Sustainable performance challenges of rural microgrids: analysis of incentives and policy framework in Indonesia

Rural off-grid electrification systems powered by renewable energy have become popular in the Global South. Unfortunately, many microgrids have experienced trouble during their first years of operation, leading to premature system deterioration. In this paper we trace these problems to institutional issues associated with goal displacement in implementing organizations and, relatedly, ineffective programme upscaling, which have remained under-researched in the rural renewable energy literature thus far. Using literature about implementation of large infrastructure projects, political economy of policy making, and replication of innovations as our conceptual lens, we examine a government-initiated microgrid programme in Indonesia. Early project failure was found to be linked to a one-sided policy focus on expanding the number of installed systems, instead of ensuring service quality. This focus is driven by political campaign strategies in which microgrid technologies are used as instruments for political legitimation, and pressure from aid donors to achieve early quantifiable results. It leads higher governmental echelons to care about reaching pre-set installation targets rather than ensuring that lower-level governments face incentives to focus on maintenance and repair. The focus on quantitative expansion also explains a lack of incentives or pressures to address a persistent lack of clarity about responsibilities of each government level, local communities, consultants, and contractors. Similar patterns can be noted in other countries, suggesting the findings have broader relevance for understanding key determinants of microgrid unsustainability in the Global South. To improve governance, pressure needs to be brought on the government by the general public, academia, NGOs and the press through increased public exposure of early system deterioration. These actions should be grounded in research that seeks to understand the complex causes of the problem, considering the whole scope of interlinked incentives and policies, before trying to tackle it.