Indonesia's power transition: the ambition is set, delivery is the test

Indonesia has made its direction of travel unmistakable. The government has set a target of net-zero power by 2060, embedded roughly 75 GW of new renewables in its latest electricity plan (RUPTL 2025–2034), and floated an audacious push for 100 GW of solar and battery storage in just 2026–2028. For a system that still runs on coal for around two-thirds of its electricity, that is an order-of-magnitude change.

The ambition, in other words, is not in doubt. The harder questions are the practical ones: how does the system actually get there, what does it cost, and what could get in the way?

To answer them, we built a purpose-built capacity-expansion model of Indonesia's power sector, modelling seven regional zones, hour-by-hour operation, stepping from a 2025 baseline out to 2060, calibrated to Indonesia's own plans (i.e., RUPTL's demand forecast, pipeline of projects, the JETP coal-retirement schedule, etc). The model does one thing: it builds and operates the cheapest power system that reliably meets demand in every zone, every hour.

We then compared three pathways: (A) the published plan (RUPTL Base), (B) an accelerated-renewables case (RUPTL ARED), and a high-ambition "ARED++" that layers a sustained solar push and a rising carbon price on top.

Five findings stand out.

1. The published plan is not a decarbonization plan

Under RUPTL Base, renewables add only about 27 GW through 2034 and the grid stays coal-dominated. Power-sector emissions don't fall, they nearly triple, to around 670 Mt CO₂ by 2060, while carbon intensity barely moves from today's ~0.8 tCO₂/MWh. Because electricity demand keeps growing at over ~5% a year, simply following the current plan locks in a high-carbon system for decades. Indonesia cannot meet its 2060 net-zero pledge on the published trajectory alone.

2. Solar is the engine; everything else plays a supporting role

In every clean pathway, solar is the single largest source of new capacity, by a wide margin. Wind matters regionally (Sulawesi, Bali and East Java, eastern Indonesia), and Indonesia's firm renewables, geothermal and hydro, are genuinely valuable. But geothermal and hydro together cap out at roughly ~40 GW; while they can anchor the system, they cannot carry the responsibility to fully decarbonize it. The arithmetic of a clean Indonesian grid is therefore mostly an arithmetic of solar: in the high-ambition case, solar grows toward ~228 GW by 2060, requiring sustained build rates of around 10 GW a year this decade (vs. ~0.15 GW a year today).

3. Storage is the decisive enabler — and a carbon price is the trigger

Solar's weakness is that it all arrives at midday. What converts a lot of cheap solar into a reliable, low-carbon system is storage, and our analysis is unusually clear about what unlocks it. It is not primarily technology cost; it is the carbon price. Sweeping the carbon price reveals a two-stage transition. At around ~$50/t, the price flips coal to gas, roughly halving emissions at modest cost. Above roughly ~$100/t, batteries begin to displace the gas that was providing firming, and the system goes deep-clean. Most of the available abatement is captured by about $100/t; beyond that, emissions gains taper while investment keeps rising. In short, ~$100/t looks like the policy sweet spot (and much higher than current carbon-price guidance for neighboring markets like Singapore, let alone Indonesia), that would mobilize storage at scale.

4. The required step-up is enormous (and simultaneous)

This is not a single push. Reaching the high-ambition pathway means a sustained, parallel scale-up across four dimensions at once: roughly $300–700 bn of cumulative power-sector investment to 2060 (around $20 bn a year on average, double recent levels and squarely in JETP territory); the ~10 GW/yr of solar noted above; storage rising from almost nothing to tens of gigawatts; and a renewable share of generation climbing from about 14% today toward 64–78% by 2060. Each of those is a stretch on its own. Doing them together, while the system also grows, is the real challenge.

5. Delivery, not ambition, is the binding constraint

If the economics increasingly favour clean energy, why might Indonesia still miss its targets? The model and the project pipeline point to five recurring bottlenecks:

• Grid and interconnection. Resource-rich outer islands like Sumatra can't supply Java's demand without scaling inter-island transmission well beyond current plans.

• Land and permitting. Utility-scale solar at the required volumes implies on the order of a million-plus hectares, and permitting today can run three to five years per project.

• The value chain. Too few EPC firms, limited domestic manufacturing, and a need for tens of thousands of trained installers (roughly a 10x scale-up of the clean-energy industrial base within a few years).

• Storage economics and carbon pricing. Storage doesn't deploy at scale until the carbon price clears ~$100/t.

• Coal's political economy. Newer coal plants are locked into long power-purchase agreements into the 2050s, which makes early retirement a contractual and financial question as much as a technical one.

Five priorities to close the gap

If delivery is the constraint, the response comes down to five priorities — structural moves that, together, turn the ambition into a buildable pathway:

• Anchor accelerated renewables (ARED) as the working floor, with a carbon-price path. Adopt the accelerated case as the planning baseline and publish an escalation path toward ~$100/t CO₂ by 2040, the single lever that unlocks storage.

• Fast-track land and permitting for solar. Streamline land procurement and approvals for utility and floating solar, the current binding constraint on the volume leader.

• Launch a clean-energy industrial plan. Build EPC capacity, domestic manufacturing and the workforce, so the buildout becomes a competitiveness-and-jobs story rather than an import bill.

• Scale inter-island transmission beyond RUPTL. Commit to the HVDC and grid upgrades that let resource-rich outer islands supply demand centers.

• Stand up bankable procurement and a just transition. A corporate power-purchase-agreement framework to mobilize private capital alongside JETP public finance, plus a fund for the workers and regions affected by coal's wind-down.

The through-line is that decarbonizing a growing power system is harder than decarbonizing a flat one (Indonesia must add capacity and shift the mix at the same time) but the levers are known, and the sooner they are pulled, the lower the eventual cost.

Where the corporate sector comes in

Industry consumes 40–45% of Indonesia's electricity, and more than 400 global companies have committed to 100% renewable energy in their supply chains. That demand is, today, largely stranded by the lack of a bankable way to buy clean power. Aligning that corporate demand with national planning, through a credible corporate-PPA framework and demand aggregation, is among the most direct ways to mobilize private capital alongside JETP public finance, and to keep Indonesia competitive for manufacturing investment as regional peers move first.

That is the agenda for an upcoming series of strategic dialogues that I will be participating during a trip to Jakarta where I will be meeting both public and private sector stakeholders: not to relitigate the ambition, but to build the delivery pathway behind it. Out model only shows what it takes; the pipeline shows where to start; the bottlenecks show where to focus. The next step is to act on them.