Liga Asuransi – The world is currently moving toward a major energy transition. Dependence on fossil fuels, which has supported the global economy for decades, is slowly shifting toward clean and sustainable energy. Indonesia occupies a strategic position amidst this momentum. With abundant natural resources, ranging from solar, hydro, geothermal, wind, and biomass, Indonesia has a great opportunity to become a global leader in renewable energy development.renewable energy).
Government commitment to achieving targetsNet Zero Emissions by 2060is becoming increasingly evident. Several massive green energy projects are underway, from the Cirata Floating Solar Power Plant (PLTS Terampulang), the Kayan Hydroelectric Power Plant megaproject in North Kalimantan, green energy development in the Indonesian Capital City (IKN), to the world’s largest geothermal exploration project. All of these projects are not only part of the national agenda but also in the international spotlight, making Indonesia a key player on the global energy map.
However, these ambitious ambitions also come with complex challenges: significant funding, technical risks, natural disasters, and regulatory uncertainty. Without proper mitigation, these strategic projects could face serious obstacles. This is where comprehensive planning, including a robust risk mitigation strategy, is crucial to ensure projects are not only completed but also operate stably over the long term.
For investors, contractors, and energy industry players, L&G Insurance Brokers is a strategic partner in ensuring every renewable energy project is protected with the best insurance solutions. With extensive experience in handling large-scale energy projects, an extensive network of global insurance companies, and a deep understanding of risks in the energy sector, L&G is ready to assist you from construction to operation.
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Indonesia’s Roadmap to Renewable Energy
Indonesia has set a major direction for energy transformation throughNational Energy General Plan (RUEN). The medium-term targets that are in the spotlight a renewable energy mix of 23% by 2025, before increasing to 31% by 2050While this figure may seem ambitious, global trends and the push for new technologies make it a real opportunity if supported by consistent policies.
One of the important milestones is Indonesia’s involvement inJust Energy Transition Partnership (JETP)agreed at the G20 Summit in Bali in 2022. In this scheme, Indonesia received a funding commitment of up toUSD 20 billionfrom developed countries and international financial institutions to support the acceleration of the energy transition. These funds will be used to reduce dependence on coal, build renewable energy-based power plants, and strengthen green transmission infrastructure.
In addition, the latest regulations such asPresidential Regulation No. 112 of 2022 concerning the Acceleration of Renewable Energy DevelopmentIt also serves as a strong signal that the government is serious about paving the way for renewable energy investment. This regulation regulates the selling price of electricity from renewable energy generators, the contract scheme with PLN, and attractive fiscal incentives for investors.
At the regional level, Indonesia also has a great opportunity to become renewable energy hub in Southeast Asia. With solar energy potential of more than200 GW, geothermal energy of24 GW(one of the largest in the world) and its strategic geographic location, Indonesia has the potential to become a supplier of green energy to neighboring countries. In fact, the idea of exporting renewable energy-based electricity to Singapore through a large-scale solar power plant project in the Riau Islands is now being seriously considered.
However, the success of this roadmap does not depend solely on the government. Close collaboration between the government, the private sector, foreign investors, and financial institutions is required to ensure the project proceeds as planned. Regulatory transparency, legal certainty, and protection are essential.riskbecome the main foundation in attracting sustainable investment.
Key Projects in the Spotlight for 2025
As Indonesia achieves its ambitious green energy transition, several large-scale renewable energy projects are currently underway with significant progress—while presenting real challenges on the ground. The following recent examples serve as both a warning and a warning that risk protection is essential:
1. Cirata Floating Solar Power Plant – Expansion and Challenges
The Cirata Floating Solar Power Plant has become an icon of Indonesia’s energy transition. Its capacity now reaches 192 MWp, making it one of the largest floating solar installations in Southeast Asia.
On August 20, 2025, a team from the Directorate General of Electricity together with the Inspectorate General of the Ministry of Energy and Mineral Resources conducted a supervisory visit to this project, ensuring the reliability of the electricity business system and governance.
In addition, PLN Nusantara Power has explored expansion with Masdar (UAE) through the signing of an agreement. Principles of Agreement in early April 2025 as a step to increase the capacity of the Cirata PLTS.
However, this expansion is not without social challenges. Local fish farmers are concerned about potential disruptions to their livelihoods if the project expands into parts of the reservoir currently used for floating net cages (KJA). Social conflicts like these present a real challenge for the developer.
2. Kayan Hydroelectric Power Plant – A National Strategic Project with Environmental & Social Controversy
Kayan Hydroelectric Power Plant, which is planned to have a capacity of up to 9.000 MW, has been entered as one National Strategic Projects (PSN) Indonesia.
As of May 2025, the project’s physical progress had reached approximately 35%. Road infrastructure to the site had been completed, signaling that the field preparation phase was beginning to mature.
However, the project also poses significant challenges: several indigenous villages, such as Long Pelban and Long Lejuh, are at risk of being submerged by the dam. Local communities have expressed concerns about the loss of land, culture, and identity if the project proceeds without social mitigation measures.
