West Nusa Tenggara is a province of Indonesia facing severe energy shortages. The province contains 10 districts and municipalities spread across a large geographic region with a mountainous topology that makes electricity transmission expensive. The current grid has about 14 MW of generation capacity at central power generating stations. The government of Indonesia has examined and changed its policy to better facilitate local generation that would reduce transmission costs while providing local economic growth through independent power producers (IPPs).
To allow for the growth of IPPs several major steps were taken that could be used in similar power markets.
- Instituting reform to build Public-Private-People Partnerships (PPPP). This included establishing a feed-in-tariff to provide financial incentives for IPPs to provide power to the state electric company PLN. For communities and individuals, the government also gave special incentives for self-generation. This multi-stakeholder approach also helps to build capacity in the civil society for power generation.
Establishing the legal framework and incentivizing community-level producers. Community level producers have different motivations than commercial producers and need to have policy tailored for their values and goals.
Enabling cooperation between distributed generation and conservation. One of the most readily available forms of distributed generation is miniature hydro which could provide an estimated 96.5 MW of generation capacity. The deployment of mini-hydro needs to be coupled with forest conservation authorities and part of the enabling policy was to establish communication channels between these parties.
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