Kulon Progo and Indonesia's Repositioning in the Global Green Economy

In Kulon Progo Regency, Special Region of Yogyakarta, a 50 MW solar power plant project with an investment of around US$32 million or Rp574 billion will soon be built on 50 hectares of land. At first glance, this project appears to be an ordinary regional investment. However, when viewed within a broader global landscape, it is actually part of the largest economic and geopolitical transformation of the 21st century. The world is not merely undergoing an energy transition; it is witnessing the birth of a new economic power map determined by who controls clean energy technology, strategic minerals, the battery supply chain, electric vehicles, and solar panels. The Kulon Progo solar plant is therefore not just an electricity project, but a small part of the great global green economy contest.

For more than a century, world geopolitics was determined by oil and gas, with the Middle East becoming the epicentre of the global economy due to its control over the energy sources driving modern industry. History is now changing. Reports from various international energy agencies show that solar power has become the fastest-growing new source of electricity generation in the world, and in many countries, the cost of solar electricity is now cheaper than new fossil fuel plants. This shift has given rise to what some economists call new energy geopolitics. If the 20th century was defined by the scramble for oil fields, the 21st century will be determined by mastery of clean energy technology, solar panel manufacturing, batteries, energy storage systems, and smart grids. In this context, the energy transition is no longer solely an environmental agenda but has become an instrument of national competitiveness.

Global economic competition is increasingly taking place through green energy policies. China has built a very strong dominance in the global solar panel supply chain, with most of the world’s production of polysilicon, wafers, solar cells, and modules now residing within its industrial ecosystem. This production scale advantage has caused solar panel prices to continue falling, accelerating adoption worldwide. Meanwhile, the United States has responded with aggressive industrial policy through the Inflation Reduction Act, providing various fiscal incentives for domestic clean energy manufacturing. The European Union has taken similar steps through its Green Deal Industrial Plan to reduce dependence on external clean energy supply chains. In short, green energy is no longer just a climate issue but an arena of global industrial and technological competition, and Indonesia cannot stand apart from this dynamic.

Indonesia possesses significant capital in this new energy landscape. Besides having the world’s largest nickel reserves, a key component for electric vehicle batteries, the country also has enormous solar energy potential due to its equatorial location. Various studies indicate that national solar potential reaches hundreds of gigawatts with relatively stable irradiation levels throughout the year. The government has begun translating this potential into more concrete policies. The PLN Electricity Supply Business Plan for 2025-2034 targets additional generating capacity of around 69.5 GW, with approximately 42.6 GW coming from renewable energy and energy storage systems. Solar power is the largest contributor to this target, with around 17.1 GW of new capacity planned. The investment required to execute this plan reaches more than Rp2,100 trillion and is projected to create around 1.7 million jobs, the majority of which are green jobs. This demonstrates that solar energy is no longer an experimental project but a core part of the national development strategy.

What makes the Kulon Progo project interesting is not just its electricity capacity, but its ability to address the energy trilemma: providing sufficient, affordable, and sustainable energy simultaneously. The development of solar energy often faces criticism regarding its extensive land requirements, creating a conflict between energy and food production in many countries. The Kulon Progo project, however, demonstrates a different approach. The land used is not protected paddy fields and can still be utilised for horticultural cultivation such as melons and watermelons. This approach aligns with the agrivoltaics concept developing in countries like Japan, Germany, and France, where the same land produces both food and energy. This is a concrete form of sustainable development that has often remained mere policy jargon.

Green growth theory departs from the idea that economic growth and environmental protection are not contradictory goals. On the contrary, green investment can become a new source of economic growth, a process Joseph Schumpeter called creative destruction, where new technologies gradually replace old ones and create new, more productive economic sectors. The Kulon Progo solar plant is a tangible example of this process. Beyond generating clean electricity, the project creates construction activity, labour demand, new skill development, increased land value, and opportunities for the growth of new economic sectors.