A Blended Government-Private Sector Perspective Analysis for Optimizing Subsidies to Promote Renewable Energy Deployment in Indonesia
Z.G. Ashqar (TU Delft - Electrical Engineering, Mathematics and Computer Science)
J.K.A. Langer – Coach (TU Delft - Technology, Policy and Management)
K. Blok – Mentor (TU Delft - Technology, Policy and Management)
Z. Roosenboom-Kwee – Graduation committee member (TU Delft - Technology, Policy and Management)
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Abstract
This thesis delved into methods regarding optimizing subsidy policy for accelerating renewable energy in Indonesia. The method used objective programming to maximize subsidy efficiency from both a private and governmental perspectives.
The ASEAN region, and Indonesia in particular, faces a critical need to transition from fossil fuels to renewable energy, with a government target of 30% renewable energy in the total primary energy supply by 2030. Despite supportive regulations, renewable projects remain financially unviable at current market conditions. This thesis identifies optimal subsidy policies to promote large-scale renewable energy development using an innovative optimization approach that maximizes the change in equity Net Present Value (NPV) relative to subsidy costs. Results indicate that policy effectiveness is primarily determined by the total resources mobilized, with technology-specific needs: solar PV benefits initially from capital subsidies, shifting to production-based support, while wind, geothermal, biomass, and hydropower rely more on capital subsidies. Findings emphasize the importance of capital and financing costs, and provide policy recommendations to enhance government effectiveness and private-sector engagement. Future research should explore policy flexibility, carbon pricing, and dynamic scenario alignment.