5 Facts About Renewable Energy Investments in Indonesia

5 Facts About Renewable Energy Investments in Indonesia

  • InCorp Editorial Team
  • 31 August 2022
  • 4 minute reading time

Indonesia shows great intent to transition to renewable energy through various attempts and strategic moves, one of which has been explicitly mentioned by President Joko Widodo, also known as Jokowi.

Jokowi has invited G7 countries to invest in Indonesia to smoothen the energy transition plan that spans the next eight years. He continues to emphasize and promote the extraordinary potential of Indonesia below the sea and earth within the Indonesian territory.

Retno Marsudi, the Minister of Foreign Affairs, has shared that Indonesia has an apparent and concrete commitment to tackle climate change through the energy transition.

She further goes on to share that large amounts of investment are needed to fully recognize Indonesia’s potential. Alongside this, technology transfer is also integral in ensuring success.

Thus far, the President elucidates that the transition optimization will help to enhance economic growth, open up business opportunities, and create new jobs. Furthermore, Jokowi has also held at least nine bilateral meetings with various countries, including India, France, and Germany.

He has also met with British Prime Minister Boris Johnson, Canadian Prime Minister Justin Trudeau, Japanese Prime Minister Kishida Fumio, and IMF Managing Director Kristalina Georgieva.

The Challenges Behind Renewable Energy Investments

One of the primary obstacles in transitioning to green energy is the economic value. In terms of investment, energy projects are not economically justified.

Due to this, investments in this sector are not as attractive as those in other sectors. Therefore, to ensure that the transition continually occurs, a partnership is an integral part.

This is seen through several pilot projects that have begun in Indonesia by big Asian companies. The green industry and projects cannot be treated as usual projects and need special attention in their development.

The government can realize the development as Indonesia’s economy progresses and its GDP rises. Consumers can therefore absorb clean energy.

Plans of exporting green energy are also in motion despite the products not being cheap yet. The realization target sets for the next 5 (five) years.

5 Facts about Renewable Energy in Indonesia

1. Serious Steps for Transition

There are 24 Indonesian provinces that have completed the Regional Energy General Plan. Aside from that, three provinces are also in the process of registering the legislation. One region is currently in discussion with the Ministry of Home Affairs. At the same time, the other three provinces have just started talks with the Regional House of Representatives.

2. Overcoming Challenges

The global energy supply is currently disrupted due to current socio-political conflicts that continue to occur. There is a high importance placed on protecting the regional supplies in various regions.

3. Strong Conditions of the Renewable Sector

Indonesia is strategically located on the equator, which means that the nation is exposed to abundant sunlight. Indonesia has a lot of wind energy that can be captured by wind power plants and converted into electricity. Indonesia also has a surrounding coastline which can also be developed into electricity.

4. Green Bonds

The Indonesian government issued regulations on the usage of greed bonds in 2017, followed by the issuance of the bonds for USD 3 billion in 2018.

5. Low Capacity Green Energy Utilization

Indonesia has an abundance of alternative capacity due to the large reserves of geothermal, solar, and wind energy. However, the utilization levels remain low. An example can be seen through Indonesia’s geothermal energy reserves, which have reached 400 gigawatts, but a mere 2.5% has been utilized so far.

Energy Investments for Indonesia’s Economy

Jakarta is said to have considerable potential from utilizing and managing waste that is then transformed into electricity. The demand for power and electricity in Indonesia continues to increase as the economy grows.

The Head of Socio-Economic and Policy at the International Renewable Energy Agency (IRENA) reveals that there is a dire need for policies to be holistic such that they are focused on deploying renewable technology and integrating it with transitional policies and the civil society.

Cekindo is a one-stop center for all your business needs. The professionals in Cekindo are capable and experienced in helping various businesses secure their business licenses and import license, which are vital for operations.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us.

Lead Form

Disclaimer: The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.

We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials.

We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.

Frequent Asked Questions

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

There are two main types, namely, primary business licenses and non-primary business licenses. The primary ones commonly apply to various industries, such as general and industrial business licenses. Additional non-primary ones are included, depending on the operations of your business. Examples of non-primary business licenses are operational and commercial licenses.

Yes, you must apply for it to be able to issue work permits for your foreign employees. This permanent business license is also a prerequisite for the applications for other business licenses and import licenses.