A joint report by RE100, the Institute for Essential Services Reform (IESR), and the Institute for Energy Economics and Financial Analysis (IEEFA) indicates that Indonesia can speed up its renewable energy growth by enabling shared access to the transmission network. This approach would support the state electricity utility PT Perusahaan Listrik Negara (PLN) and encourage additional investment without putting pressure on the national budget.
Report co-author Mutya Yustika, Energy Finance Specialist at IEEFA Indonesia, explained that the report assesses the key success factors for implementing shared use of Indonesia’s transmission network. She noted that previous IEEFA analysis indicated the proposed scheme could create a new revenue stream for PLN to support its ongoing grid modernization and expansion efforts, while also boosting Indonesia’s appeal to investors.
The proposed scheme can finance the estimated USD5 billion required annually for power generation and the USD146 billion investment gap that Indonesia needs to meet its 2030 climate targets.
Co-author Grant Hauber, IEEFA’s Strategic Energy Finance Advisor for Asia, noted that shared use of transmission networks is increasingly becoming standard practice across Southeast Asia to stimulate private investment in renewable energy. He emphasized that for industries—particularly RE100 members—grid access sharing can significantly accelerate efforts to reach 100% renewable energy in their supply chains by 2050.
Opportunities for Growth
The shared use of transmission networks presents a significant opportunity to boost the supply of Renewable Energy Certificates (RECs) through private sector investment, all while maintaining PLN’s central role in managing the national electricity system. The report advises that PLN enhance its capabilities to function effectively as a transaction hub for shared electricity infrastructure.
It further recommends that the Indonesian government incorporate a framework for joint transmission network utilization into the upcoming New and Renewable Energy Bill (EBET), and integrate this model into PLN’s 2024–2034 Electricity Supply Business Plan (RUPTL).
The report outlines four essential conditions for the success of a shared transmission network for renewable energy: guaranteed access for renewable energy developers, fair and transparent tariff structures—preferably set by an independent regulator—robust interconnections, and well-defined contractual terms.
Additionally, renewable energy projects should be connected to the national grid with mechanisms in place to limit curtailment due to oversupply. Power producers must also commit to minimum generation levels, adhere to grid codes, and contribute to grid balancing costs when needed.
Yustika suggested that, in the long term, a dedicated PLN subsidiary could manage transmission to improve cost transparency. She also recommended introducing an upfront grid usage fee for renewable developers, alongside an annual quota system and renewable electricity roadmap to ensure long-term sustainability.
Regional learning
The report compares Indonesia with Vietnam and Malaysia, noting that all three have a single-buyer model led by state utilities. However, unlike Indonesia, Vietnam and Malaysia have unbundled electricity markets, with separate entities for generation, transmission, and distribution.
Hauber noted that allowing direct negotiations between renewable developers and buyers helps set fair pricing and terms without weakening utility oversight, and that this unbundled model can accelerate renewable energy integration into the grid.
Both single buyers and grid operators are independent of state-owned utility companies. The grid provides a facilitation service rather than a traditional, fully vertically integrated approach.
Hauber adds that Malaysia and Vietnam also use spot market-like mechanisms to encourage renewable energy developers in the electricity market, a system currently unavailable in Indonesia.
Fabby Tumiwa, Executive Director of IESR, highlighted that Indonesia has over 3.7 TW of renewable energy potential, with 333 GW being economically viable. He emphasized that joint transmission networks offer long-term benefits and that clear, stable regulations are key to attracting private investment.
Ollie Wilson, Head of RE100 at Climate Group, stated that shared transmission access could significantly boost private investment in Indonesia’s renewables. With over 130 RE100 members active in the country, he emphasized the need for a supportive energy market to match regional progress, advance coal retirement, and realize Indonesia’s Golden 2045 vision in collaboration with PLN.
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