Geopolitical chaos in the Middle East is disrupting oil supplies and stoking inflation fears. Countries in Southeast Asia rush to mitigate the energy crisis. Tanker traffic through the Strait of Hormuz has come to a near standstill, disrupting oil and gas shipments to Asia. 

Analysts warn that oil prices could surpass $100 a barrel if the tanker flows are not restored quickly, a prospect that has sent a chill through the corridors of power in Jakarta. As a net energy importer, Indonesia is particularly exposed to major disruptions in the Middle East. Countries across Southeast Asia are scrambling to reduce their dependence on imported oil, accelerating the shift toward renewable energy with a renewed sense of urgency.

Danantara’s defining test

For Indonesia, managing this shock will require not only sound fiscal policy but also a decisive role from the Danantara Sovereign Wealth Fund (SWF). One of the largest SWFs in the world by claimed assets, Danantara is now under pressure to demonstrate its value, and jump-starting a long-term transition to renewables could be its defining test.

While the Indonesian government is oddly indifferent to the issue — with senior ministers reportedly saying that the country is not at risk of an energy crisis — if Danantara can jump-start a permanent, long-term transition to renewables, it could reduce dependence on imported fuel.

While efforts to transition Indonesia’s energy mix from coal to renewables have gained an unexpected endorsement from the top, feasibility and governance remain significant challenges. 

From ambition to acceleration: Indonesia betting on solar

During Danantara’s first anniversary celebration in mid-March, President Prabowo Subianto set a striking target: 100 gigawatts of solar power capacity to be installed within two years. He also established a special task force on renewable energy and energy conservation to drive the initiative forward.

The president said, as quoted by local media, that the 100 gigawatts is a strategic step to accelerate Indonesia’s energy transition and reduce reliance on imported fossil fuels — now more costly due to disruptions tied to the US-Israeli war on Iran. It was not an entirely new idea; the 100 gigawatts figure had been floated since 2025, but the current circumstances have given it fresh urgency and explicit presidential backing.

That backing has a track record behind it. At the inauguration of renewable energy projects in 15 provinces in June 2025, President Prabowo expressed his intention for Indonesia to achieve energy independence, emphasizing solar energy as the primary solution for achieving energy sufficiency in remote areas. 

Then, in August 2025, Energy and Mineral Resources Minister Bahlil Lahadalia outlined how the government seeks to bring electricity to 5,700 villages and 4,400 hamlets across the archipelago by 2030. Bahlil, quoting the president, said the villages will have solar power plants in cooperation with the private sector and the state utility company  Perusahaan Listrik Negara (PLN). The plan calls for 80 gigawatts of distributed solar photovoltaic (PV) systems paired with 320 gigawatt-hours of Battery Energy Storage Systems (BESS), managed by the Merah Putih Village Cooperatives (KDMP), alongside 20 gigawatts of centralized solar.

Ambition, legality and capacity to deliver

Solar ambitions run into legal cracks and questions about the government’s ability to deliver. The plan itself is not without flaws. Indonesia’s Constitutional Court has held that electricity for public use must remain under state control. Yet the village solar scheme leans toward an “unbundled” model — one that separates generation, transmission, distribution and retail into distinct businesses. That tension is more than a regulatory technicality; projects built in rural communities can profoundly transform local life for better or worse, and getting the legal framework wrong could jeopardize both the communities and the program itself.

The government’s broader capacity to execute large-scale programs has also come under scrutiny. The Free Nutritious Meals (MBG) initiative and the Merah Putih Village Cooperatives (KDMP) show what the administration can mobilize when it chooses to do so. But more than 21,000 reported cases of food poisoning linked to the MBG program serve as a sobering reminder of what happens when ambitious schemes are launched before they are ready.

Capital flows in, but details stay scarce

Danantara’s solar bet draws fresh capital, but the details behind the deal remain thin. So far, the country’s newest sovereign wealth fund, Danantara, seems to be upbeat about the initiative. Danantara on March 5 said that it received $1.4 billion in investment to accelerate solar power plant development, but Danantara did not address this properly with enough details. 

CEO Rosan P. Roeslani said only that the investment was made in 2025 as part of the 100 gigawatts effort and would fund a facility expected to take a year and a half to build. The source of the funds, the nature of the facility, its location, the technology involved and its projected impact on surrounding communities were all left unaddressed.

Despite the expected shortcomings, though, the timing could not be better. A significant sum to support renewable energy is a much-needed boost for Indonesia’s ambitious energy transition. Not only does it signal to international partners that Jakarta is serious about turning its long-standing transition pledges into tangible investment on the ground, but it also comes at a time when the global energy supply is under significant strain and Indonesia requires alternatives.

Turning crisis into a catalyst

Rising fuel costs are forcing Jakarta’s hand, but turning the crisis into lasting change will take more than momentum. In the near term, the government is likely to resist raising prices for subsidized fuel and the ubiquitous three-kilogram liquified petroleum gas (LPG) canisters. But if the conflict in the Middle East persists, tighter quotas and eventual price adjustments are all but inevitable. That pressure, uncomfortable as it is, creates a political opening.

This moment can be used as a catalyst, a valid reason for the administration and the lawmakers to come up with a strong, accelerated shift to renewables as part of the efforts to reduce reliance on the global supply chain. But catalysts only work if they produce lasting structural change. That means improving transparency about the solar program’s progress, making investors’ identities public, and being clear about the technologies chosen. Without accountability, ambitious targets have a way of quietly fading when the sense of crisis passes.

Indonesia’s clean energy promises and the road ahead

The targets are set, and the tools exist, but Indonesia has yet to match its clean energy promises with action. Indonesia has an ambitious energy transition target, but it harbors skepticism due to slow progress, continued reliance on coal and conflicting policy priorities. Our leaders set ambitious targets and brag about them at international summits. Besides Indonesia’s net-zero emissions (NZE) by 2060 or sooner,  President Prabowo has publicly promised a coal phase-out within 10–15 years and shift to 100% renewable energy within a decade.

Indonesia needs to take this opportunity to make its energy sovereignty dream come true. Domestic renewables rely on local resources, so once they are built, they will be immune to fuel price swings in the Middle East.

Policy tools are already available. We do indeed seek a higher share of renewables in the primary energy mix. Now we need to realign the Electricity Supply Business Plan (RUPTL) with Just Energy Transition Partnership (JETP) and the National Energy General Plan (RUEN), accelerate coal retirement, avoid new fossil capacity, prioritize grid upgrades outside Java–Bali and invest in storage so that solar and wind can displace oil and gas.

[Swapnarka Arnan edited this piece.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.