Cost and Policy Hamper Renewable Energy Use in Indonesia's Industrial Sector

Indonesia's industrial sector exhibits a significant appetite for renewable energy, yet the practical implementation remains constrained by high costs and supportive government policies. Sam Kimmins, Director of the Climate Group, observed that the elevated prices of renewable energy in Indonesia are directly linked to a policy landscape that has not adequately encouraged direct corporate investment in clean energy projects. This environment makes it difficult for developers to secure low-cost capital, consequently keeping renewable electricity prices high.

"The reason why renewable energy is more expensive than it should be is because of the policy environment," Kimmins stated during the Climate Group Asia Action Summit in Singapore on May 21, 2026. He explained that without direct investment from companies, reducing prices becomes a considerable challenge. The Climate Group is actively working to improve this situation by promoting the development of industrial areas centered around renewable energy.

The demand for green electricity within industrial zones is escalating, fueled by the requirements of global export markets and supply chains, including the European Union's Carbon Border Adjustment Mechanism (CBAM). Kimmins highlighted that adopting renewable energy can significantly enhance the attractiveness of Indonesian industrial estates to global corporations such as Nike, Adidas, and New Balance, along with their suppliers. Many Indonesian suppliers work with multiple brands, making it difficult for them to invest in their own renewable energy infrastructure.

Developing renewable energy at the industrial estate level offers a solution, allowing companies to simply purchase green electricity provided by the estate management. Kimmins also noted the progress of the RE100 campaign globally, where success often begins with a single local company joining, inspiring others. While this transition can take weeks in some countries, it may take months or years in others. Currently, 122 RE100 member companies in Indonesia are purchasing renewable electricity. Kimmins believes the presence of these multinational corporations aids in knowledge transfer to Indonesian companies regarding renewable electricity procurement and low-emission supply chain development. He sees the growing RE100 movement as a catalyst for increased corporate confidence in shifting to clean energy. Furthermore, Kimmins views Indonesia's commitment to developing 100 gigawatts of renewable energy as a positive signal to investors, assuring them of government action and responsiveness to market needs.