Jakarta, INTI - Indonesia is seeking to significantly expand its renewable energy capacity through the Electricity Supply Business Plan (RUPTL), with a target of reaching 42 GW of renewable energy generation by 2034. However, renewable energy capacity growth over the past five years has averaged only around 0.7 GW annually. To meet the target, the country needs to add at least 4 GW of renewable energy capacity each year.
One of the major challenges identified is the lengthy procurement process for renewable energy projects. Solar and wind power developments in Indonesia currently require an average of four to six years before becoming operational, far longer than in many other countries where similar projects are typically completed in under three years. In contrast, the physical construction of a solar power plant can take as little as 120 days.
Deon Arinaldo, Director of Energy System Transformation at Institute for Essential Services Reform (IESR), stated that renewable energy technologies, particularly solar and wind power, are experiencing rapid global growth.
“This means that solar and wind power are highly disruptive technologies and will continue expanding massively, despite the considerable barriers that still exist in Indonesia,” Deon said during the webinar titled “Policy Brief Dissemination: Energy System Flexibility and Procurement Process Reform to Accelerate Variable Renewable Energy,” organized by IESR.
IESR Pushes for Procurement Reform and Reserve Auctions
IESR believes Indonesia’s renewable energy procurement system must be improved to become more efficient and capable of supporting the country’s clean energy targets. His Muhammad Bintang, Head of the Electricity and Energy Storage Division at IESR, explained that following the issuance of Presidential Regulation No. 112/2022 regarding the acceleration of renewable energy development for electricity supply, the government introduced a ceiling price mechanism for renewable electricity tariffs, replacing the previous system based on electricity generation costs.
According to Bintang, private developers see the regulation as a positive development. However, the maximum tariff cap has not been revised since 2022, while certain technologies, including floating solar power plants, still lack clear pricing provisions under the regulation.
IESR also highlighted procurement practices carried out by PT PLN, which continues to rely on a List of Selected Suppliers mechanism, allowing only certain companies to participate in project tenders. The organization argues that the system limits competition and may hinder the participation of new, innovative, and more efficient developers.
As a solution, IESR recommends implementing reverse auction mechanisms to encourage broader market participation and create more competitive electricity pricing.
The organization also emphasized the need for reforms across all procurement stages, including planning, pre-tender, tender, and post-tender processes.
“Before entering the tender stage, every project identified in the RUPTL should already have a preliminary feasibility study, which could help accelerate both procurement and tender implementation,” Bintang explained.
In addition, IESR recommends that the government review existing energy planning documents and involve regional administrations in the preparation of the RUPTL to ensure electricity demand projections better reflect regional needs. Stronger monitoring systems and clearer regulations regarding project defaults are also considered necessary.
For PLN, IESR proposed establishing a regular procurement schedule, periodically updating the List of Selected Suppliers, and adjusting PLN’s role in managing large-scale and geographically dispersed renewable energy projects. One proposal includes forming a dedicated subsidiary focused specifically on renewable energy project planning and procurement.
Stakeholders Highlight Need for Feasibility Studies and Project Readiness
Eko Yudho, EVP of Electricity System Planning at PT PLN, acknowledged that feasibility studies are generally conducted only after the RUPTL has been finalized.
“A feasibility study is essential because it allows projects to be defined more accurately and comprehensively, including technical, location, and grid requirements,” Eko said.
Meanwhile, Herman Darnel Ibrahim, Chairman of the Advisory Board of Asosiasi Energi Surya Indonesia (AESI), stated that an open bidding system can only function effectively when feasibility studies and project data are already available in detail.
“Ideally, project details should be mapped by region or small-scale system, covering both utility-scale and rooftop solar projects. A clear location inventory is crucial,” Herman explained.
Zainal Arifin, Associate Professor at Institut Teknologi PLN, added that Indonesia still needs to fulfill several prerequisites before fully implementing an open bidding mechanism.
“Reverse auctions can be introduced, but the necessary prerequisites must first be completed, including project readiness and adjustments to the business model,” Zainal said.
Conclusion
Indonesia’s ambition to rapidly expand renewable energy capacity will require major improvements in procurement efficiency, regulatory clarity, and project readiness. Through reforms such as reverse auctions, stronger planning mechanisms, and broader stakeholder involvement, the country is expected to accelerate renewable energy deployment and move closer toward achieving its long-term clean energy targets.
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