Indonesia's leading presidential candidates are considering a push to end the state-run Perusahaan Listrik Negara's (PLN) monopoly as part of efforts to accelerate the transition to greener energy.
All three candidates competing to win the February 14 election in Southeast Asia's largest economy have said that they will priorities cleaning up the power sector to reduce emissions.
To achieve that goal, Defence Minister Prabowo Subianto and former provincial governor Ganjar Pranowo, currently in close competition according to recent polls, are considering ending PLN’s monopoly to allow renewable power producers to sell directly to customers.
The Defense Minister Prabowo Subianto. (Photo: Prabowo Subianto)
This might prove challenging as Indonesia lacks the necessary regulations to determine fees independent power producers must pay to PLN and the scope of services PLN can provide to them. The geography of the vast archipelago also means the grids of major islands are not interconnected, complicating nationwide power sharing.
Former Jakarta governor Anies Baswedan, who is behind in opinion polls, has called for enhanced leadership in the power sector but has not proposed breaking up PLN's monopoly.
The previous discussions about opening the sector to competition have faced pushback due to concerns that the currently tariffs fixed by the government could fluctuate according to market forces.
Proponents argue that opening the sector would speed up the adoption of renewables, as independent power producers will be incentivized to offer green power to firms pledging carbon neutrality.
PLN is the sole seller to most customers, managing power plants and buying from the independent producers, with over half of its power supply sourced from coal and 12% from renewable energy. The company has said it plans to develop 31.6 GW of renewable capacity from 2024 to 2033.
Agam Subarkah, chief executive of climate consultancy Cendekia Ikim Indonesia, said, "These candidates must remain focused on the purposes of the policy, which are accelerating the adoption of renewable energy, offering competitive pricing to customers and emission reduction."
Ganjar, the candidate from the ruling PDIP party, has proposed concentrating PLN’s efforts on expanding power lines and connecting islands. His climate policy advisor, Alexander Sonny Keraf, said that this would enable renewable producers to "wheel" electricity onto the grid and to customers.
Keraf, a former environment minister, said PLN had objected to proposals for wheeling in the past, but if Ganjar wins, "we will force them".
PLN plans to develop 31.6 GW of renewable capacity from 2024 to 2033. (Photo: PLN)
Eddy Soeparno, a senior official at Prabowo's campaign, said that experts drafting energy policy for Prabowo have also discussed wheeling, but with the government maintaining control over tariffs.
"Multiple buyers and multiple sellers, but within the context of energy security, which means the selling prices to consumers must remain affordable," said Soeparno.
Agam, from the climate consultancy, expressed concern that delaying access to renewable power for companies could mean lost investment.
He said, "If these companies cannot secure renewable energy by 2025 or 2030, they might consider Indonesia as somewhere they cannot expand their business due to the difficulty in getting renewable energy."