Singapore’s energy strategy has one defining problem – space. Short of something drastic like building an artificial island to host a nuclear power plant, renewable assets sited in neighboring Indonesia are one of only a few viable options. The first serious deal in that vein is now being explored.
France’s TotalEnergies and Royal Golden Eagle (RGE), an industrial group founded in Indonesia and now based in Singapore, have reached a significant milestone in their joint venture to develop a large-scale solar and battery storage project, with Singapore’s Energy Market Authority (EMA) awarding equally-owned joint venture Singa Renewables a conditional license to import 1 GW of renewable power from Indonesia. The agreement was formalized during an official ceremony in Jakarta on May 28th, 2025 attended by French President Emmanuel Macron and Indonesian President Prabowo Subianto, and represents one of Southeast Asia’s most ambitious cross-border renewable energy initiatives.
President Macron’s state visit to Indonesia is part of a week-long tour of Southeast Asia. Beyond energy cooperation, the Presidents oversaw signing of more than a dozen agreements covering trade, investment, and critical minerals, with both leaders emphasizing collaborative efforts to accelerate the transition to cleaner energy.
If Singapore has been limited by space, Indonesia has been limited by ambition. Up to now, Indonesia has been one of the biggest markets in the world with effectively zero progress on renewable energy, on par with Russia in terms of developing only the most nominal solar power schemes.
Indonesia’s energy mainstay is its domestic coal industry, which produced 836 million tons in 2024 (exceeding the government’s 700 million ton target), – compare to India’s 1 billion tons and China’s 4 billion tons. Most of Indonesia’s coal is exported (555 million tons), to India and China, but this leaves enough to generate 60% of the country’s electricity. With one of the globe’s highest emissions-intensity rates, the country maybe not finally embark on a real renewable energy strategy which will feature solar power front and center – until after 2030.
The latest change to Indonesia’s Power Development Plan, for 2025-2034, only features 17.1 GW, 11.7 GW hydro, 7.2 GW wind, 5.2 GW geothermal, 900 MW biomass of additions in the course of a decade, along with two 250 MW SMRs, and 6 GW / 27 GWh battery energy storage. Coal and gas will still account for 16.6 GW of new additions – so ambition is low both in terms of absolute growth of power demand, and the nature of new energy sources.
We think 10 GW of solar additions a year would not be unreasonable in the near future, if authorities really go ahead with the energy transition – this Singapore move is not the only sign that a new strategy is being considered. As things stand, Indonesian demand is set to peak at around 300 million tons in the late 2030s, and if economic growth is strong, then even a heavy adoption of renewables will only blunt this. The country’s 2040 coal phaseout target, announced in November, is a long way away in more senses than just the remaining 15 years.
Singapore for its part is essentially limited to LNG within its own borders, with everything else requiring too much space, unless it builds a new island for nuclear power. Singapore can and is developing rooftop solar, but again space limitations will restrict ‘in-house’ solar power to a strictly auxiliary role – contrast a 2 GW rooftop solar 2030 target with an expected peak demand approaching 12 GW. Wind power is a no-go because of both poor natural conditions (2 meters/second, compared to a commercial minimum of 4.5 meters/second, or 10 and 12 in the North Sea and Taiwan Strait). Highly active shipping lanes around the port city also make offshore wind turbines a no-go even if the wind was useful.
We’ve previously covered proposals coming from Australia to build solar power megaprojects in the Pilbara mining region or the Northern Territory, such as Sun Cable, but predictably these projects are stalling in light of the massive upfront investment and lead times involved in building a 3,000-kilometer submarine HVDC line. If that kind of project makes sense – and we think they will be built, in the 2030s – then it makes sense to start off with solar power built closer to home, in Indonesia, missing out on both +40% stronger Australian desert sun, and the obstacle of a region-spanning transmission line.
So far, rather than pursuing aggressive renewable energy deployment, both Singapore and Indonesia have controversially prioritized the expansion of natural gas as a “transition fuel.” Indonesia’s most recent energy strategy (RUPTL) continues this approach, with gas playing a growing role in facilitating Indonesia’s energy transition, as its share of the primary energy mix increases gradually through 2050.
A fundamental obstacle to Indonesia’s energy transition lies in the market structure, dominated by state-owned utility Perusahaan Listrik Negara (PLN), which distributes electricity to 98% of the country’s households, and runs the company’s coal and hydro fleets.
PLN functions as the sole buyer of electricity while also being the main organization overseeing electricity procurement. This dual role as both producer and regulator leads to inherent conflicts of interest. Additionally, the utility’s constitutionally protected monopoly imposes structural obstacles to the adoption of renewable energy sources.
The ‘take-or-pay’ model requires PLN to either buy all produced electricity or incur penalties, which guarantees profitability for coal-based power generation and keeps the electricity sector reliant on fossil fuels. Take-or-pay (ToP) commitments in power purchase agreements (PPAs) between PLN and independent power producers, as well as in fuel supply contracts for gas generators, diminish the flexibility of thermal units and impact the overall system’s capacity to integrate variable renewable energy sources. On a physical level, adopting intermittent renewables will also require this utility to learn to flexibly operate its coal plants, incurring thermal stress damage and requiring new training and power market design.
If Indonesia is highly reluctant to adopt renewables at home, it can still profit by supplying solar power to Singapore. The TotalEnergies-RGE partnership represents a promising model for regional cooperation. Singapore aims to import 6 GW of low-carbon electricity by 2035, up from an initial 4 GW target, as demand is projected to reach 128 TWh by 2050 – beyond domestic solar capabilities. The solar capacity will be coupled with batteries.
The TotalEnergies deal, while significant, highlights complex forces hindering meaningful energy transition. PLN’s coal-dependent business model conflicts with Indonesia’s climate commitments, prioritizing low consumer prices and the 1 million employees of the national coal industry over environmental considerations. Without addressing these fundamental market structure issues that favor fossil fuel incumbents, even ambitious cross-border projects may struggle to achieve necessary decarbonization scale.
Success requires both continued regional cooperation and structural reforms to energy markets that have historically protected fossil fuel interests at climate goals’ expense. The path forward demands transformation of entire energy ecosystems, not just individual project agreements.