Provision of access to state grids for private power producers is meant to spur the development of renewable energy, which currently plays a minor role in Indonesia’s power industry. According to Ember, fossil fuels accounted for 81% of Indonesia’s power generation in 2023, whereas low-carbon sources, including wind, solar and hydroelectric power plants, accounted for a mere 19%.
Coal-fired TPPs are the most popular of the conventional energy sources, accounting for 62% of the power output in 2023, including due to the high availability of feedstock. Indonesia is the third-largest producer of power-generating coal, second only to China and India in terms of its share in the global supply structure (9% versus 50% and 13%, respectively, according to IEA data for 2023).
However, in recent years, Indonesia has ranked second worldwide in terms of the pace of coal-fired power plant construction. According to Global Energy Monitor, the capacity of coal-fired TPPs launched in Indonesia between 2018 and 2023 totaled 17.2 GW, which was more than in India (16.3 GW versus 142.4 GW in China). As a result, Indonesia’s power industry is more carbon-intensive than the energy systems of the leading developing economies of the Asia-Pacific.
In China, 1 kilowatt-hour of electricity generated in 2023 resulted in an average of 582 grams of CO2 equivalent in greenhouse gas emissions, compared to 475 grams of CO2 equivalent for Vietnam and 682 grams of CO2 equivalent for Indonesia, according to Ember. At the same time, Indonesia ranks fourth among Asia-Pacific countries in terms of its share in the global structure of greenhouse gas emissions from the power sector (2.1% versus 31.2% for China, 7.7% for India and 2.6% for Japan, according to the Energy Institute).
Providing grid access for private renewable energy producers will allow Indonesia to make its power industry less carbon-intensive. The adoption of this standard de facto means that the state-owned company PLN will take on the costs of upgrading the grid infrastructure, which is usually required for the large-scale implementation of renewable energy facilities. This is also demonstrated by global trends: the global capacity of newly-launched renewables skyrocketed from 188 GW in 2019 to 473 GW in 2023, while investments in the construction of power grids over the same period rose from $310 billion to $374 billion (in 2023 prices), according to IRENA and the IEA.