Furthermore, foreign investors withdrew due to environmental and regulatory risks, forcing the developer to seek new partners to ensure project funding remained secure.
3. Waste-to-Energy (WTE) Project by Danantara Indonesia
Another project that was recently highlighted in late September 2025 was Danantara Indonesia’s (sovereign wealth fund) plan to launch minimum of eight waste-to-power projects until the end of October 2025. This project aims to convert municipal waste into electrical energy, especially in the Java and Bali areas.
Each WTE project is planned to produce ±15 MW per 1,000 tons of waste, with an investment of around IDR 2–3 trillion per unit capacity.
This project shows that Indonesia does not only rely on sunlight and water, but also utilizes the huge potential of waste as a renewable energy source.
The examples of the projects above—the Cirata Floating Solar Power Plant, the Kayan Hydroelectric Power Plant, and Danantara’s WTE—show that Indonesia is moving rapidly towards implementing green energy. However, each project carries nontrivial risks: social, environmental, technical, and regulatory. Therefore, project organizers must prepare a thorough protection strategy to prevent potential failures or lawsuits from destroying investments.
Major Challenges in Renewable Energy Development in Indonesia
The transition to green energy is never smooth. Every major renewable energy project in Indonesia is fraught with complex challenges—from technical to social to regulatory. These challenges are not obstacles, but realities that must be addressed and managed to ensure that investments deliver sustainable benefits.
Following are some of the major challenges that have emerged in the course of Indonesia’s renewable energy projects:
1. Social Conflict with Local Communities
The case of the Cirata Floating Solar Power Plant demonstrates how energy infrastructure development often clashes with the economic interests of surrounding communities. Fish farmers in the Cirata Reservoir opposed the expansion, fearing it would disrupt their floating net cages.
A similar situation is evident at the Kayan hydroelectric power plant, where several indigenous villages are at risk of being submerged. Local residents feel they were not fully involved in the planning process, fueling social resistance. Without proper conflict management, any project, no matter how large, can stall or even fail.
2. Environmental Risks
Renewable energy projects are indeed emission-friendly, but their environmental impacts still need to be considered. For example:
- The Kayan hydroelectric power plant has the potential to submerge forests and indigenous lands rich in biodiversity.
- The Danantara WTE project must ensure its combustion technology is truly pollution-free, as otherwise, it will only add to new environmental problems in the form of hazardous gas emissions.
This challenge requires companies to conduct more comprehensive environmental studies and provide real mitigation.
3. Regulatory and Licensing Issues
Many renewable energy projects are hampered by overlapping regulations. The Kayan hydroelectric power plant (PLTA Kayan) lost investors due to perceived weak legal and regulatory certainty. WTE projects also face challenges in policy synchronization between the central and regional governments.
This condition makes investors cautious, and increases the need for guarantees and financial risk protection.
4. Funding and Investment
Renewable energy projects require significant investment. The Kayan hydroelectric power plant, for example, costs billions of dollars. Meanwhile, the Danantara WTE project requires Rp 2–3 trillion per unit of capacity.
This substantial investment is highly vulnerable to market volatility, currency fluctuations, and construction delays. Without risk protection, losses could erode capital and threaten the project’s sustainability.
5. Technical and Operational Challenges
Renewable energy requires advanced technology. The Cirata Floating Solar Power Plant (PLTS Terapung Cirata) faces challenges related to maintaining solar panels on water, which is not as easy as using land-based panels. WTE projects require a precise wastewater treatment system to prevent them from becoming a source of pollution.
Technical failures have the potential to cause significant losses, both financially and reputationally.
6. Market Uncertainty and Electricity Demand
Although national electricity demand continues to increase, the uptake of renewable energy sources remains dependent on PLN and government policies. Changes in electricity selling prices (feed-in tariffs) can impact project feasibility.
Given these challenges, it’s clear that renewable energy isn’t just about building power plants, but also about managing complex risks. This is where the role of the government is crucial.energy project insurance which is able to provide comprehensive protection, starting from the construction and operational stages, to potential third-party claims due to social and environmental impacts.
The Importance of Risk Protection with Insurance in Renewable Energy Projects
Renewable energy projects always come with positive intentions: reducing emissions, increasing energy security, and elevating Indonesia to the global stage as a leader in green energy. However, behind this idealism, real risks cannot be ignored. In fact, the larger the project scale, the greater the potential losses if not managed properly.
Here insurance plays a crucial role as safety net / financial and reputational impact for project owners, contractors, and investors.
1. Asuransi Construction All Risks (CAR) & Erection All Risks (EAR)
During the construction phase of the Kayan Hydroelectric Power Plant (PLTA Kayan) or Cirata Solar Power Plant (PLTS Cirata), the potential risks are very high—from work accidents and heavy equipment damage to natural disasters. CAR & EAR provides comprehensive protection to ensure the project continues to operate even in the event of unforeseen incidents.
2. Third Party Liability (TPL) Insurance
With the high potential for social conflict, such as cases of community resistance near reservoirs or traditional villages, TPL insurance is a solution. This policy protects companies from claims by third parties who suffer losses due to the project, such as land damage, environmental pollution, or workplace accidents affecting local residents.
