Government Urged to Accelerate the Transition to Renewable Energy
Amid global geopolitical volatility, energy security has become a major focus. Fluctuations in primary commodity prices and disruptions to global supply chains are rippling across the world. This uncertainty is prompting many countries to reassess their energy independence strategies while remaining committed to long-term decarbonisation targets. For Indonesia, these fluctuations serve as a crucial alarm to reduce dependence on fossil fuels vulnerable to international market pressures. At the same time, the push to transition to new and renewable energy (EBT) is no longer merely an environmental commitment but an economic imperative. Investments in green technology and clean energy infrastructure are essential for Indonesia not to fall behind in a global economy that increasingly prioritises low-emission standards. However, this transition requires a well-planned road map to avoid destabilising domestic energy supply and household purchasing power. These were the conclusions of a discussion hosted by Forum Dialog Nusantara (FDN) on Monday (18 May) themed ‘Transition to New and Renewable Energy (EBT)’.
According to Ilham Akbar Habibie, Co-Founder & Chairman of the Advisory Board of FDN yesterday, the effort to boost domestic oil and gas production to 1 million barrels would take up to a decade and would require reforms to the fiscal terms of cooperative agreements to be competitive with neighbouring countries. For solutions through mass electrification and procurement of charging infrastructure, long-term regulatory commitments are also needed. ‘Equally important is consistency to attract ongoing global technology partnerships and foreign investment,’ he said.
Budget impacts: At the same event, Deputy Chair of Commission 12 of the DPR, Sugeng Suparwoto, said that the realised world oil price in 2026 reaching US$105 per barrel far exceeded the macro assumptions in the initial APBN of US$70, with the dollar rate around Rp17,200–Rp17,600. ‘This gap has direct implications for increased subsidies and energy compensation including Pertalite and imports of LPG 3 kg around 8 million metric tonnes per year projected to rise from Rp409 trillion to approaching Rp700 trillion,’ he asserted. He noted geologically that Indonesia’s proved reserves remain 2.4 billion barrels (enough for about 12 years), so downstream oil and gas should be oriented toward high-value petrochemical feedstocks, supported by accelerating the Petroleum Fund and enacting tactical regulatory measures for renewable energy.
Energy Nuclear Utilisation: Meanwhile, a member of the National Energy Council (DEN), Dr Supeni Inten Cahyani said that the Government is revising the PP on national energy policy to accommodate decarbonisation, the Net Zero Emission target by 2060, and the integration of nuclear energy as a baseload pillar. DEN formulated five short-term strategies, including: clarifying the legal umbrella for EBT, implementing work-from-home policies to significantly reduce urban transport fuel consumption, speeding up de-dieselisation of isolated power plants, applying cluster incentives/disincentives for fossil fuels, and downstream processing of critical minerals such as nickel and copper for domestic battery industry supply chains. The entire targets can only be executed optimally if demand creation is driven by reindustrialisation of domestic manufacturing.
Meanwhile, Ardian Inkaresa, EVP of Hydro & Various EBT at PT PLN (Persero) acknowledged that by April 2026 the electricity mix remained dominated by coal-fired plants (PLTU) at 65-66% and gas at 15-16%, with renewables at 15.11%, dominated by hydroelectric and geothermal. In response to the President’s directive for a 100 GW EBT target, PLN shifted its operational paradigm by integrating a Shadow Follower system using a combination of large-scale solar PV and Battery Energy Storage System (BESS) to address power intermittency. PLN launched concrete tactical steps via a large-scale procurement bundling program titled ‘Program Gigawatt’, starting with the Mentari Nusantara 1 solar project at 1 GW, which is estimated to reduce the cost of power supply (BPP) by roughly Rp7.4 trillion per year and cut diesel imports by 2.7 million kilolitres.
Energy Transition Setting: Executive Director of Reforminer Institute, Komaidi Notonegoro, reminded the government not to get trapped into populist yet irrational energy transition targets. The stagnation of upstream oil and gas reform, marked by the unfinished revision of the Oil and Gas Law since 2008 and the involvement of 19 ministries/agencies in licensing, are the main disincentives for global investment. He concluded that an 8% GDP growth target requires a power supply that is affordable and reliable. ‘Forcibly premature mothballing of coal-fired plants that are still protected by domestic price (DMO USD 70 per tonne) is projected to shake household purchasing power (as consumption accounts for 55-60% of GDP) and undermine industrial competitiveness due to potential increases in base electricity tariffs,’ he added. Nadine Chandrawinata, founder and Executive Director of Seasoldier, emphasised the importance of active involvement of the younger generation in collaboration. Prabowo urged Indonesia to move away from fossil fuels to electricity; with mass production of electric cars targeted by 2028, the national industry is to be intensified.