The Indonesian Chamber of Commerce and Industry (Kadin) reveals four challenges of green energy investment in Indonesia that must be addressed immediately so as not to hinder the acceleration of energy transition in the country.

Bobby Gafur Umar, Deputy Coordinator for Investment, Downstream and Environment at Kadin, said the first challenge is in the form of legal certainty and regulatory improvements. 

According to him, especially in Indonesia, it is not uncommon for regulatory changes to occur due to changes in government. This creates legal uncertainty for business actors and investors.

Kadin hopes that the new government can immediately fix various issues related to the investment climate and licensing.

"We see that President Prabowo Subianto has been very firm and has demonstrated his commitment to law enforcement. To pursue investment, legal certainty is needed," Bobby said at the Indonesia Green Energy Investment Dialogue 2025 event on Thursday, February 27, 2025.

Another challenge is subsidies and incentives, especially for the electricity and transportation sectors. According to him, the price of electricity generated from renewable energy (EBT) is more expensive than from fossil energy.

Meanwhile, investors and business actors expect better returns when investing capital in renewable energy projects.

"There is still a gap between policy and economic price structure. This is what we need to find a solution for," he said.

Kadin proposed that the government consider providing incentives for green energy investment, especially fiscal incentives.

BP Danantara investment support

Hashim Djojohadikusumo, the President's Special Envoy for Climate and Energy also expressed his optimism about investment growth through investor involvement for each investment project. 

One of them is through the Daya Anagata Nusantara Investment Management Agency (BP Danantara) which will finance various strategic projects, including in the new renewable energy (EBT) sector.

“The idea is to invite many investors to come and invest in viable projects, including environmentally friendly projects,” Hashim said.

He cited that through investor involvement, BP Danantara could increase its investment capital to US$40 billion (Rp663.3 trillion) per year. Hashim is optimistic that the injection of funds from BP Danantara will increase investment in the green energy sector, due to high demand and the potential for clean energy reaching 3,687 Gigawatts (GW).

Todotua Pasaribu, Deputy Minister of Investment and Downstream/ Deputy Head of the Investment Coordinating Board (BKPM), said that the government prioritizes investment in the green energy sector. There is the potential for new renewable energy of 3,700 GW, with only 144 GW of which has been tapped.

He said the government is committed to continuing to improve the competitiveness of domestic investment with a number of strategies, such as improving legal certainty, facilitating licensing, relaxing the Domestic Content Level (TKDN) requirements for renewable energy generators, and tax incentives.

Meanwhile, Aryo Djojohadikusumo, Deputy Chairman for Energy and Mineral Resources at Kadin, appreciated the government's move to prioritize the renewable energy sector as one of the investment destinations.

"The president mentioned renewable energy, green energy many times. And he specifically mentioned additional fresh funds. Most of it will probably be injected into green and renewable energy and industries that are important for green energy like minerals," he said.