Indonesia is quickly emerging as a key player in the electric vehicle (EV) industry, with significant investments being made to spur its growth. However, the journey towards a thriving EV market is not without obstacles. The main challenge lies in the inadequate charging infrastructure and the country’s dependence on coal for electricity generation.
The lack of a sufficient charging network is a major concern in Indonesia, leading to the issue of «range anxiety» among EV owners. Currently, there is a shortage of public charging stations, making it inconvenient for drivers to recharge their vehicles. The National Electricity Company, responsible for providing charging stations, has struggled to keep up with the growing demand. Moreover, high costs of public charging compared to home charging discourage consumers from installing chargers at their residences.
In order to address the scarcity of public charging infrastructure, the National Electricity Company has introduced opportunities for public-private partnerships in the establishment of charging stations. These partnerships require an investment of IDR 342,000,000 ($21,859) per station. Additionally, the Ministry of Energy and Mineral Resources has imposed maximum service costs for electric charging, ensuring affordability for consumers.
To encourage the adoption of EVs, the government has implemented various incentives. The Value-Added Tax (VAT) on EVs is set at 11 percent, with a government subsidy of 10 percent, resulting in consumers only paying 1 percent. However, these incentives are subject to EVs meeting specific local content requirements.
Despite these efforts, Indonesia’s primary source of electricity still heavily relies on coal-fired power plants, accounting for 43 percent of the energy mix. This poses a challenge in achieving a truly sustainable transition to EVs. However, the government has committed to gradually phasing out coal and increasing the share of renewable energy sources. According to the National Energy Policy, the aim is to reduce coal’s share to a minimum of 30 percent by 2025 and 25 percent by 2050, while increasing the contribution of renewable energy to 23 percent by 2025 and 31 percent by 2050.
To overcome these hurdles and develop the necessary EV infrastructure, it may be necessary to provide additional incentives to encourage businesses to partner with the National Electricity Company. Determining the financial and technical aspects of these partnerships will be crucial in Indonesia’s transition to renewables and the promotion of EV adoption.
1. What is «range anxiety» in the context of EVs? Range anxiety refers to the fear or concern of running out of battery power while driving an electric vehicle and the subsequent inability to reach a charging station.
2. What steps has Indonesia taken to promote EV adoption? Indonesia has implemented tax incentives, lowered luxury goods sales tax for EVs and hybrids, and set local content requirements for EVs to qualify for incentives.
3. What is the current energy source for electricity generation in Indonesia? Coal-fired power plants make up 43 percent of Indonesia’s primary energy supply for electricity.
4. How does the government plan to transition from coal to renewables? Indonesia’s National Energy Policy aims to reduce coal’s share to a minimum of 30 percent by 2025 and 25 percent by 2050. The policy also targets an increase in the contribution of renewable energy sources to a minimum of 23 percent by 2025 and 31 percent by 2050.