In a nation with over 270 million people, electricity is a resource in high demand in Indonesia. The industrial and transportation sectors have emerged as areas with the
, driven by the need for power in production and mobility. Over the years,
has also steadily increased. As a rapidly growing economy, Indonesia is expected to keep pace with its rising electricity demand, especially in the industrial and household sectors.
Has electricity reached every corner in Indonesia?
The electrification rates in Indonesia vary among the country's 38 provinces and over 17,000 islands. Java provinces generally have higher electrification rates compared to regions outside Java Island, while the eastern part of the archipelago tends to lag behind. Although a 100 percent electrification rate has been a target since 2020, it remains unattained to this day. To reach the goal, the Indonesian government has developed grid extensions for rural areas located close to existing networks, as well as mini grids harnessing local renewable resources on remote islands.
The shift towards clean energy
Coal power emissions in Indonesia have almost doubled in the past decade. Coupled with the fact that the country is one of the
world’s largest contributors to global electricity emissions, it is clear that Indonesia needs to shift its energy production towards more renewable sources. Perusahaan Listrik Negara (PLN), Indonesia's main electricity provider, is working with the Ministry of Energy and Mineral Resources to add 60 gigawatts of
electricity generation capacity based on renewable resources by 2040, mainly focusing on bioenergy. Furthermore, the country has set a target to achieve 23 percent renewable energy use by 2025 and 31 percent by 2050.
Challenges facing the Indonesian electricity sector
Indonesia's power generation is heavily dependent on fossil fuels, with coal generating most of the country's electricity. Coal also remains the economic backbone of Indonesian regions with substantial reserves, and miners are among the country's largest taxpayers. While the Indonesian government is attempting to increase the
usage of renewable energy sources, challenges remain. Over the years, PLN has relied significantly on electricity subsidies from the Indonesian government to keep electricity prices affordable. Meanwhile, compared to coal, the cost of generating power from renewable energy is considerably higher. This requires a complex financial consideration of three possible financing schemes: charging the power companies, consumers, or more government subsidization. This suggests that Indonesia still has a long way to go in its transition toward a low-carbon electricity future.
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