BKPM Optimistic That Data Centres’ Own Power Supply Could Unlock New Investment Opportunities

The Ministry of Investment/Investment Coordinating Board (BKPM) believes Danantara’s guidance that large-scale data centre investors prepare their own electricity supply could create new investment opportunities, rather than discourage investors from entering Indonesia.

Danantara previously advised data centre investors requiring more than 500 megawatts (MW) of electricity to arrange their own energy supply.

Nurul Ichwan, Deputy for Investment Promotion at the Ministry of Investment/BKPM, said certainty over electricity and water supplies was among the factors investors considered before deciding to invest in a country. Data centre operations, particularly those supporting artificial intelligence (AI), require large amounts of energy and water.

According to Ichwan, information about available electricity supply capacity can help investors calculate their energy needs from the outset. If the available supply is insufficient, investors can seek partners to help provide electricity.

“Because their supply needs are also substantial, if they are told at the outset, ‘This is the amount of electricity capacity we can provide,’ and they consider it insufficient, they can bring in investment partners to prepare the electricity supply,” he said.

Ichwan said Danantara’s guidance may reflect an effort to anticipate the substantial potential for data centre investment in Indonesia. The government needs to ensure electricity is available as investor interest in the sector grows.

“We do not want many interested investors to arrive at almost the same time, only to find that our electricity supply is inadequate,” he added.

Nevertheless, Ichwan expects independent electricity provision to be necessary only if PT PLN’s capacity can no longer meet data centres’ needs. As long as PLN has capacity available, he said, the state-owned electricity company can continue supplying investors.

“My assumption is that this [policy] would apply only if PLN can no longer provide enough supply for the data centre. As long as PLN still has capacity, it will certainly supply their needs,” Ichwan said.

“If that situation does arise, I am sure regulations will be prepared. However, so far I have not heard that we have discussed this further,” he concluded.