Indonesia's power reserve could fall below safe level by 2027, experts warn

By Rikordias Siahaan

Indonesia's main electricity grid could fall below its recommended reserve margin by 2027, increasing the risk of supply disruptions unless new generating capacity comes online in time, according to the 2025 White Paper published by the Indonesian Electricity Society (MKI).

The report projects that the reserve margin in the Java-Madura-Bali power system will decline from an estimated 37.5% in 2025 to below the recommended 33%-35% range by 2027 if electricity demand continues to grow at around 4.45% annually without sufficient new power plants entering commercial operation.

Bambang Praptono, coordinator of MKI's Board of Experts, said the situation could become a "time bomb" in 2027 and 2028 because the challenge extends beyond the balance between electricity supply and demand.

"The problem is not only about supply and demand. PLN is also facing bottlenecks in the transmission network and primary energy infrastructure," Bambang told Petromindo.

Shrinking reserve margin

According to the White Paper, the declining reserve margin would leave Indonesia's largest electricity system increasingly exposed to unplanned plant outages, transmission failures, fuel-supply disruptions and spikes in electricity demand.

Bambang said the reserve margin has gradually been eroded because electricity demand continues to grow while very few large generating units have entered operation in recent years.

"What used to be called an oversupply is no longer there. It has been eroded because no new power plants are entering the system from year to year," he said.

He added that the Java-Madura-Bali network should be viewed as a single integrated system, meaning reliability risks apply across the entire grid rather than to individual provinces.

New capacity may arrive too late

The White Paper identifies 2027 as the point at which the reserve margin is expected to fall below the recommended level, with further deterioration possible in 2028 unless additional generation enters service.

Bambang said the main concern is the mismatch between rising electricity demand and the time required to develop replacement capacity.

"If projects are still waiting to be tendered, it may take another six to seven years before they reach commercial operation, assuming everything goes smoothly," he said.

As a result, projects entering procurement today may not begin operating until the early 2030s, leaving the system with progressively less flexibility to absorb plant outages, maintenance, fuel shortages or unexpected demand growth.

Transmission and fuel constraints

The White Paper says maintaining adequate generating capacity alone will not eliminate the risk. It identifies transmission bottlenecks, delayed substation development and constraints in primary energy supply as additional threats to system reliability.

Land acquisition for transmission corridors continues to slow network expansion, while infrastructure development has not always kept pace with new generating capacity and rising demand.

The report also highlights regional disparities. Transmission and substation availability in Sumatra and Java-Madura-Bali has reached 110.6%, compared with only 82.3% in Kalimantan, Sulawesi, Nusa Tenggara, Maluku and Papua.

Coal supply presents another concern.

Bambang said inventories at some coal-fired power plants have fallen well below the recommended 15-day operating level.

"Some plants only have one, two or three days of coal," he said.

He added that some independent power producers were reluctant to burn lower-calorific coal because it could reduce plant performance.

The White Paper similarly warns that declining coal inventories, particularly in the Java-Madura-Bali system, could increase the risk of disruptions and force greater reliance on more expensive fuels. It recommends stricter enforcement of Indonesia's domestic market obligation (DMO), including export restrictions for miners that fail to meet domestic supply commitments.

Gas is not an immediate solution

The White Paper recommends expanding gas-fired generation as new coal-fired power projects become increasingly restricted under government policy.

While Bambang said gas-fired plants require less land and can generally be developed more quickly than large-scale solar projects, he cautioned that fuel availability and equipment supply remain significant constraints.

"What makes gas-fired generation expensive is the gas. If domestic supply is insufficient, it will have to be imported," he said.

The White Paper estimates that planned gas-fired capacity under PLN's 2025-2034 electricity supply plan (RUPTL) could require around 225 LNG cargoes annually. It recommends accelerating development of domestic gas fields, including Andaman, Masela and Geng North, while redirecting expiring export contracts to domestic power generation.

Bambang also warned that global demand for hydrogen-ready gas turbines has created manufacturing bottlenecks.

"If we order a gas turbine now, it may only be ready in 2030. Manufacturers are already fully booked," he said.

Investment challenge

The White Paper estimates Indonesia will require around US$1.104 trillion of investment in power generation and interprovincial transmission between 2024 and 2060, equivalent to roughly US$30 billion annually.

It also cites PLN's estimate that its accelerated renewable energy programme for 2025-2040 will require another US$235 billion.

At the same time, the report notes that Indonesia's Supreme Audit Agency identified a Rp108.67 trillion funding gap in PLN's 2021-2022 investment programme, contributing to delays in projects under the 2021-2030 electricity supply plan.

Bambang said greater participation by independent power producers would therefore become increasingly important.

"Independent power producers are a necessity if Indonesia does not want to go dark," he said, adding that investors would need commercially viable returns and balanced risk allocation to support future investment.

A narrowing window

The White Paper concludes that Indonesia's challenge is no longer simply planning new generating capacity, but ensuring power plants, transmission infrastructure and fuel supplies are delivered before reserve margins fall below recommended levels.

Without faster procurement, financing and construction, Indonesia could enter 2027 with tightening reserve margins, rising electricity demand and a power system increasingly vulnerable to operational disruptions.

Editing by Reiner Simanjuntak