Powering Indonesia’s Growth – A More Electrified, More Renewable Economy with Solar at its Core
Indonesia’s next phase of economic growth requires an affordable, reliable, and low-carbon power system to strengthen industrial competitiveness and support the country’s 8 percent economic growth target. Accelerated electrification and renewable energy deployment, particularly solar power, offer a strategic pathway to meet rising electricity demand while reducing dependence on fossil fuel-based generation.
The Institute for Essential Services Reform (IESR) publication, Powering Indonesia’s Growth – A More Electrified, More Renewable Economy with Solar at its Core, examines how electrification and a renewable energy-based power system can support Indonesia’s economic development. Its modelling shows that accelerated electrification could increase electricity demand by approximately 7 percent annually. A least-cost power system centred on solar and energy storage could meet this growing demand at 5–15 percent lower total system costs by 2035, without requiring additional coal- or gas-fired power plants.
The report highlights Indonesia’s 100 GWp solar programme as a strategic opportunity to accelerate power sector transformation. Realising this ambition, however, requires an enabling policy and investment framework to support large-scale deployment, including securing suitable land, streamlining permitting processes, accelerating grid connections, improving renewable energy procurement, expanding transmission and distribution infrastructure, and reducing financing costs. With effective policy implementation and targeted investments, Indonesia can develop a more cost-efficient, competitive, and sustainable electricity system while supporting long-term economic growth.
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