Sri Mulyani: Renewable energy affordability is a challenge for energy transition

Jakarta – Minister of Finance Sri Mulyani said, Wednesday (13/7), that the challenge of energy transition from fossil energy to renewable energy is the aspect of affordability in terms of financing. Because the cessation of the use of fossil energy is not free of cost.

“It is expensive, because it will have an impact on PLN (state electricity company) in terms of the cost of electricity production. If the consequence is an increase in costs, then electricity prices will be more expensive,” Sri Mulyani said at the G20 side event in Bali, entitled “Sustainable Finance: Instruments and Management in Achieving Sustainable Development of Indonesia”.

She said, energy transition should be fair and affordable. For this reason, Mulyani said that there are three things that need to be considered to test the principle of affordability of this energy transition. Firstly, by looking at people’s purchasing power. “This means that the community and industry must consume electricity which is much more expensive, can they afford it?,” she said.

Secondly, by looking at the ability of PLN, if the community and industry are unable to pay higher electricity prices, then PLN will bear the losses due to this, Mulyani said, adding that PLN has the potential to transfer the losses to the government. Thus, the third aspect of affordability is to provide subsidies from the state budget.

If these three aspects are considered properly, then according to Mulyani, Indonesia will be able to transition the use of energy from non-renewable to renewable without damaging the people’s economy, PLN’s business and financial situation, as well as the government’s budget.

Indonesia is committed to achieving net zero emissions in efforts to deal with climate change. One of them is by transitioning energy production that was previously fossil-based to renewable energy while building a green economy in a fair and affordable manner. (Hartatik)

Banner photo: Minister of Finance Sri Mulyani was the speaker of the G20 side event entitled “Sustainable Finance: Instruments and Management in Achieving Sustainable Development of Indonesia”, on Wednesday (13/7) in Bali. (Photo: Hartatik)

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