PLN’s IPP pipeline signals long-term bet on geothermal and renewables

By Raymond Hendriawan & Rikordias Siahaan

Indonesian state-owned power utility PT PLN (Persero) is leaning on independent power producers (IPPs) to drive Indonesia’s next phase of electricity expansion, with nearly 40% of installed capacity already privately owned and most projects under development concentrated in geothermal and renewable energy.

In its global bond prospectus recently published, the state utility said IPPs accounted for 30,788 megawatts, or 38.49%, of total installed generation capacity as of Sept. 30, 2025. PLN has signed 114 significant power purchase agreements, including 79 operating plants and 35 projects of at least 50 megawatts under development.

The development pipeline is dominated by geothermal projects, underscoring a gradual tilt in future additions. Expansion units at Dieng, Patuha, Rajabasa, Rantau Dedap, Muara Laboh and Hululais are scheduled to come online between 2025 and the early 2030s, with contract terms extending to as late as 2055. Hydro projects such as the 510 megawatt Batang Toru plant and the 350 megawatt Merangin project are also in construction.

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Solar and wind are gaining ground. Floating solar plants planned at Saguling, Karangkates and Singkarak, alongside the 70 megawatt Tanah Laut wind farm, reflect PLN’s push to diversify beyond coal and gas while locking in long-term supply under private financing structures.

Coal, however, remains embedded in the system. Large-scale plants such as the 2,000 megawatt Jawa 9 and 10 project carry contract terms through 2075, highlighting the longevity of PLN’s baseload commitments. Coal-fired PPAs typically run for about 30 years from commercial operation, while gas-based contracts last around 20 years.

Under most agreements, PLN pays a fixed capacity charge for dependable power, estimated at about 80% of available megawatts in aggregate, and a variable energy charge linked to fuel and operating costs. The structure provides revenue certainty for developers while creating long-term payment obligations for the utility.

The disclosures in the bond document show how Indonesia continues to rely on private capital to expand generation without fully burdening the state balance sheet. With renewables forming a significant share of the pipeline and coal projects signed in recent years stretching decades into the future, PLN’s IPP framework is set to shape the country’s power mix well beyond mid-century.

Editing by Reiner Simanjuntak