3. Environmental Liability Insurance
Specifically for renewable energy projects that impact ecosystems, this policy protects companies from environmental remediation costs or claims resulting from pollution. This is relevant for Danantara’s WTE project, which is vulnerable to criticism related to emissions and hazardous waste.
4. Delay in Start-Up (DSU) Insurance
Any construction delay has the potential to cause significant financial losses. For example, the Kayan Hydroelectric Power Plant, which requires billions of dollars in investment, cannot afford to lose money if its operational schedule is delayed. DSU Insurance ensures that losses due to delays are minimized.
5. Political Risk Insurance
Energy projects often involve foreign investors. Therefore, political risk insurance (e.g., regulatory changes or government intervention) is essential to ensure investors feel more secure investing in Indonesia.
6. Protection against Labor Risks
With thousands of workers in the field, the risk of accidents is unavoidable. Workers’ Compensation Insurance, or Personal Accident Insurance, provides compensation for workers and their families.
7. Strategic Benefits for Investors & Government
With comprehensive insurance protection, renewable energy projects:
- More attractive to investors because the risks are measurable.
- Get more trust from lending financial institutions.
- Helping the government achieve its Net Zero Emission target without sacrificing financial stability.
At this point, it is clear that without risk protection through insurance, renewable energy projects are not only financially risky, but may also lose public and investor support.
The Role of Insurance Brokers in Monitoring Renewable Energy Projects
As renewable energy projects expand massively in Indonesia, complex risk challenges are also increasing. From technical and environmental to socio-political risks, all require appropriate mitigation strategies. This is where insurance broker presents not just as an intermediary, but as a strategic partner who accompanies project owners, contractors, and investors from the planning stage to operations.
1. Comprehensive Risk Analysis From the Beginning
Insurance brokers assist with risk assessments at every stage of a project: design, construction, operation, and energy distribution. With clear mapping, companies can identify vulnerable points that could potentially lead to significant claims.
2. Designing Appropriate Insurance Solutions
Each renewable energy project has different characteristics. Hydroelectric power plants (PLTA) face the risk of flooding or landslides, solar power plants (PLTS) are susceptible to panel damage due to extreme weather, while WTE projects face environmental challenges. Brokers play a key role in tailoring your needs to the most relevant policy package, including CAR, EAR, DSU, and Environmental Liability.
3. Negotiation with Insurance Company
It’s no secret that the larger the project, the more complicated the insurance placement process. Brokers are there to help fight for the best terms & conditions, from premiums to extended coverage to risk exclusions. This role ensures project owners receive maximum protection at an efficient cost.
4. Increase Investor and Lender Confidence
For large projects like the Kayan hydroelectric power plant or the Cirata solar power plant, the involvement of an experienced insurance broker enhances credibility with investors and banks. A comprehensive insurance policy ensures that the project is professionally managed and its risks are controlled.
5. MentoringAt Claim Time
When a risk actually occurs, brokers play a crucial role in expediting the claims process, from document collection and communication with the insurance company to ensuring claims are paid as agreed. This is a significant difference compared to handling the claim in-house.
6. Strategic Consultant for Long Term
Insurance brokers don’t just place policies. They also provide strategic recommendations to ensure risk management in renewable energy projects continues to evolve in line with changes in technology, regulations, and climate conditions.
With that role, it is clear that the presence of an insurance broker is crucial for the success of renewable energy projects. Without a broker, project owners risk losing efficiency, facing uncertainty when it comes to claims, and even struggling to secure financial support.
Conclusion
Indonesia is at a crucial point in its energy transition towards a greener future. With major projects like the Kayan hydroelectric power plant, the Cirata solar power plant, and the Waste-to-Energy program in various cities, the country is affirming its commitment to becoming a global leader in renewable energy. However, behind these significant opportunities, there are always risks to anticipate: technical failures, construction delays, natural disasters, and even environmental lawsuits.
This is why proper and comprehensive insurance protection is vital. Not only to protect assets worth trillions of rupiah, but also to ensure investor, lender, and public confidence in the project’s sustainability.
Why L&G Insurance Brokers?
As one of the leading insurance brokers in Indonesia, L&G Insurance Brokers has extensive experience in assisting strategic energy, infrastructure, and industrial projects. We are present not merely as intermediaries, but as strategic partners which helps you:
- Conduct an in-depth risk analysis.
- Develop an insurance program that suits the specific needs of the project.
- Negotiate the best terms & conditions with the insurance company.
- Accompany the claim process until completion.
With the support of an extensive network and a deep understanding of risk dynamics in Indonesia, L&G Insurance Brokers is ready to be your main partner in ensuring that renewable energy projects run safely, efficiently, and sustainably.
📞 Contact us at 08118507773 for free risk consultation and get the best protection solution for your project.
Together with L&G Insurance Brokers, let’s realize Indonesia’s energy transition towards a resilient, sustainable, and opportunity-filled future.
