Institutional and Political Economy Constraints in Advancing Inclusive Low-Carbon Renewable Energy Transitions in Indonesia: A Systematic Literature Review

Abstract

Indonesia’s commitment to achieving a 23% renewable energy share by 2025 reflects an ambitious pathway toward low-carbon development; however, progress remains slow and uneven. This study systematically reviews the literature to examine how institutional arrangements, political economy dynamics, financing mechanisms, and energy justice considerations shape renewable energy deployment in Indonesia. Using a systematic literature review (SLR) approach guided by PRISMA, the study synthesizes peer-reviewed research addressing regulatory frameworks, the role of the state-owned utility PLN, investment and financing structures, and community inclusion. The findings reveal that entrenched institutional interests, centralized governance, and fossil fuel–oriented incentives constrain renewable energy scalability, while fragmented regulations undermine investor confidence and local participation. At the same time, evidence highlights that decentralized and community-based renewable energy models, when supported by credible regulations and tailored financing instruments, can enhance both bankability and social equity. The review also identifies persistent justice gaps, particularly distributive and procedural injustices affecting rural and marginalized communities. By integrating insights across policy, finance, and justice dimensions, this study contributes a holistic understanding of Indonesia’s energy transition challenges and underscores the need for coordinated reforms that align regulatory credibility, inclusive financing, and participatory governance to achieve an equitable low-carbon transition.