In the 2026 State Budget Bill, the government has budgeted Rp 37.5 trillion for the development of new renewable energy (EBT).
The EBT development budget is part of a total budget of Rp 402.4 trillion to strengthen energy security, which is one of the priority programs next year. "There is a significant [budget] for EBT, Rp 37.5 trillion," said Finance Minister Sri Mulyani Indrawati at the 2026 Budget Posture press conference at the Ministry of Finance Office, Friday (15/8/2025).
According to Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), the figure is still relatively small - only one-tenth of the real need to drive the energy transition in Indonesia.
"Based on IESR calculations, the annual budget requirement for the energy transition reaches US$ 30 billion until 2030. So this budget (RAPBN EBT 2026) may be less than a tenth of the budget needs for the energy transition," he told SUAR (19/9/2025).
Fabby added that the limited government budget is not intended to fund all projects, but as a catalyst that can mobilize funding from other sectors so that it can reach US$ 30 billion. He added that this strategy is important so that the large investment needs for the energy transition can be met.
According to him, the government budget can be used to build access to electricity to rural areas, such as the construction of communal solar power plants (PLTS) in villages. An IESR study shows that Indonesia has solar energy potential between 3.3 TWp and 20 TWp, spread from Sabang to Merauke.
Fabby explained that this potential can be utilized to provide reliable electricity for 5,500 villages that do not yet have adequate access to electricity, optimize the potential of 655 GW of rooftop PLTS in residential buildings throughout Indonesia, and utilize 300 GW of floating PLTS potential in national waters.
Regarding the PLTS program in villages, Fabby sees a great opportunity for the private sector to collaborate with the government, although the detailed plan is still in the preparation stage. He advises the government to open project tenders competitively.
"The government can provide a market, but let companies compete to provide the best price," he explained.
The role of the private sector is not only limited to providing components, but also in training skilled labor. Fabby estimates that one PLTS project requires 50-60 workers for 6 months-9 months from construction to operation. In addition, he added that the private sector can also provide materials and components that meet standards, such as "tier 1" solar modules with a 40% domestic content rate (TKDN).
Meanwhile, larger and bankable energy transition projects, listed in PLN's Electricity Supply Business Plan (RUPTL), could involve the private sector. Fabby said the funding needs for projects in PLN's RUPTL until 2034 could reach US$ 80 billion, and 60% of the funding is for power plants, so the private component could enter more.
"Large and bankableinvestments are those that can attract the private sector. They will enter if the project provides an adequate rate of return," said Fabby.
According to Fabby, in the next 10 years for the execution of the RUPTL, the private sector plays an 80% role in funding renewable energy power generation, so the need for private funding is up to US$70 billion-US$80 billion.
According to him, there are three renewable energy sectors that have the most potential to grow rapidly in the next 1 year-3 years:
- Solar energy (PLTS): Indonesia has enormous solar potential, reaching 3,300 gigawatts-3,400 gigawatts. This technology is easy to install, scalable, and available throughout Indonesia.
- Bioenergy from biomass: The potential for biomass from agricultural waste (especially palm oil) and municipal waste is huge and can be utilized for power generation.
- Small-scale micro-hydro power (MHP) projects can be rapidly developed in many locations.
In addition, he added, wind energy also has the potential to be developed within 3 years in several locations.
Chairman of the Indonesian Renewable Energy Society (METI), Zulfan Zahar, emphasized the importance of the role of the private sector. He highlighted METI's commitment to encourage the acceleration of renewable energy project tenders, especially those managed by PLN.
"The potential for EBT investment can reach US$ 200 billion or equivalent to Rp 3,000 trillion. If EBT tenders are opened more widely and the process is accelerated, economic opportunities for Indonesia will grow significantly," Zulfan was quoted as saying in an official statement (16/8/2025).
Zulfan added that METI will focus on collaboration and overcoming bureaucratic obstacles, to make the investment process more efficient and attractive to investors.
