Indonesia’s push toward cleaner energy faces a growing challenge from within its own industrial expansion. Across the country, more companies are building captive coal-fired power plants to secure electricity for downstream operations.
These facilities are designed to power energy-intensive industries such as nickel smelters, aluminum, steel, and other processing sectors. Most of them still depend on fossil fuels, particularly coal and gas.
The concern is not small. Raditya Wiranegara, Director of Research and Innovation at the Institute for Essential Services Reform (IESR), warned that without stronger grid expansion and easier access to renewable energy for industrial players, captive power plants could become the largest contributor of greenhouse gas emissions in the electricity sector.
“If not controlled, these fossil-based captive power plants could make it difficult for Indonesia to shift to cleaner energy,” Raditya said during a discussion titled “Decarbonizing Captive Power Plants in Indonesia” on Thursday, February 19, 2026.
The numbers illustrate the trend. According to IESR data, captive power capacity jumped from 14 gigawatts in 2019 to 33 gigawatts in 2024. The majority of that capacity is fueled by fossil energy. Looking ahead, the pipeline remains heavy with coal and gas projects, with an additional 17.4 gigawatts planned after 2024.
Captive power plants differ from public utilities. They are built and operated directly by industrial companies to meet their own electricity needs and are not connected to the national power grid.
“The significant growth of fossil-fueled captive power plants has resulted in increased carbon emissions in the electricity sector,” Raditya stated.
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The impact is already visible. Emissions from captive plants reached 131 MtCO2 in 2024, accounting for around 37 percent of total emissions in the power sector.
“If the growth of fossil-based captive plants continues unchecked, CO2 emissions will reach 166 MtCO2 by 2037,” he added.
The government is now assessing how to respond. Through the Ministry of Energy and Mineral Resources, it is reviewing energy transition policies specifically aimed at captive power plants.
Fadolly Ardin, Electricity Coordinator for Downstreaming and Economic Zones at the Directorate General of Electricity within the ministry, explained the regulatory framework. IUPTLU Wilus and IUPTLS licenses were introduced to serve industries that cannot be supplied by PLN, or in cases where PLN cannot provide the required capacity.
“Renewable energy projects within Wilus will be required to meet the clean energy mix,” Fadolly said.
He clarified that companies holding an Electricity Supply Business License for Own Use, known as IUPTLS, are not bound by the 2025 to 2034 Electricity Supply Business Plan or RUPTL. This allows them to develop projects according to their corporate strategies.
However, companies holding an Electricity Supply Business License for Public Interest with designated business areas, referred to as IUPTLU Wilus, must follow the provisions set out in the 2025 to 2034 RUPTL. Even so, completing the projects is not mandatory, as development still depends on demand from tenants operating in those areas.
“Wilus holders will be subject to clean energy mix obligations because they are included in the RUPTL,” he said.
As industrial growth accelerates, the direction of captive power development will play a decisive role in determining whether Indonesia can balance economic expansion with its clean energy ambitions.
