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Indonesia Energy Industry 2025

Energy & Natural Resources Industry in Indonesia

Indonesia's energy sector presents massive opportunities with USD 410 billion market value, ambitious 40 GW renewable energy target by 2025, world's largest geothermal reserves (40% global potential), and strategic position as regional energy hub with strong government support for clean energy transition.

USD 410B

Energy Market Value

40 GW

Renewable Target 2025

28 GW

Geothermal Potential

730 MMboe

Oil & Gas Reserves
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Why Invest in Indonesia's Energy Sector?

Indonesia offers unique advantages for energy businesses with abundant natural resources, supportive regulations, and massive infrastructure development programs.

Southeast Asia's Largest Market

280 million population, fastest-growing economy, 75 GW total installed capacity, 6-7% annual energy demand growth driven by industrialization and urbanization.

Energy Transition Leadership

Government committed to 23% renewable energy by 2025, net-zero emissions by 2060, USD 35B renewable investment pipeline, supportive regulatory framework.

Rich Natural Resources

40% of global geothermal reserves, substantial solar irradiation (4.8 kWh/m²/day), significant hydropower potential, world's top coal exporter, proven oil & gas reserves.

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Indonesia Energy Market Overview

Indonesia's energy landscape is transforming rapidly, transitioning from coal dependency to renewable sources while maintaining oil & gas production and exploring new technologies.

Power Generation: 75 GW Installed Capacity

Coal (60%), Gas (25%), Renewables (15%) - Target: 23% renewable by 2025

Oil & Gas: 730 MMboe Proven Reserves

Producing ~700K bpd oil, 6 Bcfd gas - Upstream investment opportunities

Coal Mining: 600+ Million Tons Annual Production

World's largest thermal coal exporter with 38 billion tons reserves

Indonesia Energy Market Overview
Regional Energy Hub

Energy Investment Segments

Strategic opportunities across Indonesia's energy value chain

Renewable Energy

USD 35B Investment

Solar, wind, geothermal, hydropower, bioenergy projects with government support and feed-in tariff schemes

Key Opportunities:
Solar PV farms Geothermal plants Hydropower Biomass energy
Major Players:

Sarulla Geothermal (330 MW), Cirata Floating Solar (145 MW), Various IPPs

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Oil & Gas

USD 15B Annual Capex

Upstream exploration & production, downstream refining, LNG facilities, petrochemical complexes

Key Opportunities:
Exploration blocks Production sharing Refinery modernization LNG terminals
Major Players:

Pertamina, Chevron, ExxonMobil, TotalEnergies

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Power Generation

75 GW Capacity

Power plants (coal, gas, renewable), IPP schemes, grid infrastructure, smart grid technology

Key Opportunities:
IPP projects Grid expansion Smart meters Energy storage
Major Players:

PLN, Independent Power Producers, Private generators

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Mining & Coal

600M Tons/Year

Coal mining operations, mineral extraction, processing facilities, export infrastructure

Key Opportunities:
Mining concessions Processing plants Coal gasification Export facilities
Major Players:

Adaro, Bukit Asam, Bayan Resources, Freeport

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EV & Battery

USD 9B Target

Electric vehicle ecosystem, battery manufacturing, charging infrastructure leveraging nickel reserves

Key Opportunities:
Battery plants EV assembly Charging stations Nickel processing
Major Players:

Hyundai Battery, LG Energy Solution, CATL partnerships

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Energy Services

Growing Sector

Engineering services, O&M contractors, energy efficiency solutions, consulting & advisory

Key Opportunities:
EPC contractors Maintenance services Energy audit Project management
Major Players:

Local & international contractors, Service providers

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Indonesia's Renewable Energy Transition

Government prioritizes clean energy with ambitious targets and strong incentives

Geothermal Energy

28 GW

40% of global reserves, only 2.2 GW utilized

Solar Power

532 GW

Potential capacity, 4.8 kWh/m²/day irradiation

Hydropower

75 GW

Potential from rivers and dams

Wind Energy

60 GW

Coastal and offshore wind potential

Government Initiatives

  • RUPTL 2021-2030: 20 GW renewable energy capacity addition plan
  • Feed-in Tariff: Guaranteed power purchase agreements for renewable projects
  • Tax Incentives: Income tax holidays, VAT exemptions for green energy
  • Just Energy Transition: USD 20B international climate financing commitment
  • Carbon Trading: Carbon market mechanism to incentivize emissions reduction

