Indonesia once again fell short of its renewable energy (RE) target in 2025, as coal and gas continued to dominate the country's electricity supply. Despite President Prabowo Subianto's repeated promises to accelerate the energy transition, the lack of commitment at the implementation level, particularly by state-owned utility firm PLN, and a volatile regulatory framework are undermining progress.

The share of renewable energy in Indonesia's national energy mix rose by just 1.1 percentage points (pps) to 15.75% in 2025, far from the revised target of 17% to 19%. The country's renewable energy capacity did grow, with installed capacity increasing by over 1 GW to 15.6 GW, driven by significant gains in hydropower and solar power.

However, total installed capacity grew by approximately 7 GW, with fossil fuels continuing to outpace renewables, offsetting any growth.

Fabby Tumiwa, executive director of the Institute for Essential Services Reform, pointed out that the RE mix consistently underperformed relative to targets over the past five years. Originally set at 23% for 2025, the target was lowered to 17-19% in the revised National Energy Policy, but even this adjusted target was not met.

"The regulatory environment is a major issue," Fabby said, noting that investors are deterred by a confusing landscape, with problems such as regulatory inconsistency, slow permitting processes, and the abrupt cancellation of key policies, such as the net-metering scheme for rooftop solar in 2024.

Incentive mechanisms like the feed-in tariff, once central to attracting investment, were also revoked, deepening the uncertainty. "What's mandated by laws and regulations isn't consistently implemented," Fabby explained, increasing the perception of high risk for potential investors, who see the country's policies as imprudent.

Further complicating matters, PLN's 2021-2030 electricity business plan projected 10 GW of new renewable capacity by 2025, but only 25% to 30% of this target has been realized.

Abrupt permit revocations for energy projects have raised concerns about the stability of energy contracts and the transparency of legal proceedings, further eroding investor confidence.

Indonesia is now regarded as a high-risk destination for energy transition investments, with investors demanding higher returns to compensate for these uncertainties. This conflicts with the government's goal of providing low-cost renewable power to stimulate demand.