Financing Battery Energy Storage Systems in Indonesia (IEA)

Summary

• In the STEPS, Indonesia's electricity demand rises from nearly 500 TWh in 2025 to nearly 800 TWh by 2035.p.7
• The RUPTL 2025-2034 aims to install 69 GW of power capacity, including 6 GW of standalone storage and 3.6 GW of hybrid (solar PV-plus-BESS) capacity.p.7
• Commercial financiers are estimated to provide USD 2.5 billion to Indonesia's BESS projects, half of total investment needs, while public finance provides an estimated USD 2.3 billion.p.9
• Weighted average cost of capital for BESS projects in Indonesia lies between 9% and 11%.p.10
• Steady capacity payments of an estimated USD 111 per kilowatt (kW) to USD 297/kW per year would deliver the returns commercial investors seek for standalone BESS.p.11
• The global average cost of turnkey 2-hour storage duration BESS declined by 46% from 2020 to 2025.p.14
• Utility-scale BESS installations exceeded 2 GW across the ASEAN region by the end of 2025, with installed capacity growing by 25% that year.p.17

Key insights

1. Over 25% of future BESS capacity is allocated to independent power producers, mainly for hybrid installations.p.8
2. Nearly 90% of the roughly 6 GW of standalone battery storage in the ARED scenario is planned for Sumatra and Java, Madura and Bali.p.8
3. PLN is responsible for over 70% of total capacity additions but accounts for only 60% of overall BESS spending needs from 2026 to 2034.p.9
4. Adding battery storage to solar PV projects raises PPA prices by a range of USD 8 per megawatt-hour (MWh) to USD 18/MWh across the RUPTL's main regions.p.11
5. Total investment in utility-scale BESS in emerging market and developing economies excluding China nearly tripled from 2024 to 2025.p.13
6. Battery storage remains in its early stages in Indonesia, with approximately 30 MW of capacity operational by the end of 2025.p.17
7. The share of BESS capacity in EMDE excluding China rises from 5% in 2025 to 13% in 2035.p.18
8. PLN plans over 42 GW of low-emissions power additions by 2035, including 13 GW of solar PV, 7 GW of wind and 5 GW of geothermal power.p.20
9. Subsidy and compensation transfers to PLN reached IDR 200 trillion (USD 12 billion) in the 2025 fiscal year, around a third of total revenues.p.26