As AI development accelerates, data centers are consuming increasing amounts of electricity worldwide. In the U.S., data centers currently account for 3% of total electricity demand, with projections suggesting this could rise to 8% by 2030. Energy consumption concerns have already delayed some data center projects. Indonesia, with its rapidly growing digital economy and data center industry, faces a similar challenge.
To address this, Indonesia has been working to integrate renewable energy into data centers while ensuring energy efficiency. But how realistic are these goals?
Making Data Centers Green
Indonesia’s data center electricity consumption is expected to skyrocket in the coming years. As part of its commitment to achieving net-zero emissions by 2060, the government has encouraged data centers to shift toward renewable energy sources such as solar, wind, and hydropower. However, like in China, the transition poses significant challenges.
Currently, Indonesia relies heavily on coal for electricity, with over 60% of the power grid supplied by coal-fired plants. Renewable energy sources remain limited and prone to intermittency issues, raising concerns about their reliability for high-demand infrastructure such as data centers.
A recent industry report highlights this challenge:
“The utilization of renewable energy is unpredictable and cannot provide a long-term stable power supply, which may lead to fluctuations in the power system.”
The primary strategies for powering data centers with renewables in Indonesia mirror global approaches:
- Expanding overall renewable energy production to increase the share of green energy available on the national grid.
- Directly integrating renewable sources into data centers’ power systems, enabling computation to rely on renewables when available.
A pilot project in Indonesia’s Batam Digital Park, for example, aims to integrate solar energy into data center operations. However, like in China, these strategies cannot fully overcome the intermittency challenge, leaving coal as the fallback power source.
Can Battery Storage Solve the Problem?
One proposed solution is large-scale battery deployment to store renewable energy for use when solar or wind power is unavailable. But is this feasible?
If Indonesia aims to power its growing data center industry with 100% renewable energy, significant battery storage capacity would be required. Based on projections of energy demand, the country would need to deploy hundreds of gigawatt-hours (GWh) of battery storage to compensate for solar and wind intermittency.
For reference, Indonesia’s total battery production capacity is still in its infancy compared to China, which manufactured over 900 GWh of batteries in 2023 alone. While Indonesia is investing in domestic battery production—especially in nickel-based lithium-ion batteries—the pace may not be fast enough to support data center growth in the short term.
“Although Indonesia is developing smart grids and energy storage capacity, the process is not fast enough to catch up with the surging power demand in AI-driven sectors.”
Beyond production, integrating battery storage at scale requires a robust grid infrastructure, which remains a major challenge.
The Potential of Hydropower and Nuclear Energy
Hydropower is often considered a more stable renewable energy source, and Indonesia has significant untapped hydropower potential. A recent study found that Indonesia could generate a substantial portion of its energy needs from hydropower if properly developed. The country’s first zero-emission data center, powered by hydropower, is under development in West Sumatra.
However, hydropower also has limitations. Severe droughts have reduced hydroelectric output in the past, and geopolitical considerations—such as transboundary river usage—could complicate expansion efforts.
This brings nuclear energy into the discussion. Unlike renewables, nuclear power does not suffer from intermittency issues. While Indonesia has long debated nuclear energy, recent government initiatives indicate renewed interest. The National Research and Innovation Agency (BRIN) has proposed building small modular reactors (SMRs), which require less cooling water and could be deployed in remote areas.
Indonesia’s plan for nuclear development aligns with China’s recent push for next-generation nuclear technology. Among the projects approved in China is the world’s first commercial-scale high-temperature gas-cooled reactor, which offers a model for Indonesia to follow.
Why Isn’t Nuclear a Bigger Part of the Discussion?
Despite its potential, nuclear energy remains absent from most official discussions on powering Indonesia’s data centers. This could be due to several reasons:
- Public perception: Like China, Indonesia has faced environmental protests in the past, and nuclear energy remains a contentious issue.
- Regulatory hurdles: Indonesia’s nuclear development has been slow due to lengthy approval processes and safety concerns.
- Investment priorities: The government has focused more on solar and wind projects, aligning with global climate commitments.
However, given the rapid growth of AI-driven data centers, the country may need to reconsider its stance on nuclear energy. If Indonesia is serious about achieving a sustainable digital infrastructure, nuclear power could play a crucial role in stabilizing the grid.
Conclusion: The Future of Indonesia’s Data Centers
Indonesia is at a crossroads. The government’s commitment to renewable energy is commendable, but the reality is that current infrastructure and storage limitations make a 100% green-powered data center sector unlikely in the short term.
To meet growing energy demands, a diversified approach is needed—one that includes renewables, advanced battery storage, and potentially nuclear power. Without such a strategy, Indonesia risks facing the same energy bottlenecks seen in other rapidly developing digital economies.
With AI and cloud computing continuing to expand, how will Indonesia power its future data centers? That remains the key question.
