Exploring options for decarbonizing the Indonesian power sector through market reforms l Herian Atma

Field | Discipline

• Energy economics

Expertise

• Energy modelling
• Power system modelling

Summary

Power sector reforms have been implemented in both developed and developing economies in the past. The reasons for reform vary between countries, but typically aim to address issues such as inefficiency, lack of investment, and inadequate access to electricity. Reforms have taken various forms, including the establishment of independent regulatory entities, greater private participation,unbundling of state-owned monopolies, and the introduction of competition in parts of the sector. However, the implementation of those reforms has also resulted in varying degrees of success, and there are important lessons to be learned.

Recently, the government of Indonesia announced a long-term vision to achieve net zero emissions in the energy sector by 2060. Achieving this goal will require the power sector to reach carbon neutrality or even negative emissions, which is a challenging target given the country's heavy dependence on fossil fuels, particularly coal.

The power sector in Indonesia is not yet fully competitive, with limited competition on the generation side. Currently, the state-owned company PLN is the single wholesale buyer of electricity in most parts of the country. One of the main challenges in decarbonizing the power sector is the limited deployment of renewable energy, which has been hindered by regulatory barriers, limited investment, and land acquisition issues.

To achieve a fully functioning competitive market in the power sector, greater opportunities must be provided for private entities. If managed correctly, this could facilitate investment in the right places and at the right times. However, several questions arise, such as:

• What is working and not working in the Indonesian power sector? What needs to change?

• What can be learned from other countries?

• What are the possible routes for sector reform? How can the actors involved be identified and modeled? What behaviors should be parameterized?

• What are the indicators of success, and how does the reformed sector perform in comparison to the existing one? Would the reform help achieve the net zero emission target?

This research project will employ various multidisciplinary methods. First, literature reviews and cross-country assessments will be conducted to identify the drivers and lessons learned from power sector reforms. Second, an agent-based modeling approach will be used to explore the uncertainty and complexity of reforms. Finally, bottom-up techno-economic modeling will be performed to evaluate the implications of different power market designs in achieving decarbonization goals.

The outcomes of this research could help to understand the extent to which power sector reforms can contribute to achieving ambitious long-term targets, such as net zero emissions.

 
Supervision by

Promotor: associate professor M.A. (Machteld) van den Broek | Integrated Research on Energy, Environment and Society - IREES | ESRIG, University of Groningen.

• Co-promotor: Dr. F. (Franco) Ruzzenenti | Integrated Research on Energy, Environment and Society - IREES | ESRIG, University of Groningen.

More information and contact details can be found on the personal profile of Herian Atma