Over the past few decades, Indonesia’s economic growth has relied on three main pillars: domestic consumption, commodity exports, and conventional infrastructure development. While this model has maintained stability, it is increasingly constrained by global structural changes driven by climate change, technological disruption, and shifting energy geopolitics.
In a rapidly decarbonizing global economy, countries that position the energy transition as a growth strategy will gain a strong competitive advantage. In this context, large-scale solar energy development should be viewed not only as an energy transition program, but also as a new engine of economic growth.
President Prabowo Subianto has set a target to develop up to 100 gigawatts (GW) of solar power capacity within approximately two years. If achieved, this would be among the largest energy projects in Indonesia’s history and globally. Given its scale and short execution period, the program could create a major “investment shock” with significant macroeconomic effects.
Assuming utility-scale solar costs of USD 900,000–1,000,000 per MWp, total investment is estimated at around USD 100 billion. A 320 GWh Battery Energy Storage System (BESS) adds another estimated USD 100 billion. Supporting infrastructure such as transmission networks and electrical component industries could add around 25 percent in additional costs, plus roughly USD 30 billion for industrial development. Total investment could therefore reach about USD 255 billion.
If implemented within two years, annual investment would exceed USD 127.5 billion, or approximately 9.1 percent of GDP, representing a substantial fiscal and economic stimulus. From a development economics perspective, such investment generates strong multiplier effects across construction, manufacturing, logistics, finance, and technology. With a conservative multiplier of 1.7, the total economic impact could reach USD 433.5 billion, or more than 15 percent of GDP per year during implementation. Using Indonesia’s ICOR of 6.33–6.5, direct investment of this scale could contribute around 1.4 percentage points to annual GDP growth. The broader impact, however, extends beyond capital formation.
If around 60 percent of funding comes from foreign investment, inflows could reach USD 150–153 billion, strengthening financial markets and accelerating industrial capacity. At the same time, demand for solar panels, batteries, and related components would stimulate domestic manufacturing, supported by Indonesia’s nickel downstream industry.
The program would also generate large-scale green employment, improve workforce skills, and reduce long-term electricity costs, enhancing industrial competitiveness and export resilience. Overall, the combined 100 GW solar and 320 GWh BESS program could raise economic growth by approximately 1.5–2 percentage points annually, potentially lifting growth to 6.5–7 percent.
However, success depends on strong institutional readiness, particularly in financing, grid integration, and PLN’s capacity. Without financial strengthening and reform, the expansion could strain public utility balance sheets. If managed effectively, this program could become a structural turning point for Indonesia’s economy, driving investment, industrialization, and long-term competitiveness.
March 25, 2026, CNBC Indonesia
(https://www.cnbcindonesia.com/opini/20260325135407-14-721256/percepatan-energi-hijau-sebagai-mesin-baru-pertumbuhan-ekonomi-ri)