Indonesia’s economy is on a roll. The archipelago nation harbors ambitions for 8% growth a year on its growing strength as an exporter of coal, palm oil, LNG, and stainless steel made from its booming nickel mining industry.

Investments from China are driving this growth—and run the gamut from traditionally dirty industries (mining, steel, and aluminum) to the crown jewels of Chinese clean energy tech: batteries,  electric vehicles (EVs), and solar panel production. In 2023, Xinyi Glass, the world’s largest solar PV panel maker, announced an 11.5 billion USD investment in a quartz sand processing plant in Indonesia. 

This glass is set to be exported for now. And while Indonesia has a real role to play in China’s renewable and clean tech economy, the export boom is creating a paradox. As Indonesians provide the raw materials for the planet to clean itself up, their own nation faces high levels of industrial pollution and ecological destruction. 

On my December 2024 whirlwind tour of Java, the vibe felt like that of China a decade ago. Besides smoggy skies and a ubiquitous smell of burning coal in the country’s most populated province, one sees new construction and a burgeoning middle-class on the move everywhere. The hunger to escape poverty is real and intense. The present push for mining, heavy industry, and fossil fuel development suggests that the country already has decided to trade ecology for economy, at least in the near term. A number of Chinese scholars told me that Indonesia is following the model of China and nearly all industrialized nations: pollute first and clean up later.  

But there is one major difference from the China of ten years ago. The Indonesia of 2025 is a nation where renewables and related technologies are already financially sustainable and in demand. Electric buses from BYD cruise Jakarta’s streets. Massive wind power partnerships with Chinese state-owned enterprises have been announced. all signs that Indonesia is turning to China to pursue a clean energy transition. 

China could help the country meet some of its ambitious decarbonization goals by investing—and, more importantly, transferring—clean energy technologies via Indonesian mandated joint ventures (JVs). But to solidify the country’s ability to reach a net zero future, Indonesia must resist dirty energy and overhaul its national policies to rein in fossil fuels and build out its transmission grids. 

Map highlights Java locations in Jacob’s article.

Coal’s Slow Exit

Dependence on coal won’t vanish quickly. Part of my recent journey was a visit to Southeast Asia’s biggest coal plant, located inside the Suralaya industrial zone on the northwest coast of Java. I traveled there to find out if China could help Indonesia accelerate its adoption of clean energy. 

Far from needing renewables in Indonesia’s population center, Java’s power grid currently has overcapacity. Most of this comes from dirty coal dug up in Kalimantan and shipped to Java on barges. So the Suralaya coal plant shows no sign of closing down at present. In fact, some currently idle power plants in the industrial zone now are being renovated, signaling more coal usage in years to come.

Left: The Suralaya coal plant is the largest in Southeast Asia. Right: One of Suralaya’s smokestacks peeks out behind village homes.

The interplay between dirty and clean energy in Indonesia holds contradictions. The nation derived approximately 40% of its energy from coal in 2023 with natural gas and oil accounting for almost half of the nation’s energy supply. Renewables, mainly hydropower, contributed about 13% (See Infographic). This is slowly moving on track to support the National Energy Policy draft’s goal to have renewable energy make up 20% of the energy supply. 

 

Massive industrial complexes such as Suralaya also process mountains of coal into electricity for the nearby Krakatau Steel and BASF plants. Yet, public and policy support for renewables is expanding. At the most recent global climate talks held in Azerbaijan, for instance, President Prabowo Subianto’s brother Hashim Djojohadiku pledged that Indonesia would build 75GW in renewables—especially wind and solar—between now and 2040. This commitment represents a sharp rise from today’s total of around 13.5GW. 

Yet in a country whose ruling class is deeply invested in fossil fuels (and coal in particular), it is reasonable to ask whether bold promises to decarbonize are realistic. Given its manufacturing leadership in wind and solar power and status as the largest source of Indonesian foreign direct investment, China has an obvious role to play in any clean energy transition which might happen.

Much as they do at home in China, however, Chinese policymakers and companies are taking a buffet approach to energy investments in Indonesia. Coal, wind, solar, geothermal all on the menu. And the contradictions here also are apparent.

For example, Chinese President Xi Jinping pledged to halt finance for new coal-fired power plants that feed electricity grids in 2021. Yet some Chinese enterprises are still building captive coal plants to power a specific factory or industrial park. Such off-grid investments comply with the letter—but not the spirit—of Xi’s coal ban. 

One can find contradictions even within a single site In Sulawesi’s massive Morowali Industrial Park (where Chinese and Indonesian JV companies process nickel for EV batteries and stainless steel), most of the electricity supply comes from coal. Yet  Chinese investors are now starting to bring renewable energy to Morowali.

Indonesia’s coal economy is massive, and mining has literally reshaped the nation’s landscape. Yet analysts such as Fabby Tumiwa of Jakarta think tank ISER point out that the industry’s roots don’t go that deep. Only in recent decades has coal mining reached its current scale. This fact gives Fabby and other clean energy observers hope that coal can be replaced relatively quickly with affordable renewable energy technologies.

