Experts Highlight Power Wheeling Scheme Implementation Challenges In Indonesia

Illustration. (Photo: Doc. Antara)

JAKARTA - A renewable energy expert from the University of Indonesia, Eko Adhi Setiawan, highlighted a number of challenges that need to be overcome before the power steering scheme or joint utilization of the electricity network can be implemented in Indonesia.

In an online discussion held by IESR in Jakarta, Wednesday, September 25, Eko said the power steering scheme, which allows private electricity producers (IPPs) to sell electricity directly to consumers, offers great potential to increase competition and encourage the use of renewable energy. However, its implementation is faced with a number of complex obstacles.

The first challenge is the complexity of tariff calculations. Eko said that a fair tariff determination for power steering must involve many parties, including the Ministry of Energy and Mineral Resources, PLN, and IPP. This process is considered very complex and requires clear and detailed regulations.

Second, contract renegotiation. According to Eko, the existing electric power purchase agreement (PPA) between PLN and IPP is generally difficult to change. The renegotiation process has the potential to cause conflict and dispute.

The problem is getting more complex because the power steering scheme he said could reduce PLN's revenue because IPP can sell electricity directly to consumers.

"This is also difficult for PLN because they already have a PPA contract in the long term. PLN must receive assistance from the government. Energy and Mineral Resources must intervene to overcome this," said Eko, who is also an Associate Professor of the University of Indonesia, quoted from Antara.

Third, the need for network modernization. Eko explained that to support power steering, PLN needs to modernize electricity networks significantly, including the implementation of smart grids.

A large investment and development of new technologies, according to him, is needed to manage intermittent or unstable renewable energy because it relies heavily on the weather.

Fourth, the expansion of the transmission and distribution network. Eko said that the expansion of the transmission and distribution network, especially in remote areas, would require large investments that must be borne by PLN and the government.

The fifth challenge is the complexity of regulation and the transaction mechanism. The government, he said, needs to draw up a new regulation that regulates fair and effective trade rates, audits, and mechanisms. Major changes in energy policy are also needed to support electricity transactions outside the PLN monopoly.

Eko further said that there was resistance from PLN in implementing the power steering scheme. He understands that PLN sees this scheme as a threat to their business model, which currently dominates transmission and distribution networks.

"And that's natural because they (PLN) already have a PPA contract in the long term," he concluded.

The joint use of the power steering network is a mechanism that allows power generation owners to distribute electricity to consumers using existing transmission networks and owned by other parties.

In the context of the Indonesian electricity market, PLN as the owner of the electricity network is a major stakeholder in implementing this mechanism, apart from consumers and power generation owners.

The concept of power steering is one of the important points discussed in the Draft Law on New Energy and Renewable Energy (RUU EBET) in the DPR RI. However, until now, the bill has not been ratified because an agreement has not been reached regarding the mechanism for implementing power steering.