Thu, 07 Dec 2023

JAKARTA, Indonesia: The leading candidates in Indonesia's upcoming presidential election are considering ending the state power utility's monopoly to expedite the transition to cleaner energy, their campaign teams informed Reuters.

All three contenders competing in the February 14 election have expressed their commitment to cleaning up the power sector to reduce greenhouse gas emissions.

Defense Minister Prabowo Subianto and former provincial governor Ganjar Pranowo, who are closely matched in recent polls, are exploring the possibility of terminating the state-run Perusahaan Listrik Negara's (PLN) monopoly. This move would allow renewable power producers to directly sell their electricity to consumers.

However, this endeavor is not without challenges. Indonesia currently lacks the necessary regulations to determine fees that independent power producers should pay to PLN and the extent of services PLN can provide to them. Furthermore, the country's vast archipelago results in unconnected grids among its major islands, complicating nationwide power distribution.

Former Jakarta governor Anies Baswedan, who trails in opinion polls, has called for improved leadership in the power sector but has not proposed dismantling PLN's monopoly.

Past discussions about opening the sector to competition have faced opposition, as there are concerns that government-fixed tariffs could become subject to market fluctuations. Advocates argue that opening the sector would hasten the adoption of renewables, as independent power producers would be motivated to offer green energy to companies committed to carbon neutrality.

Currently, PLN is the primary electricity provider for most customers in Indonesia. It manages power plants and purchases electricity from independent producers, with more than half of its supply coming from coal and 12 percent from renewables.

Ganjar, the ruling PDIP party candidate, suggests focusing PLN on expanding power infrastructure and connecting islands. This would enable renewable energy producers to feed electricity into the grid and supply customers. Meanwhile, experts working on energy policy for Defense Minister Prabowo have discussed power wheeling but with the government retaining control over tariffs.

Agam Subarkah, CEO of climate consultancy Cendekia Ikim Indonesia, said delaying renewable power to companies could mean lost investment.

"If these companies cannot secure renewable energy by 2025 or 2030, they could mark Indonesia down as somewhere they cannot expand their business in because of the difficulty in getting renewable energy," he said.

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