Cirata: A Dam Good Thing

From Suralaya, my journey continued through an oddly Americanized highway landscape to Cirata, a hydroelectric dam built in the 1980s. At every exit along the way, a Starbucks beckoned, punctuating a landscape of fields of burning tropical plants, industrial warehouses, and gas stations.

Cirata’s history reflects Indonesian efforts to develop different sorts of power plants over many years. At the time it was first built, President Suharto’s New Order was trying to industrialize Java via massive infrastructure projects, with a leading role for hydropower. In 2022, however, the country forged a new energy path at the reservoir, when Indonesia’s state electricity company PLN signed a deal with Abu Dhabi’s state-owned energy company Masdar to construct a floating solar array on the site. This project is  the largest solar array in Southeast Asia, and it is capable of generating 2GW of power—which is enough to power 1,700,000 homes for one year. 

On a chartered boat floating out to see the glittering panels, the contrast with the coal plant at Suralaya was great. Looking down from the nearby hills on a cloudy day, one could almost miss the existence of the panels at all, as their color blended with the steely blue of the reservoir.

The clean austerity of the Chinese tech also provided a contrast to the boisterous village life along the shore. Local residents shared complaints about the floating solar panels, saying they caused invasive floating duckweed, and complicated angling because the fish hid beneath the solar panels. They even said that the project made the weather hotter. 

Invasive floating duckweed sprouts disrupt fishing across the Cirata Reservoir, home to Southeast Asia’s largest floating solar plant.

Indonesia requires all infrastructure projects to have a 51% local entity ownership stake, and 40% of supplies must be manufactured locally. Yet Cirata offers a case in point about China’s technological advantage. While financing for the 2022 project came from the Emirates, and the official owner of the array is Indonesian, Chinese state-owned PowerChina did the actual construction.

Local residents described the Chinese infrastructure as impersonal and cold, removed from the shantytown style developments just alongside. “They came with their own workers,” said the boatman who ferried me. Chinese workers evidently installed the panels efficiently and without much interaction with the locals. The sublime technology of the solar panels resting on the water did seem very much planted from afar, like alien spaceships. 

While this discrepancy between Chinese technologies and local expectations may appear great, it likely resembles a similar dynamic a generation ago in China. Over time, the American and European companies trained Chinese partners in technologies (though not always the most cutting-edge versions). China’s local content regulations then forced further tech transfer. Chinese entities did pilfer information and equipment, some of which they did not know how to use. 

Indeed, the complaints I heard from some Chinese business people about Indonesia’s 51% ownership requirement and annoyance with local governments (often described as corrupt) reminded me of German complaints in Changchun’s VW plant ten years ago. It is all part of the process. Indonesian insistence on local production of solar panels and EV cars signals that this process is clearly already underway. 

Seeing happy local middle-class families digging into their food at a breakfast buffet during my visit to Cirata offered another insight: showed that localizing investment is sparking prosperity. From industrial parks like the Subang Smartpolitan zone near Cirata (home to the BYD plant opening in 2026) to and the Semarang industrial zone that hosts Lesso Solar’s manufacturing plant (where 70% of employees are local), locally born innovations of the future will emerge. 

Can Chinese Renewables Short Circuit Coal?

Yet tensions do remain at the heart of these endeavors. Yuyun Andradi of Trend Asia told me: “I don’t see a genuine intention of tech transfer in the investments China has made.” This must change if China is serious about helping global south countries such as Indonesia to develop in a sustainable way.

Indonesia is hungry for energy investment. There are many groups with money to invest: wealthy Muslim states like the UAE, Singapore’s Temasek, and the US government’s Development Finance Corporation. 

There’s nothing special about Chinese capital in this respect; it’s just another entrant, albeit a prominent one, in a crowded field. The more intriguing question for Indonesia’s energy future is whether Chinese investments might accompany technology transfer from solar and wind to transport and telecoms.

It would be ideal if the Indonesian employees and managers at the solar module Lesso plant will gain essential skills to open manufacturing plants of their own. Chinese investment in clean energy can be a blueprint for future growth that could give Indonesia a cleaner future. 

As we have seen, however, the abundance of coal in Indonesia could slow down this potential clean energy transition. While the nation’s previous president committed to decrease coal investments, coal plants, especially at industrial parks, remain on the rise. Prabowo says that he wants to shut 13 of his country’s coal plants before 2030. Talk is cheap, however. Shutting down coal plants and compensating their owners is not. 

In this landscape, it appears to be in corporate China’s interest to aggressively develop new Chinese energy technology in Indonesia. Such a push can make this island nation a test case for the benefits that Chinese investment can provide—not only for economic growth, but for the holistic well-being of the communities involved. 

Chinese economists such as Huang Yiping of PKU’s National School of Development have been calling for a “Global South Green Development Plan.” Indonesia is ready for it, if Chinese companies are ready too.