Indonesia and Singapore are advancing plans for a major cross-border renewable energy project, though a final agreement on electricity pricing remains the primary hurdle. During a recent visit to Jakarta, Singapore Prime Minister Lawrence Wong and Indonesian President Prabowo Subianto signed bilateral agreements to cooperate on low-carbon electricity exports, signaling a commitment to the initiative despite ongoing tariff negotiations.
Energy Minister Bahlil Lahadalia confirmed that while both nations are working toward a deal, a “win-win price” has not yet been established. The government intends to finalize an arrangement that benefits both sides, with pricing remaining under state authority.
Project Scale and Economic Projections
Singapore aims to import up to 3.4 gigawatts (GW) of renewable electricity from Indonesia, a move intended to supply approximately one-third of the city-state’s power demand by 2035. This is part of a broader strategy to source 6 GW of low-carbon electricity from five neighboring countries. The power will primarily be generated through large-scale solar photovoltaic projects located in Indonesia.
Economic viability remains a focus for stakeholders. An October 2025 report by S&P Global estimated the delivered cost of this electricity at approximately S$300 ($232) per megawatt-hour, a figure that accounts for transmission and backup infrastructure. Renewable Energy Certificates (RECs) are expected to be a key component in the project’s financial structure.
Did You Know? Indonesia’s solar energy potential is substantial, with the Energy Ministry estimating capacity at 3,400 GW and independent research suggesting the figure could reach as high as 7,700 GW, ensuring domestic needs can be met even after exports.
Addressing the “Green Premium”
Industry experts emphasize that pricing must account for the “green premium,” or the higher cost of producing clean energy compared to conventional sources. Fabby Tumiwa, executive director of the Institute for Essential Services Reform (IESR), noted that a fair price must reflect production costs, reasonable margins, and the technical expenses associated with subsea transmission to Singapore.
Bisman Bahktiar, executive director of the Center for Energy and Mining Law (Pushep), stressed that long-term price stability is essential to secure investor confidence. He suggested that contracts should include adjustment mechanisms to account for shifting market conditions and production costs over the life of the project.
Expert Insight: The success of this project hinges on balancing Indonesia’s desire for domestic economic growth—such as local manufacturing of solar components—with Singapore’s need for reliable, affordable clean energy.
Regulatory Hurdles and Regional Integration
Current Indonesian regulations restrict electricity exports to state-owned enterprises or government-appointed firms. This policy has created uncertainty for private developers that had already secured conditional approvals from Singapore. To date, Singapore has granted conditional approval to 11 projects totaling 8.35 GW, six of which are based in Indonesia.
To streamline these efforts, President Prabowo appointed the sovereign wealth fund Danantara to manage export agreements. The fund has already signed cooperation deals with Keppel Electric, Sembcorp Utilities, and Singapore Energy Interconnections. Danantara Chief Executive Rosan Roeslani stated that the government is committed to resolving regulatory and infrastructure issues before the end of the decade.
The project aligns with the ASEAN Power Grid initiative, which seeks to integrate regional electricity markets by 2045. In September 2024, ASEAN energy ministers reached an agreement to develop a framework for subsea power cables, which will facilitate the necessary surveying, laying, and protection of infrastructure across regional waters.
Frequently Asked Questions
What is the main obstacle to the Indonesia-Singapore energy project?
The primary obstacle is a final agreement on electricity pricing, with officials from both countries still working to determine a tariff that is acceptable to both parties.
How much electricity does Singapore plan to import from Indonesia?
Singapore plans to import up to 3.4 gigawatts (GW) of renewable electricity from Indonesia as part of its goal to source 6 GW of low-carbon power by 2035.
How will the energy be exported from Indonesia?
The energy will be generated through large-scale solar projects and transmitted via subsea cables, with the project overseen by the Indonesian sovereign wealth fund, Danantara, in accordance with national regulations.
What impact do you think regional power grid initiatives will have on the energy transition of Southeast Asian nations?
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