Tapping Indonesian Last Mile Electrification Potential: Novel Off-grid Business Model Concepts

Last miles electrification for rural areas in archipelagic countries bear the most challenge to electrify, as they are scattered, usually low-demand and uncertain in growth. In the case of Indonesia, the complexity adds as the task often pinned to PLN as a state-owned utility and rely to their network extension. Low participation of private sectors to take part in providing electricity for off-grid and rural areas are one of the factors as the implication of current challenging legal and regulatory set up. UK-Indonesia MENTARI Program analyses three possible new business models namely Joint Cooperation Contract, Regional Owned Enterprises-Private Partnership and Micro-IPP, including legal and regulatory gap, enabler, and opportunities. An alternative financing mechanism, contract for difference concept, is proposed to facilitate the financing gaps. As take away, direct subsidy to customer with auction and proper business model within the fits of government and PLN will enable services commercially to the marginalized area.