Indonesia Must Stop Thinking in Megawatt Units

Whenever Indonesia discusses its energy future, we almost always begin with numbers. How many gigawatts of power plants will be built? How many megawatts of renewable energy will be added? How much generation capacity is required to meet growing electricity demand?

What are the targets for solar, wind, geothermal, or hydropower capacity over the next ten per cent years? These figures are important, as without sufficient capacity, it is impossible for a country to run its economy.

However, there is a more fundamental issue. Megawatts only measure energy capacity, not the value created by that energy. A country can possess large generation capacity but still have an energy system that is expensive, unreliable, or unable to support industrialisation. Conversely, a country with an appropriately designed energy system can use every unit of energy to generate far greater economic productivity.

Therefore, it may be time for Indonesia to stop viewing energy primarily as a question of how many megawatts we possess, and start asking much more important questions: how much prosperity, productivity, and economic strength can we create from each of those megawatts?

Capacity-based thinking is actually very easy to understand. Energy is a sector that requires massive investment, and its developmental results can be clearly measured. The government can state that generation capacity has increased by a certain number of gigawatts, transmission networks have expanded by a certain number of kilometres, or the electrification ratio has reached a specific level.

All of these are important indicators. However, these indicators only explain the input side of the energy system. They do not explain whether that energy is available at the time and location required by industry, whether the price is competitive, whether the quality of electricity is sufficient for advanced manufacturing, or whether the additional capacity actually creates new economic activity. In a modern economy, energy is not the end goal. Energy is an input for something far greater.

The history of the Industrial Revolution provides an illustration of this difference. When humans discovered how to utilise coal on a large scale, the change that occurred was not merely an increase in the amount of available energy. That energy transformed human production capabilities. Steam engines allowed factories to produce goods in quantities previously impossible. Railways accelerated the mobility of goods and people. The steel industry flourished. Cities grew. Trade increased. Energy became productivity, and productivity became economic growth. What made coal so important was not just its energy content, but the human ability to transform that energy into economic output. In other words, the value of energy does not stop at the unit of energy produced. Its value emerges from what humans can do with that energy.

The same principle applies to Indonesia today. When we build power plants, the first question must indeed be how much capacity is needed. But the second question must be more important: what will that capacity be used for? Will it strengthen existing industries? Will it open new industrial zones? Will it attract data centres and computing hubs?

Will it develop advanced manufacturing? Will it support transport electrification? Will it produce hydrogen or value-added chemical products? Will it increase the productivity of small and medium enterprises? If these questions are not part of energy planning, we risk building electrical capacity without maximising its economic capacity.

This is where the concept of energy productivity becomes increasingly important. In a simple economy, we tend to measure energy from the consumption side: how much electricity is used, how much fuel is consumed, and how much energy is produced.

However, developed nations increasingly need to look at the relationship between energy and output. How much economic value is generated from each unit of energy? How many jobs are created? How much investment flows in? How much export is generated? How much does industrial productivity increase? Through this lens, energy is no longer treated as a passive commodity, but as a productive asset.

This perspective is becoming more vital as the global economic structure changes. The world no longer just needs energy to run conventional factories. Artificial intelligence, cloud computing, data centres, electric vehicles, robotics, precision manufacturing, and various new technologies require large amounts of electricity alongside high-quality supply.

Data centres, for example, do not just need large amounts of electricity. They require electricity that is consistently available, of high quality, and can be projected over the long term. The semiconductor industry is even more sensitive to power disruptions. For such industries, a single supply disruption can have an economic cost far greater than the value of the electricity lost during that disruption.

Therefore, when Indonesia wants to attract future investment, it is not enough to say that we have additional generation capacity. Investors do not come simply because a country has many megawatts. They come when energy is available in the right place, at the right time, at a competitive price, and with a reliable level of dependability. This is the difference between installed capacity and economic capacity. The former speaks to power generation. The latter speaks to…