# Indonesia energy transition and subsidy reform > Developing situation record from CLSTR: https://clstr.news/situations/indonesia-energy-transition-and-subsidy-reform > Updated: 2026-11-02T04:31:41.000Z. Sources: 18. Developments: 5. Indonesia is implementing strategies to reform its energy sector and reduce state spending on electricity subsidies. The government has set an ambitious target to reach 100 gigawatt-peak (GWp) of renewable energy capacity within three years, a move intended to save approximately US$4 billion in electricity subsidies. President Prabowo Subianto has initiated solar power projects across several regions, including West Java and the Riau Islands, to expand current solar capacity. Parallel to the shift toward renewable energy, the government is planning to reform how electricity subsidies are distributed. Mochamad Firman Hidayat of the National Economic Council (DEN) has announced plans to pilot a scheme that shifts from subsidies embedded in electricity tariffs to direct cash transfers for eligible citizens. This pilot would adjust electricity rates to market prices in selected regions while providing compensation through a digital social protection system. Pressure for these reforms has increased as energy subsidy and compensation spending reached Rp376.8 trillion between January and September 2026, representing a 54.1 percent surge compared to the previous year. To manage the expanding 2026 State Budget, Finance Minister Suahasil Nazara reported that the government has reallocated nearly Rp 200 trillion from other programs. This reallocation addresses rising costs from energy subsidies and compensation, as well as approximately Rp 60 trillion spent on natural disaster relief, including forest and land fires and disasters in northern Sumatra. As of November 2026, the government has raised its budget allocation for energy subsidies and compensation to Rp 500 trillion for 2026, up from an initial Rp 338 trillion. Minister of Home Affairs Tito Karnavian stated that the government is considering increasing subsidies for fuel, electricity, and air travel to control inflation ahead of the Christmas and New Year holiday period. ## Claims - Energy subsidy and compensation spending reached Rp376.8 trillion from January to September 2026. (reported by 3 sources) - Energy subsidy spending increased by 54.1 percent compared to the same period in the previous year. (reported by 3 sources) - The Indonesian Crude Price (ICP) reached US$112.81 per barrel in September 2026. (reported by 3 sources) - The state budget assumption for oil price was US$70 per barrel. (reported by 3 sources) - The rupiah exchange rate was around Rp18,000 per US dollar in September 2026. (reported by 3 sources) - Approximately half of the energy subsidies are enjoyed by the wealthiest 20 percent of households. (reported by 2 sources) - The ETP Forum recommends using the National Single Social and Economic Data (DTSEN) for subsidy reform. (reported by 2 sources) - The renewable energy mix fell from 18.3 percent in Q1 2026 to 17.3 percent in Q2 2026. (reported by 1 source) ## Timeline ### 2026-11-02: Indonesia considers increasing energy subsidies to curb inflation Indonesia is weighing additional energy subsidies for fuel and electricity to manage holiday-driven inflation, while raising its 2026 energy subsidy budget to Rp 500 trillion due to rising oil prices. 2 sources. https://clstr.news/cluster/indonesia-considers-increasing-energy-subsidies-to-curb-inflation ### 2026-11-01: Indonesia government shifts Rp 200 trillion to manage budget expansion Indonesia is reallocating Rp 200 trillion in its 2026 budget to cover rising costs from natural disasters and energy subsidies, while targeting Rp 600 trillion in revenue for the final two months of the year. 4 sources. https://clstr.news/cluster/indonesia-government-shifts-rp-200-trillion-to-manage-budget-expansion ### 2026-10-30: Indonesia: Domestic investment hits Rp2,000 trillion as energy subsidies rise Indonesia's domestic investment reached nearly Rp2,000 trillion under President Prabowo, while energy subsidy spending rose 54.1 percent to Rp376.8 trillion, prompting calls for urgent reform. 12 sources. https://clstr.news/cluster/indonesia-energy-subsidies-reach-rp3768-trillion ### 2026-10-29: Indonesia plans pilot for direct electricity subsidy transfers Indonesia's National Economic Council plans to pilot direct electricity subsidy transfers to eligible citizens to improve aid accuracy and transition tariffs toward market prices. 5 sources. https://clstr.news/cluster/indonesia-plans-pilot-for-direct-electricity-subsidy-transfers ### 2026-10-06: Indonesia targets 100 GW of renewable energy to cut subsidies Indonesia aims to reach 100 GWp of renewable energy capacity in three years, a move projected to save up to Rp73 trillion in electricity subsidies through expanded solar power projects. 8 sources. https://clstr.news/cluster/pgn-to-integrate-palm-oil-waste-biomethane-into-indonesian-gas-infrastructure --- Cite as: Indonesia energy transition and subsidy reform. CLSTR, https://clstr.news/situations/indonesia-energy-transition-and-subsidy-reform