Indonesia’s Energy Transition: Exercising Strategic Agency in Partnership with China - Asia Society
Published January 12, 2026
Indonesia’s Energy Transition: Strategic Agency in Collaboration with China
Indonesia, the largest archipelago nation in Southeast Asia, is undergoing a significant energy transition, seeking to balance economic growth with sustainable practices. The country’s energy landscape is evolving, and its partnership with China is becoming increasingly pivotal in this transformation. This article explores the dynamics of Indonesia’s energy transition, focusing on its strategic agency in fostering collaboration with China.
As of 2021, Indonesia's energy consumption was primarily reliant on fossil fuels, with approximately 87% of its energy mix derived from coal, oil, and natural gas. The Indonesian government has recognized the urgent need to shift towards renewable energy sources to meet its growing energy demands while addressing climate change. The target is to achieve a 23% renewable energy share in the national energy mix by 2025, as outlined in the National Energy Policy (KEN) and the National Medium-Term Development Plan (RPJMN).
In recent years, Indonesia has made strides in renewable energy development, particularly in solar, wind, and geothermal energy. The nation boasts significant geothermal resources, estimated to be around 28 gigawatts (GW), making it the world leader in geothermal energy potential. However, the actual installed capacity remains low, at around 2.1 GW. To harness this potential, Indonesia is seeking international partnerships, particularly with China, which has emerged as a global leader in renewable energy technology and investment.
China’s involvement in Indonesia's energy sector has been multifaceted. Chinese companies have been active in constructing renewable energy projects, including solar farms and hydropower plants. For instance, the China Energy Engineering Corporation (CEEC) has been involved in several significant projects, such as the 1,000 MW hydropower plant in North Sumatra. Additionally, the China National Offshore Oil Corporation (CNOOC) has expressed interest in investing in Indonesia's renewable energy sector, further solidifying the bilateral energy partnership.
The collaboration between Indonesia and China extends beyond project development. It also encompasses technology transfer, capacity building, and financial investment. Chinese firms are not only bringing capital but also advanced technologies that can enhance Indonesia’s renewable energy capabilities. For example, the deployment of solar photovoltaic (PV) technology from China has been instrumental in reducing the cost of solar energy in Indonesia, making it more accessible for both consumers and investors.
Moreover, Indonesia's strategic agency in this partnership is evident in its approach to negotiating terms that align with national interests. The Indonesian government has been proactive in setting regulations that encourage foreign investment while ensuring that local content requirements are met. This approach aims to develop domestic industries and create jobs, fostering a sustainable energy ecosystem.
Despite the promising prospects of this partnership, challenges remain. The Indonesian government has faced criticism for its continued reliance on coal, which constitutes a significant portion of its energy mix. While there are plans to phase out coal-fired power plants, the transition to renewables must be managed carefully to avoid disruptions to energy supply and economic stability. The government is also grappling with regulatory hurdles and bureaucratic inefficiencies that can hinder project implementation.
Another challenge is the need for substantial investment in infrastructure to support the growth of renewable energy. Indonesia's grid system requires modernization to accommodate the intermittent nature of renewable sources such as solar and wind. Investments in grid technology and energy storage solutions are crucial for ensuring a reliable energy supply and maximizing the benefits of renewable energy projects.
Indonesia's energy transition is not just about shifting from fossil fuels to renewables; it is also about ensuring energy access for all citizens. Approximately 12% of Indonesia's population still lacks access to electricity, particularly in remote and rural areas. The government is committed to expanding electrification efforts, and renewable energy can play a vital role in achieving this goal. Off-grid solar solutions, for example, can provide electricity to underserved communities, improving living standards and supporting local economies.
In line with its energy transition goals, Indonesia is also prioritizing its commitments to international climate agreements. As a signatory to the Paris Agreement, the country has pledged to reduce greenhouse gas emissions by 29% by 2030, with an unconditional target of 41% reduction contingent on international support. This commitment aligns with Indonesia's broader vision of sustainable development and environmental stewardship.
To facilitate its energy transition, Indonesia has established several initiatives aimed at attracting foreign investment and fostering local innovation. The Renewable Energy Law, enacted in 2014, aims to promote the development of renewable energy sources by providing incentives for investors and simplifying regulatory processes. Additionally, the government has launched programs to encourage research and development in renewable energy technologies, aiming to position Indonesia as a regional hub for clean energy innovation.
Looking ahead, the partnership between Indonesia and China is expected to deepen as both countries navigate the complexities of energy transition. The Indonesian government is keen to leverage China's expertise in renewable energy while ensuring that its own strategic interests are preserved. This collaborative approach could serve as a model for other countries in the region seeking to transition to sustainable energy systems.
In conclusion, Indonesia's energy transition is a multifaceted process that involves strategic agency in collaboration with international partners, particularly China. As the country strives to meet its renewable energy targets and reduce its reliance on fossil fuels, it must navigate various challenges, including infrastructure development, regulatory frameworks, and energy access. Through proactive engagement and strategic partnerships, Indonesia aims to build a sustainable energy future that benefits its economy and its people.
No comments:
Post a Comment