Didik Prasetiyono, Vice Chairman, Indonesian Industrial Estate Association (HKI)
By Didik Prasetiyono
Vice Chairman, Indonesian Industrial Estate Association (HKI)
Panelist at Indonesia Sustainable Energy Week (ISEW)–IndoSolar 2026
Indonesia is entering a more decisive phase of its energy transition. Over the past several years, much of the discussion has focused on energy-mix targets, additions to renewable generation capacity, emissions reductions, and reducing dependence on fossil fuels. These targets are important because they provide direction for investment and policymaking. Yet once the targets have been set, the more difficult work begins: how to build an increasingly clean energy system without compromising the reliability of electricity supply, placing excessive burdens on the economy, or weakening industrial competitiveness.
These issues came to the forefront at Indonesia Sustainable Energy Week (ISEW) 2026, held alongside IndoSolar 2026 in Jakarta on 19–20 August 2026. The first day’s theme, From Targets to Action: Delivering Indonesia’s Energy Transition, was particularly relevant as the discussion began to shift from the scale of Indonesia’s renewable energy potential and targets toward the challenges of implementation: grid access, system readiness, regulation, financing, and consumers’ ability to obtain low-carbon electricity. In a session on power-sector reform, representatives from government, PLN, industry, the solar energy association, and legal practitioners came together to examine the same challenge from different perspectives.
The direction of national policy is becoming increasingly clear. PLN’s 2025–2034 Electricity Supply Business Plan (RUPTL) envisages the addition of 69.5 gigawatts (GW) of generation and energy-storage capacity over ten years. Of this amount, 42.6 GW will come from new and renewable energy, while 10.3 GW will come from energy storage systems. Solar photovoltaic (PV) will account for the largest addition, at 17.1 GW, followed by hydropower at 11.7 GW, wind at 7.2 GW, geothermal at 5.2 GW, and bioenergy at 0.9 GW. When renewable energy and storage are combined, they account for approximately 76 percent of the planned capacity additions through 2034. This direction represents an important shift in the development of Indonesia’s power sector.
However, installed capacity alone does not tell the whole story. One gigawatt of solar PV capacity has a different generation profile from one gigawatt of generation that can operate almost continuously. Solar PV produces electricity based on sunlight availability, while wind generation depends on wind conditions. As the share of these sources increases, the system will require energy storage, flexible generation, interconnection, increasingly accurate generation forecasting, and a grid capable of managing supply fluctuations over time.
Therefore, the figure of 76 percent does not mean that 76 percent of Indonesia’s electricity in 2034 will automatically come from renewable energy. There is an important distinction between installed capacity, the energy actually generated, and the low-carbon electricity ultimately delivered to consumers. This distinction matters because the success of the energy transition will ultimately be determined not by capacity recorded on paper, but by the system’s ability to provide increasingly clean electricity reliably and sustainably.
Energy Is Available, but Not Always Close to Where It Is Needed
Indonesia possesses vast renewable energy resources, but nature does not distribute those resources according to the map of industrial estates. Hydropower potential follows rivers and topography; geothermal resources follow geological conditions; and large-scale solar and wind development requires suitable resources and land. At the same time, the largest concentrations of electricity consumption and industrial activity remain centered in Java and several major economic corridors.
On the demand side, the need for low-carbon electricity is becoming increasingly tangible. Multinational companies are extending their decarbonization targets throughout their supply chains. Electronics, automotive, battery, consumer goods, data center, and export-oriented manufacturing industries are increasingly considering energy sources in their investment decisions. Access to green electricity is becoming part of the discussion over where factories should be located, alongside land, logistics, water, labor, and incentives.
Indonesia therefore faces a distinctive challenge. Renewable energy resources are available, and industrial demand is emerging, but the two are not always located in the same place. Enormous energy potential in one region cannot realize its full economic value if the centers of consumption are hundreds or even thousands of kilometers away.
At this point, the challenge of the energy transition begins to shift. The question is no longer simply how to generate green electricity, but how to deliver it to where it is needed.
Transmission as Industrialization Infrastructure
The 2025–2034 RUPTL recognizes this need by planning approximately 47,758 circuit-kilometers of new transmission lines and an additional 107,950 MVA of substation capacity. This is not simply a matter of adding grid capacity. PLN itself has identified the mismatch between the location of renewable energy resources and centers of electricity demand, including industrial estates, as one of the principal challenges facing Indonesia’s power system. Much of the country’s renewable energy potential is located far from consumption centers. The ability to generate clean electricity must therefore be accompanied by the ability to transmit it to where that electricity is needed. The scale of transmission development envisaged in the RUPTL demonstrates that Indonesia’s energy transition is, fundamentally, also a massive energy-connectivity project.
