POWER July 2013 - 35

POWER POLICY
ers (IPPs) to generate and sell electricity to
end users in the Indonesian market, ending
PLN's 60-year-long monopoly as the single
electricity supplier in Indonesia.
Trickling Change
The election of President Susilo Bambang
Yudhoyono in 2004 ushered in more reforms,
including policies to create an at2.
Indonesia's power system today. In 2012, 41.5% of Indonesia's 200,291 GWh
was consumed by households. Industry and commercial users consumed a combined 52.4%.
Source: PLN
Self-use
6,560 GWh
PLN
149,783 GWh
(75%)
Total generation
200,291 GWh
IPPs
50,508 GWh
(25%)
Transmission
193,730 GWh
Self-use
94 GWh
Distribution
188,6998 GWh
Self-use
280 GWh
Industry
60,176 GWh (34.6%)
Commercial
30,988 GWh (17.8%)
Public
10,694 GWh (6.1%)
Residential
72,133 GWh (41.5%)
3. An achievement. Between 2006 and 2011, PLN increased total annual generation from
its power plants by 37%, to 142,739 GWh. Though solar, wind, and gas engines are included,
their contribution to the total is too small to show up. Courtesy: Handbook of Energy and Economic
Statistics of Indonesia (2012)
tractive climate for investment in energy
infrastructure, to mitigate pollutant emissions,
and to scale up renewables. But Purra
isn't convinced that the sector has been
transformed enough. " Despite numerous
and on-going attempts to reform, restructure
and vitalize the sector, the sector continues
to suffer from grave inefficiencies that bear
on market participants' profitability, hinders
overall economic growth, and maintains an
untenable and uncertain environment for
foreign investors, " he points out.
One gripe is that today PLN continues
to be the sole purchaser of electricity and
the second-largest state-owned enterprise
in Indonesia. It still owns and operates
about 75% of the country's generating
capacity, it has retained its monopoly on
the transmission system, and it continues
to function as its system operator (Figure
2). Moreover, the entity is responsible for
the country's electricity supply through the
" right of first refusal " clause, and IPPs can
only serve areas that have been declined by
PLN and are not included in PLN's plans
for electrification. Decentralization following
implementation of the new energy law
has, meanwhile, increased the autonomy of
regional authorities for the sake of increasing
rural electrification, to ease the implementation
of new projects, and to stimulate
collaboration between regional authorities
and private actors.
Some improvements are certainly ap4.
PLN power purchases from captive power plants and IPPs. Also between
2006 and 2011, PLN increased the amount of power purchased from emerging independent power
producers and captive power plants, for a total in 2011 of 183,419 GWh-a 38% increase compared
with 2006. Courtesy: Handbook of Energy and Economic Statistics of Indonesia (2012)
parent, however. In 2005, recognizing
that PLN could not independently fund
infrastructure growth because it heavily
depends on government subsidies, and to
attract private investment to the sector, the
government enacted new Public Private
Partnership (PPP) legislation. The following
year, it announced stage 1 of a " fasttrack "
program that would be followed
by a second program in 2010; each stage
seeks to accelerate development of 10 GW
of new capacity, and the second part is
specifically geared to the growth of IPPs
and renewable energy. Though stricken by
debilitating delays and regulatory hurdles,
both measures have been arguably successful.
Compared with 2006, PLN increased
its total annual generation by 37% in 2011
(Figure 3), while generation from IPPs also
increased substantially (Figure 4).
In 2011, meanwhile, coal, oil, and gas
power plants made up 46% of Indonesia's
power capacity. Diesel, used to fuel offgrid
capacity on remote islands, held the
second-largest share at 15% (Figure 5).
Pressing Forward
Propelled by an ambition frequently reiterated
by the decade-old administration
July 2013 | POWER
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