Indonesia’s Rise as Southeast Asia’s Premier Green Energy Powerhouse
Indonesia, endowed with vast natural resources, stands on the brink of becoming Southeast Asia’s leader in green energy. With an estimated 400 gigawatts (GW) of renewable energy potential, Indonesia’s capabilities are not just theoretical but distinctly achievable. Solar energy alone accounts for half of this potential, while hydropower and geothermal could contribute up to 75GW and 29GW respectively. Such a robust renewable resource base suggests that Indonesia could comfortably meet, if not exceed, its future energy demands, ensuring a sustainable and equitable energy transition.
The prospect of renewables contributing up to two-thirds of Indonesia’s energy mix by 2050 marks a significant shift from the current status, where it only accounts for 14 percent. Beyond generating power, Indonesia’s suitability for carbon capture and storage (CCS), given its depleted oil and gas reservoirs and considerable saline aquifers, presents another avenue for cutting CO2 emissions. Furthermore, the growing industrial need for decarbonization puts Indonesia in an excellent position to become a major producer of green hydrogen, with projected demand in Asia soaring to more than 300 million tonnes per annum by 2050.
Potential Regional Energy Hub
Indonesia’s strategic location and substantial renewable and CCS potential enable it to meet its own needs and catalyze decarbonization throughout Southeast Asia. Government support, coupled with policy interventions, paves the way for Indonesia to become a pivotal player in the region’s green energy transition. Initiatives such as the export of 2GW of green electrons to Singapore underscore the country’s role in facilitating cross-border electricity trade and energizing investments in renewable energy manufacturing.
However, to actualize its ambition of becoming a green energy powerhouse, Indonesia must foster the rapid adoption of renewable energy. This endeavor requires robust policies, infrastructure development, and enhanced supply chain capabilities. Incentives similar to the United States’ Investment Tax Credit (ITC) and India’s National Solar Mission can stimulate the domestic demand necessary for a thriving renewable energy sector.
Ensuring Investment in Green Energy
Creating an attractive environment for investors encompasses tax incentives for manufacturers and developers, alongside subsidies and grants for research and development (R&D). Policies such as commercial tariff premiums and clear market data transparency are crucial to inviting and securing investment in renewable energy projects.
Infrastructure upgrades, particularly in the domestic power grid, and investments in smart grid technology are essential for integrating renewable sources. Enhancing capabilities in emerging fields like green hydrogen and CCS, through government-supported R&D, will align with Indonesia’s green energy objectives.
Regional Collaboration for Success
Supporting infrastructure deployment, formulating electricity trading agreements, and establishing coherent policies across ASEAN are vital for Indonesia’s success as a green energy hub. The ASEAN Power Grid initiative exemplifies the kind of regional collaboration necessary for the trade of green energy across Southeast Asia.
With strategic initiatives across demand, supply, and infrastructure, Indonesia is well-positioned to lead Southeast Asia’s green energy transition. This transformation not only positions Indonesia as a regional powerhouse but also promises substantial economic and social benefits for the nation’s future.
