November 27, 2025 | 07:18 pm
TEMPO.CO, Jakarta - Researcher at the Institute for Essential Services Reform (IESR), Deon Arinaldo, argues that Indonesia has the potential to become the hub for data center development utlizing renewable, geothermal in particular. But this is hindered by regulations and the high cost of initial exploration.
"In terms of technology and economics, renewable energy, including geothermal, can be cheaper than PLTU (coal-fired power plants). The challenge is not the technology, but rather policies that still favor PLTU through schemes such as coal DMO (domestic market obligation)," said Deon during a media briefing in Jakarta on Thursday, November 27, 2025.
Deon illustrated that neighboring countries such as Malaysia and Vietnam are more prepared to attract data center investments by providing direct access for developers to use the national electricity network based on renewable energy.
"In Indonesia, the regulations are already in place, but not yet implemented, thus holding back investors," he said.
The demand for clean energy for data center operations is expected to grow rapidly in the coming years. Geothermal energy is considered an ideal option as it can provide a stable power supply throughout the day.
Despite the high initial cost for geothermal plants, Deon went on, the electricity price can be competitive if the risks are borne through government policies. "Geothermal energy is consistent and non-intermittent, unlike solar power plants," Deon said.
According to him, the acceleration of renewable energy utilization for data centers must be done promptly to prevent Indonesia from missing out on opportunities in the green industry sector. "This is a strategic momentum. We are talking about energy demands up to 2045. If we want to become the data center hub of Southeast Asia, clean energy especially geothermal must be a priority," he said.
Previously, the Director General of Digital Technology at the Ministry of Communication and Digital, Mira Tayyiba, mentioned that Indonesia has the potential to experience a 16.8 percent annual growth in data center demand based on the World Bank's projection. Operators also target 100 percent clean energy fulfillment by 2030.
A study by CSIS, the Indonesian Solar Energy Association (AESI), Tenggara Strategics, UMBRA, and Prasetiya Mulya University identified the five most promising regions for clean energy-based data centers: North Sumatra, Batam, Jakarta, the Nusantara Capital City (IKN), and North Sulawesi. These regions are considered strategic because they are close to regional internet backbone routes and have great potential for renewable energy, such as solar, wind, water, biomass, and geothermal.
Despite the growing digital demands, Indonesia's data center capacity is still lagging behind neighboring countries. The national total capacity has only reached about 456 MW, far below Malaysia (1,218 MW) and Singapore (1,022 MW), despite Indonesia's much larger population.
Aqila Izatul Rahman contributed to the writing of this article
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