Powering the nation: Indonesian Power Industry Survey 2026

Regulation needs to work in practice

Indonesia has introduced several regulatory measures intended to support renewable energy development and strengthen the position of IPPs. While these reforms provide an important foundation, respondents continue to identify opportunities to improve project delivery, investment certainty and renewable energy deployment.

When asked which policy measures would have the greatest impact on attracting private investment, respondents most frequently identified PPA and procurement reform, adjustments to renewable energy purchase prices, and improvements to land permitting and social acceptance (see Chart 2.1).

_{Chart 2.1 Priorities for attracting renewable energy investment in Indonesia}

Greater transparency could shorten the path to delivery

Procurement transparency and predictability remain important concerns for power-project developers. The largest share of respondents rated PLN’s procurement process three out of five for transparency, while 26% regarded the process as non-transparent. Respondents particularly cited clarity around tender evaluation, schedules, and PLN’s owner’s cost estimate. (see Chart 3.1).

_{Chart 3.2 What could improve power-project procurement?}

_{Chart 3.1 How transparent is PLN's procurement process?}

Time is another significant constraint. Lengthy negotiations and approval processes were the most frequently identified barrier in procurement and PPA development. Respondents’ preferred improvements include transparent, time-bound negotiations, clearer roles for strategic partners, and stronger project-data readiness from PLN. (see Chart 3.2).

Bankable PPAs need clarity, consistency and flexibility

The Power Purchase Agreement (PPA) is one of the most important contractual foundations of a power project. Respondents continue to identify lengthy negotiations, unclear risk allocation and the absence of a standard template as barriers to efficient project development, highlighting the importance of clear and commercially workable contract provisions.

Take-or-pay levels, carbon-credit provisions, and grid-connectivity and infrastructure requirements were each selected by 24% of respondents as areas requiring clearer PPA treatment (see Chart 4.1).

_{Chart 4.1 Which PPA provisions need greater clarity?}

_{Chart 5.1 How does the current PLN purchase-price structure affect project viability?}

_{Chart 5.2  Does the current ceiling price encourage renewable energy investment?}

_{Chart 5.3 Which renewable energy pricing mechanism do the respondents prefer?}

Feed-in tariffs were the most frequently preferred alternative, selected by 45% of respondents. Price-adjustment mechanisms followed at 19%, while feed-in premiums and ceiling tariffs with floor prices each received 16% (see Chart 5.3).

Storage requires separate attention. More than 10GW of storage is planned by 2034, but Indonesia does not yet have a dedicated PLN purchase-price framework for standalone BESS and PHES projects. Half of respondents say this significantly reduces financial viability, while 34% say it increases uncertainty and risk (see Chart 5.4).

_{Chart 5.4 How does the lack of dedicated storage pricing affect project viability?}