Indonesia's plan to export renewable electricity to Singapore is expected to generate up to $4.2 billion in annual foreign exchange earnings, along with $210 million to $600 million in income tax revenue, while also strengthening the country's energy transition, a report by the Institute for Energy Economics and Financial Analysis (IEEFA) says.

The report titled "Maximizing reciprocal benefit from Indonesia's green electricity export to Singapore" ran counter to a decision last month by Minister of Energy and Mineral Resources Bahlil Lahadalia, who temporarily halted electricity export permits to Singapore, citing a lack of reciprocal benefits for Indonesia.

According to the report, Indonesia could earn between $4.2 billion and $6 billion annually from green electricity exports, assuming an export volume of 3.4 gigawatts (GW) with a tariff of $0.14–$0.20 per kilowatt-hour (kWh). Additionally, the government could introduce royalties per kWh of exported electricity to further boost state revenue.

“The electricity export plan to Singapore will bring substantial foreign exchange and tax revenues, helping fund Indonesia’s domestic renewable energy projects. Moreover, by shifting renewable energy financing to Singapore, this initiative could ease the burden on Indonesia’s state budget (APBN),” Mutya Yustika, Energy Finance Analyst at IEEFA, said as quoted in a statement on Friday, March 7, 2025. 

Beyond fiscal gains, the construction of power plants for export purposes would strengthen Indonesia’s renewable energy manufacturing and supply chain. Current renewable energy capacity growth in the country is still in the range of hundreds of megawatts (MW), which is insufficient to support large-scale manufacturing operations.

A 2 GW electricity export target would require up to 11 gigawatt-peak (GWp) of solar panels and 21 gigawatt-hours (GWh) of battery storage (BESS), representing a significant demand for local manufacturers.

“Electricity exports to Singapore will also create new job opportunities in Indonesia. For instance, the 192 MWp Cirata Solar Power Plant employed 1,400 workers during its construction and operation. With 11 GWp of solar panel capacity, the industry could generate 80,000 jobs, excluding additional employment in related manufacturing sectors,” Mutya cited.

Policy recommendations

To ensure maximum benefits from this initiative, Indonesia must address several key issues:

1. Set Renewable Energy Export Quotas – The government must determine the amount of electricity that can be exported while ensuring sufficient supply for domestic needs.
2. Establish Competitive Export Tariffs – Special tariffs should be set based on market prices and agreements between Indonesia and Singapore, considering the higher transmission costs of electricity exports.
3. Ensure Fair Carbon Credit Distribution – While Singapore is the buyer, Indonesia should retain a share of the carbon credit benefits since the renewable power plants are located within its territory.

“Exporting renewable electricity to Singapore will significantly boost Indonesia’s renewable energy capacity. With solar power leading the expansion, the country’s renewable energy portfolio is expected to exceed 10 GW, strengthening its energy transition efforts,” Mutya concluded.