Supply chain incentives: The suggested policy reform on Domestic Price Cap aims to eliminate market price distortion for domestic coal, but PLN will still be compensated for any price difference above $70/ton. How would this be impactful to PLN’s decision making in order to push for more renewables?

After consideration of take or pay contract and grid/system stability, PLN is required to prioritize the cheapest option of electrons in deciding its merit order as stated in its grid code. By revealing the true cost of coal in its energy use, theoretically, PLN would have to prioritize renewable sources that are cheaper than fossil fuel in general. This would be the targeted impact for PLN decision making.

It is important, however, that the policy decision will not create negative impact to the customers if there is any price increase in PLN’s cost of generation. Therefore, PLN should be compensated through a windfall profit mechanism, to keep electricity prices affordable for the customers.

For more explanation, refer to Sub-Chapter 8.2.

Supply chain incentives: Why does the CIPP recommend to keep the Domestic Market Obligation (DMO), but to remove Domestic Price Obligation (DPO)?

Strengthening financial policies: How would the development of Transition Taxonomy in Indonesia support the JETP Investment Focus Areas?