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Integration of renewable energy hindered by coal price cap

Indonesia's coal price cap encourages the consumption of coal while slowing the integration of renewable energy into the country's power grid.

KEY MESSAGES

  • A price cap on mandatory sales of Indonesian coal to Perusahaan Listrik Negara (PLN), the state-owned electricity company, distorts the market and locks in coal consumption
  • There are five other viable strategies to shore up PLN's finances without harming the integration of renewable energy into Indonesia's power supply
  • While subsidy reforms may affect consumer power prices, there are additional strategies to offset these impacts