Electricity Sector of Indonesia - Consumption & Production

The sheer size of Indonesia means that – logistically – it is much more complicated for the Indonesian government to safeguard both an efficient and stable electricity supply than it is for a smaller country. Moreover, Indonesia comes in the shape of an Archipelago (consisting of more than 17,000 islands, although not all are inhabited), implying underwater power cables are necessary (which can be risky as there is quite some sea traffic in many parts of the nation, including fishing activity).

Meanwhile, with around 280 million people, Indonesia has a huge population which implies that electricity demand is massive accordingly. What makes it particularly difficult is that there are many pockets of sparsely populated regions in the remote areas of the country. Usually, communities living in these remote areas are poor, and thus it is important lift these communities out of poverty. However, often this means very difficult terrain has to be overcome in order to connect these communities to the electricity grid (such as dense forests, steep cliffs and mountains, in areas where there has never been adequate infrastructure development).

Another challenge is the issue of robust economic growth. While it is a blessing for Indonesia that it has been enjoying strong economic growth (around 5 percent, each year), this also means Indonesians consume increasingly more electricity as they start using electrical appliances such as air conditioners and smartphones. It is the responsibility of the government to make sure additional electricity is available, either through public investment in the power sector or by safeguarding an attractive investment climate that attracts investment from private sector players (in the power sector).

In fact, robust economic growth in this populous nation actually attracts quite some (domestic and foreign) direct investment in a wide range of sectors, thereby raising demand for electricity accordingly as new businesses (including factories) need to be added to the country’s electricity grid. And, if the government fails to safeguard a sufficient, stable and affordable flow of electricity, then it could actually miss out on direct investment realization which would in turn imply it misses out on chances to accelerate social and economic development.

Moreover, a new challenge is the energy transition. Amid pressures from the West, Indonesia has committed itself to move away from fossil fuels (particularly coal, gas, and oil) while tapping the potential of renewable energy sources (the country hopes to have turned carbon neutral by 2060). The challenge is to find enough investment to add clean green power to the grid (while removing dirty power) without causing spikes in energy prices (as that could push many Indonesians currently living narrowly above the poverty threshold into full-blown poverty).

Electrification Ratio Program of Indonesia

The Indonesian government targets to push the electrification ratio (referring to the number of Indonesian households that is connected to the country’s electricity grid) to the full 100 percent. This is part of the government’s social development agenda.

It is interesting that over the past 15 years (or so) this ratio has really soared. While back in 2010 Indonesia’s electrification ratio only stood at a mediocre 67.1 percent, it reached 99.79 percent at the end of 2023, although it is certainly true that those remote villages that are added to the grid are usually unable to enjoy a stable supply of electricity as blackouts (power outages) frequently occur. Even on a developed island like Java, power outages still frequently occur (a phenomenon that is not good for social and economic development). The most common cause of power outages on the developed islands is damaged parts in the electrical distribution system. This can be due to the weak quality of the parts (that therefore are quickly damaged), but can also be caused by heavy rain (floods), strong winds or the impact of lightning.

Table 1; Electrification Ratio of Indonesia:

	2020	2021	2022	2023	2024 (target)	2025 (target)
Electrification Ratio	99.20%	99.45%	99.63%	99.79%	100.0%	100.0%

 

	2010	2014	2016	2017	2018	2019
Electrification Ratio	67.15%	84.34%	91.16%	95.53%	98.30%	98.89%

^{Source: Perusahaan Listrik Negara (PLN)}

Looking back, it is remarkable how low the electrification ratio of Indonesia still was in 2010 (which is not that long ago). In table 1, one might notice that strong growth was experienced between 2010 and 2017, but the rate starts to have difficulty rising from 2018. There is a simple explanation for this: it becomes increasingly more complex and expensive to connect those remaining Indonesian households to the grid due to their remote locations.

In an attempt to speed up and complete the 100 percent electrification program, the central government has introduced frameworks to reduce the financial burden for state-owned electricity company Perusahaan Listrik Negara (PLN) by encouraging the acceleration of privately-held small-scale electricity supply businesses for rural electrification in the remote areas. This involves micro-grids (typically using diesel, solar and small-scale hydropower as source) and provision of individual solar home systems. A key advantage of these micro-grids is that one can select the least costly model based on the conditions at the specific location, taking into account climate, geography, as well as factors such as economies of scale for capital costs, technology suitability, and other operations and maintenance expenditures.

Provinces that show an electrification ratio below 90.0 percent are Highland Papua (14.1 percent), Central Papua (49.3 percent), South Papua (75.5 percent), East Nusa Tenggara (87.5 percent), Southwest Papua and North Maluku (both 88.2 percent), West Papua (89.1 percent) and Papua (89.8 percent). The feature all these provinces share is that they are located in the far eastern part of Indonesia, which is a sort of economic vacuum (sparsely populated and far away from the key sea trade routes).

Indonesia's Total Installed National Power Plant Capacity

If we take a look at total national installed power capacity of all power plants across Indonesia, it reached 91.16 GW at the end of 2023. This is a 8.8 percent increase in total power capacity compared to the previous year (which is an impressive growth rate).

