A paper for Politeknik APP Jakarta national seminar

Currently under review at Asian-Pacific Economic Literature.

The implication of the aggressive emission target on the Indonesian electricity sector

The pledge to reduce emission has reached a new height globally, and Indonesia is no exception. According to Indonesia’s latest NDCs, it vowed to reduce emission by 31.9% to 43.2%. One of the key for Indonesia to reduce its emission is electrification, which makes greening the grid a priority for the Indonesian government. However, Indonesia has been relying heavily on coal while the growth of renewable is slow. A linear optimization technique show that cleaning the indonesian electricity sector from coal leads to a potential increase in cost by 37%. The key to reduce this cost increase is by enabling the Indonesian independent power producers, which grow their electricity generation much faster than the state owned company. The government must improve the efficiency of procurement, improve its pricing, and forego local content requirements, if it wants to achieve its emission target.