Major Renewable Projects

  • Sarulla Geothermal

    330 MW, USD 1.7B, world's largest single-contract geothermal plant

  • Cirata Floating Solar

    145 MW, USD 145M, Southeast Asia's largest floating solar

  • Tangguh LNG Expansion

    3.8 MTPA additional capacity, cleaner energy export

  • Batang Toru Hydro

    510 MW run-of-river hydroelectric project in North Sumatra

How to Start an Energy Business in Indonesia

Step-by-step guide for foreign investors

1

Feasibility Study

Resource assessment, market analysis, site selection, environmental impact study, financial modeling for energy projects.

2-3 Months Details
2

Company Formation

Establish PT or PT PMA with energy sector KBLI codes, appropriate capital structure based on project scale.

3-4 Weeks Details
3

Energy Licenses

Obtain licenses from Ministry of Energy, environmental permits, IPP approval, or mining concession depending on sector.

3-12 Months Details
4

Project Financing

Secure funding through equity, debt, project finance, or government incentives and subsidies for renewable projects.

2-6 Months Details
5

Construction & Installation

EPC contracting, equipment procurement, construction management, commissioning, and grid connection for power projects.

12-36 Months Details
6

Operations

Commercial operations, power purchase agreements, O&M management, compliance, and performance monitoring.

Ongoing Details

Energy Business Regulations & Requirements

Key compliance and licensing requirements

Power Generation

For electricity generation and IPP projects:

  • Electricity Business License from Ministry of Energy
  • PPA Agreement with PLN or direct customer
  • Environmental Permit (AMDAL or UKL-UPL)
  • Construction Permit for power plant facilities
  • Operational Permit after commissioning
  • Grid Connection approval and technical standards

Mining & Oil/Gas

For mining operations and upstream oil & gas:

  • Mining Concession (IUP) or PSC for oil & gas
  • Exploration License with work plan approval
  • Environmental Assessment before operations
  • Community Development CSR program compliance
  • Divestment Requirements for foreign investors
  • Domestic Processing obligation for mineral exports

Need help navigating energy regulations?

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Energy Business Categories (KBLI Codes)

Official business classification codes for energy industry

Business Classifications

KBLI Categories for Energy

Explore Indonesian Standard Industrial Classification (KBLI) business categories relevant to the energy sector. View all categories

Cereal agriculture (excluding rice), various legumes, and oil-producing seeds and grains

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Coal Products Industry

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Coal mining.

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Electric Power Generation

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Electric Power Support Services

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Natural gas extraction and geothermal energy production.

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Oil extraction.

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Orchards and Plantations of Oil-Bearing Fruits

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Other Petroleum Refining Products Industry

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Petroleum Refining Fuel and Lubricating Oil Industry

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Procurement and Distribution of Natural and Synthetic Gas

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Provision of Steam/Hot Water, Cold Air, and Ice Production

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Showing 12 of 18 categories for energy

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Need help selecting the right KBLI code for your energy business?

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Frequently Asked Questions

Common questions about energy business in Indonesia

Yes, foreign investment is allowed in most energy segments with varying ownership limits. Power generation (including renewables) allows up to 95% foreign ownership. Oil & gas exploration permits 100% foreign ownership through Production Sharing Contracts. Mining has divestment requirements (51% local after certain period). Coal-fired power plants face restrictions in line with energy transition policy. Review Negative Investment List for specific requirements.

Indonesia offers attractive incentives for renewable energy: 1) Tax Holidays: Up to 10 years corporate income tax exemption for investments above USD 100M, 2) Feed-in Tariff: Guaranteed power purchase rates from PLN, 3) Import Duty Exemption: Zero import tax for renewable energy equipment, 4) Accelerated Depreciation: Faster asset depreciation for tax purposes, 5) VAT Exemption: No VAT on certain renewable energy goods/services, 6) Just Energy Transition: USD 20B international financing package for clean energy. Visit our tax incentives page for details.

