The Institute for Essential Services Reform (IESR), a Jakarta-based think tank, is advocating for power wheeling to be implemented in Indonesia. It says it would create a renewable energy market and have a positive impact on industrial investment.
May 20, 2024 Patrick Jowett
Image: James Tiono, Unsplash
The introduction of power wheeling in Indonesia would help to accelerate the country’s energy transition towards net zero emissions, according to Jakarta-based think tank IESR.
Power wheeling, which refers to transporting energy from an electrical grid to an electrical load outside grid boundaries, would allow electricity producers in Indonesia to supply electricity directly to end users via the transmission and distribution networks owned by the permit holder.
IESR is pushing for the mechanism to be included in the country’s New Energy and Renewable Energy Bill. The institute’s executive director, Fabby Tumiwa, said that power wheeling could create a renewable energy market and have a positive impact on industrial investment in Indonesia.
“The existence of a power wheeling scheme will make it easier for the industry to obtain electricity from renewable energy sources so that it can reduce the carbon footprint of the industry, reaching the target of its sustainability, and provide a good green industry image for its customers,” Tumiwa said. “This is positive for improving the investment climate in Indonesia.”
Tumiwa added the current dependence on demand and the procurement process from state utility PLN is one of the factors that complicates the rapid development of renewable energy in Indonesia. He says PLN’s position as a single offtaker causes the development of renewable energy resources to be “suboptimal.” He claimed that a power wheeling scheme would encourage the involvement of other state-owned and private electricity producers in the development of renewable energy, supporting the diversification and growth of Indonesia’s renewable energy mix.
The institute said that power wheeling must come with assurances that it will not sacrifice the reliability of the electricity supply and that the wheeling charge tariffs should reflect the costs required to maintain and improve the reliability of the system, therefore not harming the net owner. It added that the government or regulator should set the tariff formula for the use of the shared electricity grid.
In February, the Indonesian government abolished net-metering. The IESR said this could make it harder for the country to meet its solar deployment targets.
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