Indonesia’s electricity sector sits at the intersection of three mandates that increasingly collide: (1) deliver reliable power as a foundation for national development; (2) keep electricity affordable and equitable for households and businesses across a vast archipelago; and (3) decarbonize fast enough to meet Indonesia’s own climate trajectory — including a power-sector transition consistent with net zero emissions before 2060.

Yet the sector’s current institutional design still concentrates planning, procurement, system operations, and much of investment decision-making in a single vertically integrated, state-owned utility — Perusahaan Listrik Negara (PLN) — within a political economy where tariffs, contracts, and access have long been arenas of distributional conflict. When reform debates surface, they predictably encounter the same hard truth highlighted two decades ago: electricity reform is never “just technical.” It is fundamentally about who pays, who benefits, and who controls rents — which is why tariff policy, procurement discipline, and governance credibility become the real battlegrounds, not the engineering.¹

That political economy is no longer a background condition; it is now the decisive constraint on Indonesia’s ability to execute a credible energy transition at least cost. The Just Energy Transition Partnership (JETP) Comprehensive Investment and Policy Plan (CIPP) formalizes a high-ambition near-term benchmark — including a 2030 emissions cap for the power sector and a step-change in renewable electricity generation by 2030, on a pathway toward a net zero power sector by mid-century.²

But Indonesia’s own planning documents also reveal the structural tension: under a “renewables base” planning scenario in the Rencana Usaha Penyediaan Tenaga Listrik (RUPTL) 2025–2034, coal still accounts for roughly half of electricity generation in 2034, with renewables below one-third. Even a more ambitious RUPTL scenario improves the renewables share, but still leaves coal as the single largest source of generation well into the 2030s.³

This is not merely a matter of “more projects” — it reflects deeper questions about how the sector plans, how it contracts, how it allocates risk, and how it disciplines investment decisions in a system where a dominant buyer and planner can unintentionally hardwire lock-in.

At the same time, the system is carrying warning signs of inefficiency that make the transition harder and costlier. The CIPP itself notes a very high reserve margin in the Java–Bali system — far above typical reliability requirements — which is a polite way of saying the system risks paying for capacity it does not need.⁴

When oversized planning meets long-term contractual obligations, the result is predictable: fiscal and quasi-fiscal pressure, tariff politics, and an incentive to run existing thermal plants to recover costs, even when cleaner alternatives become available. This dynamic can also crowd out investments that actually matter for a modern power system — grid flexibility, storage, demand response, and smarter procurement — because the sector’s attention and balance sheet are consumed by legacy obligations.