INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Serafina (Fina) Muryanti and Adya Sepasthika, ABNR Counsellors at Law
The strategy for managing existing power plants and developing new ones is designed to opti- mise electricity generation capacity up to 2060. To meet growing electricity demand and replace retiring plants, an additional capacity of approx- imately 9.6 gigawatts per year is required. By 2060, the total capacity is expected to reach 443 gigawatts, comprising (i) 41.5% variable renew- able energy with storage capacity of around 34 gigawatts and (ii) 58.5% dispatchable renewable energy. The roadmap includes projections for capac- ity and emissions reductions, with peak CO₂ emissions expected in 2037 at 599 million tons, decreasing to nearly zero by 2058. 1.8 Unique Aspects of the Power Industry The power industry in Indonesia is heavily reg- ulated by the government, although the par- ticipation of private investors is allowed and encouraged by the government. Nevertheless, the power industry in Indonesia is still inherently under the monopoly of PLN. 2. Market Structure, Supply and Pricing 2.1 The Wholesale Electricity Market The wholesale electricity market in Indonesia is still monopolised by PLN, although private- owned companies can directly sell electricity to end-consumers subject to the requirements of the regulations. There are several private power utility (PPU) companies, or integrated power companies, in Indonesia that sell electricity to end-consumers in an industrial area or parks (such as PT Cikarang Listrindo and PT Beka- si Power). The wholesale price of electricity is determined by the central government with
approval from the House of Representatives. The wholesale electricity market in Indonesia is based on the energy market. The main supplier of electricity to end-consumers is PLN, although there are certain cases, such as industrial parks, where the electricity is supplied by PPUs. The electricity tariff charged to end-consumers is determined by the central government and may vary between regions. 2.2 Electricity Imports and Exports The import and export of electricity to/from other jurisdictions is permitted. The import of electric- ity may depend on the following conditions: • there is a shortage of electricity supply in local areas that cannot be met by PLN or private power companies in Indonesia; • it is only to support and meet local electricity needs; • it is not detrimental to the state and national interest (ie, in terms of sovereignty, security and economic development); • it is needed to improve the quality and reli- ability of local power supply; • it does not disregard the development of domestic power supply capability; and • it does not lead to dependence on power pro- cured from abroad. Electricity can be exported if (i) there is no short- age of electricity in the local area, (ii) the sale is not subsidised and (iii) it does not compromise the quality and reliability of the local or domestic power supply. The export/import of electricity can only be done by the holder of an electricity supply business licence, with a separate or additional electricity business licence required for the export/import of electricity from MEMR. The (export/import)
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