Indonesia to add 42 GW of renewable energy capacity in the next decade

In late May, the Indonesian Ministry of Energy and Mineral Resources launched its 10-year electricity business plan (RUPTL) for the period 2025–2034. Over the next decade, electricity demand is expected to rise by 67% from 306 TWh in 2024 to 511 TWh. To meet this growth, the state electricity company PLN plans to add 69.5 GW of new power generation capacity.

The planned capacity will be dominated by new and renewable energy, which makes up 61% of the total capacity. This includes 17.1 GW of solar, 11.7 GW of hydropower, 7.2 GW of wind, 5.2 GW of geothermal and 0.9 GW of bioenergy. The RUPTL also includes plans for 10.3 GW of energy storage. The remainder will come from gas (10.3 GW) and coal (6.3 GW).

Dody Setiawan, Senior Analyst Climate and Energy at think tank Ember, comments: ‘The release of the new RUPTL offers renewed hope for Indonesia’s energy transition. With electricity demand set to rise and a ban on new coal plants in place, timely procurement and deployment of renewable energy projects is now critical to ensure the country’s future energy security.’

A total investment of $182bn is expected to be needed to implement power plant and transmission line expansion plans. The RUPTL is also forecast to create more than 836,000 jobs, the majority of which are categorised as green jobs.

‘Meeting renewable energy infrastructure targets requires significant investment and skilled human capital. This presents a unique opportunity for Indonesian energy conglomerates and financial institutions to diversify their portfolios and begin transitioning away from fossil fuels. Doing so can help avoid financial and regulatory risks, including exposure to volatile fossil fuel markets,’ adds Setiawan.

Ember analysis suggests that investing in renewable energy projects in just three coal producing provinces in Indonesia could generate close to 100,000 jobs.  

A few days after the Indonesian government unveiled its electricity business plan, RGE and TotalEnergies signed an agreement to develop a solar plant with battery energy storage system (BESS) in the country’s Riau province. To be developed through their equally-owned joint venture Singa Renewables, the utility-scale project (whose exact capacity was not specified) will be developed in phases. It will supply electricity to domestic and industrial consumers in Riau, as well as exporting it to Singapore via subsea cable.

Indonesia faces potential gas supply shortfall

Meanwhile, Wood Mackenzie has warned that Indonesia, Southeast Asia’s largest gas market, faces a potential gas supply shortfall in the coming years.

‘Energy security and affordability have become paramount, particularly in Asia, where gas will play a central role in increasing access to affordable energy while supporting a transition to more sustainable sources,’ says the market analyst. However, the country’s ‘ambitious’ production targets of 1mn b/d of oil and 12bn cf/d of gas by 2030 are ‘at risk due to declining domestic gas supply’. Its latest analysis highlights the ‘urgent need for clear, consistent, long-term policies to attract investment and accelerate the development of discovered gas resources’.

Wood Mackenzie reports that Indonesia’s gas demand, including contracted exports, is expected to remain stable at around 6bn cf/d until 2035. But the country could face a gas deficit by 2033 without the development of new supply. ‘In this case, Indonesia would become more dependent on higher-cost LNG imports. Alternatively, it could bolster support for low-cost coal, which competes against gas in the power sector despite its emissions disadvantage. However, gas remains a crucial feedstock for industrial use,’ it says.

The analysis highlights that Indonesia has no shortage of domestic gas resources to develop, with over 35tn cf of resource held across the Abadi, Geng North, Tangkulo and Layaran discoveries. The Indonesia Exploration Forum estimates over 30bn boe of yet-to-find resources in the North and South Sumatra Basins and the Northeast Java Basin alone. However, $50bn is estimated to be needed to develop these resources and others if Indonesia is to achieve its goal of producing 12bn cf/d by 2030.

To prevent a gas crisis, Wood Mackenzie recommends Indonesia focus on rapidly monetising its undeveloped resources and continuing to attract investment for exploration.  

Regional initiative to accelerate grid integration, energy security and decarbonisation across Southeast Asia

In other news, in a move to step up regional energy cooperation on the road to net zero, leading energy companies from Malaysia, Singapore and Vietnam have formed a tripartite alliance. The partnership will explore the export of renewable electricity, in particular wind, from Vietnam to Malaysia and Singapore via a new subsea cable linking to the Malaysian peninsular national grid. Additional ‘firming renewable energy generation and storage’ will also be assessed.  

Under the joint development agreement, Malaysia, as represented by the MY Energy Consortium established by Tenaga Nasional Berhad (TNB) and Petronas, will collaborate with a consortium comprising PetroVietnam Technical Services Corporation (PTSC), a member of Vietnam National Industry – Energy Group (Petrovietnam) of Vietnam, and Sembcorp Utilities, a wholly-owned subsidiary of Singapore-based Sembcorp Industries.  

The alliance reflects the growing momentum towards an integrated ASEAN power grid.

Solar, wind and batteries could enable Thailand to reduce reliance on LNG imports  

Meanwhile, scaling up renewables would be the most economic pathway for Thailand to make progress towards its climate-related goals, according to a new report from BloombergNEF.  

Thailand, which is the third largest electricity consumer in Southeast Asia, is aiming for carbon neutrality by 2050, and net zero emissions by 2065 or earlier, reports BNEF.

‘Our report shows Thailand can prioritise deployment of renewables and energy storage to meet growing electricity demand,’ comments Ponglert Chanthorn, BNEF’s Thailand and Singapore lead analyst and co-author of the report. ‘This has the added benefit of reducing the need for increasing reliance on costly LNG imports from far-flung locations such as Alaska and in turn improve Thailand’s long-term energy affordability and security.’

Under its Gas Plan 2024 (covering the period from 2024 to 2037), Thailand plans to blend natural gas with 5% clean hydrogen by volume as a cleaner fuel for gas power plants by 2030. However, hydrogen-gas blending in power generation will not be the most cost-effective decarbonisation pathway for Thailand, BNEF concludes in its report. Direct renewable energy use is a far more effective and affordable method to reduce power-sector emissions, it says.

‘Thailand needs to prioritise clean hydrogen for hard-to-abate sectors where direct electrification is not possible,’ adds Shantanu Jaiswal, BNEF’s Head of South and Southeast Asia and report co-author. ‘Gas power plants running on green hydrogen under the most optimistic green hydrogen production costs would still generate electricity at more than three times the cost of solar paired with batteries in 2050.’

Solar and wind power accounted for only 5.6% of Thailand’s domestic electricity supply in 2024, BNEF estimates. However, its net zero scenario suggests that solar and wind could supply 60% of Thailand’s electricity in 2050 while strengthening the country’s energy security and eliminating emissions.