Indonesia’s energy system was built to perform, not to survive
writen by Yuliasman Chaniago
In February 2021, Texas, the United States’ energy capital and home to one of the world’s most deregulated electricity markets, went dark. A winter storm overwhelmed a grid stripped of redundancy in the name of cost efficiency. Some 4.5 million households lost power. The economic damage exceeded $195 billion. The proximate cause was cold weather. The underlying cause was a system designed to run lean, with no buffer for the unexpected.
Three years later, the World Economic Forum’s 2024 Global Risks Report ranked energy supply crises among the top five global risks by impact over the coming decade. The concern is not about a scarcity of energy resources. It is about how those resources are structured, governed, and, most critically, how resilient the systems that deliver them truly are.
This is a question Indonesia cannot afford to sidestep.
The efficiency trap
The logic of energy optimization is seductive. Strip out redundancy, consolidate supply chains, maximize throughput, minimize idle capacity. In theory, it produces cheaper energy and higher returns. In practice, it creates what systems analysts call “tight coupling”, a condition where every component depends on every other, leaving no room for error when something goes wrong.
Europe discovered this at great cost. For decades, the continent built its gas infrastructure around a single dominant supplier, Russia, because Russian gas was cheap and fitted the logic of cost-efficient procurement. When that supplier weaponized its leverage in 2022, European economies paid dearly. Germany’s industrial output contracted sharply; energy prices triggered household energy poverty across the continent. The IMF estimated the output shock across the EU at roughly one percent of GDP, a figure that understated the downstream disruption to supply chains, food prices, and public finances.
The pattern is not unique to Europe. Japan, after Fukushima in 2011, found itself acutely exposed when its nuclear fleet shut down overnight, forcing emergency fossil fuel imports at enormous cost. South Korea’s heavy reliance on LNG spot markets left its industrial sector badly exposed during the 2022 price surge. Each case reflects the same structural error: systems built for efficiency in stable conditions, with no design allowance for shock.
Indonesia’s position
Indonesia’s energy system carries a version of this vulnerability. The country remains heavily dependent on coal, which accounts for roughly 60 percent of electricity generation, much of it sourced domestically. That domestic abundance is often cited as insulation from external shocks. The argument deserves scrutiny.
Coal’s role in Indonesia’s energy mix is entangled with global commodity markets in ways that domestic reserves alone cannot buffer. When international coal prices surged in 2022 following the Russia-Ukraine war, Indonesia’s own domestic supply obligations were tested: the government imposed export restrictions after coal producers, incentivized by high global prices, directed supply outward. A commodity that was “domestic” in origin became subject to global market logic at the worst possible moment.
The pattern repeated itself in March 2026, when escalating Iran-Israel tensions threatened to disrupt Strait of Hormuz shipping lanes. Indonesia, which sources a significant share of its crude oil imports from Middle Eastern suppliers, found itself in reactive mode, scrambling to identify alternative sources rather than activating a pre-positioned contingency plan. The episode exposed a persistent institutional gap: Indonesia does not lack awareness of geopolitical risk. What it lacks is the discipline to convert that awareness into pre-crisis action. A diversified supply architecture built in advance, spreading procurement across multiple regions, reducing concentration at any single chokepoint, and accelerating domestically generated renewables to reduce import dependency altogether, would have absorbed the shock before it became a scramble.
Meanwhile, Indonesia’s energy transition carries a structural tension that is frequently underappreciated. Renewable energy investment, which the government has pledged to accelerate under its Just Energy Transition Partnership (JETP) commitments, requires a fundamentally different system architecture, one built for geographic distribution, intermittency management, and grid flexibility. Building that architecture while maintaining energy security through a period of transition demands redundancy, not further optimization.
What the evidence shows
Countries that have navigated energy transitions with the least disruption share a common approach: they invest in resilience infrastructure before they need it, not after.
Norway’s hydropower system is deliberately operated with significant reservoir buffer, not full optimization of generation capacity. This means Norway can absorb years of drought without a supply crisis. Japan, post-Fukushima, built one of the world’s most sophisticated strategic petroleum reserve systems and diversified its LNG supplier base to 27 countries. Germany, having absorbed its own gas dependence lesson, accelerated LNG terminal construction and regional grid interconnects in ways that materially reduced its vulnerability within 18 months.
None of these are cheap strategies. All of them involve maintaining capacity that sits idle under normal conditions. That is precisely the point. Resilience is, by definition, costly in the short run and invaluable in the long run.
Beyond the state: building collective sovereignty
Resilience, however, is not solely the government’s obligation to build. Indonesia’s business sector carries an equal responsibility, and the risks of neglecting it are already visible.
When a major operational disruption hit Chandra Asri, Indonesia’s largest petrochemical complex, the downstream effects rippled rapidly across plastic and packaging manufacturers, chemical suppliers, and industrial users with no independent buffer. The episode illustrated a structural vulnerability that extends well beyond energy: Indonesia’s industrial base remains highly concentrated, with single points of failure that, when triggered, cascade quickly through supply chains and ultimately into consumer prices and employment.
Building what might be called collective sovereignty, means ensuring that large enterprises and critical infrastructure operators maintain genuine business continuity capabilities, not merely paper-level crisis plans. Singapore and South Korea both mandate business continuity standards for firms in critical supply chains as a condition of operating licenses. Indonesia has the regulatory tools to move in the same direction. The question is whether the political will exists to require it before the next shock makes it unavoidable.
The deeper argument
The WEF’s 2025 Global Risks Report introduces a concept that applies directly here: the “polycrisis”, situations where multiple stressors hit simultaneously, amplifying each other. Climate disruption affects hydrology, which affects hydropower, which strains the grid, which makes industrial economies more vulnerable to geopolitical energy shocks. These causal chains are already playing out across Asia.
Indonesia, as a major energy producer and a rapidly industrializing economy with ambitions to reach high-income status by 2045, sits at the intersection of these pressures. Its energy choices over the next decade will be made under conditions of genuine uncertainty, about commodity markets, about the pace of the energy transition, about regional geopolitics, and about climate variability. In that environment, the capacity to absorb shocks matters as much as the capacity to generate supply.
Efficiency is not the wrong goal. But efficiency without resilience is a fragile bet. The Texas blackout, the European gas crisis, the supply shocks across Asia in 2022, and Indonesia’s own reactive scramble in 2024 were not random misfortunes. They were the predictable consequence of systems designed to perform well when everything goes as planned, and to fail when it does not.
Indonesia still has room to build differently. That window will not remain open indefinitely.