Transmission networks have traditionally been viewed as technical infrastructure within the electricity sector. In a low-carbon economy, however, their role becomes far more strategic. Toll roads connect production centers with markets. Ports connect industry with global trade. In the same way, transmission infrastructure will increasingly determine Indonesia’s ability to connect clean energy resources with centers of economic activity.
Without adequate transmission infrastructure, additional renewable generation risks being constrained in its ability to deliver electricity. Conversely, a strong grid allows energy resources from different regions to support one another, increases system flexibility, and opens opportunities for renewable projects that might otherwise be difficult to develop because they are located too far from demand centers. Transmission development should therefore be viewed not merely as a consequence of adding generation capacity, but as a prerequisite for unlocking new generation potential.
This is precisely where PLN’s role becomes even more important. Indonesia’s energy transition does not require a smaller PLN. It requires a stronger PLN, increasingly capable of managing and integrating a much more complex electricity system. At the same time, the enormous scale of investment required means that private-sector capital, technology, and project-development capabilities will remain essential. Industry stands on the demand side and needs certainty that energy will be available when required, at the necessary quality and at competitive prices.
The relationship among these three actors need not be framed as competition. PLN has the grid and responsibility for maintaining system reliability; the private sector brings investment and technology; while industry provides demand that can create certainty for long-term investment. Government, meanwhile, has the responsibility to establish regulatory and financing frameworks that allow all three to work together under sound governance.
Expanding Access to Green Energy Without Weakening the System
The debate surrounding Pemanfaatan Bersama Jaringan Transmisi (PBJT), or shared utilization of transmission networks—often associated in Indonesian power-sector discussions with power wheeling—frequently becomes a contest over who should be allowed to use the grid and who might lose market share. Yet the needs of industry are more practical. Companies with decarbonization targets require credible mechanisms to obtain low-carbon electricity, but these needs must be met without compromising system reliability or disproportionately shifting costs onto other consumers.
PBJT can be one instrument, but it is not the only one. Renewable Energy Certificates (RECs), green electricity tariffs, renewable generation for self-consumption, dedicated supply arrangements, long-term power purchase agreements, and other procurement mechanisms can be developed according to system characteristics and consumer needs. During the discussions at ISEW 2026, grid access, technical readiness for integrating renewable energy, and the regulatory framework were identified as interconnected challenges.
Industrial demand for green energy can even become part of the solution to the investment challenge. Industrial consumers capable of making long-term purchasing commitments can provide demand certainty for developers and financial institutions. With the right regulatory design, industrial demand for low-carbon electricity need not become an additional burden on the system; instead, it can help create a market that accelerates investment in renewable energy.
Electrification Does Not Automatically Mean Decarbonization
The push toward electrification must also be placed within a broader framework. Electric vehicles are becoming more widespread, industrial processes are shifting from direct fuel consumption to electricity, and the growth of data centers is creating new sources of large-scale electricity demand. These developments are positive because electricity can, in principle, become progressively cleaner as the generation mix changes.
However, electrification does not automatically mean decarbonization. Electric vehicles may produce no tailpipe emissions, but the electricity used to charge their batteries still comes from the power system. Similarly, a factory that replaces a fossil-fuel boiler with an electric boiler does not automatically become low-carbon if the additional electricity demand is still supplied by emissions-intensive generation.
Growth in electricity consumption must therefore be accompanied by a decline in the power system’s carbon intensity. Electrification should continue to accelerate because it offers significant technological and efficiency benefits, but the electricity supplying it must also become progressively cleaner. If only one side of this equation advances rapidly, the decarbonization benefits will remain limited.
Coal and the Economic Cost of Transition
The next reality is coal. Indonesia’s energy structure remains deeply connected to the commodity. Data from the Ministry of Energy and Mineral Resources indicate that coal still accounts for approximately 40 percent of national primary energy supply, while coal-fired power plants continue to play a major role in electricity generation. At the same time, Indonesia remains one of the world’s largest coal producers and exporters.
This reality cannot be used as a reason to postpone the transition, but it cannot be ignored when determining its pace. Coal is not merely a fuel for power generation. Behind it are investments in power plants and mining operations, long-term contracts, national and regional government revenues, workers, transport companies, ports, and economic activity across numerous producing regions.
