Indonesia has the largest geothermal energy potentials in the world and offers opportunities in wind, solar, biomass, and hydropower. However, the utilization of the resources is still low. The increase in mineral oil prices and the subsequent reduction of fuel subsidies have considerably improved the feasibility of renewable energy (RE) in Indonesia. The Government of Indonesia aims to increase the use of new and renewable resources to produce energy from 4.4 percent of energy mix currently to 25 percent by 2025. The target is certainly achievable given Indonesia's massive potential RE resources. Potential supplies of geothermal, solar, wind, micro hydro and biomass energy are estimated at 160 gigawatts of electric capacity. However, the development of RE has been slow because the state-of-art technology involved for this energy is more expensive than energy produced by conventional hydrocarbon-fired plants. Commercial opportunities for U.S. companies exist in equipment and technology related to RE energy development.
The power industry in Indonesia has experienced a high growth in demand, averaging 6 - 8% per annum in the last ten years. However, due the lack of infrastructure in the power sector between 2000-2005, Indonesia is still facing a power crisis in various areas. The current installed generation capacity is 30,940 MW, of which 5,496.4 MW is from renewable energy sources. The state-owned electricity company PT PLN generates 85% of the total capacity, while the rest comes from Independent Power Producers (IPP) and captive power.