State-owned oil and gas holding company Pertamina, through subsidiary PT Pertamina New & renewable Energy (PNRE), plans to purchase a 20 percent share of Philippines' biggest solar power producer Citicore Renewable Energy Corporation to increase its capacity in variable renewable energy.  Pertamina's stronger pursuit of renewable energy, however, may cause overlapping interests with state-owned electricity company PLN, resulting in inevitable competition between two.

Pertamina will invest in CREC by buying 2.23 billion shares priced at PHP 3 per share, amounting to US$114.8 million (Rp 1.85 trillion), pending approval from the State-owned Enterprises (SOEs) Ministry.¹  Through the purchase of Citicore's stock, Pertamina paves the way to expand its presence in Southeast Asia, particularly in the rapidly growing Philippine renewable energy market. Citicore is one of the biggest solar power companies in the Philippines aiming to produce 1 gigawatt (GW) of solar power per year. ²

Through the partnership, Pertamina expects to strengthen its capabilities in variable renewable energy development such as solar and wind energy, which is still nascent in Indonesia, Pertamina requires knowledge, technology and skill transfer to be able to accelerate its renewable energy development, including project development, as well as engineering, procurement and construction (EPC).³

Up to now, Pertamina's core business still relies on oil and gas, both in the upstream and the downstream sectors. Because of its capabilities in drilling, the company has ventured into geothermal power plants through PT Pertamina Geothermal Energy (PGEO), a subsidiary of PNRE. PGEO is currently the largest geothermal power company in Indonesia, with installed capacity of 1.9 GW, of which 672 megawatts (MW) it manages directly and 1.2 GW through joint operation contracts.

Geothermal and hydro power are categorized as dispatchable renewable energy as they produce electricity 24 hours a day. Meanwhile, solar and wind are considered variable renewable energy because of their intermittency in supplying energy. Solar and wind would require energy storage systems to supply energy 24 hours a day. Indonesia has relatively big installed capacity of dispatchable renewable energy, with 6.7 GW of hydro power and 2.6 GW of geothermal. Installed capacity of solar and wind power, however, remains small at 728 MW and 152 MW, respectively.

Pertamina currently has some solar energy, but it is mostly small-scale and for internal use. Therefore, by entering into partnership with Citicore of the Philippines, it aims to venture into utility-scale solar energy projects, especially in Indonesia. Indonesia has a huge solar energy potential of 3,294 GW.

During the last climate summit COP29 in Baku, Azerbaijan, Pertamina disclosed nine ambitious targets to help achieve the government's net-zero emissions (NZE) target by 2060, including 60 million kiloliters (kl) of biofuel sales, 5.5 kl of petrochemical production, 1.4 GW of installed geothermal capacity and 1.5 million tonnes of CO2 equivalent emission reduction through carbon capture and storage (CCS). Just to achieve targets in renewable energy, Pertamina has already prepared $5.7 billion, or 8 percent of its capital expenditure for renewable energy development.⁴

As Pertamina expands its business in renewable energy, this may cause an overlap with the other energy-based state-owned electricity company PLN. A few years back, the SOEs Ministry planned to merge all geothermal power companies under one holding company. As PGEO is the biggest geothermal company in the country, the SOEs Ministry would make PGEO the holding company. But the move met with opposition from PLN through electricity labor unions. The plan was eventually canceled.

At the same time, PLN initiated a drive to change liquefied petroleum gas (LPG)-powered stoves among Indonesian households with electric stoves to absorb electricity surplus and to save the country's foreign reserves by reducing imports of LPG, but this move also met opposition from LPG distributors and sellers. The plan was aborted.

However, as the country is committed to achieving NZE by 2060 the two giants, Pertamina and PLN, need to collaborate to invest in the energy transition, not only in electricity but also in other sectors, especially transportation. The country's move to decarbonize the transportation sector by introducing electric vehicles could result in merging interests for both Pertamina and PLN.