Table 2; Total Installed Capacity of Indonesia’s Power Plants (MW):

	2018	2019	2020	2021	2022	2023
Power Capacity	65.568.30	70,023.11	74,168.98	76,538.49	83,813.09	91,164.00

^{Source: Electricity Statistics (2023), Secretariat of the Directorate General of Electricity}

It is important to emphasize that the numbers in table 2 include the capacity of those power plants that do not operate (anymore) but do still carry the nameplate ‘power plant’.

It is fully state-owned electricity company Perusahaan Listrik Negara (PLN) that supplies 46.13 GW of that total of 91.16 GW.

Data from Secretariat of the Directorate General of Electricity also show that 50.52 percent of the country’s total installed power capacity is supplied by the steam power plants (PLTU), which in Indonesia mostly uses coal as fuel source. And so, Indonesia remains heavily dependent on coal in terms of its energy supply.

It is interesting that despite the push for clean energy in recent years, the data show that PLN, in fact, has only become more dependent on the use of coal to fire its power plants. Whereas in 2017 coal contributed 58.4 percent to total electricity generation in PLN’s power plants, the figure reached 67.2 percent in 2022.

Obviously, it is very attractive for Indonesia to use coal as the country has ample coal reserves at its disposal. Moreover, coal-fired power plants remain much more stable and reliable than their renewable counterparts, and as we pointed out above, having a stable supply of electricity is key for the nation’s social and economic development. It in fact seems likely the Indonesian government is eager to use up most of its coal resources in the decades ahead before fully embracing renewable sources.

Government’s 35,000 Megawatt Power Program

The construction of new power plants (and consequent additional electricity on the grid) is related to the central government’s 35,000 Megawatt (MW) power program. This program, which was launched by the central government in 2014, ranks among the flagship programs launched by Indonesian President Joko Widodo with the aim to achieve energy sovereignty (and thereby also supporting the country’s economic independence).

Initially, this program heavily relied on the development of coal-fired power plants. However, on paper, the push for renewable energy has made the government decide to cut the construction of coal-fired power plants via Presidential Regulation No. 112 of 2022 on the Acceleration of Development of Renewable Energy for the Provision of Electricity. While this presidential regulation does leave quite some room for the construction of coal-fired power plants (under specific conditions), the regulation aims for all coal-fired power plants to be offline by 2050.

However, by moving away from coal-fired power plants, it initially became uncertain whether the 35,000 MW program could be completed as targeted as coal remains to be the more stable and cheaper solution in terms of electricity generation.

Indeed, the program was not completed on time. Initially, the 35,000 MW program was planned to be completed by 2019. However, based on recent media reports, the targeted completion date has been moved to 2028. At start of 2024, only 59 percent of the program (20,780 MW) had been completed. Meanwhile, also at the beginning of 2024, a combined 9,380 MW in power plant capacity was under construction.

Table 3; Overview of 35,000 MW Power Program (per January 2024):

Development Stage	Power Capacity	Percentage of Total
Commercial Operation	20.78 GW	59%
Under Construction	9.38 GW	26%
Power Purchase Agreement	0.91 GW	3%
Planning	4.10 GW	11%

^{Source: Directorate General of Electricity (January 2024)}

Consumption of Electricity in Indonesia

In line with strong economic and social development, more and more electricity is being consumed around Indonesia, both by individuals, industries and governments.

When we take a look at table 4 we see that the ‘residential’ category (households) is the biggest consumer of electricity across Indonesia (and by a wide margin). Indeed, Indonesia is now home to a population that numbers around 280 million people, and so one can imagine that this force consumes a lot of energy. On second place comes the industry sector.

Table 4; Electricity Consumption in Indonesia by Sector (GWh):

Sector	2019	2020	2021	2022	2023
Residential	103,733.43	112,155.85	115,370.04	116,095.41	122,339.69
Industry	77,878.65	72,239.86	80,904.44	88,483.30	88,587.68
Commercial	46,901.25	42,819.32	44,440.85	50,532.19	57,112.00
Social	8,621.83	8,098.06	8,665.99	10,073.23	11,496.10
Government Offices	4,750.29	4,634.78	4,707.98	4,995.12	5,285.12
Public Street Lighting	3,632.71	3,634.88	3,544.96	3,582.23	3,615.19

^{Source: Statistik Perusahaan Listrik Negara (PLN) 2023}

Meanwhile, table 5 shows that per capita electricity consumption in Indonesia has been increasing structurally in recent decades amid rapidly rising soclal and economic development of Southeast Asia's largest economy.

Table 5; Per Capita Electricity Consumption in Indonesia (MWH/capita):

2019	2020	2021	2022	2023	2024	2025
1.08	1.09	1.12	1.17	n/a	n/a	n/a

 

2012	2013	2014	2015	2016	2017	2018
0.79	0.84	0.88	0.91	0.95	1.02	1.06

 

2005	2006	2007	2008	2009	2010	2011
n/a	n/a	n/a	n/a	0.65	0.70	0.74

^{Source: Badan Pusat Statistik (BPS)}

In the context of social and economic development, it is crucial that the Indonesian government delivers stable and affordable electricity to all communities living in all corners of the Archipelago. Although frequent power outages remain a problem, the government has been doing a good job at raising the electrification ratio. And so, it is now also time to focus on the quality of the existing power system.

It will particularly be interesting to see how Indonesia (currently highly dependent on dirty fuels) deals with pressures from the West to embrace renewable energy as the ongoing energy transition threatens to make energy more expensive.