Green hydrogen’s production volume is fundamentally limited by RE capacity. With 3,686 GW of renewable energy (RE) potential and strategic proximity to major Asian economies, the country could become a significant green hydrogen1 producer and exporter, potentially producing 15.5 MTPA green hydrogen by 2060. Capitalizing these opportunities requires establishing three interdependent conditions: projects’ economic viability, infrastructure readiness, and supporting regulatory frameworks—all moving faster than competitors and aligned with market demand timelines.
Hydrogen produced using RE sources to split water into hydrogen and oxygen through electrolysis
The Economic Challenge: Making Green Hydrogen Competitive
Green hydrogen remains significantly more expensive than fossil-fuel based alternatives. Currently, grey hydrogen2 costs USD 3.5/kg (MEMR, 2024) while green hydrogen costs USD 4.3-8.3/kg in Indonesia3. Green hydrogen’s costs stem from capital-intensive nature of electrolyzer (33-45% of total CAPEX) and massive renewable electricity requirements (40-70% of LCOH) (ACCEPT, 2024).
However, economic viability extends beyond production costs—demand must exist. Indonesia’s National Hydrogen and Ammonia Roadmap (Roadmap Hidrogen dan Amonia Nasional, RHAN) projects domestic demand for hydrogen could soar from 0.8 MTPA by 2030 to 11.7 MTPA by 2060 with domestic consumption across fertilizer, ammonia, refining, and eventually hard-to-abate industries. However, since domestic demand will grow gradually, early projects must rely on export off takers to achieve scale and bankability. Indonesia’s near-term economic case relies on exports to Japan, South Korea, and Singapore, countries committing to import green hydrogen derivatives but lacking domestic renewable resources at scale.
Viability requires achieving cost competitiveness through technology know-how and cost-effective renewables generation, securing long-term offtake contracts to guarantee revenue, and leveraging export projects to build domestic capability—simultaneously.
The Infrastructure Gap: Building the Value Chain
Hydrogen production depends on large and consistent renewable energy supply. Because reliable operations require stable power flows, geothermal resources with high-capacity factors and integrated solar–wind–storage hubs become strategic anchors for Indonesia’s hydrogen ecosystem. Infrastructure for conversion, transport, and storage is equally important. Hydrogen typically requires conversion into ammonia or other hydrogen carriers to enable efficient handling, shipping, and long-distance transport.
Indonesia’s infrastructure momentum is growing. PLN has developed 22 green hydrogen plants with a combined production capacity of around 200 tonnes per year and has outlined plans to expand output to 100,000 tonnes per year in partnership with international technology providers. Hydrogen hubs integrating renewable generation, conversion facilities, and logistics platforms strengthen Indonesia’s ability to scale both domestic and export-oriented hydrogen supply chains.
The Regulatory Vacuum: Strategy Without Implementation
Indonesia’s strategic direction is anchored in the National Hydrogen Strategy and RHAN, which define phased development from 2025 to 2060. The roadmap identifies 215 action points covering safety standards to export promotion and targets attracting USD 25.2 billion in private sector investment by 2060. Yet as of October 2025, binding regulations governing hydrogen production, distribution, trade, or certification remains absence.
The timing problem is acute. Japan and South Korea target first commercial imports by 2027-2028. Australia has enacted comprehensive regulation and signed bilateral agreements; Oman and Saudi Arabia are advancing similar frameworks. These competitors will strengthen its position in hydrogen market access while Indonesia miss the opportunity to be the first movers.
Golden Time for Green Hydrogen Project Deployment
The momentum behind Indonesia’s hydrogen sector is supported by flagship partnerships that demonstrate technical capability and commercial interest. The collaboration among PLN, ACWA Power, and Pupuk Indonesia targets the development of an integrated green hydrogen and ammonia facility producing 30,000 tonnes of hydrogen and 120,000 tonnes of green ammonia annually, leveraging approximately 600 MW of renewable capacity. These projects serve as early catalysts for Indonesia’s hydrogen ecosystem, building technical experience, strengthening supply chains, and sending a clear signal to global buyers.
To accelerate deployment, Indonesia can concentrate efforts on:
- Enact implementation regulations
The anticipated New and Renewable Energy law provides legislative foundation, but hydrogen-specific implementing regulations must follow by 2027, including green hydrogen certification aligned with international standards, comprehensive safety and technical standards, and export licensing procedures. These enable project developers to secure financing and proceed to construction. - Concentrate resources on integrated demonstration projects
Accelerate adoption of proven low-carbon processes and build technical capacity via joint ventures and bilateral demonstration projects. Indonesia offers resource-rich production platforms and regional market access for technology providers. - Secure binding offtake agreements with strategic buyers
Leverage diplomatic and commercial relationships with Japan, South Korea, and Singapore to negotiate long-term green ammonia purchase agreements, providing revenue certainty, technology partnerships, and support for eventual domestic manufacturing capability.
The Window Is Closing
Indonesia’s long-term vision through RHAN provides a comprehensive blueprint, but its competitive position will be shaped by progress in the next few years. Countries that establish operational readiness, secure offtake relationships, and demonstrate production capability by 2027–2028 will define the first wave of the global hydrogen market. Indonesia possesses strong fundamentals—vast renewable resources, strategic geography, and an established industrial base. Converting these into long-term advantages requires coordinated action, rapid execution, and policy certainty. The opportunity is substantial, and the momentum is clear. The coming years will determine whether Indonesia emerges as a leading green hydrogen producer in Asia or watches others take the early lead.
- Hydrogen produced using RE sources to split water into hydrogen and oxygen through electrolysis ↩︎
- Hydrogen produced from natural gas through steam methane reforming ↩︎
- With potential to reach USD 2/kg under favorable scenarios (IESR, 2025) ↩︎
