Energy efficiency (EE) is vital for achieving emission reduction goals and enhancing Indonesia’s industrial competitiveness. In Indonesia, EE is embedded in the national regulatory framework, including Law No. 30 of 2007 on Energy, Government Regulation No. 33 of 2023 on Energy Conservation, and the National Energy General Plan (RUEN). Energy efficiency is central to Indonesia’s Enhanced NDC target of reducing GHG emissions unconditionally by 31.89%, and conditionally by 43.20%, by 2030. However, the EE investment ecosystem in Indonesia remains underdeveloped due to various structural barriers, including high perceived risk, a weak ESCO ecosystem, inadequate financing options, low demand aggregation, an underutilised regulatory framework, and limited ESCO technical capacity.
A key finding of this report is that Indonesia’s primary regulatory framework for energy efficiency (EE) is already comprehensive. Presidential Regulation No. 38 of 2015 and Bappenas Regulation No. 7 of 2023 explicitly recognise energy conservation as infrastructure eligible for Public–Private Partnership (PPP/KPBU) financing, establishing a strong legal basis for private-sector-led EE projects. Government Regulation No. 33 of 2023 further supports this framework by requiring commercial buildings and industrial facilities to move towards more sustainable practices. Green finance regulations—POJK 51/2017 on Sustainable Finance, POJK 60/2017 on Green Bonds, and the Indonesia Taxonomy for Sustainable Finance—provide enabling conditions for banks to mobilise EE investment.
The constraint, therefore, is not the absence of regulation, but the limited translation of these frameworks into bankable projects and market-compatible structures.
This report is a publication of the ASEAN Centre for Energy (ACE), produced under the GCF-KDB Programme (FP196): Supporting Innovative Mechanisms for Industrial Energy Efficiency Financing in Indonesia. It was prepared by the EE&C Department of ACE, with analytical and research contributions from the consultant team. The views, findings, and recommendations expressed herein represent the institutional position of ACE.