Indonesia’s stable economic growth over the last decade has been primarily driven by domestic consumption and services. Underpinning that growth has been increased domestic energy consumption and demand, the drivers of which include greater numbers of people entering the middle class, with accompanying energy-intensive lifestyles, and a process of electrification across the archipelago. Part One of this paper will examine Indonesia’s current energy dynamics by sector and the strategic drivers influencing the Indonesian Government’s approach to the energy industry. Indonesia’s future energy demands, energy reserves and the possible opportunities for Australian business will be discussed in Part Two. 

Key points:

• Domestic consumption has been a key driver of Indonesian economic growth and, should growth remain stable, result in increased demand for energy in the future.
• Energy supply broadly has not been sufficient to meet increasing demand and consumption trends, both internationally and domestically.
• Electricity generation will be a core consumer of energy as Indonesia’s middle class grows.
• Alternative energy sources constitute a relatively small proportion of the Indonesian energy matrix, despite abundant sources such as geothermal and hydro.