Investigating decentralized renewable energy systems under different governance approaches in Nepal and Indonesia: How does governance fail?

Abstract

Decentralized energy systems have numerous advantages over mega energy projects, including environmental friendliness, lower upfront costs, greater affordability and reliability, lower risks, an easier ability to cope with system failures, and community empowerment. Despite these advantages, the type of governance used when constructing these systems can play an important role in yielding these positive impacts to local communities. This study investigates how renewable energy projects can fail under certain types of governance. We use case studies in Indonesia and Nepal to demonstrate the problems and factors in terms of the governance structures that have diminished the performance of decentralized small-scale renewable energy projects. The Indonesian case study focuses on the top-down governance of a renewable energy project. The project’s promotion under a conventional central government-led framework resulted in a process of granting renewable energy plants to local governments without considering stakeholders. In the Nepalese case, a renewable energy project was designed using a polycentric approach to governance. However, the donor (the European Commission) remotely controlled the project process, thereby hampering the intended polycentric governance strategy, which was originally conceived to include multi-level stakeholders. By focusing on real cases throughout a project’s progress, this study illustrates how monopolized power excludes the interests and commitments of multi-stakeholder interests and commitments to a project, which impinges on the final result.