Indonesia has achieved remarkable economic success over the last two decades, lifting millions out of poverty. The recent COVID-19 pandemic has momentarily halted this economic growth, causing the country’s first recession in decades. Yet, the recovery from the pandemic presents an opportunity to build back a stronger and more sustainable economy, helping Indonesia to achieve its commitments under the Paris Agreement as well as the Sustainable Development Goals.

The Clean Energy Finance and Investment Policy Review of Indonesia is one of the key outputs of the OECD Clean Energy Finance and Investment Mobilisation (CEFIM) Programme. The CEFIM Programme aims to support governments in emerging economies in South and Southeast Asia as well as Latin America to unlock finance and investment in renewable electricity and energy efficiency (“clean energy”).

The Clean Energy Finance and Investment Policy Review of Indonesia supports Indonesia’s efforts to realise a clean energy transition. It provides a comprehensive overview of the current policy environment, highlighting progress and identifying opportunities for strengthening policy interventions that can help to scale up clean energy finance and investment. The following is a summary of the assessment and key recommendations from six policy areas that form the framework for the review and that are elaborated in chapters 2 through 7.

This chapter examines key trends related to clean energy finance and investment in Indonesia. It provides a brief overview of key macroeconomic, investment and social developments in Indonesia over recent decades. It analyses key trends in energy demand and energy efficiency, as well as in the power sector, highlighting progress against clean energy and climate targets. The chapter also provides a snapshot of Indonesia’s clean energy market, looking at recent trends in the cost of clean energy technologies, as well as finance and investment flows.

This chapter examines governance for clean energy finance and investment governance and power planning in Indonesia. It provides an overview of Indonesia’s institutional framework for clean energy and electricity market structure, as well as identifies areas to improve coordination across institutions, at all levels of government, to ensure effective and consistent goals and policies. The chapter also highlights progress and opportunities to improve the country’s clean energy finance and investment-related targets, strategies and power planning mechanisms with a view to sending credible, ambitious and long-term signals to investors.

This chapter examines clean energy policies and regulations in Indonesia. It analyses Indonesia’s evolving policy environment for energy efficiency and renewable energy development, as well as how regulatory conditions and reforms have been shaping the market landscape for clean energy investment. The chapter reviews the role of expanding energy performance standards and labelling schemes, as well as the need for clearer regulatory conditions for energy service companies. It also considers the impact of recent and expected regulations on renewable electricity generation, and identifies opportunities to align with international best practice and facilitate the development of renewable energy capacity.

This chapter reviews Indonesia’s investment and competition framework in the context of clean energy. It examines the country’s efforts to level the playing field between the national power utility and independent power producers, as well as to create a fair, efficient and transparent procurement process for renewables. It assesses Indonesia’s foreign direct investment regime, highlighting possible avenues to make it more attractive to foreign investors in the clean energy sector. The chapter also explores other important avenues to improve the framework for clean energy investment, including how to facilitate land access and acquisition and reduce the costs of clean energy equipment (local content requirements) as well as how to better harness public-private partnerships for clean energy.

This chapter examines investment promotion and facilitation policies in place in Indonesia. It analyses the use of targeted incentives and financing for energy efficiency and renewable energy development, and provides insights into good practices in other countries. It highlights key measures implemented by the government to improve the business environment for clean energy projects, as well as areas of untapped opportunity to attract further investment. It also examines the role that public procurement of energy efficiency services and corporate sourcing of renewables can play to jump-start market-based instruments and foreign investment in clean energy projects. The chapter identifies remaining challenges and proposes recommendations to address them.

This chapter examines the current status and future requirements of clean energy finance in Indonesia. It reviews the current state of the Indonesian financial markets and highlights the need to deepen capital market development. It highlights financial market regulation, including the role of sustainable finance policies and targeted green finance instruments in mobilising finance for clean energy projects. The chapter also examines the role of development finance in mobilising private capital and opportunities for institutional innovation to catalyse private sector finance and investment.

This chapter examines other key areas that can help improve Indonesia’s clean energy finance and investment framework. It reviews Indonesia’s efforts to accelerate regional grid integration with a view to facilitating the expansion of renewable electricity, as well as to promote innovation, research & development for clean energy, which can help bring down the cost of clean energy technologies and support the domestic clean energy industry’s development. The chapter also examines existing training and education programmes that are essential to create and develop knowledge and skills for clean energy finance and investment as well as looks at efforts to promote gender equality in the clean energy sector.