Renewable Energy Tariffs and Incentives in Indonesia: Review and Recommendations

By Asian Development Bank

This report proposes a renewable energy subsidy mechanism for Indonesia to close the gap between the costs of renewable and conventional power generation. It takes into account the additional economic benefits of renewable power and considers how the government can support its rapid deployment in the power sector. The report emphasizes the need for Indonesia to adopt international best practice for planning, procurement, contracting, and risk mitigation to reduce the financial costs of renewable energy development. To achieve this, implementation of the subsidy should be part of a broader inter-ministerial electricity policy reform program.

• Language: English
• Publisher: Asian Development Bank
• Release date: Sep 1, 2020
• ISBN: 9789292623241

Book preview

RENEWABLE ENERGY TARIFFS AND INCENTIVES IN INDONESIA

REVIEW AND RECOMMENDATIONS

SEPTEMBER 2020

Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO)

© 2020 Asian Development Bank

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Some rights reserved. Published in 2020.

ISBN 978-92-9262-323-4 (print); 978-92-9262-324-1 (electronic); 978-92-9262-325-8 (ebook)

Publication Stock No. TCS200254

DOI: http://dx.doi.org/10.22617/TCS200254

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Note:

In this publication, $ refers to United States dollars.

Cover design by Editha Creus.

This report was prepared by PT. Castlerock and Economic Consulting Associates for the Ministry of Finance of Indonesia.

Contents

Tables and Figures

Abbreviations

Names for Indonesian entities and legal documents are given in both English and Indonesian on first use. Subsequent references use the Indonesian acronym. An exception is made for the Ministry of Finance where the English acronym is used given its familiarity.

Weights and Measures

Currency Equivalents

Acknowledgments

This work was conducted under the technical supervision of Florian Kitt, energy specialist, Energy Division, Southeast Asia Department (SERD), of the Asian Development Bank (ADB). Additional guidance and support was provided by Andrew Jeffries (director, Energy Division, SERD, ADB). The report was written by William Derbyshire (consultant, ADB) and Mike Crosetti (consultant, ADB), with contributions from Kelsey Yates (consultant, ADB). The team wishes to thank Yongping Zhai (chief, Energy Sector Group, Sustainable Development and Climate Change Department, ADB) as the report’s peer reviewer.

The team wishes to thank the Indonesian Ministry of Finance, PT Sarana Multi Infrastruktur, and development partners for their inputs and discussions during the preparation of the report. The team also thanks colleagues from the Indonesia Resident Mission and the Department of Communications for their support.

Key Recommendations

This report proposes a renewable energy (RE) subsidy mechanism to close the gap between the