As per MRFR analysis, the Indonesia Hydropower Market Size was estimated at 7.63 (USD Billion) in 2023. The Indonesia Hydropower Market Industry is expected to grow from 8.31 (USD Billion) in 2024 to 14.34 (USD Billion) by 2035. The Indonesia Hydropower Market CAGR (growth rate) is expected to be around 5.085% during the forecast period (2025 - 2035).
Key Indonesia Hydropower Market Trends Highlighted
The Indonesia Hydropower Market is currently experiencing significant growth driven by the country's focus on renewable energy sources. The government has set ambitious targets to increase the share of renewable energy in the national energy mix, aiming for 23% by 2025. This commitment is fueled by the need to reduce greenhouse gas emissions and achieve energy independence. Efforts to improve infrastructure and investment incentives for hydropower projects are key market drivers.
Furthermore, the Indonesian archipelago, with its abundant rivers and waterfalls, presents numerous opportunities to develop new hydropower plants, particularly in remote areas where electricity access is limited.In recent years, we have witnessed a distinct shift towards the single-purpose use of water small-scale hydropower projects, more commonly referred to as small hydropower plants. Unlike larger installations, these projects are more popular because they face fewer regulatory obstacles as well as being less expensive to implement.
There is more active participation from local communities, which makes the projects more socially responsible and also helps improve the ancillary economies. Market trends have also been affected by the use of modern technologies in the generation of hydropower, like smart grids, more efficient turbines, etc. Also, the interest in hybrid systems deriving hydropower in association with other sources like solar and wind is on the rise.
By leveraging the strengths of various energy sources, Indonesia can enhance its energy reliability. The government supports the integration of these innovative systems as part of its broader energy strategy. Overall, the momentum within the hydropower sector is poised for further expansion, presenting exciting business opportunities for investors and developers while contributing to Indonesia's sustainable energy goals.
Source: Primary Research, Secondary Research, MRFR Database and Analyst Review
Indonesia Hydropower Market Drivers
Government Support and Policy Initiatives
The Indonesian government has been placing a significant emphasis on renewable energy, particularly hydropower, as part of its national energy policy, aiming for 23% of its energy mix to come from renewable sources by 2025. This has led to substantial investments and incentives for hydropower projects across the archipelago. Organizations like the Ministry of Energy and Mineral Resources of the Republic of Indonesia have rolled out various programs to promote hydropower development, aligning with Indonesia's commitments under the Paris Agreement.Recent initiatives include subsidies for energy-efficient technologies and easing regulatory frameworks to facilitate the installation of new plants. With more than 75 projects in the pipeline, the government is set to elevate the share of hydropower in its energy portfolio from 9% to around 15% by 2030. This commitment is expected to play a critical role in driving the Indonesia Hydropower Market Industry forward.
Rising Energy Demand
Indonesia's rapidly expanding population and its economic growth have led to an increased demand for energy, with the nation anticipating a rise in electricity consumption of about 6% annually. The nation, which has a current population of over 270 million, is projected to reach 300 million by 2030. As urbanization accelerates, there is a rising need for reliable energy sources. This scenario presents a substantial opportunity for the Indonesia Hydropower Market Industry to capture this growing demand, especially as conventional energy sources begin to dwindle.Major energy firms like state-owned PLN have reported rising energy demands, urging investments in more sustainable and renewable sources like hydropower as a viable solution.
Investment in Infrastructure Development
The Indonesian government is increasingly prioritizing infrastructure development as a means to enhance its energy capacity. Investments in hydropower projects are bolstered by various international financing organizations aiming to support sustainable energy initiatives. Reports indicate that Indonesia is expected to spend upwards of USD 100 billion on infrastructure over the next decade, with hydropower projects taking a significant share of these investments.Established organizations like the Asian Development Bank and World Bank are actively funding and promoting hydropower developments in Indonesia, recognizing the potential for sustainable national growth. This inflow of investment will thus directly impact the growth trajectory of the Indonesia Hydropower Market Industry.
Environmental Concerns and Renewable Energy Transition
As the world increasingly acknowledges climate change, Indonesia is faced with the pressing need to transition from fossil fuels to renewable energy sources. The Indonesian government reported that coal power plants account for nearly 60% of the country's energy production, raising significant environmental concerns. In response, the government aims to start reducing reliance on coal, targeting an increase in the share of renewable energy sources, including hydropower, in its energy mix.The momentum for restoration of ecosystems and preservation of biodiversity presents a strong case for investment in hydropower projects, which are considered environmentally friendly alternatives. Organizations like the Indonesian Forum for the Environment are advocating for this transition, further stimulating interest and support for the Indonesia Hydropower Market Industry.
Indonesia Hydropower Market Segment Insights
Hydropower Market Capacity Insights
The Capacity segment of the Indonesia Hydropower Market has emerged as a vital component in meeting the country's energy demands as the market increasingly pivots towards renewable energy sources. As Indonesia seeks to diversify its energy mix, hydropower stands out due to its ability to harness the country's abundant water resources, contributing significantly to energy generation. The government has made substantial investments in developing hydropower infrastructure, recognizing its role in achieving energy security and environmental sustainability.Among the various types of hydropower, Mini Hydropower has gained traction due to its feasibility in rural areas, providing localized and sustainable solutions to communities that may lack access to larger power grids.
