Challenging Task of Indonesian Government to Supply Electricity to All Corners of Archipelago
In this article we are taking a look at the supply and consumption of electricity across Indonesia. It is important to emphasize the difficulties that are being faced by central and regional governments to supply electricity to all corners of the country.
For example, the sheer size of the country 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 not 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. 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 green power to the grid (while removing dirty power) without causing spikes in energy prices (as that could push many people into full-blown poverty).
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