Indonesia and Singapore sign a cross-border power deal, then get stuck on price

A retreat, then a stall

President Prabowo Subianto and Singapore Prime Minister Lawrence Wong met in Jakarta on July 6, 2026 for the Singapore-Indonesia Leaders' Retreat, and left with 26 signed agreements: 18 government-to-government and 8 business-to-business, according to Antara News. The centrepiece was electricity. Indonesia's sovereign wealth fund, Danantara Indonesia, was appointed to lead the country's cross-border power exports and signed two memoranda of understanding, one with Singapore's Keppel Electric and one with Sembcorp Utilities, to work toward supplying at least 3.4 gigawatts of low-carbon electricity to Singapore by 2035 on commercial terms.

A third memorandum covers carbon markets: the two governments agreed to identify high-integrity carbon credit projects, exchange technical expertise, and work toward an Article 6 implementation agreement under the Paris Agreement, Eco-Business reported. A fourth workstream commits both sides to building a cross-border Renewable Energy Certificate framework, so that electricity trading and carbon accounting can proceed on a common, internationally recognised standard before the first electrons actually cross the strait.

What did not get signed was a price. Energy and Mineral Resources Minister Bahlil Lahadalia told reporters the negotiation is still open. "The process is ongoing. We are still negotiating the price. Our regulations place the price in the government's hands. We want a win-win situation, mutually beneficial," he said, according to Antara. Four days later, speaking to Jakarta Globe, he struck the same note: "We should be able to find common ground soon, but we haven't reached a win-win price yet."

Why the numbers are hard to reconcile

Singapore's ambition is to import up to 6 gigawatts of low-carbon electricity from neighbouring countries by 2035, enough to cover roughly a third of its projected future electricity needs, as the city-state has almost no room left for utility-scale solar or wind of its own. Its Energy Market Authority has already granted conditional approval to 11 cross-border electricity projects totaling 8.35 gigawatts, six of them originating in Indonesia, which puts Jakarta in a strong position on volume. The dispute is over what each megawatt-hour should cost once it clears the border.

Indonesian regulators are pushing for what negotiators describe as a green premium, a price that reflects the capital cost of new solar, wind, and transmission infrastructure built specifically to serve the export contract rather than domestic demand. One illustration of the gap in how the two markets currently value clean power: Argus Media reported Singapore-based solar International Renewable Energy Certificates trading near 23.50 US dollars per megawatt-hour, against Indonesian solar certificates trading under 3.50 US dollars per megawatt-hour, a roughly sevenfold spread. SolarQuarter, citing an earlier S&P Global estimate, put a plausible delivered cost for Singapore-bound green power near 232 US dollars per megawatt-hour once generation, storage, and subsea transmission are all factored in.

"The process is ongoing. We are still negotiating the price. Our regulations place the price in the government's hands. We want a win-win situation, mutually beneficial."

• Bahlil Lahadalia, Indonesia's Minister of Energy and Mineral Resources

Indonesia also brings resource scale to the table. The government's own estimate puts national solar potential at 3,400 gigawatts, and some research estimates run as high as 7,700 gigawatts, a figure Jakarta has cited repeatedly to argue it should not have to discount its power simply to secure an export buyer. But scale on paper does not by itself resolve who pays for the transmission cables, storage, and grid upgrades that would let that potential reach Singapore.

A structural complication: who is allowed to sell

Layered on top of the pricing dispute is a regulatory one. Indonesian rules currently restrict electricity exports to state-owned enterprises or companies specifically appointed by the government, which is why Danantara, rather than any of the private developers, was named lead exporter. Singapore's Energy Market Authority, by contrast, has already issued conditional approvals to a broader set of developers, some of them private, creating a mismatch between which projects Singapore is willing to buy from and which entities Indonesian law currently allows to sell. Resolving that gap, alongside the tariff, is understood to be part of what negotiators mean when they say they are still working toward a "win-win" structure.

Why it matters beyond one bilateral deal

This is not a routine trade memorandum. It is a test of whether Indonesia can monetise its renewable resource base as an export commodity, the way it has long exported coal, palm oil, and nickel, but through a channel that requires new infrastructure, new financing, and a functioning cross-border carbon and certificate accounting system rather than a port and a ship. If Jakarta and Singapore land on a durable pricing formula, it becomes a template other regional buyers can reference. If the talks stall or the eventual price undercuts the cost of building the underlying generation and transmission assets, investors backing similar projects elsewhere in the region will take note.

The carbon markets memorandum raises the stakes further. An Article 6 arrangement between the two countries would let Singapore count emissions reductions financed in Indonesia toward its own climate targets, while Indonesia gains a funding channel for projects that might not otherwise pencil out. Getting the accounting right, so credits are not double-counted between the electricity trade and the carbon trade, is a technical problem the two governments have only just begun to define through the proposed Renewable Energy Certificate framework.

Sirkularium's view

For government and public institutions watching this file, three things are worth tracking rather than the headline capacity figure. First, the eventual tariff structure will effectively set a reference price for Indonesian renewable exports more broadly, so provincial governments and state enterprises weighing their own cross-border or industrial clean power deals should watch the number rather than assume it will mirror domestic tariffs. Second, the regulatory question of who is permitted to export matters as much as the price. If Indonesia widens export eligibility beyond state-appointed entities over time, competition among domestic developers could compress the green premium Jakarta is currently negotiating for. Third, the Renewable Energy Certificate and Article 6 frameworks, if implemented carefully, could become reusable infrastructure for Indonesia's other bilateral carbon and power discussions, not just this one. Institutions with a stake in the country's carbon market credibility, including the national registry launched earlier this month, have reason to follow how rigorously double-counting is prevented here, since any weakness would be scrutinised well beyond this single transaction.