This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2021-09-09

Unit: USD millions





2021 (Estimated)

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Imports from the U.S.





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Data Sources:  Global Trade Stats, Central Bureau of Statistics Indonesia and unofficial estimates. Average exchange rate of Indonesian rupiah to U.S. dollars from the World Bank.


In recent years, Indonesia has made a shift toward greater utilization of clean energy. Although coal is still the biggest energy source for electric power plants at 56% of the total,  the government has been putting greater emphasis on clean coal technology to reduce emissions from fossil-fuel power plants. The power industry in Indonesia experienced 4.4% annual growth in 2020 while the electrification rate in Indonesia reached 99.2% as of December 2020, according to the Ministry of Energy and Mineral Resources (MEMR). The East Nusa Tenggara and Maluku regions had the lowest electrification ratios, with 88% and 92% respectively, according to MEMR data.

At the end of 2020, total installed electric generation capacity was 71 Giga Watts. Of this, 43.04 GW (60.7%) was generated by state-owned electricity company PT Perusahaan Listrik Negara (PLN), 18.18 GW (26.5%) by independent power producers, 5.64 GW (7.7%) by operating permit holders, 3.58 GW (5.1%) by private power utilities and the remaining 55 MW (0.01%) by the government. The national transmission system has approximately 58,959 km of lines and 77,514 Mega Volt Amperes of transmission transformer capacity.  The distribution system includes approximately 946,101 km of transmission lines and 41,987 MVA of transformer capacity.

Indonesia imported $4.9 billion of electrical power equipment in 2020, of which U.S.-origin products constituted approximately 15%.  Other major suppliers include China, Singapore, Japan, Korea, Malaysia, France and Germany.  Indonesian companies typically import U.S. products directly or through an agent/distributor in Singapore.

The smart power grid industry has increased in importance as Indonesia works to increase the electrification ratio with a particular focus on rural and remote areas in Eastern Indonesia. The initiative is in line with the government’s target to incease the renewable energy contribution to 23% of the energy mix by 2025 and in line with Indonesia’s smart city program covering 100 cities. Government regulations provide the regulatory framework for increasing private sector participation in transmission and distribution through microgrid licensing. U.S. firms would benefit from initiatives to replace costly diesel generation and leverage emerging microgrid deployment.

Challenges include the fact that the current Indonesian government administration has a general policy of strong national control over power generation and distribution, a lack of policy transparency, and local content requirements.

Leading Sub-Sectors

U.S. companies are strong competitors in markets for turbines and turbine parts, transmission and distribution equipment, smart grid technology, microgrid equipment, energy saving and efficiency technologies, and emission reduction technology.


In January 2021, PLN began its first stage its program of replacing 5,200 unit in total of existing diesel fired power plants with renewable energy resource mainly solar power plants and gas fired power plants. This program aims to ease the burden of country’s fuel import, lowering the electricity production cost and increase renewable energy contribution to the energy mix. The first stage has begun for the conversion 200 diesel power plants to solar power plants for total combined capacity of 225 MW with the priority for diesel power plant with more than 15-years of operation and located in remoted areas that does not posses a well established grid system. Additionally for the aim for the first stage is to support the local’s community  economy by having more reliable electricity for the growth of industry in tourism, fishery, and etc. The second stage conversion would convert up to 500 MW combined capacity of diesel power plants. Lastly, third stage would be converting for 1,300 MW of combined capacity diesel power plants. The aforementioned project would cost for an estimated USD 6.83 billion.

The new National Electric Generation Plan for 2021-2030 (RUPTL) forecasts that electricity demand in Indonesia will grow 4.9% annually.  According to RUPTL estimates, by 2027 electricity demand from 79 million customers will reach 443 terawatt hours (TWh) and the electrification ratio will reach 99.4%

Achieving the target, first announced by President Jokowi in 2014, of adding 35 GW in power generation capacity would require a total investment of an estimated U.S. $72.9 billion and the installation of 291 power plants, 732 transmission lines (75,000 set tower), and 1375 unit substations. Even if the 35 GW plan is not fully achieved, the construction of power plants, transmission and distribution lines in Indonesia should bring commercial opportunities for U.S. companies.  Areas of opportunity include the supply of equipment including turbines, coal emission technology, substations, transmission, transformers, smart metering and distribution equipment. In addition, electrification projects will create increased opportunities for renewables and gas, including clean and lower emissions coal technologies.

Indonesian Ministry of Energy and Mineral Resources (MEMR) has initiated a new policy regime under which renewable energy projects have to compete on a strictly economic basis.  New regulation establishes a benchmark cost for power generation within each region. So long as a project proposal is below 85% of the regional cost then PLN is authorized to accept the project through direct negotiation between the project developer and the off-taker. Also, Ministerial Regulation ESDM No. 38/2016 provides a regulatory framework to incentivize private companies to develop independent microgrid utilities in remote and underserved locations.  Under 38/2016, a developer can theoretically combine a group of villages and communities into a bundled packet and apply for the issuance of a license to own and operate an independent utility concession. Indonesian political dynamics mean that the actual issuance of such a license is likely to be quite challenging.

The national energy plan sets an ambitious renewable energy target of a 23% contribution to Indonesia’s energy mix by 2025, up from the current 13%. This creates opportunities in sub sectors such as solar, biofuel, waste to energy, and electric vehicles. Having the largest renewable energy resource in Indonesia with potential about 200 GW, solar has been growing in demand such as for rooftop solar photovoltaic technology from homeowners, government buildings, public facilities and commercial facilities. In addition, Indonesia government also is working on building floating solar projects especially in Java island as floating solar project offers less challenge in terms of land acquisitions. In meantime, Indonesian government has launched waste to energy projects in 12 cities across Indonesia, including some that are moving forward with tenders expected in the future. Although majority of the projects are not moving as fast as expected but a few waste to energy projects have progressed forward.

For biofuel, the government of Indonesia plans to develop green refinery facilities as as way to leverage its vast palm oil resources as bio fuel for industrial fuel needs. Since late 2018, biodiesel sold in Indonesia has had a 20% biofuel mix but in 2019 became the first country in the world to implement a 30% biofuel ratio. Indonesia is also aiming to move toward electric vehicles, with a target of 20% sales by 2025. Presidential Regulation No. 55 of 2019 seeks to accelerate the growth of the electric vehicle industry. To support the electric vehicle industry growth, in 2021, PLN seeks to build 168 of public electric charge stations. With the abundant natural resource of nickel, as material for the battery and to support electric vehicle, Indonesia government has been encouraging foreign investors to invest in the battery industry manufacturing in Indonesia. 

The U.S. Embassy in Jakarta established the U.S. Power Working Group as a platform to support and showcase U.S. firms interested in electrification and other commercial opportunities. The working group provides a forum for U.S. firms to engage with the Indonesian government to promote their products and services. Working group participants include power industry partners and associations who share best practices and formulate strategies to leverage the expansion of Indonesia’s energy infrastructure.


  • Ministry of Energy and Mineral Resources (MEMR or ESDM)
  • Directorate General of Electricity, Ministry of Energy and Mineral Resources
  • Directorate General of New & Renewable and Conversation Energy, Ministry of Energy and Mineral Resources
  • State-owned company - PT Perusahaan Listrik Negara (PT PLN)
  • IPP - Association of Independent Power Producer in Indonesia (APLSI)

Interested parties may contact Commercial Specialist Mario Simanjuntak at