Enhancing the role of the private sector in achieving transitional renewable energy targets in Indonesia

Abstract

The Indonesian Government have set several medium-term targets for renewable energy development that aim to support the transition of the Indonesian electricity sector to a lower carbon future while still maintaining sustainable growth. Achieving such targets requires clear policy and regulation, a strict mandate, improved coordination among institutions, and largescale investment. While these targets may appear to be unrealistic, in light of the Paris Agreement, Indonesia like many countries has a global obligation to reform its energy sector, transitioning away from a reliance on fossil fuels. Due to limited public finances, private sector investment has been identified as crucial for renewable energy development in Indonesia. My research aims to create a framework through which the effectiveness of Indonesian energy policy options that seek to enhance private sector investment in renewable energy development can be assessed. The framework is based on the dimensions of the energy trilemma: energy equity, energy security, and environmental sustainability.Indonesia is blessed with abundant fossil fuel and renewable energy resources, however around 10% of its population remains without access to electricity. Historically, there has been a dependence on fossil fuels, based on a belief that the country is rich in oil. However, in fact Indonesia has become a net importer of oil since 2004 and over the years, state revenue from oil and gas exports has continued to decline. Indonesian energy policy has traditionally subsidised the production and consumption of fossil fuels. Despite this, Indonesia's energy policy has continued to support the production of fossil fuels and subsidised their domestic consumption. This precedent has seen Indonesia lag behind other countries in the search for more reliable and sustainable energy options. At the same time geographical challenges of Indonesia, extending across thousands of islands, further complicates the challenges of sustainable energy policy. This thesis takes an institutionalists' approach to investigate the energy transition in Indonesia, emphasising the importance of cooperation among institutions, different levels of government, the private sector, and civil society. I take a private sector perspective (i.e. renewable energy developers and investors) to investigate the barriers and enablers of renewable energy investment in Indonesia. The analysis presented recognises the need for the involvement of multi actors within

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