Green Energy Stocks: Don’t Invest Before You Understand This

Imagine you are fully convinced that green energy is the next big thing, so you buy into the sector. But the stock price barely moves, or worse, it drops. What went wrong? Chances are, you did not really understand the business behind it.

Green energy is not one single type of business. There are many power generation technologies within it, and each one has a very different economic character. Before looking at any ticker, it is worth understanding the business from the ground up.

Not All Power Plants Follow the Same Logic

Solar power plants (PLTS) are generally considered the easiest technology to understand, with relatively low construction costs and faster build times compared to other technologies. The technology is mature and widely deployed. But there is one major constraint: solar only generates electricity when the sun is out. Without storage systems, output drops at night or during cloudy weather.

Hydropower plants (PLTA/PLTM) can generate electricity fairly consistently when water flow is stable. The key risks lie in seasonal conditions, permitting, civil construction, and access to the transmission grid. Geothermal (PLTP) has a major advantage in stability, capable of running 24 hours a day regardless of weather, but its upfront costs are high due to the need for exploration, drilling, and steam field development.

Wind (PLTB) can be cost-competitive in the right locations, but wind quality in Indonesia is uneven, making its economics highly site-dependent. Biomass and biogas can deliver more stable output since they are feedstock-based, but if supply is expensive or inconsistent, project margins can come under pressure quickly.

Construction Costs: How Wide Is the Gap?

IRENA, or the International Renewable Energy Agency, which is an intergovernmental organization that supports countries in accelerating the transition toward renewable energy and sustainable energy systems, released data from 2024 that shows significant cost differences across technologies.

Globally, the total installed cost of solar PV sits at around US$ 691 per kW, or roughly IDR 11 billion per MW at an exchange rate of IDR 16,000. Onshore wind is around US$ 1,041 per kW, hydropower at US$ 2,267 per kW, bioenergy at US$ 3,242 per kW, and geothermal is among the most expensive upfront at around US$ 4,015 per kW. [1]

But lower capex does not automatically mean higher revenue. A plant’s earnings also depend on how much electricity it can actually produce and at what tariff it sells. This is where geothermal, despite its high upfront cost, often comes out ahead over the long run because its production capacity is far more stable. [2]

PPA: The Contract That Determines Revenue Certainty

For most green energy projects in Indonesia, revenue comes from selling electricity to PLN through a Power Purchase Agreement (PPA). This document governs the tariff, contract duration, capacity, and payment mechanism. For investors, whether or not a plant has a solid PPA in place is often one of the key indicators of asset quality.

Under Presidential Regulation No. 112 of 2022, the government set a Maximum Reference Price (Harga Patokan Tertinggi / HPT) framework for electricity purchases from renewable energy sources. Tariffs for hydropower range from around 6.74 to 11.23 US cents per kWh, solar from 6.95 to 11.47 cents, geothermal from 7.65 to 9.76 cents, and biomass from 9.29 to 11.55 cents per kWh. These are not final project tariffs as actual figures depend on capacity, location, and PPA negotiations, but they provide a useful starting point for understanding the revenue potential of each technology. [3]

Which Technology Is the Most Attractive Investment?

The honest answer is: there is no single technology that automatically wins. Solar is attractive because of its low capex and fast construction timeline. Geothermal and hydro are attractive because of their stable output and more predictable long-term revenue, especially when backed by a strong PPA. Wind is attractive in the right locations. Biomass and biogas are attractive when feedstock supply chains are secure.

In the context of stocks, investors are not buying a technology in the abstract. They are buying a company that manages those assets. So what matters is not just the “green energy” label, but what type of plants the company owns, how much capacity is already operational, whether there is a long-term PPA in place, what the debt structure looks like, and whether the valuation still makes sense.

Green Energy Issuers on the IDX: Who Are the Players?

Several issuers listed on the Indonesia Stock Exchange (IDX) can serve as a starting point for mapping this sector. BREN (PT Barito Renewables Energy Tbk.) has significant exposure to geothermal through Star Energy Geothermal, as well as wind exposure through the Sidrap wind farm.

PGEO (PT Pertamina Geothermal Energy Tbk.) is a Pertamina subsidiary focused on geothermal energy utilization.

On the hydro side, there are KEEN (PT Kencana Energi Lestari Tbk.) with a portfolio spanning hydropower and biomass plants, ARKO (PT Arkora Hydro Tbk.) which focuses on run-of-river hydropower, and HGII (PT Hero Global Investment Tbk.) which operates in micro-hydro with long-term PPA-based agreements with PLN.

Mentioning these names is not a buy or sell recommendation. The goal is simply to show that green energy on Indonesia’s capital market comes in several forms: some geothermal-based, some hydro-based, some diversified, and some still in growth mode.

The “Green” Label Is Not a Guarantee

Green energy is in a strong growth trend, especially as Indonesia’s energy transition agenda picks up pace. But investing in this sector still requires reading the data, not just the narrative. Behind every green energy issuer, there are construction costs, electricity tariffs, PPA contracts, production capacity, and very specific project risks.

If you are interested in this sector, start with simple questions: what type of plant does the company own, what does it cost to build, how is the electricity sold, and how stable is the output? From there, investment decisions can be made with much more clarity.

So, out of all the power generation technologies we covered, which one do you find most interesting to explore further? Let us know in the comments!

References

[1] IRENA — Renewable Power Generation Costs in 2024 https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2025/Jul/IRENA_TEC_RPGC_in_2024_2025.pdf

[2] IRENA — Renewable Power Generation Costs in 2024, Executive Summary https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2025/Jul/IRENA_TEC_RPGC_in_2024_Summary_2025.pdf

[3] BPK RI — Presidential Regulation No. 112 of 2022 on Acceleration of Renewable Energy Development for Electricity Supply https://peraturan.bpk.go.id/Details/225308/perpres-no-112-tahun-2022

---

Disclaimer: This content is created for educational purposes or service promotion, and does not constitute a recommendation to buy or sell any specific Securities. Any risks arising from investment decisions made based on the information in this publication are the sole responsibility of the respective audience. PT KAF Sekuritas Indonesia is licensed and supervised by the Financial Services Authority (Otoritas Jasa Keuangan / OJK).