Indonesia, one of the world’s largest coal producers and exporters, has unveiled a new 10-year electricity procurement plan that promises a significant shift toward renewable energy while still accommodating the construction of new coal-fired power plants as late as 2033. Released on May 26, 2025, the 2025-2034 Electricity Procurement Business Plan (RUPTL) outlines an ambitious addition of 69.5 gigawatts (GW) of power capacity, with renewables accounting for the majority at 42.6 GW. However, the inclusion of 16.6 GW of fossil fuel-based capacity, including 6.3 GW from coal, has sparked skepticism among analysts and environmental advocates about the country’s ability to meet its environmental targets and net-zero emissions pledge by 2060.
A Renewable Push Amid Coal Dominance
The new RUPTL marks a notable departure from previous plans, with renewable energy sources such as solar (17.1 GW), hydroelectricity (11.7 GW), wind (7.2 GW), and geothermal (5.2 GW) forming the backbone of Indonesia’s future energy mix. This shift reflects a growing recognition of the economic and environmental benefits of clean energy, particularly as the costs of solar and wind power have dropped below those of fossil fuels in many contexts. Yet, coal remains a dominant force, currently generating over 60 percent of the nation’s electricity, underpinned by government policies like coal price caps that ensure affordable supply for power producers.
Indonesia’s equatorial location offers immense potential for solar energy, and the government is exploring innovative solutions such as floating solar farms on reservoirs and offshore installations to bypass the high costs of land acquisition and community displacement. Additionally, a potential agreement with Singapore to export 2 GW of solar power annually from Batam via an undersea cable could position Indonesia as a regional leader in renewable energy trade. “Very soon. It won’t be long. Signs started to emerge that we would have an agreement (with Singapore)” said Energy and Mineral Resources Minister Bahlil Lahadalia during the RUPTL briefing on May 26, referencing a memorandum of understanding signed in March 2023. 
Challenges to Renewable Acceleration
Despite the optimism surrounding renewables, the pace of implementation remains a significant hurdle. Tata Mustasya, executive director of the Indonesian Sustainable Welfare Foundation (Sustain), highlighted the scale of the challenge, noting that Indonesia must build renewable power plants five times faster than current rates in the first five years of the plan and 11 times faster in the subsequent five. “This is hard to achieve without major policy reforms” said Mustasya, pointing to the slow progress in recent years, with only 3.2 GW of renewable capacity added between 2018 and 2023, averaging just 0.53 GW annually.
Policy barriers, such as unattractive power purchase rates for solar farms, have deterred investment, while coal interests continue to wield significant influence. The Jakarta-based Institute for Essential Services Reform (IESR) has criticized the government for failing to create a level playing field for renewables, with state utility PLN maintaining a monopoly on electricity distribution. Mustasya suggested reforms like offering competitive rates for solar farms and redirecting coal royalties to fund smart grid infrastructure to better integrate renewable power into the national grid.
Coal’s Persistent Role and Financing Dilemmas
The decision to include new coal plants in the RUPTL, extending their operational timeline to 2063—beyond the previous 2057 target—has drawn criticism for contradicting Indonesia’s earlier commitments to phase out new coal capacity beyond pre-existing projects. This move also challenges the nation’s net-zero emissions goal by 2060, as new coal plants typically operate for about 30 years. A Jakarta-based business group executive, speaking anonymously to The Straits Times, expressed disappointment, stating, “This is against an earlier commitment” while acknowledging the plan’s attempt to balance green investment with coal interests.
Financing the 16.6 GW of additional fossil fuel capacity, including 6.3 GW from coal and 10.3 GW from gas, poses another challenge. Mutya Yustika of the Institute for Energy Economics and Financial Analysis (IEEFA) noted that strict environmental, social, and governance (ESG) guidelines adopted by many foreign banks and financial institutions could hinder funding for new fossil fuel projects. “Obtaining the necessary financing will be challenging” said Yustika, suggesting that these constraints might inadvertently accelerate the shift toward renewables.
Infrastructure and Economic Ambitions
The RUPTL also includes plans for 47,758 kilometers of new transmission lines, connecting Java with Sumatra and Kalimantan, a critical step toward creating a unified national power grid. Currently, only Java, Bali, and Madura are linked, with other islands operating on separate systems. “Expanding transmission lines is necessary to connect new power plants, particularly renewables, to demand centers to strengthen the grid reliability and flexibility” said Dody Setiawan, a senior analyst at the London-based energy think tank Ember.
This infrastructure expansion aligns with President Prabowo Subianto’s ambitious target of 8 percent annual economic growth during the latter part of his five-year term, which began in October 2024. Indonesia, Southeast Asia’s largest economy, has averaged around 5 percent growth over the past decade, and reliable energy supply is seen as essential to industrial development. Setiawan described the RUPTL as an “important step in the right direction” for balancing economic goals with decarbonization, though he emphasized the need for clear regulatory support to ensure implementation.
Policy Incentives and Global Pressures
Analysts argue that bold policy incentives are essential to reduce the upfront capital costs of renewable energy projects, which, despite low operational costs, require significant initial investment. Mustasya proposed large-scale competitive bidding auctions for solar farm projects, combining multiple initiatives into a single package to achieve economies of scale. Such measures could attract the green investment Indonesia has been courting while addressing public health concerns over coal plant emissions and their contribution to global warming.
International pressure also plays a role, as Indonesia faces scrutiny over its environmental policies. With wind and solar currently comprising less than 1 percent of the nation’s power capacity, the government’s earlier target of achieving 23 percent renewable energy by 2025 was downgraded to 17-19 percent, reflecting the slow pace of transition. The RUPTL’s focus on renewables offers a chance to rebuild credibility, but only if paired with actionable reforms.
A Path Forward with Uncertainties
Indonesia’s latest power plan represents a complex balancing act between its coal-dependent past and a renewable-driven future. While the emphasis on clean energy sources is a promising signal, the continued reliance on coal raises questions about the feasibility of meeting climate commitments. As the government navigates lobbying from coal interest groups, financing constraints, and the urgent need for policy reform, the success of the RUPTL will depend on its ability to translate ambitious targets into tangible progress. For now, stakeholders across the spectrum—from environmentalists to industrialists—wait to see whether Indonesia can power its economic aspirations without sacrificing its environmental promises.
As the nation pushes toward an integrated grid and explores cross-border energy partnerships, such as the potential solar export deal with Singapore, the coming years will test the resolve of policymakers and the resilience of a system long tethered to fossil fuels. Will Indonesia emerge as a renewable energy leader in Southeast Asia, or will coal’s shadow linger longer than planned?
