Two Barriers to Renewable Energy Adoption in Indonesia
Climate Group’s Energy Director, Sam Kimmins, believes Indonesian industrial zones have strong interest in renewable energy use, though implementation is hindered by costs and government policies. He states that the high cost of renewable energy in Indonesia stems from a policy environment that does not support direct corporate investment in clean energy projects.
This situation makes developers struggle to secure low-cost financing, keeping renewable electricity prices high. ‘The reason renewable energy is more expensive than it should be is due to the policy environment. If companies can’t make direct investments, it’s hard to lower prices,’ Kimmins said during the Climate Group Asia Action Summit in Singapore on Thursday, 21 May 2026.
Kimmins said Climate Group aims to drive change by developing renewable energy-based industrial zones. Green electricity demand in these zones is rising due to export and global supply chain requirements, including the EU’s Carbon Border Adjustment Mechanism (CBAM).
Kimmins added that renewable energy adoption would boost the appeal of Indonesian industrial zones to global firms such as Nike, Adidas, and New Balance and their suppliers. He explained many suppliers in Indonesia work for multiple brands, making it difficult to build their own renewable infrastructure.
He noted that developing renewable energy at the industrial zone level could resolve this issue, as companies can simply purchase green electricity provided by the zone managers. Kimmins also mentioned the RE100 campaign’s progress in various countries, stating success often begins when one local company joins, followed by others seeing that a clean energy transition is feasible.
Kimmins said the process happens quickly in some countries—within weeks—while others take months or years. He also noted that 122 RE100 member companies are currently purchasing renewable electricity in Indonesia.
Kimmins stated that multinational RE100 members can transfer knowledge to Indonesian firms on purchasing renewable electricity and building low-emission supply chains. He believes the larger the RE100 movement, the greater companies’ confidence in switching to clean energy.
Additionally, Kimmins viewed Indonesia’s commitment to 100 gigawatts of renewable energy as a positive signal for investors. He said companies need assurance that the government is moving and responding to market needs, citing LEGO’s decision to build facilities in Vietnam partly due to power purchase agreements and shared grid access there.
Kimmins said access to renewable electricity is now a critical factor in global companies’ investment decisions. Therefore, the government must act swiftly to keep Indonesia competitive as an international supply chain investment destination.
However, he noted Indonesia’s government is open to energy transition discussions. Kimmins said there is constructive dialogue and willingness to drive change, though reforming a decades-old fossil fuel-dependent energy market is no easy task.