The year 2025 begins with persistent global geopolitical tensions. The war between drags on, conflict in the is heating up, and the continues. All of this could send shockwaves through the global energy market — including in Indonesia.
Indonesia still relies heavily on imported crude oil and natural gas. In 2024, Indonesia spent on imported crude oil and natural gas — leaving it highly vulnerable to sudden price hikes caused by war or trade tariffs.
When war broke out in Ukraine in 2022, — and Indonesia’s subsidy budget ballooned.
These geopolitical tensions should serve as a wake-up call to hasten the transition to renewable energy. Beyond reducing emissions, expanding domestic renewables would cut import dependence and bolster national energy security.
Ironically, Indonesia’s recent diplomacy with the United States (US) has deepened its reliance on imported energy, with President Prabowo Subianto approving in crude oil and LPG imports in exchange for lower trade tariffs.
These global shocks further expose Indonesia’s deep dependence on imported fossil fuels, making the shift to renewables not just a climate necessity but a strategic imperative for energy security and economic resilience.
Rooftop solar: A quick solution stuck in limbo
Rooftop solar is among the fastest ways to scale up renewable energy. To spur adoption, the government has introduced regulations such as the , the , and the .
However, these regulations have drawn sharp criticism. The 2021 regulation capped the capacity of rooftop solar that could connect to PLN, the state electricity company. Meanwhile, the 2024 quota regulation , which had allowed households to offset electricity bills by feeding excess power back into the grid.
These restrictions have discouraged public adoption of rooftop solar, slowing down Indonesia’s progress toward its renewable energy goals.
Australia offers a strong example: it leads the world in rooftop solar adoption through federal subsidies under , complemented by state-level rebates and interest-free loan programs.
As a result, rooftop solar installation costs can be reduced to , making solar panels affordable for households and small businesses.
Expanding large-scale renewables and infrastructure
Beyond rooftop solar, Indonesia must accelerate large-scale projects like the , and expand electricity infrastructure for transport and industry.
This is critical given that — both account for the bulk of national energy consumption — are still heavily dependent on coal, natural gas, and oil.
Expanding the national grid and building electric vehicle (EV) charging networks are critical for enabling a smooth transition to clean, electricity-based industry and transport.
Scaling up renewable fuel production
Not all sectors can readily switch to electricity; aviation, maritime, and heavy industry will continue to remain reliant on chemical fuels.
Indonesia must also scale up renewable fuel production — including green hydrogen, ammonia, methanol, bioethanol, sustainable aviation fuel, and biodiesel — ensuring they are produced using renewable electricity and sustainable feedstocks, while avoiding deforestation by prioritising waste-based sources.
PLN has begun developing a hydrogen supply chain for industry and fuel-cell vehicles — one of its largest initiatives is the , a partnership with Saudi energy giant ACWA Power, set to operate in 2026. The hydrogen will be converted into ammonia to support Indonesia’s domestic fertiliser industry.
Other hydrogen projects underway include (ACWA Power and Pupuk Indonesia), (Sembcorp and Transgasindo), (Pupuk Indonesia and Fortescue Future Industries), and (HDF Energy). All projects are scheduled to begin operations between 2026 and 2027.
Indonesia has also begun producing sustainable aviation fuels. State-owned oil company Pertamina’s started output of Bioavtur J2.4 in 2021 — a 2.4% palm oil-based blend with fossil jet fuel — with a capacity of . The technology was developed by Pertamina Research and Technology Innovation (RTI) and since 2010.
Pertamina is also developing new facilities to produce sustainable fuels — including gasoline, jet fuel, and diesel from used cooking oil — at its refineries in .
All this demonstrates that Indonesia has both the capacity and resources to advance renewable energy — so why does it still lean so heavily on imports?
Strengthening multilateral cooperation
The biggest challenge in Indonesia’s energy transition is financing. To address this, Indonesia must strengthen multilateral cooperation, particularly with its Asia-Pacific neighbours, including ASEAN members and Australia.
Incentives like tax holidays can draw in foreign investors, while streamlined licensing reforms will ease the flow of foreign capital.
Funding could also be mobilised through partnerships with global institutions such as the Quad coalition (Australia, India, Japan, and the United States), the International Energy Agency (IEA), the Asian Development Bank (ADB), and the World Bank.
Indonesia has also agreed to until 2035, backed by US$30-50 billion in solar investments, plus another US$2.7 billion for solar panel and battery manufacturing.
The program is projected to generate in annual foreign exchange revenue.
Pertamina has also supplied SAF to during the Bali International Air Show on September 18-19, 2024.
By prioritising three key actions — accelerating electrification, advancing renewable fuels, and strengthening multilateral cooperation — Indonesia has a major opportunity to fast-track its energy transition.
Stronger energy security would not only protect Indonesia from global shocks but also lay the foundation for sustainable economic growth in the decades to come.
, Research Associate, ARC Training Centre for the Global Hydrogen Economy, Particles and Catalysis Research Laboratory, ; , Professor, ; , Business Manager at NSW Decarbonisation Innovation Hub, , and Wibawa Hendra Saputera, Lecturer in Department of Chemical Engineering, Institut Teknologi Bandung
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