Conversion of Diesel Power Plants to Solar, Indonesia Potentially Saves Rp62 Trillion per Year
President Prabowo Subianto’s ambition to develop 100 gigawatts (GW) of solar power plants (PLTS), beginning with the conversion of 13 GW of diesel power plants (PLTD) to PLTS in the initial phase, is deemed worthy of support. The Institute for Energy Economics and Financial Analysis (IEEFA) reveals that this step could suppress electricity costs and generate state budget efficiency of up to $4 billion or Rp62 trillion per year.
IEEFA notes that reliance on diesel for electrification in remote areas has burdened the state finances due to high fuel import costs and global oil price fluctuations. This can be seen from the surge in PLTD costs from Rp4,746 or approximately $0.37 per kilowatt-hour (kWh) in 2020 to Rp8,748 or $0.57 per kWh in 2023.
The conflict in the Middle East further highlights Indonesia’s vulnerability as an oil importer. This crisis demonstrates that energy resilience cannot be achieved while Indonesia remains dependent on the global fuel market.
IEEFA’s latest calculations show that a combination of PLTS and battery energy storage systems (BESS) can produce low-cost electricity at around $0.08 to $0.20 per kWh. This figure is far cheaper than PLTD, which reaches $0.29 to $0.40 per kWh, and can even hit $0.55 to $0.65 per kWh as seen in 2023.
“The transition to PLTS systems will transform the cost structure of electrification on remote islands. Instead of importing fuel and facing complex logistics, Indonesia can harness abundant sunlight, store it locally, and distribute it reliably for over a decade,” said IEEFA’s Research & Engagement Lead Mutya Yustika in her statement on Thursday (2/4/2026).
IEEFA estimates that converting PLTD to PLTS could save around $2 billion from reduced diesel fuel imports. Additionally, this step would also cut subsidies by $1.5–2 billion per year, equivalent to 15 to 18 percent of the total electricity subsidies and compensation to PT PLN (Persero), which amounted to $11 billion in 2024.