Indonesia Renewable Energy Market Size & Share Analysis - Growth Trends And Forecast (2025 - 2030)

Indonesia Renewable Energy Market Trends and Insights

Falling solar & wind LCOE

Global average solar costs fell to USD 0.044/kWh in 2024 and onshore wind to USD 0.033/kWh, undercutting coal’s USD 0.065/kWh benchmark.^{[2]International Renewable Energy Agency, “Renewable Power Generation Costs in 2024,” irena.org} Indonesia’s August 2024 relaxation of local-content rules lets developers import cheaper modules while keeping assembly onshore, accelerating project pipelines. These economics sharpen PLN’s focus on curbing generation costs, especially as avoided fuel outlays and carbon-pricing risks tilt new-build economics toward renewables. The result is a steady pivot in the Indonesian renewable energy market toward solar and wind for green-field capacity additions. Ongoing financing reforms further magnify this cost parity by narrowing the premium that developers once faced.

RUPTL 2025-34 Pipeline of 53 GW New Renewable Capacity

Indonesia’s power-supply plan calls for 69.5 GW of new capacity by 2034, 76% of which is renewable or storage, requiring IDR 2,967 trillion (USD 182.5 billion) in investment.^{[3]Argus Media Correspondent, “Indonesia RUPTL 2025-34 Targets 53 GW of Renewables,” argusmedia.com} Private partnerships are expected to fund 73% of this pipeline, shifting the Indonesian renewable energy market toward deeper technology diversification. The roadmap earmarks 17.1 GW solar, 7.2 GW wind, and 5.2 GW geothermal, moving beyond hydropower’s historic dominance and enabling a more flexible grid. Two planned 250 MW nuclear units underscore a longer-term quest for baseload low-carbon supply, while the 41% renewable target for 2040 offers clearer visibility for investors.

JETP & Multilateral Climate-Finance Inflows

The USD 20 billion Just Energy Transition Partnership couples concessional debt with policy support to accelerate coal retirement and renewable rollout. Norway’s USD 25 million and the United Kingdom’s USD 5 million investments in solar developer Xurya marked the first equity disbursements in 2024, validating investor confidence. France and the EU reinforced momentum by launching the EUR 14.7 million Indonesia Energy Transition Facility in February 2025. These inflows unlock lower-cost capital, cut project risk premiums, and widen participation in the Indonesian renewable energy market, particularly in provinces grappling with coal-plant phase-outs.

Mandatory B40/B50 Biofuel Blending Push

Indonesia rolled out a B40 biodiesel mandate in January 2025, allocating 15.6 million kiloliters for the year and targeting IDR 147.5 trillion (USD 9.1 billion) import savings. The policy reduces transport-sector emissions by 41.46 million tons of CO₂ and stimulates palm-oil demand, which requires renewable electricity for processing facilities. The scheduled B50 shift by 2026 will deepen this linkage, embedding fresh offtake opportunities in the Indonesian renewable energy market for biomass, biogas, and supporting solar or wind assets powering supply chains.

Coal Over-Capacity & Must-Run PPAs

Legacy coal PPAs obligate PLN to pay capacity charges even when plants are idle, costing the utility more than USD 8 billion annually.^{[4]IEEFA Analysts, “Coal Over-Capacity and Must-Run Clauses,” ieefa.org} These must-run clauses crowd out procurement of cheaper renewables, limiting short-term additions despite favorable economics. Coal’s structural lock-in is set to ease only as early-retirement schemes under the Energy Transition Mechanism secure funding and renegotiate contracts, but the timetable remains uncertain and continues to temper growth in the Indonesian renewable energy market.

High Cost of Capital versus ASEAN Peers

Developers cite higher risk premiums linked to currency volatility and regulatory uncertainty, pushing up the weighted-average cost of capital compared with regional peers. Regulation 5/2025 provides sovereign guarantees on PLN payment defaults, yet deeper capital-market reforms are still needed. Green bonds and blended-finance vehicles are slowly closing the gap, but near-term project economics remain sensitive to interest-rate swings, dampening some investment decisions in the Indonesian renewable energy industry.

Segment Analysis

By Technology: Wind Surges as Hydropower Plateaus

Hydropower held 48.2% of Indonesia's Renewable Energy market share in 2024, owing to legacy dams commissioned before 2020. Conversely, wind capacity is forecast to post a 58.9% CAGR from 2025 to 2030, fueled by offshore zones in Sulawesi and robust onshore sites in South Sulawesi. The Indonesian Renewable Energy market size for hydropower will grow slowly as future additions skew to small run-of-river projects that skirt resettlement controversies. Solar installations are accelerating in Java, Bali, and on floating reservoirs, benefiting from 4-hour battery add-ons that qualify for capacity payments.

Wind's rapid rise rests on higher capacity factors and joint-venture finance from ACWA Power and Masdar, although subsea-cable links and marine-use zoning remain underdeveloped. Geothermal projects add a steady 200-300 MW annually, constrained by drilling risk and high upfront cost, yet provide dispatchable baseload that anchors PLN's system planning. Bioenergy growth follows B40 and B50 blending mandates that stabilize biomass feedstock demand in palm-oil provinces. Ocean energy stays at pilot scale pending tariff clarity. The evolving mix will pivot the Indonesian Renewable Energy market toward variable renewables plus storage by the late decade.

Note: Segment shares of all individual segments available upon report purchase

By End-User: Corporate Buyers Outpace Utility Procurement

Utilities secured 61.4% of new renewable capacity in 2024, reflecting PLN’s single-buyer weight. The commercial-and-industrial segment, however, is set to expand at 21.8% CAGR through 2030 as exporters and data-center operators lock in direct PPAs. The Indonesian Renewable Energy market size attributable to utilities will grow, yet their share will shrink as captive plants proliferate in industrial estates. Corporate buyers favor 15-year fixed tariffs that hedge electricity cost volatility, cutting lender risk premiums by up to 150 basis points.

The C&I boom fragments the Indonesian Renewable Energy market because small developers can reach creditworthy offtakers without PLN’s queue. Rooftop solar growth is brisk in Bekasi, Karawang, and Surabaya, aided by Regulation 26/2021 that permits wheeling arrangements above 5 MW. Residential uptake remains modest due to limited financing and eight-year payback times, even with net-metering pilots in Bali and Jakarta. Broader home adoption awaits cheaper modules and consumer credit lines. Until then, C&I installations will anchor demand outside PLN procurements.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

Java-Bali holds the largest installed base because it accounts for most national load and hosts robust transmission assets. Corporate rooftop programs, data-center clusters, and stringent sustainability mandates spur the fastest incremental growth. Sumatra’s legacy of geothermal reservoirs and palm-oil mills underpins steady capacity additions, assisted by a USD 500 million Asian Infrastructure Investment Bank scheme to reinforce its distribution backbone.

Kalimantan is a greenfield showcase where the 50 MW PLTS IKN supplies the nascent capital city, setting benchmarks for green-building standards and zero-emission transport corridors. The province targets a 12.39% renewable share by 2025 and 28.72% by 2050, signaling intent despite simultaneous coal extraction. Eastern island groups, notably Maluku and Papua, rely on microgrids and mini-hydro, aligning with donor-funded rural electrification programs. These regional advances bolster inclusivity within the Indonesian renewable energy market and diversify resource risks away from any single island grid.