IPP licensing process: 1) Form PT PMA with energy KBLI codes, 2) Conduct feasibility study and secure site, 3) Obtain Business License for Electricity Supply (IUPTL) from Ministry of Energy, 4) Environmental permit (AMDAL/UKL-UPL), 5) Negotiate Power Purchase Agreement (PPA) with PLN or direct customer, 6) Construction permit and grid connection approval, 7) COD certification after commissioning. Timeline: 6-18 months depending on project complexity. We provide full licensing support.

Indonesia has world's largest geothermal reserves at 28 GW potential (40% of global reserves), but only 2.2 GW currently utilized. Government targets 7.2 GW by 2030. Key locations: Sumatra, Java, Sulawesi. Advantages: baseload renewable energy, domestic resource, job creation. Challenges: high upfront costs (USD 3-5M/MW), long lead times (5-7 years), geological risks. Incentives: feed-in tariff USD 0.097/kWh, geothermal fund for exploration, tax holidays. Major players: PLN, Pertamina, Star Energy, Supreme Energy.

Yes, Indonesia is phasing out coal power in line with energy transition: 1) New Coal Ban: No new coal-fired power plant licenses after 2023, 2) Existing Plants: Must retire by 2055 or earlier with JETP financing, 3) Exceptions: Critical areas without alternatives may get temporary exemptions, 4) Co-firing: Coal plants encouraged to co-fire with biomass (up to 30%), 5) Alternative: Focus on renewable energy and gas-fired plants. Government prioritizes clean energy development.

Common energy KBLI codes: 06100 (Crude Oil Extraction), 06200 (Natural Gas Extraction), 05200 (Coal Mining), 19201 (Oil Refining), 19202 (LNG Production), 35111 (Electric Power Generation), 35112 (Renewable Power Generation), 35301 (Steam & Air Conditioning), 42211 (Power Plant Construction), 43221 (Electrical Installation). Visit our KBLI directory for complete list or consult with our team for appropriate codes for your specific energy project.

Timeline varies by technology: Solar PV: 12-18 months (site acquisition to commissioning), Wind: 24-30 months (including wind assessment), Geothermal: 5-7 years (exploration to production), Hydropower: 3-5 years (feasibility to operations), Biomass: 18-24 months (plant construction). Key factors: permitting (3-12 months), PPA negotiation (6-12 months), financing (3-6 months), construction (6-24 months). We help accelerate timelines through fast-track licensing services.

Environmental compliance requirements: 1) AMDAL (Environmental Impact Assessment): Required for large projects >10 MW or high environmental risk, 2) UKL-UPL: Simplified environmental management for medium projects, 3) SPPL: Environmental statement for small projects, 4) Emission Standards: Air quality, water discharge, noise limits, 5) Community Engagement: Social impact assessment and CSR programs, 6) Monitoring: Regular environmental reporting to authorities. Process: 3-6 months for AMDAL approval. Non-compliance risks penalties and license revocation.

Currently limited but emerging opportunities: 1) Domestic Priority: Indonesia prioritizes domestic electricity supply, 2) ASEAN Grid: Long-term vision for cross-border power trade within ASEAN, 3) Pilot Projects: Batam-Singapore interconnection under discussion, 4) Renewable Focus: Export opportunities for excess renewable capacity, 5) Regulation: Requires special approval from Ministry of Energy. More realistic near-term: Power export through mining/industrial operations or captive power for special economic zones.

Multiple financing sources available: 1) Project Finance: Non-recourse financing from commercial banks (60-70% debt), 2) Development Banks: IFC, ADB, JICA offer concessional financing for renewables, 3) Green Bonds: Growing market for sustainable energy bonds, 4) Geothermal Fund: Government fund for geothermal exploration risk, 5) ESDM Financing: Ministry programs for renewable energy, 6) Export Credit Agencies: Financing from equipment supplier countries, 7) Private Equity: Growing interest in Indonesian renewable sector. We assist with financing strategy and applications.

Ready to Enter Indonesia's Energy Market?

From renewable energy projects to oil & gas exploration, our experienced team provides comprehensive support for your energy business setup in Indonesia. Join leading global energy companies already operating in Indonesia.

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