by: Firdaus Cahyadi*
The energy transition is inevitable. In the Indonesian context, the energy transition is not only about reducing greenhouse gas (GHG) emissions, which cause the climate crisis, but also about reducing dependence on fossil energy. Indonesia’s dependence on fossil fuels can negatively impact long-term energy security.
In that context, energy transition is a necessity for Indonesia. The question, then, is how the energy transition is carried out. As written in the September 15, 2024, edition of Tempo Magazine, September 2024, a group of entrepreneurs who are members of RE100 urged the government to boost the energy transition through a power wheeling scheme.
The power wheeling scheme uses a shared network dedicated to renewable energy. RE100 is an organisation consisting of 430 international companies. It is committed to using electricity from renewable energy sources by 2050. Currently, the electricity consumption of RE100 members in Indonesia reaches 2.1 terawatt-hours (TWh), equivalent to 0.74 per cent of the total electricity sales of PT Perusahaan Listrik Negara (Persero) or PLN in 2023.
In the tradition of the neoliberal economic school, businesspeople make sweet promises and threats at the same time. They promised that members of their group would increase investment in Indonesia by billions of US dollars if renewable energy were supported, including through a power wheeling scheme. After making sweet promises, they also threatened that international companies and their supply chains would move to other countries, which would have a more significant role in renewable energy in their economy and energy mix.
Power wheeling will determine variable electricity tariffs through market mechanisms. In other words, power wheeling has become part of the unbundling practice of electricity in Indonesia. Unbundling is the separation of electricity generation, transmission, distribution, and sale into separate entities.
The Indonesian Constitution, Article 33 of the 1945 Constitution (UUD) paragraph 2, clearly states that the state controls branches of production that are important to the state and that control the lives of many people. Energy is one of these branches of production. Liberalizing the energy sector through an unbundling scheme is clearly against constitutional principles.
The violation of the constitution in unbundling the electricity sector is not just a discourse. The decision of Constitutional Court Number 111/PUU-XIII/2015, dated December 14, 2016, clearly and unequivocally confirms that unbundling in supplying electricity does not follow the 1945 Constitution Article 33. The question is if, in the Indonesian context, it is clear that the practice of unbundling in the electricity sector is declared contrary to the constitution, why is the practice promoted again through the power-wheeling scheme?
The energy transition is not a bad agenda. However, the energy transition will show its pockmarked face if the actors behind it direct the agenda only for profit accumulation without considering social justice. Indonesia has a lot of renewable energy potential. It is ironic if the great potential is utilised by actors who only aim to accumulate profits in the name of green energy. The choice of energy transition in Indonesia based on market liberalisation will benefit a handful of these actors. The question then is, who are the actors who benefit from the electricity liberalisation project under the mask of energy transition?
It is interesting to look at Indonesia Corruption Watch’s (ICW) research report for 2024. The report, ‘Who Benefits, Extractive Business and Renewable Energy Behind Prabowo-Gibran’, reveals that renewable energy business players in Indonesia are largely dominated by political-economic elites who were previously in the fossil energy business.
In the report, ICW mentioned the TOBA Group, which previously focused on dirty coal energy but now has a business in renewable energy. According to the report, the TOBA group has projects for the Trembesi Floating Solar Power Plant (PLTS) in Batam and the Bayu Power Plant (PLTB) in East Nusa Tenggara Province.
Not only TOBA Group, Adaro Group, which previously focused on the coal business, is also venturing into the renewable energy business. The Adaro Group, in the ICW report, is said to have Mentarang Induk Hydroelectric Power Plant (PLTA) projects in North Kalimantan, Tanah Laut Wind Power Plant in South Kalimantan, and Kelanis Solar Power Plant in Central Kalimantan.
According to the ICW research report, the Bakrie Group follows a line of conglomerates previously in the dirty coal energy business and other renewable energy businesses. The companies that once triumphed in the coal business through BUMI and stumbled over the Lapindo mudflow case now also have a renewable energy business. PT Bakrie & Brothers has a rooftop solar power plant business through its subsidiary PT Braja Multi Cakra. PT Bakrie & Brothers, through its subsidiary PT Bakrie Power, also has a PLTS Hybrid procurement and installation project in South Sulawesi.
Unfortunately, according to the research, some are businessmen close to the Indonesian President-elect in the 2024 presidential election, Prabowo-Gibran. This means that large-scale renewable energy projects in Indonesia have the potential to have adverse social and ecological impacts on surrounding communities and are prone to conflicts of interest. The question then is whether the proposed power wheeling is part of the conflict of interest of the old players in the fossil energy business, who are close to political power and are now venturing into the renewable energy business.
If the government successfully adopts the liberalisation of electricity in the name of energy transition through the power wheeling scheme, then the parties who benefit and lose are very clear. A handful of capital owners benefit, but most people are harmed because one of their livelihoods, energy, is left to market mechanisms.
* The author is a communications specialist with over 20 years of experience in the social and environmental movement.
This article first appeared on Retizen on October 15, 2024