0 Reddit 0 Linkedin email

Indonesian President Joko Widodo’s energy investment plans have not yet materialised. One village is taking matters into its own hands.

By Oliver Ward

More than 25 million households across Indonesia do not have access to electricity. Even in Jakarta, the electrical supply is unpredictable. Businesses are often left without power during peak trading times. Lights are dim, fans go out, and owners have to process payments manually.

Widodo promised energy reform in 2015

President Joko Widodo launched an ambitious energy investment program in 2015. He plans to increase Indonesia’s energy production and infrastructure. He unveiled plans for new power plants, substations, and distribution lines. But these do not come cheap.

Source: World Resources Institute

The plans have yet to deliver a reliable electricity supply. 2020 is only two years away, but the plans have still not materialised.

Bringing electricity to rural Indonesia is not an easy task. The geography of Indonesia makes managing electrical infrastructure difficult. The 17,000 islands that make up Indonesia pose challenges to grid expansion.

There have been other barriers to Widodo’s 2020 dream

Until 2017, the Indonesian government had no way of monitoring electricity supply. Last year, the Institute on Essential Services Reform (IESR), Prayas Energy Group (PEG), and World Resources Institute (WRI) launched the Electricity Supply Monitoring Initiative (ESMI) in Indonesia. The initiative sought to gather data on electricity usage in Jakarta.

It installed monitors in 25 locations across the city. Some monitors collected data from commercial buildings, others from households and public buildings. The data collected is still a small sample. But there are plans to roll the scheme out across Indonesia. Access to data will help the government channel money where it will best improve supply.

Foreign investment hasn’t materialised

Without investment Widodo’s dream will remain just that, a dream. The energy sector saw little change in foreign investment levels in 2016. In 2017, the Asian Development Bank (ADB) gave the Indonesian energy sector a loan of US$1.1 billion. However, Widodo still has some way to go to get his US$43.7 billion.

Part of the issue is the energy sector in Indonesia still has strict caps on foreign ownership. For example, foreign firms can only own up to 67% of a geothermal power plant. Foreign ownership of operations and management at the plants is capped at 49%.

There are signs of this changing. At the end of January, Energy and Mineral Resources Minister, Ignasius Jonan, unveiled plans to revoke 11 restrictions on investment into the energy sector. He has not indicated what restrictions they might be.

Ali Herman Ibrahim is chairman of the Indonesian Private Electricity Plants Association (APLSI). He hoped that the regulations would “help to smooth the investment process in order to produce mutual benefits for the government and private companies.”

A grassroots solution could hold the solution to Indonesia’s electricity problems

Kamangghi village may have the solution for Indonesia’s electricity problems. The village sits on sparsely populated Sumba Island. Before 2010, only 10% of the village population had access to electricity. Now, a micro-hydro plant and solar panels power the whole village. By 2026, all the residents of Sumba Island will have access to electricity.

The campaign to connect Kamangghi village did not depend on reforms or investment. A local councillor in East Sumba named Umbu Hinggi Pajanji worked with the People-Centred Economic and Business Institute to install a small solar panel outside the village. A locally-formed cooperative organised its upkeep and maintenance.

Then in 2011, the local communities and a Dutch NGO built the micro-hydro plant. The villagers themselves helped by digging out a hillside in the construction process. The plant generates 37 kilowatts of electricity. The local population only uses around six. The local cooperative sells the excess energy to PLN. The money generated is then put back into the village. Villagers have used the revenue to expand water pipelines in the village.

The projects have changed the villager’s lives. Shops can stay open after dark. Villagers can continue weaving. The local school now powers computers.

Rural villages feel the effect of underinvestment in energy infrastructure. It makes sense that they should have a hand in its development. In Kamangghi, the opportunity to generate its electricity provided local people with jobs. The village is also generating revenue from its surplus energy.

Technological developments are transforming the banking industry. New players are giving the responsibility and choice back to the consumer. There is no reason why the energy industry cannot follow suit. Through cooperatives, many rural areas can develop their own energy infrastructure. The local people can drive their own future and reap the rewards. Other villages can look to Kamangghi. They do not need to wait for Widodo’s dreams to come true. They can reach out and grasp it themselves.