Investigation into the Indonesia Power Industry for Implementation of a Competitive Generation Market

Indonesia has more than 5 big islands, yet only one of them has been deregulated, which is the Jawa-Bali-Madura system. In planning to supply more generation, state´s electric utility has announced a tender for building two identical units of power plant in the area of south Kalimantan Island. After the deregulation, what would be the outcome this area has? Both units will hold a significant share of generation supply in the area, hence possibly creating a market power. Assuming each unit is owned by different generation company, gaming strategy is expected to exist between the two firms. The objective of this paper is to analyse and compare the outcome of different models and their impact on the Indonesia electricity market. Specific recommendation will be obtained to generating firm on what kind of strategy of game theory would be the most suitable for them in the new market.