Indonesia Has Abundant Green Energy Potential, Here Are the Challenges
Jakarta, CNBC Indonesia - The Ministry of Energy and Mineral Resources (ESDM) has revealed that the main challenge in utilising the national potential for new renewable energy (EBT) is the imbalance or mismatch in location between the sources and the industrial demand centres.
Although Indonesia has abundant EBT sources, most of them are located far from the main load centres or industrial areas.
Director of Strategic Electricity Development at ESDM, Andriah Feby Misna, explained that to date, the development of the energy and industrial sectors has not proceeded in an integrated manner. This has resulted in many industries that require a supply of clean electricity being unable to obtain optimal access.
“However, if we look at the development of energy and industry, it is indeed still not integrated, so even now there are still many industries that actually need renewable energy but cannot obtain it,” she stated during the Public Discussion “Renewable Energy Zones (REZ) as an Enabling Instrument” hosted by INDEF, in Jakarta on Tuesday (28/4/2026).
The distribution of EBT potential mainly occurs in types such as hydropower, geothermal, and wind power. These power plants cannot be relocated, thus requiring long and expensive transmission networks to deliver the energy to industrial areas.
Currently, the government is beginning to examine the implementation of the Renewable Energy Zone (REZ) concept as a solution to integrate industrial zone planning with EBT development. It is hoped that this will accelerate permitting and provide demand certainty for power plant investors.
“Well, this might indeed require integration in planning between industrial needs and energy development plans, and I feel that the Renewable Energy Zone could be one of the instruments,” she added.
On the other hand, EVP of Electricity System Planning at PLN, Arief Sugiyanto, provided an overview of the situation in Sulawesi and Kalimantan regions. He noted that industrial centres such as smelters are often located in different provinces from the major EBT potential sites.
“Well, most of those locations are quite far from the demand. For example, in Sulawesi, there are smelters in the southern area and in Southeast Sulawesi, but most of the hydropower plants are in West Sulawesi and Central Sulawesi. So that has to be brought through transmission networks to the south and southeast,” he explained on the same occasion.
In addition to geographical factors, the development of energy source transmission to consumers is also hindered by land acquisition issues. In densely populated areas like Java, developers are often faced with difficult choices between using land for energy plants or for factory operations, which are considered more financially profitable.
“The most important support for solar power plants, then Renewable Energy Zones and transmission, is land, which is the primary one. Then the challenge again, if we talk about solar power plants, if we build in one industrial area and there is also a solar power plant. Well, from the developer’s side, whether this land is more profitable to build a solar power plant or more profitable to build another factory,” he emphasised.