Indonesia has several key foundations in place to support the development of a green hydrogen market. It has abundant and diverse renewable energy resources, an established base of hydrogen-consuming industries, and a national-level policy direction through the National Hydrogen Strategy and the National Hydrogen and Ammonia Roadmap (RHAN). The question is therefore increasingly shifting from whether Indonesia has a role in green hydrogen to how these advantages can be translated into actual projects. Translating these advantages into commercially viable projects, however, remains challenging. Green hydrogen production costs are still relatively high, while the development of supporting infrastructure for storage, transportation, and end-use further increases project costs and investment requirements.
A practical starting point is to build the market around real demand. Indonesia already consumes hydrogen in industries such as fertilizer, refining and petrochemicals, while other applications could also emerge in isolated power systems, heavy transport, maritime transport, and hydrogen-derived fuels. Early projects should therefore focus on identifiable and sufficiently large demand, with state-owned enterprises potentially playing an important role in supporting early green hydrogen market development. This approach would reduce the risk of developing critical infrastructure before there is sufficient utilisation to support them.
Demand, however, is only one part of the equation. Projects also need a clearer enabling environment covering permitting, safety, certification, infrastructure access, pricing and commercial arrangements. At the same time, high-quality feasibility and FEED studies, credible offtake structures, and appropriate public de-risking instruments are needed to move promising concepts toward investment decisions. Indonesia therefore does not need to solve hydrogen development through a single policy instrument; it needs the regulatory, commercial, technical and financial pieces to develop together around projects that have a credible pathway to market.
To address these challenges, selected pilot projects could serve as controlled learning environments to test how emerging regulatory, commercial, and technical arrangements perform in practice. One relevant precedent is GreenLab in Denmark, which was designated by the Danish Energy Agency as a regulatory energy test zone in 2021. Within this controlled environment, selected projects are allowed to test new energy technologies and business models under defined regulatory exemptions or adjusted requirements, while the authorities monitor their implementation and assess whether existing regulations need to be adapted. This allows practical experience from real projects to inform future regulatory development before wider market deployment.
For Indonesia, a green hydrogen sandbox project could therefore be worth exploring as a mechanism to test selected applications, identify regulatory and commercial gaps, and generate practical evidence before wider replication. Instead of waiting for the hydrogen ecosystem to fully mature, such an approach could allow regulation, project development, and market experience to evolve progressively alongside one another.
