Jakarta—Household energy consumption plays a crucial role in driving Indonesia’s economic growth, observers said. Around 87 per cent of the nation’s energy needs depend on fossil fuels, while the rest comes from new and renewable energy (NRE). Any changes in energy consumption patterns can have far-reaching impacts on the national economy.
Energy analyst Komaidi Notonegoro from Reforminer emphasises that people’s dependence on fossil energy is still high and will be challenging to replace soon. “When there are policy changes such as regulating the distribution of 3-kilogram LPG, the impact is already very much felt in the community. If there are bigger changes in other sectors, the impact on fiscal, monetary, and overall economy will be much more complex,” he said in an official statement on Tuesday, 25 February.
Of Indonesia’s total Gross Domestic Product (GDP), around 54% comes from household energy consumption. Therefore, any disruption in household energy consumption will directly affect economic growth.
“Household consumption is very sensitive to inflation. Inflation will increase if fuel and LPG prices rise, causing household consumption to decline. If this continues, the target of the Golden Indonesia of 2045 will be increasingly difficult to achieve,” Komaidi explained.
The main challenge in the energy sector is that rising consumption is not matched by adequate supply. Indonesia needs significant additional energy to achieve 8% economic growth by 2045.
“Every 1% economic growth requires about 1.5% additional energy. With 80% of our energy still coming from fossils, it is difficult to achieve the growth target without considering the role of fossil energy in the energy transition,” he added.
Regarding the use of renewable energy, Komaidi identified two main problems that remain as obstacles, namely technical and economic challenges. From a technical perspective, some types of renewable energy still depend on weather conditions.
“For example, solar power plants (PLTS) can only produce maximum electricity between 10 am and 2 pm during the dry season. The production is not optimal during the rainy season or in areas with high rainfall, such as Bogor. The same applies to hydropower plants whose production varies between the rainy and dry seasons,” he explained.
From an economic perspective, renewable energy investment is still more expensive than fossil fuels. “Almost all businesses in the early stages have high costs, which applies to NRE. High initial costs cause the selling price of electricity from EBT to be more expensive than fossil energy,” Komaidi explained.
With these challenges, a more realistic policy is needed in the energy transition to consider national energy security.
“We cannot simply abandon fossil energy without a concrete solution to cover the energy shortfall needed for economic growth,” he concluded. (Hartatik)
Banner photo: Image generated by OpenAI’s DALL·E via ChatGPT (2025)
