Indonesia’s electricity investment is set to reach an estimated IDR 2,967.4 trillion (approximately USD 184 billion) as outlined in the newly launched Electricity Supply Business Plan (RUPTL) for 2025–2034. The Ministry of Energy and Mineral Resources (ESDM) officially introduced the plan, aiming to add 69.5 Gigawatts (GW) of power generation capacity over the next decade. A significant portion of the funding will come from the private sector, signaling strong collaboration between the government and Independent Power Producers (IPPs).
Indonesia Electricity Investment Backed by Private Sector
The RUPTL indicates that 71% of the planned power generation capacity will be developed by private companies, while PLN will handle the remaining 29%. This distribution also reflects the investment structure, where 73% of the IDR 2,133.7 trillion (USD 142 billion) allocated for power plant development will be funded by IPPs, equaling approximately IDR 1,566.1 trillion (USD 104 billion).
Director General of Electricity at the Ministry of ESDM, Jisman P. Hutajulu, stated, “So in terms of Megawatts, we give 71% to IPPs, and 29% to PLN, because PLN still needs to act as a regulator and manage the existing power plants. Not everything can be handed over to IPPs.”
He added, “And in terms of investment, 73% of the total will go to IPPs. We hope all IPPs can actively participate in implementing the RUPTL.”
Renewable Energy Projects Dominate RUPTL Targets
The updated RUPTL focuses heavily on renewable energy development. The government plans for 76% of the new 69.5 GW power generation capacity to come from New and Renewable Energy (EBT) sources. The total investment for EBT projects from IPPs is projected at IDR 1,341.8 trillion (USD 89 billion), while PLN will contribute another IDR 340.6 trillion (USD 23 billion) for similar initiatives.
This direction aligns with Indonesia’s broader commitment to transitioning to cleaner energy. The remaining investment will support non-renewable energy projects, including IDR 224.3 trillion (USD 13.7 billion) from IPPs and IDR 227 trillion (USD 15 billion) from PLN.
Energy Infrastructure Funding Needs Policy Stability
The substantial funding requirements for energy infrastructure raise concerns among private developers, particularly around financing and policy consistency. Arthur Simatupang, Chairman of the Indonesian Independent Power Producers Association (APLSI), highlighted the challenges of high initial capital needs for EBT projects.
“Once again, EBT investments require large upfront capital. So, to make it happen, we need significant support from financing institutions here,” he told CNBC Indonesia.
Arthur also stressed the importance of risk mitigation from the lender’s perspective. “Because we need to look at it through the eyes of banking institutions, how this project can mitigate those potential risks,” he said.
He further emphasized that stable regulations play a key role in ensuring investor confidence. “If the regulatory framework can remain consistent, it will create a more stable business climate and provide certainty for investors. And that, of course, will be reflected in the risk factors,” Arthur said.
To secure funding, private power companies are also offering asset guarantees to financial institutions. Arthur noted that the private sector’s contribution to EBT generation in the RUPTL reaches two-thirds of the total planned capacity.
He concluded, “We also need guarantee support, a kind of blanket guarantee from the government stating that these are indeed national strategic projects. So, they will help lower the cost of capital.”
Outlook for Indonesia Electricity Investment
Indonesia’s electricity investment offers substantial opportunities, especially for private stakeholders ready to support the country’s green energy transformation. With the government providing a clear roadmap and major funding needs directed at renewable energy, success depends on strong private-public collaboration and regulatory consistency. If supported properly, these ambitious targets will enhance national energy security while pushing Indonesia toward a more sustainable future.
Source: cnbcindonesia.com
Image: Lee Yiutung/Getty Images
