.jpg)
(Photo: iStock)
To accelerate the transition to renewable energy, the Indonesian government intends to expand the open market for green electricity. Officials revealed they are currently drafting details to include a power wheeling mechanism in the renewable energy bill, allowing electricity sellers to utilize the national power company PLN (Perusahaan Listrik Negara)'s grid to sell green electricity directly to consumers, potentially ending PLN's monopoly.
Indonesia moves toward green energy liberalization
Eniya Listiani Dewi, Director of New Energy, Renewable Energy, and Energy Conservation at the Ministry of Energy and Mineral Resources (ESDM), stated on the July 4 that conditions and pricing mechanisms for transmitting green electricity through PLN are being formulated, though a finalization timeline remains unclear.
Indonesia operates under a monopoly in the electricity sector, where all independent power producers must sell electricity to PLN, which then distributes it to consumers. The power wheeling mechanism allows private enterprises to sell electricity to consumers through PLN's grid.
The Institute for Essential Services Reform (IESR) believes the new regulations will accelerate national renewable energy development and deployment, improve electricity reliability and operational efficiency, reduce PLN's burden in green electricity procurement, and further promote regional grid development.
Fabby Tumiwa, Executive Director of IESR, noted that past electricity laws have provisions for power wheeling mechanisms that were never implemented. He argues that PLN, as Indonesia's electricity sector leader, should have the right to establish and operate transmission and distribution systems, charging grid rental fees to related entities to increase revenue.
PLN risks and price fluctuations raise concerns
Despite broad industry support, opposition remains, particularly within the Indonesian government where internal disagreements persist. The Ministry of Finance fears the mechanism could lead to market-driven price fluctuations, potentially making it difficult for general consumers to afford electricity. Moreover, there are concerns about oversupply in the market, posing significant financial risks to PLN.
Given the wide-ranging policy implications and political maneuvering, related regulations have yet to materialize. In November 2022, the Indonesian government temporarily removed clauses from the bill, only to reinstate them the following year. The controversy persists, with uncertainties surrounding its passage through parliament. Internally, PLN hopes to defer further discussions until a new president assumes office, adding another layer of uncertainty to the future development of the green energy market.
Sources: pv magazine, Vietnam Plus, Jakarta News, Warta Ekonomi
