Concerns as Indonesia’s new power plan expands the role of gas

Indonesia’s new 10-year power grid plan, the Rencana Umum Perencanaan Tenaga Listrik (RUPTL), released last September, is, according to analysts, problematic for many reasons as it fails to put the country on a path towards net zero.

But one major, new area of concern is that the plan cements a new push to expand fossil gas on the grid.

“The RUPLT says gas will be a growing part of the electricity business, as a transition or bridge fuel, from coal to gas to renewables,” Novita Indri, a programme campaigner with Trend Asia, a Jakarta-based think- tank, told Gas Outlook.

To Novita and other Indonesian climate and energy analysts, the use of gas as a transition fuel in Indonesia makes little sense, as it could harm energy security and contradicts other government goals, like one focused on reducing energy imports.

The updated RUPTL envisions Indonesia adding 9.3 gigawatts (GW) of gas-fired capacity between now and 2029, which could lock in decades of greenhouse gas emissions and make it more difficult to expand renewables. If implemented, this would require a 60% increase in gas demand by the state-owned electric company, PLN. In both the base scenario and accelerated renewable energy scenarios, gas would make up between 15% and 18% of emissions.

“Rather than serving as a transition strategy, Indonesia’s gas expansion will instead become a barrier for renewables,” Katherine Hasan, an Indonesia-based analyst with the European think-tank Centre for Research on Energy and Clean Air (CREA), told Gas Outlook. “This costly, massive expansion will divert finite capital away from the investments required to build future renewable energy systems.”

Why gas, and why now

Indonesia was, for decades, a gas exporter, primarily to countries in Asia like Japan. But since 2000, gas reserves have become less productive or too expensive to exploit, and in recent years the country has been importing liquefied natural gas (LNG) from Australia and, increasingly, the United States.

“Economically, dwindling domestic supply would force a shift toward global LNG, exposing the national budget to volatile international prices,” Hasan said.

One reason for the expansion of gas in the power plan could be influence from Japan and China. Both countries have excess LNG due to long-term contracts and have been looking to re-export it to other countries in Asia. Several Japanese companies are involved in several gas projects, including terminals and power stations, via the government-led Asia Energy Transition Initiative, while Chinese companies have also invested in expanding Indonesia’s LNG infrastructure.

One argument mentioned in support of the RUPLT is that incorporating gas as a primary energy source can slow the increase of greenhouse gas emissions as it would replace coal, widely seen as a more polluting energy source. However, the argument that gas can play a role as a transition fuel or a baseload power source is one that Hasan questions.

“While technically gas power plants are deployed to meet peak load demands for their operational flexibility, Indonesia does not need new gas infrastructure because existing coal plants can already be operated flexibly to support renewables,” Hasan said.

Moreover, the need for any more fossil fuel thermal power is questionable, as there is already excess electricity on the main Java-Bali and Sumatra grids due to too many coal-fired power plants.

Less ambition for renewables

Another concern that Novita and Hasan have is that the RUPTL severely underestimates the role that renewables like wind, solar, and geothermal can play in the short and medium term. The plan actually lowered Indonesia’s 2030 target for renewable energy from 20.9 GW to 18.6 GW.

“With this gas expansion, the fossil fuel share of power generation will remain at 60% by 2040, relegating renewables to a secondary role,” Hasan said.

Indonesia, as a large, archipelago nation, has ample renewable resources. Study after study has shown that there’s huge potential for solar—over 2000 gigawatts, wind, and geothermal. What is missing, according to CREA, is adequate policy that incentivises investment and a lacking grid infrastructure to transport energy from renewable-rich areas to denser population centres like Jawa.

There are other concerns too. According to an analysis by the Institute for Energy Economics and Financial Analysis (IEEFA), reliance on imported gas carries financial and environmental risks. Concerns include gas price volatility, the risk of stranded assets, and long-term economic loss as renewables become more cost competitive. The global gas market is also notoriously unstable and has been subject to wide price fluctuations, most notably in 2022 after Russia invaded Ukraine and shocked global LNG markets.

“Instead of further locking into gas and coal, Indonesia should prioritise solar and wind energy expansion, which have proven to be rapidly deployable and scalable domestically and globally,” argued IEEFA’s Indonesia analyst, Mutya Yustika.

Another Indonesian NGO, Yayasan Indonesia Cerah criticised the RUPTL for discouraging investment in renewable energy, noting that the plan’s continued dependence on gas and coal could lock Indonesia into a dirty energy system for decades. Meanwhile, another non-profit, Climate Rangers, argued that without a firm commitment to phase out fossil fuels, continued reliance on coal or gas—even for “transition” purposes — only makes space for structural and economic dependence that’s difficult to break.

Hasan agrees. “Most strikingly, Indonesia has abundant, cost-effective clean energy potential. There is no justifiable reasoning for delaying its deployment or prioritising gas,” she said.

(Writing by Nithin Coca; editing by Sophie Davies)