Moreover, Micro and Pico Hydropower systems are increasingly favored for their low environmental impact and ability to cater to remote and off-grid locations, empowering rural populations with energy independence. In contrast, Small Hydropower systems play a crucial role in balancing the energy supply for local consumption while contributing to national production.Large and Medium Hydropower facilities, on the other hand, dominate the market, leveraging economies of scale to produce substantial amounts of electricity that align with the nation’s growing industrial and urban demands.
These larger facilities enable Indonesia to capitalize on its mountainous terrain and flowing rivers, harnessing their potential to generate consistent energy and contribute to economic development. The diversity in capacity options within the hydropower market not only helps in addressing varying energy needs but also enhances overall market stability by reducing dependence on fossil fuels. This integrated approach to hydropower capacity illustrates Indonesia's commitment to harnessing its natural resources, supporting the nation's energy transition while also boosting local economies through job creation in the renewable energy sector.
The trend towards enhancing hydropower capacity aligns with global initiatives aimed at promoting clean energy solutions, where Indonesia aims to strengthen its position in the renewable energy landscape in Southeast Asia. The combination of abundant water resources, government support, and a focus on sustainable energy solutions marks the Capacity segment as a cornerstone in the broader Indonesia Hydropower Market ecosystem, highlighting its potential to address both current and future energy challenges while promoting environmental stewardship.
Source: Primary Research, Secondary Research, MRFR Database and Analyst Review
Hydropower Market Component Insights
The Component segment of the Indonesia Hydropower Market plays a crucial role in supporting the country's hydropower development initiatives. This segment encompasses various critical elements, including Electromechanical Equipment, Electric and Power Infrastructure, Civil Construction, and others. Electromechanical Equipment is vital as it comprises turbines, generators, and other machinery that directly impacts the efficiency and output of hydropower plants. Electric and Power Infrastructure ensures reliable transmission and distribution of energy generated, a key factor given Indonesia's vast archipelagic structure.
Civil Construction is significant as it involves the creation of the physical frameworks, such as dam structures and access roads, essential for hydropower projects, addressing the unique geographical challenges presented by Indonesia's diverse landscapes. Opportunities in this segment are driven by government incentives and rising demand for renewable energy to meet sustainability goals. Challenges, however, may arise from high initial investment costs and regulatory complexities. Overall, the Component segment remains integral to advancing Indonesia’s energy transition strategy, ensuring energy security while tapping into the abundant hydropower potential within the region.
Hydropower Market End User Insights
The End User segment of the Indonesia Hydropower Market is crucial as it demonstrates diverse applications and demand across various sectors. Hydropower serves not only the Industrial sector, where it contributes to processes that require significant energy input but also the Utility sector, which is fundamental in providing reliable electricity to urban and rural communities alike. With Indonesia being a nation rich in water resources, these sectors directly benefit from sustainable energy initiatives, as hydropower is a vital component of the government's energy mix strategy aiming at reducing dependence on fossil fuels.
The Utility segment plays a vital role in ensuring that electricity is available affordably and consistently, which supports economic growth. Additionally, other applications of hydropower, including smaller scale and decentralized projects, are expanding, thus attracting interest from various industries. The rising focus on renewable energy and sustainable practices bodes well for the continued growth of the Indonesia Hydropower Market, opening avenues for improved infrastructure and investment in cleaner energy solutions. As such, the segmentation within the End User category reveals significant opportunities for enhancing energy efficiency and fostering environmental sustainability through hydropower adoption.
Indonesia Hydropower Market Key Players and Competitive Insights
The Indonesia Hydropower Market has been witnessing significant growth due to increasing energy demands and a strong push for sustainable energy solutions. As the country seeks to diversify its energy portfolio and reduce dependence on fossil fuels, hydropower has emerged as a vital component in its renewable energy strategy. The market is characterized by a mix of established players and emerging companies, each vying for market share through innovative technologies and strategic partnerships. The government's commitment to promoting renewable energy sources, coupled with various incentivizing policies, has further fueled competition within this sector.
Companies operating in this space are continuously looking for opportunities to enhance their operational efficiencies, optimize resource allocation, and invest in new projects that align with national energy goals.Indo Tambangraya Megah stands out in the Indonesia Hydropower Market due to its robust operational capabilities and strategic approach to project development. With a focus on clean energy production, the company has a strong presence in the sector, driven by its expertise in managing large-scale hydropower projects. The company effectively leverages its strong financial position to secure necessary investments and resources for project execution.
Additionally, Indo Tambangraya Megah is committed to sustainable practices, aligning its operations with national energy policies, which positions it favorably against competitors. Its extensive experience in the industry and focus on innovation have enabled the company to maintain a competitive edge while contributing to the renewable energy goals of Indonesia.Energi Mega Persada, another key player in the Indonesia Hydropower Market, has established itself through a combination of strategic partnerships and diversified energy solutions.
