JAKARTA: Last year, Indonesia once again fell short of its renewable energy (RE) target, as coal and gas continued to anchor the country’s electricity supply.
The outcome stands in contrast to President Prabowo Subianto’s repeated pledges to accelerate the energy transition.
Experts noted that the problems lay in the lack of commitment at the implementation level, including by the state-owned utility firm PLN, as well as a flip-flopping regulatory framework that erodes investors’ confidence to put their skin in local renewable projects.
The contribution of RE to the national energy mix, which refers to total electricity production, rose by only 1.1 percentage points to 15.75% in 2025.
The installed capacity of renewable sources in the national electricity infrastructure actually increased by more than one GW to 15.6GW by the end of last year, supported by a significant rise in hydropower and solar plants, which Energy and Mineral Resources Minister Bahlil Lahadalia called “quite big”.
However, the country’s installed capacity in total grew by around seven GW during the year, largely dominated by fossil fuels, which offset the growth of renewables. Fabby Tumiwa, executive director of the Institute for Essential Services Reform, highlighted that the RE mix realisation has consistently fallen short from the target over the past five years.
The original 2025 target of 23% was lowered to 17% to 19% in the revised National Energy Policy, yet the achieved figure of 15.75% in 2025 still failed to meet the adjusted goal.
“When investors seek to enter the market, they encounter a consistently confusing landscape, marked by entrenched bottlenecks, problematic permitting and unclear regulations,” Fabby told The Jakarta Post on Monday.
He identified regulatory volatility as a primary cause. Incentive mechanisms like the feed-in tariff, once a cornerstone of policy, were revoked, while the net-metering scheme for rooftop solar was abruptly cancelled in 2024.
“What’s mandated by laws and regulations isn’t consistently implemented,” Fabby explained, creating a high-risk perception for investors who see policies as “imprudent”.
Compounding this is the under-delivery on the state electricity utility PLN’s own plans, according to him.
PLN’s 2021-2030 electricity business plan projected 10GW of new renewable capacity by 2025, but only 25% to 30% of that was realised. Recent abrupt permit revocations for energy projects have exacerbated this perception, raising concerns about contractual stability without transparent legal proceedings.
Fabby argued that Indonesia is now perceived as a high-risk destination for energy transition capital.
Investors demand higher returns to offset this risk, which conflicts with the government’s aim for low-cost renewable power, which can help to boost demand from customers. — The Jakarta Post/ANN
