November 27, 2025
JAKARTA – Despite President Prabowo Subianto’s bold pledge to shift Indonesia entirely to renewable energy, a proposal to grant state utility company PLN greater leeway to build new coal-fired power plants, beyond what is currently allowed under a presidential regulation, threatens to undercut that ambition.
Energy analysts warn the exemption could entrench coal’s dominance in the national energy mix and stall momentum for clean power development. It may even derail PLN’s flagship ambition to build a nationwide super grid designed to carry green energy across the archipelago.
Presidential Regulation No. 112/2022, which aims to accelerate renewable energy development, has prohibited the construction of new coal-fired power plants except for projects already in the pipeline before the rule took effect. But during a recent public consultation on revising the regulation, the government floated additional exemptions to the construction of new coal plants, framed as necessary to maintain “system reliability and energy independence”.
Agung Budiono, executive director of energy transition advocacy group Yayasan Indonesia Cerah, opined that the loophole was specifically tailored for strategic industrial sectors.
“It is obvious that this exemption is, in practice, aimed at supporting the mineral downstreaming industry, which has been heavily dependent on captive coal power plants,” Agung told The Jakarta Post on Tuesday.
Data from the Just Energy Transition Partnership (JETP) consultation document published in November illustrates the scale of the issue, showing that Indonesia is expected to build 11 gigawatts (GW) of captive coal-fired power plants by 2030.
“The majority of these projects are designed to meet the electricity needs of the nickel, aluminum and steel sectors,” Agung said. “This [presidential regulation] revision provides a way for these projects to continue using coal, even though it clearly contradicts our climate commitments.”
In his state budget address at the Senayan legislative complex in Jakarta on Aug. 15, President Prabowo said Indonesia has to achieve 100 percent renewable energy within 10 years or sooner, reiterating a commitment first announced at the Asia Pacific Economic Cooperation (APEC) Summit last year.
However, there has been little progress in terms of regulatory changes or concrete achievements to support the ambitious target.
Deputy Energy and Mineral Resources Minister Yuliot Tanjung emphasized that revising the presidential regulation was essential to speeding up renewable energy development, noting that clean energy accounts for only 16 percent of Indonesia’s energy mix, well below the national target of 23 percent.
Yuliot also rejected claims that the government was easing restrictions on new coal-fired power plants in PLN’s electricity roadmap.
“Projects already in the pipeline will proceed, while highly emissive coal plants are being prepared for early retirement,” he said on Nov. 16, as quoted by Kontan.
PLN has yet to respond to the Post’s request for comment.
Read also: Indonesia’s ‘weak’ climate pledge lambasted
Green grid plan in limbo
Fabby Tumiwa, executive director of the Institute for Essential Services Reform (IESR), said the revision of the presidential regulation should instead prioritize reforming renewable energy pricing. He noted that the regulation’s 2019 framework is based on outdated economic assumptions, making a comprehensive pricing review essential.
“After the pandemic, the situation changed […] the assumptions may no longer be relevant today,” he told the Post on Tuesday. “To keep renewable energy attractive and draw investment, the government must review the pricing aspect.”
This issue is especially critical for PLN, which requires US$180 billion in funding over the next decade, with 70 to 80 percent expected from private sources.
“The private sector will invest only if electricity tariffs are attractive,” he said.
Strengthening renewable investment is also fundamental for PLN’s long-term Green Super Grid plan, as inter-island connectivity is only feasible with a high supply of clean energy.
“A green super grid is only feasible if […] the supply of renewable energy on those islands is high,” he said.
Fabby also criticized efforts to revise the regulation to allow new coal-fired power plants, arguing that higher emissions would make Indonesia less competitive for foreign investment.
Read also: Clean energy pledge rings hollow amid coal subsidies
Dody Setiawan, a senior Indonesia climate and energy analyst at Ember, said the government must also improve the investment climate for renewables by revamping procurement mechanisms and accelerating critical infrastructure.
“This is essential for accommodating large-scale renewable generation and the Green Super Grid project,” he told the Post on Tuesday.
Dody added that smart grid development is key to integrating variable renewable energy (VRE) and strengthening system reliability. An Ember study shows that without such upgrades, losses from power outages could reach $1 billion by 2040.
Agung from Cerah likewise argued that further exemptions to the ban on new coal-fired power plants would undercut demand for PLN’s clean energy, a vital factor for the Green Super Grid’s commercial viability. He warned that expanding coal capacity would reduce the pressure and incentives for PLN to rapidly strengthen its green transmission infrastructure.
“Above all, this exemption erodes the credibility of Indonesia’s energy transition and weakens investor confidence,” Agung said.