Indonesia’s Financially Sustainable Electricity Sector (GSI)

Indonesia’s electricity sector faces a number of challenges, notably the need to meet rising demand for electricity, to serve consumers in remote regions and meet objectives to increase the share of renewable energy. To respond to these challenges, the government launched a set of initiatives to increase generation capacity, expand electricity networks and improve quality of supply. This report by the Global Subsidies Initiative (GSI) demonstrates that further action is needed if government objectives are to be met. For example, subsidies for electricity cost Indonesia billions of dollars a year, much of that benefiting wealthy households. The report concludes that the largest challenge for Indonesia’s electricity sector is to move beyond providing electricity to delivering electricity in a sustainable manner, by reducing reliance on coal, assuring efficient electrification of remote areas and evaluating the potential of decentralized generation based on renewable capacity.