |
| Generation Output | 59% PLN (state-owned) 34% IPP 6% Off-Grid (PLN and IPP) |
| Transmission | Majority PLN |
| Distribution and retail | Majority PLN |
| Horizontal Unbundling | Partially unbundled (63% state-owned capacity) |
| Market barriers for IPP | Moderately high level of barriers (-) |
| POLICY | Ministry of Energy and Mineral Resources (MEMR) Ministry of National Development Planning (BAPPENAS) |
| PLANNING | National Energy Council Ministry of National Development Planning (BAPPENAS) |
| REGULATORY | Ministry of Energy and Mineral Resources (MEMR) Ministry of National Development Planning (BAPPENAS) |
| UTILITIES | PT Pertamina PT Perusahaan Listrik Negara (Persero) or PLN |
More Data and Analyses in the Country and Region
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