Indonesia renewables face grid limits as capacity rises to 14GW in 2024

Demand growth also strained transmission capacity across islands as buildout lags.

Indonesia’s renewable energy (RE) expansion faces execution constraints despite rising demand and capacity targets, with grid limits, policy structure, and regional imbalance shaping deployment.

A Maybank Research report said that the country’s RE capacity rose 5.9% annually between 2019 and 2024 to 14 gigawatts (GW) in financial year (FY) 2024.

The country targets 42.6 GW of renewable capacity by 2034, lifting the renewable share of the national energy mix from 14.1% to 34.3%.

Electricity demand is projected to grow 5.3% per year between FY25 and FY34 to 506 terawatt-hours.

This means installed capacity needs to expand 58.8% to 160 GW over the same period, compared with 7.6% growth between FY19 and FY24.

The system shows regional imbalance, with Maybank Research describing this as a “two grids” structure.

The structure comprises Java, which has excess generation capacity, whilst non-Java regions face undersupply despite holding most of Indonesia’s untapped hydro, geothermal, and solar resources.

Grid utilisation reached 81% in FY25, with a stated reserve margin of 34%.

Distribution losses stand at 11% to 12%, compared with a national average capacity factor of 52%.

PLN remains the dominant off-taker in the electricity market, the report said, which limits independent power producer participation and constrains RE development.

Solar photovoltaic and geothermal energy form the core of the renewable build-out strategy.

Geothermal offers a capacity factor above 80%, and Indonesia holds around 40% of global geothermal reserves, whilst solar provides a scalable option for near-term deployment.

Household solar installation costs stand at $1.2 per watt (W), or $0.55/W for DIY systems.

Production costs reach around $0.034 per kilowatt-hour (kWh), compared with PLN’s cost of around $0.10/kWh.

Singapore’s Energy Market Authority has approved up to 3.4 GW of low-carbon electricity imports from Indonesia by 2035.

Wholesale prices for exports stand at around $0.22/kWh, above domestic PLN offtake prices of around $0.068/kWh.

Export electricity flows through PLN-controlled infrastructure, whilst export licences require renewal every five years.