Source: Kontan.co.id | September 13, 2026

Investment in data centers in Indonesia continues to flow. However, aggressive capacity expansion is beginning to face a new challenge: ensuring that supply growth does not outpace demand.

Hendra Suryakusuma, Chairman of the Indonesian Data Center Providers Association (IDPRO), stated that national data center capacity reached approximately 630 megawatts (MW) as of May 2026. Meanwhile, the additional capacity pipeline announced by the government stands at around 1.3 gigawatts (GW).

However, this pipeline figure does not necessarily imply that all capacity will enter the market simultaneously. According to Hendra, a distinction must be made between capacity that has merely been announced, capacity with secured power supply, capacity under construction, operational capacity, and capacity already contracted by customers.

“The issue isn’t simply that supply is growing faster than demand,” Hendra told Kontan on Sunday (September 13, 2026).

Hendra estimates that data center capacity demand will grow by approximately 35%–45% in 2026. Over the next one to two years, additional power requirements are projected to reach 300 MW–400 MW, driven primarily by hyperscalers, artificial intelligence (AI), and edge deployments.

Given these projections, he acknowledges a risk of oversupply if the entire 1.3 GW pipeline is realized within too short a timeframe. However, this oversupply risk is considered more likely to occur in specific locations or segments rather than on a national scale.

“It is possible for a single location to end up with too much capacity at the same time,” he said.

According to Hendra, data center development needs to be carried out in phases that align with visible demand. This is crucial because data center projects require significant capital; thus, expansion without confirmed customers could depress utilization rates.

The requirements for AI-focused facilities also differ from those of conventional data centers. AI-based data centers demand higher computing density, different cooling systems, and larger-scale electrical configurations.

Therefore, Hendra believes that the health of the industry cannot be measured solely by comparing total capacity against demand. Investors also need to consider location, customer profiles, the timing of available capacity, pre-commitment levels, and the facility’s readiness to meet AI requirements.

“The measure of success is not the amount of capacity announced, but the amount of capacity actually commissioned, contracted, and utilized,” he emphasized.

It’s Not Just About Electricity

Heru Sutadi, Executive Director of the ICT Institute, assesses that the demand for national data centers remains substantial, particularly alongside the growth of cloud computing, AI, and the digital economy.

However, he believes that investment expansion must be accompanied by realistic demand projections. Currently, operational capacity stands at approximately 580 MW, with an additional pipeline of around 1.3 GW.

“The opportunities are vast, but we must avoid a scenario where capacity is built faster than the customer base grows,” Heru told Kontan on Sunday (September 13, 2026).

Heru suggests that data centers should be developed in phases based on clear contracts or customer needs. If capacity is built ahead of demand, the investment risks resulting in overcapacity.

Another risk lies in the significant capital required. Data centers demand massive investment with long payback periods. If customer growth falls short of projections, pressure on cash flow and the project’s debt-servicing ability could mount.

Consequently, financing structures require careful attention. Heru believes that projects backed by confirmed customers, long-term contracts, and guaranteed power supplies are financially healthier than those relying solely on projected demand growth.

“Even highly aggressive investments must be grounded in realistic demand calculations,” he said.

Regarding infrastructure, Hendra noted that the industry’s challenges go beyond merely securing land or electricity. Investors require “powered and connected land”—sites that offer both power access and adequate connectivity.

Data centers require vast amounts of electricity with high reliability. National power availability does not automatically guarantee a facility’s needs; factors such as network redundancy, voltage and frequency stability, substation capacity, and guaranteed power expansion aligned with development schedules are also essential.

Hendra noted that PLN has demonstrated a commitment to supporting data center expansion. Several projects have secured commitments for large-scale power supplies, including 511 MVA for DayOne in Batam, over 1 GW for BDx developments across multiple locations, and 2 x 725 MVA for the Digital Edge campus.

Meanwhile, NeutraDC is collaborating with PLN to support a hyperscale expansion in Cikarang reaching up to 200 MW. “The next task is to ensure that these capacity commitments translate into power that is genuinely available at the required location and time,” said Hendra.

He added that industrial needs go beyond mere electricity availability to include reliability. This means factoring in the readiness of transmission infrastructure and substations, feeder redundancy, power quality, and the ability to restore supply in the event of an outage.

Heru also cautioned that concentrating data center development in specific areas must not place undue strain on the power grid or compromise system resilience.

“We shouldn’t just calculate the megawatts of capacity being built; we must also identify the users, utilization rates, power sources, and the readiness of supporting infrastructure,” Heru said.

Beyond electricity, data center development requires domestic fiber-optic networks, international connectivity, undersea cables, land, and water for cooling systems.

Land requirements for AI-driven data centers can range from 10 to 30 hectares or more. However, such sites require adequate power, fiber connectivity, road access, permits, security, and space for future expansion.

Regarding the power sector, Hendra views the 2025–2034 Electricity Supply Business Plan (RUPTL) as a crucial foundation. PLN plans to add approximately 69.5 GW of generation capacity, nearly 47,800 circuit-kilometers of transmission lines, and roughly 107,950 MVA of substation capacity.

However, data center requirements need to be integrated into power system planning from the outset, given the significant time required to construct data centers, transmission lines, and substations.

“Industry demand forecasts must be incorporated into power system planning from the very beginning,” Hendra stated.

AI as a Catalyst

Despite the risk of oversupply, Heru views AI and cloud services as key drivers of data center growth over the coming years.

However, rising demand for AI computing does not guarantee that all new capacity will be immediately absorbed by the market. Rapid technological advancements can also shift customer demand patterns.

“AI is a powerful driver, but it is not a justification for building without calculating demand,” Heru said.

He believes Indonesia has the potential to become a regional data center hub. However, its competitiveness hinges on the ability to provide reliable electricity, connectivity, green energy, and a competitive digital ecosystem.

Hendra added that the need for green energy is becoming increasingly critical, as global hyperscalers and AI clients are beginning to demand the use of renewable energy to meet net-zero emission targets. He noted that more than half of IDPRO’s members have committed to achieving net-zero emissions by 2030.

“Indonesia’s future competitiveness will be determined not only by the ability to supply electricity but also by whether that electricity is reliable, scalable, competitive, and increasingly green,” Hendra concluded.