Less-than-optimal national electricity sales can actually be seen from the still low electricity consumption in Indonesia: only 1,123 kWh per capita in 2021, lower than the ASEAN average of 1,342 kWh per capita. In fact, compared to the G20 average of 5-6 MWh per capita, Indonesia has the lowest electricity consumption, at merely 1.1 MWh per capita.
Solution for targeted subsidy?
Given the dependence on LPG imports and the large electricity oversupply, the electric stove conversion program seems like the best alternative solution to a more targeted energy subsidy policy. The reasoning is actually quite solid: provide electric stoves for underprivileged households who receive electricity subsidies, namely 24.2 million consumers in the 450 VA and 8.4 million in the 900 VA category, accounting for 85 percent of total electricity subsidy recipient households.
The Government was quite confident that the conversion program would help solve two problems at once – reducing an onerous LPG subsidy while easing the electricity oversupply. In fact, on the President’s directive to implement the program, the Government and PLN distributed electric stoves to 2,000 beneficiary households in Bali and Solo free of charge, as part of a pilot project. The Government claimed that, based on the trial, those households only spent an average of Rp28,140 per month using electric stoves, a saving of 15 percent compared to using LPG cylinders.
Touting the success of the pilot project, the Government and PLN seek to expand the distribution of free electric stoves to 15.3 million beneficiary households, by providing 300,000 units in 2022 and a further 5 million units in 2023 and 10 million units in 2024. With each electric stove costing Rp1.8 million plus electricity subsidies, the total budget up until 2024 works out to Rp45 trillion.
The Government projects the conversion program to be able to potentially save Rp31 trillion in LPG subsidies from 2022-2024. The assumption is that by using electric stoves, where 7.19 kWh is equivalent to 1 kg of LPG, and the electricity price of Rp1,444 per kWh, the Government will be able to reduce the subsidy from Rp11,000 (per kg of LPG) to Rp10,387 (per kg of electric stove equivalent).
In addition, the Government can potentially save Rp41.2 trillion from 3.41 million tons of LPG import per year and US$2.8 billion in foreign exchange. It will also reduce the consumption of 3-kg LPG to 2.1 million tons. And with the massive use of electric stoves, electricity demand is projected to increase to 15.06 TWh per year, bringing in an additional Rp29.7 trillion in revenue for PLN.