With such a structure, the success of the energy transition cannot be measured simply by how quickly coal capacity can be retired. A more complete calculation must consider how quickly replacement capacity can be built, whether transmission infrastructure is ready, how much energy storage and flexible generation will be required, what the impact will be on electricity tariffs, and what will happen to workers and regions whose economies remain dependent on coal.
Reducing the role of coal-fired power generation must therefore proceed in parallel with the readiness of the replacement system. Low-carbon capacity must first be built and connected to demand centers, while energy storage and system flexibility must be strengthened. As the replacement system becomes increasingly ready, the role of higher-emission generation can be gradually reduced. This approach is not an attempt to preserve coal. Rather, it is a way to ensure that reducing dependence on coal does not create new problems such as supply shortages, declining reliability, or excessively high energy costs.
At the same time, economic transformation in coal-producing regions must begin well before demand materially declines. Economic diversification, new investment, and workforce reskilling are as much a part of the transition as the construction of renewable generation. A just transition is not only about who benefits from clean energy but also about who bears the costs of structural economic change.
Generation Costs Are Not the Whole Cost of Electricity
The decline in the cost of solar PV and battery-storage technologies over the past decade has fundamentally changed the economics of renewable energy. Many projects once considered expensive are becoming increasingly competitive. Yet the cost of generating electricity at a power plant remains different from the cost of delivering reliable electricity to consumers 24 hours a day.
As the share of solar and wind increases, so does the need for transmission networks, substations, energy storage, reserve capacity, control systems, digitalization, and generation capable of adjusting output to changing conditions. All of these components contribute to the overall system cost, even though they may not always be visible when electricity prices are compared only at the generation level.
For a factory, this distinction is very real. Industry does not simply need inexpensive electricity at midday when solar generation is at its peak. Machinery must continue operating at night, when weather conditions change, and when disruptions occur in one part of the system. The relevant measure of the economics of transition for industry is therefore the total cost of delivering low-carbon electricity with the quality, reliability, and continuity required by industrial processes.
Competitiveness must be included in this calculation because Indonesian industry does not compete only domestically. Products manufactured in Indonesian industrial estates compete with those produced in Vietnam, Thailand, Malaysia, China, India, and other manufacturing centers. If the cost of decarbonization causes production to relocate to countries that use even more carbon-intensive energy, lower domestic emissions may not necessarily translate into lower global emissions. Production—and its associated emissions—would simply have moved elsewhere.
Preserving competitiveness therefore does not mean reducing environmental ambition. On the contrary, the economy’s ability to continue growing will determine whether investment in the transition can be sustained over the long term.
Energy Transition as an Industrialization Strategy
From an industrial perspective, the measure of a successful transition can actually be expressed quite simply. Low-carbon electricity must be reliable, its price must remain competitive, mechanisms for obtaining it must be accessible, and its energy source must be verifiable to customers and global supply chains.
If these conditions can be established, green energy can become a new competitive advantage for Indonesia. Global investors are increasingly considering carbon footprints when deciding where to locate production. In the coming years, the quality and source of energy available within an industrial estate may become as important an investment consideration as land prices, logistics, labor, ports, water availability, and fiscal incentives.
At that point, the energy transition ceases to be an environmental agenda separate from the economic agenda. The development of solar PV, hydropower, geothermal energy, wind generation, energy storage, transmission networks, and inter-system interconnections becomes part of Indonesia’s industrialization strategy. Reliable and competitively priced low-carbon energy can serve as an instrument both for retaining export-oriented industries and attracting new investment that is increasingly sensitive to carbon footprints.
The 2025–2034 RUPTL has set Indonesia on a greener path while simultaneously opening the door to the next major set of challenges. New generation capacity must be built, but the grid must expand alongside it. Private investment needs to increase, but PLN’s financial health and system reliability must be preserved. Electrification should accelerate, but the electricity being consumed must become progressively lower-carbon. Dependence on coal must decline, but in a sequence and at a pace that continues to safeguard energy security, regional economies, and national competitiveness.
Ultimately, Indonesia does not have to choose between becoming greener and becoming an industrial nation. The real challenge is to make the two reinforce each other. The energy transition will have a much stronger economic foundation when it can deliver an increasingly clean electricity system while continuing to support investment, employment, exports, and industrial growth.
That may be the more relevant measure for the decade ahead: not simply how ambitious Indonesia’s energy transition targets are, but how effectively those targets can be implemented without sacrificing reliability, affordability, or industry’s ability to compete.
A successful energy transition is ultimately one that makes Indonesia progressively greener while remaining economically viable for Indonesian industry. [*]
