Despite pledges for greater cooperation, obstacles hinder the rapid expansion of renewable energy investment
A worker inspects solar panels at a plant on Karampuang Island, in West Sulawesi, Indonesia, 2022. Although investment from China surged under Indonesian President Prabowo Subianto, challenges persist in fully realising the country’s green potential (Image: Dita Alangkara / AP / Alamy)
During his first state visit as Indonesian president, Prabowo Subianto oversaw the signing of a USD 10 billion investment deal in Beijing last November. While the agreement spans sectors such as health, biotechnology, manufacturing, food security and finance, renewable energy is also slated to receive funding.
According to Indonesia’s Ministry of Energy and Mineral Resources (MEMR), part of this investment will support the development of hydropower and related green energy infrastructure.
“We value our relationship with China. We recognise China’s significant influence, not only in the economic sphere but also as a major global power,” Prabowo said in an official release from the Cabinet Secretariat.
China is Indonesia’s second-largest foreign investor after Singapore. In 2023, Chinese investment reached USD 7.4 billion, the highest in the ASEAN region. That year, Indonesia also became the largest recipient of Belt and Road Initiative investment, with major projects including the Jakarta-Bandung High-Speed Railway, industrial parks, and nickel-smelting facilities.
However, data from the Institute for Essential Service Reform (IESR) reveals a disparity in energy investments. Between 2006 and 2022, approximately USD 35 billion of Chinese investment flowed into Indonesia, but only a quarter targeted the energy sector. Critically, 86% of this energy investment focused on fossil fuels, leaving just 14% for renewables.
A report by the Institute for Energy Economics and Financial Analysis (IEEFA) highlights stagnation in Indonesia’s renewable energy sector investment for the past seven years. Only USD 1.5 billion of investment was attracted in 2023.
