IEEFA: Integrate Indonesia's 100 GW solar

IEEFA urges Indonesia to integrate its 100-gigawatt solar programme into the country's official, long-term electricity planning framework. The Institute for Energy Economics and Financial Analysis made this recommendation, arguing the target should be part of national least-cost planning, not a standalone goal.

The think tank states the programme, first announced in June 2023 and officially launched by President Prabowo Subianto on 25 August 2024, should be incorporated into future revisions of the national Electricity Supply Business Plan (RUPTL). This ten-year roadmap translates Indonesia's least-cost planning approach into specific decisions about generation, grids, storage, and procurement. IEEFA's report contends that embedding the solar ambition within this framework would allow the government and state utility PLN to coordinate investments in generation, transmission, and energy storage more effectively, ensuring the best economic and technical returns.

Planning for diverse solar projects

Future RUPTL revisions should plan for several types of solar projects together, according to the analysis. Rather than focusing solely on large solar farms or treating project types in isolation, the plan should encompass ground-based solar, floating solar (with up to 91.6 GW potential), and rooftop installations (with 30 to 40 GW potential).

The planning must also account for the different amounts of solar capacity needed to replace existing fossil fuel generation. The study indicates that displacing coal and gas-fired power would require about three times more solar capacity to produce an equivalent volume of electricity. Replacing diesel generation would need roughly twice as much solar capacity.

The shifting economics of power generation

IEEFA argues that Indonesia's power planning must reflect current and projected generation costs, moving beyond long-standing assumptions that coal is the cheapest option. The report provides levelised cost estimates, showing that utility-scale solar photovoltaic projects are now cheaper than coal-fired generation.

At the low end of these ranges, utility-scale solar is about 44 percent cheaper than coal, while onshore wind is around 32 percent cheaper. The report further states that coal generation costs rose 46 percent to IDR930 (US$0.052) per kilowatt-hour in 2025 and could reach IDR1,060 (US$0.06) per kilowatt-hour in 2026, further weakening coal's status as the default low-cost option.

Strategic benefits of integrated planning

The changing economics position the 100-gigawatt solar programme as central to a least-cost strategy, the study says. Strategically locating solar projects and associated energy storage in high-cost regions could reduce reliance on expensive fossil-fuel generation. This approach would improve energy security and direct investment to where it yields the largest savings.

IEEFA also calls for an early retirement strategy for inefficient fossil fuel power plants, particularly aging coal facilities. Retiring such plants ahead of schedule could free up grid capacity, reduce subsidies, and create room for new renewable energy additions, directly supporting the solar target. An integrated plan, considering all fixtures of the energy system, is crucial for success.

Mutya Yustika, IEEFA’s research and engagement lead for Indonesia’s energy transition, framed the challenge. "Indonesia’s challenge is no longer whether renewable energy can compete with fossil fuels, but whether the electricity planning framework can keep pace with rapidly evolving generation economics," Yustika said. The analyst stressed the critical need to plan system development based on current stats and economics rather than historical assumptions.