Indonesia: How to Boost Investment in Renewable Energy

Indonesia, the largest country in Southeast Asia, has considerable renewable energy potential. However, this potential remains largely underexploited. Fossil fuel subsidies are a major obstacle to the deployment of renewable energy on a large scale. Investment in renewable energy is limited compared to some regional peers. For instance, Vietnam attracted USD 5.2 billion of investment in renewables in 2018, while Indonesia drew only USD 0.8 billion. We propose six actions that could help Indonesia accelerate the expansion of renewables: remove subsidies for fossil fuels; establish a ministry of renewable energy; prioritise renewables in the regulatory framework; improve and streamline grid management; mobilise domestic banks to support renewable energy; prioritise market entry for investors.