Indonesia's Electricity Sector: Powering an Archipelago Amidst Soaring Demand and Energy Transition
Electricity is crucial for social and economic development. Let us examine the supply and consumption of electricity and the network infrastructure across Indonesia. It is important to highlight the various difficulties faced by the central and regional governments in supplying electricity to all corners of the country.
The vastness of Indonesia’s territory means that, logistically, it is far more complicated for the Indonesian government to guarantee an efficient and stable electricity supply compared to a smaller country. Moreover, Indonesia’s nature as an archipelagic state (consisting of more than 17,000 islands, though not all are inhabited) implies the need for submarine power cables, which can be risky due to high maritime traffic in many areas, including fishing activities.
Meanwhile, with a population of around 288 million people, Indonesia has a very large population, which means electricity demand is also massive. This situation is made more difficult by the existence of many sparsely populated pockets in the country’s remote regions. Typically, the people living in these remote areas are poor, making efforts to lift them out of poverty very important. However, this often means conquering extremely difficult terrain to connect these communities to the electricity grid, such as dense forests, steep cliffs, and mountains in areas that have never had adequate infrastructure development.
Another challenge is the issue of strong economic growth. Although it is a blessing for Indonesia to enjoy robust economic growth (around 5 percent annually), it also means that Indonesians are consuming more and more electricity as they start using power-intensive appliances like air conditioning systems and electronic devices. It is the government’s responsibility to ensure that additional electricity supply is available, either through public investment in the electricity sector or by maintaining an attractive investment climate to draw in private sector players.
In fact, strong economic growth in this densely populated country attracts considerable direct investment (both domestic and foreign) in various sectors, thereby further boosting electricity demand as new businesses (including factories) need to be connected to the national grid. And, if the government fails to guarantee an adequate, stable, and affordable flow of electricity, it could fail to realise projected direct investment, which in turn would cause Indonesia to miss opportunities to accelerate social and economic development.
Furthermore, a new challenge currently faced is the energy transition. Amidst pressure from the West, Indonesia has committed to shifting away from fossil fuels (particularly coal, gas, and oil) while harnessing the potential of renewable energy sources, with the country hoping to achieve carbon neutrality by 2060. The challenge is to find sufficient investment to add clean, green energy to the electricity grid (while phasing out dirty energy) without causing a spike in energy prices, as this could push many Indonesians who currently live just above the poverty line into real destitution.
Indonesia’s Electrification Ratio
The Indonesian government targets pushing the electrification ratio (which refers to the number of households in Indonesia connected to the national electricity grid) to a full 100 percent. This is part of the government’s social development agenda.
It is interesting to note that over the past 15 years, this ratio has indeed soared sharply. While in 2010 Indonesia’s electrification ratio stood at a relatively low 67.1 percent, the figure managed to reach 99.83 percent by the end of 2025. However, it is undeniable that the remote villages newly connected to the grid typically cannot yet enjoy a stable electricity supply, as blackouts still occur frequently.
Even on a developed island like Java, power outages are still common, a phenomenon that is unfavourable for social and economic development. The most common cause of blackouts on the developed islands is damage to components in the electricity distribution system. This can be caused by poor quality components (making them prone to quick damage), but can also be caused by heavy rain (flooding), strong winds, or the impact of lightning strikes.
Recently, in mid-2026, parts of Sumatra and Java experienced numerous blackouts. This time, rolling blackouts occurred (temporary, deliberate power cuts to prevent a fatal systemic grid failure). This disruption happened because the state electricity company, Perusahaan Listrik Negara (PLN), struggled to secure an adequate supply of coal. Amidst attractive high global coal prices, domestic producers prioritised the lucrative export market over fulfilling their domestic quota under the government’s price cap scheme, which directly exposed the fragility of the electricity grid’s supply chain.