Indonesia partners private sector to invest in green data centres

The Indonesian government is exploring public-private partnerships (PPP) to develop green data centres in the country, with the aim of enhancing its national sovereignty in artificial intelligence (AI) and data.  

The funding mechanism would be implemented through a PPP scheme in Indonesia's 2024-2029 Medium-Term Development Plan (RPJMN) that is aligned with Sustainable Development Goals (SDGs). 

"Green data centres will differ from previous data centre concepts, as they now incorporate sustainability and sovereignty, which will guide the development of data centres now and in the future," said the Ministry of National Development Planning (Bappenas)’s Digital Ecosystem Coordinator, Andreas Bondan Satriadi 

He was speaking at the Driving Infrastructure Investment Toward the Future Digital Economy panel at the recent Centre for Indonesian Policy Studies’ DigiWeek 2025 event in Jakarta.  

Other speakers were Institute for Energy Economics and Financial Analysis (IEEFA)’s Energy Finance Specialist, Mutya Yustika, as well as Indonesia Data Centre Provider Organisation (IDPRO)’s Chairman, Hendra Suryakusuma. 

Satriadi highlighted the success of using the PPP scheme to develop digital infrastructure, specifically citing the Palapa Ring fibre-optic network project. This government program aims to extend internet access to 514 districts and cities across Indonesia.

Before the project was implemented under the PPP scheme, the Indonesian government faced funding constraints. 

Given Indonesia's current fiscal challenges, upcoming efforts to establish green data centres could be facilitated through a similar scheme, he added. 

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Simplifying investment regulations 

IEEFA's Yustika highlighted that while AI and green energy presented a potential investment opportunity for the private sector, the PPP process is still considered too lengthy and needs to be simplified.

"The challenge is that working with the government through the PPP scheme requires a process at Bappenas and a tender process that can take one to two years."   

She hoped that the government – through Bappenas - would simplify the PPP scheme and shorten the processes associated with licensing, tendering and cooperation agreements. 

Bappenas’ Satriadi acknowledged the importance of simplifying the investment chain, promising that "the government will continue to streamline regulations to be faster, more open and more cost-effective."  

"Bappenas is also reviewing tax and fiscal incentives for the private sector committed to helping the government build green data centres," he added. 

IEEFA's Yustika also proposed the government to consider the possibility of allowing the building of data centres that are fully funded by the private sector to accelerate the national ecosystem, as Vietnam has already done.  

Supporting green energy   

IDPRO's Suryakusuma highlighted the dilemma between the high demand for national data centres and the industry's requirement to use more environmentally friendly energy sources.

To date, Indonesia's data centre industry has a capacity of around 500 megawatts. 

However, this capacity still lags behind Malaysia, which has consistently driven the growth of its data centres from 10 megawatts in 2019 to 1.3 gigawatts by 2025.  

With the rapid use of AI, data centre capacity would surge much faster than expected. 

"The problem is that the data centre industry consumes a significant amount of energy, most of which relies on coal-fired power. If it does not transition to green energy, these risks causing adverse environmental impacts," he said. 

IDPRO, together with the Indonesian Energy Conservation and Efficiency Society (MASKEEI), published a Green Data Centre White Paper, which contained guidelines on reducing the carbon footprint and improving the energy efficiency of data centres, as well as how to implement greener practices. 

"We are targeting 50 per cent of energy supply to come from renewable energy by 2030 at the latest," he said. 

IDPRO is also collaborating with the Ministry of Investment and Downstream Industry’s Investment Coordinating Board (BKPM) on the green energy transition of data centres. 

According to Hendra, foreign investors, particularly from North America and Western Europe, are keen on building green data centers in Indonesia. They have already submitted requests for proposals (RFPs) to provide green energy for IDPRO's existing data centers.