Key Pillars of Indonesia’s Energy Transition
As one of the countries with the largest population and a rapidly growing economy, Indonesia faces major challenges in undergoing a more sustainable energy transition.
With a high dependence on fossil energy sources, the shift towards more environmentally friendly and renewable energy sources requires fundamental changes in policy, infrastructure and multi-stakeholder participation.
In this energy transition process, the energy ecosystem is the main focus that must be built holistically. There are three key elements that need to be considered in building an energy ecosystem that supports a successful energy transition in Indonesia, namely optimising development planning, balancing investment, regulatory and institutional policies, and adopting future technologies.
One important element in the energy transition is the optimisation of development planning coordination tools. A successful energy transition requires careful and systematic planning, aligning the various interests involved in energy infrastructure development.
In Indonesia, development planning must involve many parties, ranging from the government, private sector, academia, to civil society. Each of these actors has different interests, but all need to be involved in the formulation of an inclusive and sustainable energy policy.
The government should play a central role in ensuring that this planning covers various aspects, from the provision of renewable energy infrastructure to the formulation of policies that support the reduction of dependence on fossil energy.
In addition, it is important to encourage the active participation of communities and the private sector so that the resulting policies reflect the needs and aspirations of all parties. With effective coordination tools, the planning process can be more targeted, and the results will be easier to implement on the ground.
The energy transition requires not only good planning, but also the right investment, regulatory and institutional policies. One of the key steps in supporting the energy transition is to create an attractive investment framework for the private sector.
Indonesia needs to create clear and adequate regulations that incentivise investment in renewable energy development and related infrastructure. This is particularly important as private sector investment is one of the main drivers of energy sector development.
In addition, strong and effective institutions must be built to ensure that existing policies and regulations can be properly implemented. The government should collaborate with the private sector and financial institutions to create adequate incentives, such as subsidies or tax reductions, that can attract investors.
Without supportive policies and strong institutions to regulate and oversee these policies, the energy transition will encounter many obstacles. Therefore, the right balance between investment policies, clear regulations, and solid institutions is crucial in creating a favourable climate for renewable energy development.
An equally important element of the energy transition is the ability to adopt and adapt future technologies. To accelerate the transition to cleaner and more efficient energy, Indonesia should increase investment in research and development (R&D) of new energy technologies.
This will enable the country to develop more efficient and environmentally friendly technologies and reduce dependence on fossil fuels.
It is also important for Indonesia to encourage the use of domestic technologies that support the renewable energy sector. By utilising the potential of the domestic industry, Indonesia can be more independent in the development and application of clean energy technologies.
In addition, partnerships with other countries that are more advanced in energy technology are also important to accelerate the adoption of new technologies. As a country with abundant natural resources, Indonesia has great potential to lead energy innovation at the regional and global levels, especially in the development of renewable energy such as solar, wind and bioenergy.
Source: Bappenas
