Rising Electricity Demand Highlights the Crucial Role of LNG for Power Security

Global geopolitical uncertainty has underscored the importance of energy security alongside energy sustainability and affordability. LNG sourced domestically, being the cleanest fossil fuel, will play a vital role in supporting energy security and the energy transition, particularly for the national electricity sector.

Rakhmad Dewanto, Director of Corporate Planning and Business Development at PT PLN (Persero) and Acting President Director of PT PLN Energi Primer Indonesia (PLN EPI), stated that the growth in gas demand is driven by increasing electricity consumption due to industrial expansion, transport electrification, and the development of new economic zones. This increase is also attributed to the growing needs of data centres, which are expected to require an additional 15 gigawatts of electricity over the next five years.

“Indonesia’s electricity demand will continue to rise. Therefore, we need an energy supply that is secure, reliable, and flexible. In this context, gas serves not only as a transition energy but also as a vital component in maintaining the stability of the national electricity system,” said Rakhmad.

According to Rakhmad, national primary energy needs are projected to increase by approximately 2% per year, while electricity demand is growing at a higher rate of 4.6% to 5.4% per year. This situation demands an increasingly reliable supply of gas and LNG to maintain the flexibility of the power system while supporting the increased utilisation of new and renewable energy.

In the 2025-2034 Electricity Supply Business Plan (RUPTL), national electricity production is projected to increase from 304.4 TWh to 584.3 TWh. Concurrently, the share of coal-based power plants is expected to decrease to approximately 47%, while the contribution of new and renewable energy will increase to 33%. Under these conditions, LNG remains a balancing fuel capable of maintaining system reliability when solar or wind-based power plants experience fluctuations.

PT PLN (Persero) projects that gas requirements for national power plants will grow by an average of about 4.5% per year, from 1,748 Billion British Thermal Units per Day (BBTUD) in 2026 to nearly 2,490 BBTUD by 2034. Alongside this growth, the proportion of Liquefied Natural Gas (LNG) in PLN’s gas supply is expected to increase from 57% to 67%, reinforcing the role of LNG as the backbone of electricity system reliability and a pillar of the national energy transition.

To anticipate this rising demand, PLN EPI is strengthening supply security through long-term gas and LNG contracts with West Natuna Exploration Limited (WNEL), Mubadala Energy, INPEX, and South Hub. These collaborations include gas supplies of up to 300 BBTUD and LNG contracts exceeding 49 million tonnes, providing long-term certainty for the national electricity system’s primary energy supply.

In addition to securing supply, PLN is accelerating the development of national LNG infrastructure through the development of Floating Storage Regasification Units (FSRU) in West Java, East Java, Bali, and Cilegon, the construction of gasification clusters in Eastern Indonesia, and increasing national LNG storage capacity to approximately 1.2 million cubic metres, with regasification capacity reaching 3,850 MMSCFD. This infrastructure is designed to enhance LNG distribution flexibility and strengthen the energy supply chain resilience amidst global geopolitical dynamics.

“We continue to encourage the increase of new and renewable energy. However, the electricity system must also remain reliable. This is where gas plays a strategic role in maintaining the balance between energy security, affordability, and sustainability,” said Rakhmad.

Through the strengthening of long-term supply contracts, the acceleration of LNG infrastructure development, and the diversification of the primary energy supply chain, PLN continues to build an energy system that is increasingly resilient, flexible, and sustainable. These steps serve as a vital foundation for maintaining national energy security, accelerating the integration of new and renewable energy, and supporting the implementation of ESG principles and Indonesia’s Net Zero Emissions targets.