Executive Director of the Institute for Essential Services Reform (IESR) Fabby Tumiwa cited that high prices are one of the biggest challenges in developing green hydrogen in Indonesia.

Currently, the production cost of green hydrogen is around US$3.8-12 (Rp62,928-198,720) per kilogram or four times more expensive than gray hydrogen from natural gas.

"To encourage the use of green hydrogen, the price must be lowered in the next five years," Fabby said on Thursday, March 27, 2025.

He said there are three factors that will increase the competitiveness of green hydrogen, one of which is the increasingly developing green hydrogen production technology.

For example, solar power plants (PLTS) and wind power plants (PLTB) whose electricity prices are getting cheaper, as well as electrolysis technology, thus lowering the price of green hydrogen.

Meanwhile, another factor is that global investment in the green hydrogen industry continues to increase every year. In 2020, around 102 global clean hydrogen projects reached final investment decisions, worth around US$10 billion (Rp165.6 trillion). Then in 2024, investment increased to 434 projects worth US$75 billion.

"Green hydrogen provides economic benefits, such as job creation and increasing energy security. In addition to being able to replace gas and coal as energy sources, hydrogen also has the potential to become an export commodity and contribute to the country's foreign exchange," Fabby said.

He believes that the development of green hydrogen can encourage high economic growth and low emissions. This is supported by Indonesia's renewable energy potential which reaches more than 3,686 Gigawatts (GW) and the target of achieving decarbonization by 2050.

Based on the IESR study, the potential for renewable energy projects that can be developed and are financially feasible is 333 GW. The potential for feasible renewable energy generation projects spread throughout Indonesia can be utilized to produce green hydrogen if the electricity cannot be absorbed by the state electricity company PT PLN.

"The government is expected to set a target for green hydrogen development in the next five years with the target of increasing production and creating a market, as well as a target of reducing the cost of green hydrogen production below US$2/kilogram. Its achievement must be supported by a policy framework and fiscal and financial incentives for the production and use of green hydrogen," Fabby said.