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Indonesia: Electricity capacity to double

Oene MarseilleEmir Nurmansyah
Indonesia's House of Representatives has approved a draft government regulation on National Energy Policy (the Energy Draft), which sets out guidelines for the country's energy policy through to 2050. The passage of this long-term roadmap of Indonesia's energy policy is not without controversy and as of June 2014, the draft regulation has not been signed by the President.

The Energy Draft 's target is for the nation's electricity capacity to more than double by 2025 to 115GW (as of end 2013, the installed capacity is 47GW). The capacity is envisioned to further increase to 430GW by 2050.

Renewable energy is anticipated to make up a greater proportion of the nation's energy mix, reaching at least 31% by 2050 (compared to six percent in 2013). It is anticipated that by 2050, the nation's energy picture will be as follows: oil (20%), coal (25%), gas (24%), and renewable energy (31%).

In terms of development priority, the Energy Draft focuses on: (i) the optimal usage of natural gas and renewable energy; and (ii) the utilisation of coal as the primary fuel of national energy. The nuclear power is placed on the bottom of its priority list.

It is the energy price provision which has proved to be most controversial. The draft states that the price will be determined on the basis of the economic justice principle. This principle will take into account production, environmental, and energy conservation costs, investment sustainability, and the buying power of the general public. The previous draft originally substituted "investment sustainability" with "profit", but was rejected after opposition from several members.

Subsidy still figures in the draft, especially those targeted at disadvantaged sections of society. The draft also envisions several incentives to improve energy conservation and efficiency as well as development or usage of renewable energy. Details of these incentives will be further spelled out in separate regulations.

Oene Marseille and Emir Nurmansyah

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