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Replacing LPG With Electric Induction for Cooking Can Save Indonesia Nearly $12 Billion in 5 Years: IEEFA

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The use of electric induction as an alternative to liquefied petroleum gas for cooking purposes could help Indonesia save 200 trillion Indonesian rupiah ($11.7 billion) over five years, the Institute for Energy Economics and Financial Analysis said on Friday.

"Electric induction offers Indonesia's most cost-effective alternative to LPG cooking. A one-time investment of [105 trillion Indonesian rupiah ($6 billion) to provide induction packages for eligible households could be recovered through avoided LPG subsidies in around 1.7 years, generating nearly [200 trillion Indonesian rupiah] ($11.7 billion) over five years," IEEFA analysts said.

About 92% of the country's LPG consumption in 2025 was in the form of subsidized 3-kilogram cylinders, which resulted in 87 trillion Indonesian rupiah in subsidies with each cylinder sold costing the government about 30,000 Indonesian rupiah.

Over 80% of Indonesia's total LPG consumption of 9.24 million tonnes last year was via imports in the form of finished product. These imports cost the government 130-140 trillion Indonesian rupiah in foreign exchange annually, IEEFA said, citing data from the Ministry of Energy and Mineral Resources.

About 29% of these imports were from the Middle East, which left the country's supply chain highly vulnerable to the ongoing disruptions in the Strait of Hormuz and the Gulf region.

With the price of the per 3kg subsidized cylinder remaining fixed at 12,750 Indonesian rupiah, the difference between the supply cost and the subsidized price has widened sharply, resulting in a higher subsidy burden for the country.

Using domestic compressed natural gas or coal-based dimethyl ether as substitutes is unlikely to reduce the country's subsidy burden. CNG remains more expensive than subsidized LPG even before considering the value of domestic gas resources, while DME remains an economically unviable, with the highest subsidy burden among all substitutes, IEEFA said.

"Electric induction cooking is the only option that does not rely on imported fuel or a constrained domestic gas supply. It uses electricity generated on the Java-Bali grid, where capacity is in surplus," IEEFA analysts said.

"Unlike CNG or DME, induction requires no new fuel supply chain. Each household that switches from LPG to induction could immediately reduce the state's subsidy burden, without the need for new infrastructure or cylinder procurement."

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