Indonesia will require substantial investment to decarbonize its rapidly expanding captive power sector, with total funding needs estimated at $31 billion by 2030 and $92 billion by 2050, according to the Just Energy Transition Partnership (JETP).

Captive power refers to electricity generation facilities developed by industrial users for their own consumption. In Indonesia, the sector has grown quickly in recent years, driven largely by energy-intensive industrial estates, particularly those linked to nickel processing and refining.

A report released by the Indonesian JETP Secretariat shows that captive power capacity reached 25.9 GW in 2024, with more than 75% of this capacity fueled by coal. In addition, nearly 11 GW of new captive power projects are currently under development, most of which are also expected to rely on coal as their primary energy source, underscoring the scale of the decarbonization challenge.

The report highlights an urgent need for investment to shift the sector toward cleaner energy. Funding through 2030 will mainly be directed toward the deployment of renewable energy and battery storage, with solar photovoltaic (PV) and hydropower identified as the leading technologies. In some cases, the transition pathway also includes switching from coal to natural gas, improving energy efficiency, and strengthening the integration of renewables within captive power systems.

Under the JETP transition scenario, renewable energy is projected to account for 34% of captive power generation by 2030, up sharply from 9% in 2024. This share is expected to rise further to 55% by 2040 and exceed 80% by 2050, potentially delivering a 75% reduction in carbon emissions compared with a baseline trajectory.

The findings underscore the critical role of captive power in Indonesia’s broader energy transition and the scale of capital mobilization required to align industrial growth with the country’s long-term decarbonization goals.