Indonesia Renewable Energy Market Size & Share Analysis - Growth Trends & Forecasts (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 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 Source: Solar Ascends as Hydropower Holds Scale

Hydropower retained 50.56% of the Indonesian renewable energy market share in 2024 on the back of extensive riverine assets and mature dam networks. The 510 MW Batang Toru project and other legacy dams keep baseline output high, anchoring grid reliability. In parallel, the Cirata 145 MWac floating-solar plant illustrates how developers use reservoirs to install PV at scale without new land footprints.

Solar PV is the undisputed growth engine, compounding 24% through 2030 as module prices fall and rooftop policies gain traction. Floating and ground-mount projects pave the way toward the 17.1 GW target in RUPTL 2025-34. Geothermal retains a niche yet resilient path, buoyed by Star Energy’s USD 346 million expansion that will add 102.6 MW across Salak and Wayang Windu. Wind prospects improve along coastal Sulawesi and East Nusa Tenggara, although land-acquisition disputes weigh on timelines. Collectively, these shifts keep the Indonesian renewable energy market size on its rapid trajectory while broadening the mix away from hydropower concentration.

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

By End User: Corporate Demand Reshapes Procurement

Independent power producers controlled 61% of the Indonesian renewable energy market 2024, signing long-term offtake deals with PLN. Their dominance is tested as commercial and industrial buyers escalate direct purchases, with rooftop and behind-the-meter systems expanding at a 22% CAGR. Data-center operators led early adoption by insisting on traceable clean electrons, a trend now spreading to manufacturing and logistics clusters in Java-Bali.

Utilities respond by launching Green Energy as a Service products that deliver certificate-backed power without upfront capex, while new regulations open avenues for direct corporate PPAs. Residential demand remains smaller but benefits from micro-loan schemes that lower entry barriers. These developments embed customer choice into the Indonesian renewable energy market, incrementally eroding PLN’s monopoly grip and spurring service innovation.

By Installation Type: Microgrids Unlock Remote Growth

Grid-connected central plants represented 88% of installations in 2024, reflecting economies of scale and easier access to financing. Yet off-grid microgrids are growing at a 23% CAGR, serving islands where extending the main grid would cost more than USD 10,000 per connection. The UNDP ACCESS project delivered 1.1 MW across 22 villages, validating community-owned models with productive-use loads that lift local incomes.

Battery costs fell sharply, allowing hybrid solar-plus-storage systems such as the 50 MW PLTS IKN facility in Kalimantan to provide 24/7 power reliability. Standardized designs and pooled financing reduce per-kilowatt costs, making microgrids central to Indonesia’s last-mile strategy. The growing microgrid footprint enlarges the Indonesian renewable energy market while trimming diesel reliance in remote provinces.

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.