indonesia

EXECUTIVE SUMMARY
This essay examines Indonesia’s growing desire to integrate emerging concerns, such
as environmental considerations, into its energy security strategies and describes how the
country’s renewable energy potential can play a greater role in this discussion.
MAIN ARGUMENT
Indonesia is currently confronting a high degree of energy insecurity. Yet despite its
diverse and large potential for renewable energy, Indonesia is engaging only a very small
share of these domestically available resources—totaling less than 5% of the energy mix.
The government is aware of the country’s energy insecurity and is taking more serious
actions to overcome the problem. Yet more will need to be done if Indonesia is to achieve
its goal of making renewables 23% of its energy mix by 2025. Such new efforts must also
address concerns about coordination among local and national government bodies, the
rapidly changing legal and regulatory environment, the high upfront costs associated with
renewable energy development, and a complex geography that can complicate infrastructure
development. Redoubled efforts to develop renewable energy not only would strengthen
Indonesia’s energy security but also could create attractive business opportunities for both
domestic and foreign parties.
POLICY IMPLICATIONS
• Harnessing renewable energy is among the top priorities of the current middle-term
development plan led by President Joko “Jokowi” Widodo, and potential sources of
renewable energy range from geothermal, hydro, solar, and tidal energy to several types
of bioenergy.
• In many cases, sources of renewable energy are found in islands far away from demand
centers, which can complicate efforts to develop these resources. Transportation costs
between islands are expensive, and infrastructure connecting the vast archipelago
is still very limited. Addressing these challenges will require greater attention from
policymakers, industry, and NGO partners.
• Securing social license to operate—that is, taking into account local culture and
land ownership concerns in the development process—is a further challenge for
Indonesia’s energy development that affects renewable energy options as well as the
construction of nuclear and coal power plants. Indonesian policymakers thus need
to think about best practices not only on a project-to-project basis but also as part of
their strategic-level planning.