A groundbreaking report jointly released by RE100, the Institute for Essential Services Reform (IESR), and the Institute for Energy Economics and Financial Analysis (IEEFA) outlines a compelling case for a shared transmission network in Indonesia, highlighting its potential to boost renewable energy development and deliver up to USD 150 billion in economic benefits.
The report emphasizes the strategic advantages of allowing shared access to the national grid, currently operated by state utility PT Perusahaan Listrik Negara (PLN). By leveraging a joint-use transmission framework, Indonesia could not only attract more private investment into renewable energy but also support PLN’s grid modernization efforts—all without increasing the fiscal burden on the state.
“Our report evaluates the success criteria for the shared use of Indonesia’s transmission network,” said Mutya Yustika, Energy Finance Specialist at IEEFA. “This approach could offer PLN a new revenue stream while also enhancing Indonesia’s appeal as a renewable energy investment destination.”
Addressing a Massive Investment Gap
Indonesia faces a significant funding challenge, requiring an estimated USD 5 billion annually for renewable power generation and USD 146 billion in total investments to meet its 2030 climate targets. The proposed shared network model could be a critical tool in closing this investment gap.
Grant Hauber, IEEFA’s Strategic Energy Finance Advisor for Asia, noted that shared transmission use is increasingly common in Southeast Asia as a mechanism to accelerate private-sector participation. For RE100 member companies, this model aligns with their objective of reaching 100% renewable energy in their supply chains by 2050.
Enhancing the Role of PLN and Grid Access
The report advocates that PLN enhance its role as a neutral transaction hub in a shared grid environment. This would include supporting Renewable Energy Certificate (REC) expansion and maintaining system integration without compromising PLN’s central coordination role.
Key recommendations from the study include integrating joint transmission provisions into Indonesia’s forthcoming New and Renewable Energy Bill (EBET) and PLN’s 2024–2034 Electricity Supply Business Plan (RUPTL).
To ensure successful implementation, the report outlines four essential conditions:
- Grid access for renewable developers
- Fair and transparent tariffs set by an independent regulator
- Reliable interconnections
- Clear and enforceable contracts
The authors also call for safeguards against grid curtailments and requirements for generation companies to adhere to supply minimums and grid codes.
Yustika suggests that, in the long run, PLN could establish a dedicated transmission subsidiary to enhance cost transparency. Proposals include an upfront connection fee for developers and a renewable energy quota system to ensure long-term sustainability.
Learning from Regional Peers
The report draws comparisons with electricity markets in Vietnam and Malaysia, where grid operations are decoupled from electricity generation and distribution. These unbundled models enable more agile and direct negotiations between developers and buyers, thus accelerating the integration of renewable energy sources.
Hauber pointed out that market mechanisms like spot pricing, present in Vietnam and Malaysia, are absent in Indonesia but could serve as a model for future reforms.
A Vision for a Renewable Indonesia
IESR Executive Director Fabby Tumiwa emphasized Indonesia’s vast technical renewable energy potential, estimated at 3.7 terawatts, with over 333 gigawatts deemed economically feasible. He stressed that regulatory stability and long-term planning will be critical to unlocking this potential and drawing sustained investment.
RE100’s Ollie Wilson echoed this sentiment, emphasizing the readiness of over 130 RE100 companies already operating in Indonesia to contribute to the nation’s renewable transition. “Shared grid use is a win-win for business and government,” he said, adding that it will support Indonesia’s coal retirement efforts and the broader “Golden Indonesia 2045” vision.
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