The company focuses on providing reliable hydropower services backed by a portfolio of projects that cater to various regional needs. Energi Mega Persada’s strengths lie in its technological investment and commitment to environmental sustainability, making it a respected name in the market. The company has also engaged in strategic mergers and acquisitions that have broadened its market presence and increased its operational capacity in hydropower generation. By continuously enhancing its product offerings and expanding its project scope, Energi Mega Persada is well-positioned to meet the growing energy demands in Indonesia while contributing to the nation’s sustainability objectives.
Key Companies in the Indonesia Hydropower Market Include
Indonesia Hydropower Market Industry Developments
Recent developments in the Indonesia Hydropower Market highlight growing investments and advancements amidst government initiatives aimed at boosting renewable energy. In September 2023, PLN announced plans to increase the share of renewable energy in its generation mix, which directly benefits companies like Medco Power and PGE. Additionally, Energi Mega Persada has been reported to be developing new projects to enhance hydropower capacity in remote areas. The government's commitment to the energy transition is further emphasized by the ESDM's regulatory frameworks and incentives for hydropower investments.
In terms of mergers and acquisitions, in August 2023, Adaro Energy announced the acquisition of a minority stake in a key hydropower project, enhancing its strategic footprint in the sector. Meanwhile, the Indonesian hydropower market experienced notable growth, with market valuations increasingly reflecting the potential dedication to renewable energy resources, impacting companies such as Indo Tambangraya Megah and Surya Energi Indo. The consistent push for infrastructure modernization and energy production efficiency indicates a positive trajectory for the hydropower sector in Indonesia, facilitating operational improvements and supporting overall economic stability.
Indonesia Hydropower Market Segmentation Insights
Hydropower Market Capacity Outlook
Hydropower Market Component Outlook
Hydropower Market End User Outlook
| Report Attribute/Metric Source: | Details |
| MARKET SIZE 2023 | 7.63 (USD Billion) |
| MARKET SIZE 2024 | 8.31 (USD Billion) |
| MARKET SIZE 2035 | 14.34 (USD Billion) |
| COMPOUND ANNUAL GROWTH RATE (CAGR) | 5.085% (2025 - 2035) |
| REPORT COVERAGE | Revenue Forecast, Competitive Landscape, Growth Factors, and Trends |
| BASE YEAR | 2024 |
| MARKET FORECAST PERIOD | 2025 - 2035 |
| HISTORICAL DATA | 2019 - 2024 |
| MARKET FORECAST UNITS | USD Billion |
| KEY COMPANIES PROFILED | Indo Tambangraya Megah, Energi Mega Persada, Adaro Energy, Surya Energi Indo, Medco Power, PLN, JBS, ESDM, BPI, PGE, Nusantara Infrastructure, Cipta Penjalinan Energi, Tanjung Power, Kaltimex Energy, Sumberdaya Sewatama |
| SEGMENTS COVERED | Capacity, Component, End User |
| KEY MARKET OPPORTUNITIES | Government incentives for renewable energy, Increasing demand for clean energy, Untapped river resources potential, Technological advancements in hydropower, Strengthening regional energy cooperation |
| KEY MARKET DYNAMICS | regulatory framework stability, increasing energy demand, environmental sustainability initiatives, investment in infrastructure, technology advancements in efficiency |
| COUNTRIES COVERED | Indonesia |
Frequently Asked Questions (FAQ) :
The Indonesia Hydropower Market is expected to be valued at 8.31 USD Billion in 2024.
The market is anticipated to reach a value of 14.34 USD Billion by 2035.
The market is expected to grow at a CAGR of 5.085% during the forecast period from 2025 to 2035.
The Large & Medium Hydropower segment is projected to have the largest value at 7.3 USD Billion in 2035.
The Mini Hydropower segment is expected to be valued at 1.2 USD Billion in 2024.
Major players in the market include Indo Tambangraya Megah, Energi Mega Persada, and Adaro Energy among others.
The Small Hydropower segment is anticipated to be valued at 3.66 USD Billion in 2035.
The Micro & Pico Hydropower segment is expected to reach a value of 1.34 USD Billion by 2035.
Key growth drivers include increasing demand for renewable energy and government initiatives promoting hydropower projects.
Emerging trends in sustainability and innovation in hydropower technologies are expected to create new opportunities in the market.
Leading companies partner with us for data-driven Insights.
Kindly complete the form below to receive a free sample of this Report
Research Analyst Level I In her 3 years of experience in the market research field, she has handled critical cross-domain projects. she has an in-depth knowledge of market estimation & analysis, problem-solving, primary as well as secondary research, and team management.she holds an engineering degree and is an mba professional from a well-known university, capable of evaluating the market and competitive conditions. an exceptional strategist with excellent communication skills and a passion for delivering cutting-edge & practical insights for the market. proficient in multi-tasking, and can successfully deal with competing demands, while maintaining complete confidentiality. generated business through active client and project development, networking, and high-quality responses. her knowledge and skills have helped in making solid business decisions, securing funding from investors, and avoiding business failures.
Get in Touch
© 2025 Market Research Future ® (Part of WantStats Reasearch And Media Pvt. Ltd.)
