Energy Transition That Maintains Industrial Competitiveness

Indonesia is entering a more decisive phase in its energy transition. Over the past few years, much discussion has focused on energy mix targets, additions of renewable generation, emissions reductions, and reducing dependence on fossil fuels. These targets are important because they provide direction for investment and policy. However, once targets are set, the more complex work begins: how to build an increasingly clean energy system without reducing the reliability of electricity supply, burdening the economy, or weakening industrial competitiveness.

This issue came to the fore 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, felt relevant because discussions began to shift from the scale of renewable energy potential and targets towards implementation issues: grid access, system readiness, regulation, financing, and the ability of consumers to obtain low-carbon energy.

In a session on electricity sector reform, the government, PLN, industry, the solar energy association, and legal practitioners sat together in one forum to examine the same issues from different interests.

The direction of national policy is becoming clearer. PLN’s 2025-2034 Electricity Supply Business Plan (RUPTL) plans an additional generation and energy storage capacity of 69.5 gigawatts (GW) over ten years. Of this, 42.6 GW comes from new and renewable energy (NRE), while 10.3 GW is energy storage systems.

Solar power through solar power plants (PLTS) receives the largest additional allocation at 17.1 GW, followed by hydro at 11.7 GW, wind at 7.2 GW, geothermal at 5.2 GW, and bioenergy at 0.9 GW. If NRE and energy storage are combined, around 76 per cent of the planned additional capacity until 2034 comes from both. This direction shows an important change in Indonesia’s electricity development.

However, the size of installed capacity does not reflect the entire problem. One gigawatt of solar capacity has different production characteristics from one gigawatt of a power plant that can operate almost around the clock. Solar plants generate electricity according to the availability of sunlight, while wind plants depend on wind conditions.

As the share of both sources grows, the system requires energy storage, flexible generation, interconnection, increasingly accurate production forecasting, and a grid capable of managing changes in supply over time.

Therefore, the 76 per cent figure does not mean that 76 per cent of Indonesia’s electricity in 2034 will automatically come from renewable energy. There is a difference between installed capacity, the energy actually generated, and the low-carbon electricity that can ultimately be delivered to consumers. This distinction is important because the success of the energy transition is ultimately determined not by capacity recorded on paper, but by the system’s ability to provide increasingly clean electricity reliably and sustainably.

Indonesia has enormous renewable energy resources, but nature does not distribute these resources evenly according to the map of industrial areas. Hydro potential follows rivers and topography, geothermal follows geological conditions, while large-scale solar and wind development requires suitable resource conditions and space. At the same time, the largest electricity consumption centres and industrial concentrations remain in Java and several main economic corridors.

On the demand side, the need for low-carbon electricity is becoming increasingly evident. Multinational companies are bringing decarbonisation targets into their supply chains. The electronics, automotive, battery, consumer goods, data centre, and export-oriented manufacturing industries are increasingly considering energy sources in investment decisions. The availability of green electricity is becoming part of discussions about factory locations, alongside land, logistics, water, labour, and incentives.

Thus, Indonesia’s problem is quite distinctive. Renewable energy sources are available and industrial demand is beginning to form, but the two are not always in the same location. Enormous energy potential in one region does not yet have full economic value if its consumption centres are hundreds or even thousands of kilometres away.

At this point, the challenge of the energy transition is gradually shifting. The issue no longer stops at how to generate green electricity, but how to bring it to where the electricity is needed.

The 2025-2034 RUPTL has read this need by planning around 47,758 circuit kilometres of new transmission networks and additional substation capacity of around 107,950 MVA. This need is not merely a matter of adding network capacity.

PLN itself has identified the mismatch between the locations of NRE sources and electricity demand centres, including industrial estates, as one of the main challenges for Indonesia’s electricity system. Much renewable energy potential is located far from consumption centres, so the ability to generate clean electricity must be followed by the ability to deliver it to where the electricity is needed. The scale of transmission development in the RUPTL shows that Indonesia’s energy transition is essentially also a very large energy connectivity project.

So far, transmission networks have tended to be understood as technical infrastructure for the electricity sector. In a low-carbon economy, their position becomes far more strategic. Toll roads connect production centres with markets, ports connect industry with world trade, while transmission will increasingly determine Indonesia’s ability to connect its energy resources with its industrial future.