Task force accelerates green energy development
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Satgas hilirisasi percepat pengembangan energi hijau
14 January 2025
By Rangga Prakoso
Jakarta, ID – The development of renewable energy is gaining momentum, supported by the formation of the Task Force for the Acceleration of Downstream and National Energy Resilience. This task force is empowered to address challenges and find solutions. By the end of 2024, the renewable energy mix had only reached 14%.
The task force was established under Presidential Decree Number 1 of 2025, signed by President Prabowo Subianto on 3 January 2025. This decree empowers the task force to identify and recommend strategic projects for financing through domestic banks and non-bank financial institutions.
Surya Darma, Chairperson of the Centre for Renewable Energy Studies (ICRES) Indonesia, praised President Prabowo's decision to establish the task force. He believes that the creation of this task force significantly accelerates the development of renewable energy. "The task force is essential for making breakthroughs in addressing issues, as it reports directly to the President," Surya stated to Investor Daily in Jakarta on Monday (13/1/2025).
Surya explained that the task force's authority ensures that renewable energy development will be systematically planned. This process begins with conducting studies on various energy types, determining power plant capacities, and setting commercial operation schedules. Additionally, the task force will seek funding sources and investors to support the advancement of renewable energy projects.
"This approach makes it straightforward to determine the appropriate timing for initiating each project," he stated.
According to data from the Energy and Mineral Resources Ministry, by the end of 2024, the additional capacity of renewable energy power plants reached approximately 547.4 megawatts (MW). This increase brought the total capacity of renewable energy power plants to 14.1 gigawatts (GW). However, the renewable energy mix only reached about 14%, falling short of the 2024 target of 19%.
Surya highlighted several challenges in the development of renewable energy in Indonesia. One major issue is the insufficient distribution of electricity from renewable sources, like solar power plants (PLTS) and wind power plants (PLTBs), to load centres across all regions. Additionally, transporting renewable energy equipment and components, particularly to remote areas, remains difficult and costly.
On the other hand, Surya pointed out the issue of local technology development. Indonesia still heavily depends on imported technologies for its renewable energy sector. There is a need to enhance local technology development that aligns with Indonesia's specific conditions. Additionally, the problem of electricity intermittency from PLTS and PLTBs requires efficient and affordable energy storage solutions. Currently, batteries are costly and have limited capacity, posing a challenge for widespread adoption.
"Another significant challenge in renewable energy development is the requirement for substantial initial investment. Building renewable energy infrastructure demands large upfront costs, yet the return on investment is often low because prices are not aligned with economic realities. As a result, securing funding for renewable energy projects is challenging since they are typically not considered bankable and often have long-term timelines," he explained.
Energy and Mineral Resources Minister Bahlil Lahadalia emphasised the importance of involving banks and non-bank financial institutions in financing downstream projects in Indonesia. "Our banks and non-bank financial institutions must actively participate in funding these projects," he stated.
Bahlil highlighted the Government's efforts to secure financing for downstream projects from sources beyond the State Budget (APBN). These efforts include seeking funding from banks and non-bank financial institutions.
Under Presidential Decree Number 1 of 2025, which established the Task Force for the Acceleration of Downstream and National Energy Resilience, Bahlil mandates financial institutions to fund investment projects. "This applies to everyone, including state-owned enterprises (SOEs) and private sector entities. If they wish to operate in Indonesia, they must adhere to these regulations," he stated.
Bahlil expressed hope that securing financing from these sources would allow the APBN to be allocated to other essential programmes, such as providing free nutritious meals, healthcare, and infrastructure development. When questioned about offering incentives like lower interest rates for downstream projects, Bahlil noted that the internal rate of return (IRR) for these projects is quite favorable, making them attractive for private sector investment.
"On average, the IRR for these projects exceeds 11% to 12%. With an IRR above this threshold, I believe that offering lower interest rates as an intervention for downstream projects is unnecessary," he stated.
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