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Indonesia
Association country
Energy system of Indonesia
Ambitious government plans to extend electricity access have yielded fruit in Indonesia, where the number of people without access declined from around 100 million in 2000 to around 23 million in 2016 even with a population increase of almost one-quarter. Therefore, Indonesia alone was responsible for 55% of the net decrease in the number of people without access across Southeast Asia since 2000. Those remaining without access in Indonesia are concentrated in a number of provinces, including East and Central Java, East Nusa Tenggara and Papua.
This underscores that there is no uniform solution to meeting Indonesia’s energy access targets, and that a great deal of pragmatism and flexibility will be needed to meet its goal of universal access by 2024. In recognition, the plans introduced by the government of Indonesia are multi-dimensional; they include the extension of the existing grid, promoting micro-hydro and off-grid solar technologies as well as solar-diesel hybrid and isolated diesel generators. While the plans rely heavily on financing from the national utility, Perusahaan Listrik Negara (PLN), this is largely enabled by the presence of private participation in commercially viable projects in the country’s broad power sector, which gives some latitude to PLN to support projects that the government deems as having social benefits, rather than immediate commercial returns.
Policies
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Key recommendations
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Implement the phase-out timetable alongside a large-scale and long-term communication campaign on the necessity, timeline and reallocation of state expenditures, including compensatory measures for the poor, and social and infrastructure development investments that benefit the entire population.
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Ensure consistency between modelling scenarios, targets, and implementation and focus on the quality of legislative and regulatory processes by clarifying competencies, enhancing stakeholder consultations, defining deliverables and assigning accountability at national and sub-national levels.
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Speed up decision making and open the energy sectors to market-based mechanisms for prices and fuel choices.
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To facilitate infrastructure investments in renewable energy, electricity and natural gas, set up an office, which would advise and support investors in obtaining the necessary permits and licences from central and local institutions.
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Develop and implement an integrated, long-term development plan for natural gas infrastructure, reform wholesale natural gas pricing and allocation mechanisms, and establish an independent downstream regulator for natural gas and electricity, with the long-term goal of a national wholesale market and more efficient use of gas.