Indonesia’s renewable energy sector has been one of the more closely-watched stories in Southeast Asian energy through the 2020s. The combination of large addressable demand, abundant renewable resource, and the post-COP commitments has made the country a focus for both domestic and international energy investment. The May 2026 picture is worth a working read.

The headline picture.

Indonesia’s installed renewable capacity has grown through 2024 and into 2026 but the share of renewables in the country’s overall electricity mix remains lower than the policy targets would imply. The combination of legacy coal generation, the geography of the archipelago, and the historical pace of renewable project development has produced a transition that is real but slow.

The 2025 renewable share of Indonesian electricity generation was in the mid-teens by most measures. The official 2025 target was higher, and the gap between target and actual remains a meaningful policy conversation.

The major renewable categories:

Geothermal. Indonesia continues to be one of the world’s largest geothermal generators with substantial installed capacity and ongoing development. The geothermal expansion through 2024–2026 has continued, with several major projects coming online and several others in development. The pace of new geothermal development has been slower than the resource potential would suggest.

Hydroelectric. The hydro capacity has continued to grow with several major projects in development. The smaller-scale hydro for rural electrification has also been a continued focus.

Solar PV. The solar PV development has accelerated through 2024–2026 but the absolute capacity remains lower than would be expected given the resource potential. The combination of grid integration challenges, distribution complexities across the archipelago, and the historical regulatory environment has slowed solar development relative to peer markets.

Wind. The wind development in Indonesia has been slower than solar. The wind resource is reasonable in specific locations but not exceptional, and the combination of resource quality and the development environment has not supported rapid wind deployment.

Bioenergy. The bioenergy capacity has grown, particularly using palm oil residues and other agricultural waste streams.

The policy environment.

The Indonesian government’s policy framework for renewable energy has continued to evolve through 2024–2026. The major policy elements include:

The renewable energy purchase obligation on PLN (the state utility). The framework that requires PLN to take a defined share of renewable power has been in operation. The implementation has been mixed.

The feed-in tariff and power purchase agreement framework. The PPA terms available to renewable developers have continued to be a subject of negotiation. The bankability of Indonesian renewable PPAs has been a continued concern for international investors.

The carbon pricing mechanism. Indonesia’s emissions trading scheme has been developing. The 2025–2026 implementation has been measured rather than dramatic.

The energy transition mechanism. The Just Energy Transition Partnership (JETP) framework with international financial commitments has been operationalising. The disbursement pace has been slower than the early announcements suggested.

The Critical Minerals strategy. Indonesia’s position in the global critical minerals supply chain — particularly nickel for battery production — has been a major economic and policy thread. The country’s evolving regulatory approach to mineral exports has implications for both domestic renewable industry development and global supply chains.

The investment landscape.

The investment in Indonesian renewable energy in 2024–2026 has been a mix of domestic state-led investment, international development finance, and private capital.

The state-owned enterprises — PLN, Pertamina, and various subsidiaries — have been the major domestic players in renewable development. The performance of these enterprises has been variable. The political and operational constraints on the state-owned players have been a continued challenge.

The international development finance institutions — the World Bank, the Asian Development Bank, the various bilateral DFIs — have been active in Indonesian renewable energy through the period. The scale of the development finance commitment is meaningful but the disbursement against project pipelines has been slow.

The international private capital has been more cautious. The combination of regulatory complexity, PPA bankability concerns, and the political risk premium has limited the pace of private capital flow. The capital that has come into the market has been concentrated in specific developers, specific technology categories, and specific locations.

The grid and infrastructure picture.

The grid integration of renewables in Indonesia is one of the more significant constraints on the pace of the transition. The archipelagic geography means that Indonesia’s electricity grid is not a single integrated system but a collection of regional grids with limited interconnection. The grids vary in their capacity to integrate variable renewable generation.

The major grid system on Java accounts for most of the demand. The Java grid has been the focus of much of the renewable integration work. The capacity to integrate solar PV at scale on Java has been a continued operational consideration.

The smaller grids in the outer islands have different characteristics. The Bali grid, the Sumatra grid, and the various smaller island grids have specific renewable integration challenges. The off-grid and mini-grid development for remote islands has been a focus for renewable deployment.

The transmission and distribution investment has been a continued requirement. The renewable expansion needs supportive grid investment, and the pace of grid investment has not always kept up with the renewable project pipeline.

The coal context.

The coal generation continues to dominate Indonesian electricity. The country is one of the world’s largest coal exporters and one of the largest coal consumers. The coal industry has substantial political and economic weight.

The coal phase-down conversation has been a real policy thread but the actual reduction in coal capacity has been slow. The recent commitments include limits on new coal capacity additions but do not commit to early retirement of existing coal plants at the pace that the climate trajectory would require.

The early retirement of coal capacity is one of the major elements of the JETP framework. The progress on this through 2024–2026 has been slow but the planning is moving forward.

The outlook for the rest of the 2020s.

The realistic outlook for Indonesian renewable energy through the rest of the 2020s is continued growth at a pace below the policy targets but above the historical baseline. The combination of factors — large addressable demand, supportive policy intent, international financial support, declining technology costs — supports continued expansion.

The acceleration that would be required to meet the more ambitious decarbonisation pathways requires several enabling factors:

The grid investment to match the renewable expansion.

The streamlining of the project development and approval pathways.

The improvement in PPA bankability to attract more private capital.

The early retirement of existing coal capacity to make space for renewables.

The mobilisation of climate finance at the scale that the JETP commitments suggested.

The 2026 picture is that progress is happening but slower than the climate goals require. The Indonesian renewable energy story remains one of the most consequential energy transition stories in Southeast Asia and one of the most consequential globally given the scale of the addressable demand. The next several years will be critical in determining whether the pace of the transition accelerates to match the climate trajectory or settles at the slower trajectory that current pace suggests.