Conventional energy remains the primary source of electricity in Indonesia, especially through the use of coal, which still dominates the national power system.
However, the growing demand for clean energy and global pressure to reduce carbon emissions are pushing Indonesia to accelerate its transition toward renewable energy that is more environmentally friendly and sustainable.
Indonesia has enormous renewable energy potential, ranging from solar, hydro, to wind power. Unfortunately, its utilization is still relatively small compared to the country’s dependence on coal-fired power plants (CFPPs).
This situation makes the energy transition both a major challenge and a significant opportunity for the future of Indonesia’s energy industry.
Indonesia’s Dependence on Conventional Energy
For many years, coal has been the backbone of Indonesia’s electricity supply. As of 2024, around 68% of the country’s electricity production still comes from coal-fired power plants. This figure has even increased compared to previous years.
In 2015, coal contributed approximately 56% of the national energy mix, while the use of gas and diesel gradually declined.
This indicates that Indonesia has not fully moved away from fossil fuels but has instead shifted the composition of conventional energy usage by increasing its reliance on coal.
Currently, Indonesia’s coal-fired power plant capacity reaches approximately 54 GW. Most of these plants are operated by PLN and Independent Power Producers (IPPs) under long-term contracts.
Many coal plants are still operating efficiently, but some are already more than 30 years old and require long-term management strategies.
On the other hand, renewable energy utilization still lags behind. As of 2024, the combined capacity of solar and wind power in Indonesia was only around 1.07 GW, contributing merely 0.27% of the country’s total electricity production.
Challenges of the Energy Transition in Indonesia
Climate change and rising carbon emissions are pushing many countries to reduce their dependence on fossil fuels. Indonesia faces the same pressure to accelerate its energy transition.
Through the National Electricity General Plan (RUKN) 2025–2060, the government has started promoting several emission reduction strategies, including:
- Biomass co-firing
- Carbon Capture and Storage (CCS)
- Green ammonia utilization
However, these technologies still face many challenges in terms of cost, infrastructure, and effectiveness.
1. Biomass Co-Firing Is Considered Less Optimal
Biomass co-firing involves mixing biomass materials, such as wood pellets or agricultural waste, with coal in power plants.
Although considered a short-term solution for reducing emissions, this strategy has several limitations. Biomass has a lower calorific value than coal, meaning more fuel is required.
In addition, securing large-scale biomass supplies could create new problems such as:
- Pressure on forest land
- Land-use conflicts
- Disruptions to the food sector
- High logistics costs
Emission reductions from biomass co-firing are also considered relatively small, estimated at only around 1.5%–2.4% of total emissions from Indonesia’s coal-fired power plants.
2. CCS and Green Ammonia Are Still Expensive
CCS technology is also being promoted as a solution for reducing emissions from coal plants. CCS works by capturing carbon emissions from coal combustion and storing them underground.
However, implementing CCS requires massive investment because it involves carbon capture, compression, transportation, and storage processes. Not all regions in Indonesia also have suitable underground carbon storage sites.
In addition to CCS, green ammonia is being discussed as an alternative fuel blend to replace coal.
Unfortunately, the production cost of green ammonia remains significantly higher than conventional fuels, potentially increasing national electricity costs.
As a result, many experts believe that maintaining coal-fired power plants with additional technologies such as CCS or co-firing is not the most effective long-term solution.
Repurposing Coal-Fired Power Plants as a Future Solution
Amid these challenges, repurposing coal-fired power plants is increasingly viewed as one of the most realistic solutions for accelerating Indonesia’s energy transition.
Repurposing refers to transforming former coal plant sites into clean energy hubs, such as:
- Solar power plants
- Battery Energy Storage Systems (BESS)
- Modern electricity grid infrastructure
Former coal plant sites already offer many advantages because they are connected to transmission networks and have substations, water access, and large land areas.
This allows renewable energy projects to be developed more quickly and cost-effectively compared to building entirely new facilities.
Besides reducing development costs, repurposing can also help maintain economic stability in regions that have long depended on the coal industry.
Workers from coal plants and supporting sectors can transition into the clean energy industry through training and new skill development programs.
Several countries have already implemented this strategy. Canada, for example, successfully transformed the former Nanticoke coal plant into a 44 MW solar power facility by utilizing existing infrastructure.
Renewable Energy Potential in Indonesia
Indonesia actually possesses enormous renewable energy potential. With its tropical climate and vast territory, solar energy is considered one of the country’s most promising energy sources.
In addition, Indonesia also has significant hydro and wind energy potential that can sustainably support national electricity demand.
The government has begun encouraging clean energy investment through various policies and national targets. Private companies are also taking an increasingly important role in accelerating renewable energy development in Indonesia.
TBS’s Role in Supporting Clean Energy
One company actively developing renewable energy in Indonesia is TBS Energy. The company continues expanding its business portfolio into the clean energy sector through several strategic projects across the country.
Through PT Adimitra Energi Hidro (AEH), TBS developed a 2x3 MW Mini Hydro Power Plant in Lampung.
The project officially reached its Commercial Operation Date (COD) in January 2025 and now supplies 6 MW of clean energy to the Southern Sumatra region.
Hydropower plants offer the advantage of generating stable energy that can complement intermittent renewable sources such as solar and wind power.
Besides producing clean electricity, the project also benefits surrounding communities through infrastructure development and improved energy access.
In addition to hydropower, TBS is also developing a 46 MWp Floating Solar PV project in Tembesi, Batam. Key milestones of this project include:
- Financial closing completed in 2024
- Targeted full operation by 2026
- Will be connected to the national electricity grid
This floating solar project is expected to help reduce carbon emissions, improve air quality, and create new green jobs in Batam.
Indonesia’s New Energy Industry Direction with TBS
The shift from conventional energy to clean energy is becoming a crucial step for Indonesia’s future.
Although dependence on coal remains high, advances in technology and renewable energy investment are opening major opportunities to create a more environmentally friendly and sustainable national energy system.
Compared to maintaining coal plants with costly technologies such as CCS or biomass co-firing, renewable energy utilization and coal plant repurposing are considered more efficient and realistic long-term solutions.
Through its 6 MW Mini Hydro project in Lampung and the development of the 46 MWp Floating Solar PV project in Batam, TBS Energy demonstrates its commitment to supporting Indonesia’s energy transformation toward a greener, more modern, and sustainable future.
