Whereas strain is constructing on Indonesia to transition away from coal, the fossil gasoline will doubtless stay a basic a part of the nation’s power combine for the foreseeable future.
It’s presently unfeasible to “utterly take away coal” from the power system, in keeping with Idris Sihite, assistant minister for strategic planning on the Ministry of Vitality and Mineral Assets.
“We now have 99.2 billion tonnes of coal. We now have to handle the coal trade,” he mentioned, noting that Indonesia is “all the time seen because the unhealthy man” at worldwide local weather conferences due to its heavy reliance on the polluting fossil gasoline.
Sihite was talking on the Indonesia version of the Asia Pacific Vitality Talks in Jakarta, hosted by power know-how agency Siemens Vitality.
The price of decarbonisation in Indonesia additionally stays “too excessive”, warned policymakers, who’re cautious of a hasty retreat from fossil fuels. That is regardless of the transition to cleaner power sources being a precedence for the nation’s authorities, amid growing emissions and extra frequent climate-induced excessive climate occasions within the nation.
Rachmat Kaimuddin, chair of the nationwide power transition taskforce, mentioned that the worth of Indonesia’s huge fossil fuels property wanted to be managed because the nation transitions to greener power sources and emerges as a regional dealer in renewable power.
Indonesia depends on coal for 60 per cent of its electrical energy, has a younger fleet of coal-fired energy stations and is the world’s largest coal exporter. The nation additionally has considerable renewable sources which are underexploited, famous Kaimuddin, who can also be deputy coordinating minister of maritime affairs and investments in infrastructure and transportation.
“Indonesia is a big exporter of power, however largely fossil fuels. As we transition, we need to be sure that Indonesia is power safe and may be an exporter [of renewables] too,” he mentioned.
The “backside line” for making that occur is a dependable transmission system that may deal with the intermittency of renewables whereas making certain that clear power generates financial advantages and replaces jobs misplaced within the fossil fuels sector, Kaimuddin mentioned.
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Indonesia is blessed with enormous renewables potential, however there’s no marketplace for it but.
Eka Satria, chief government, Medco Energy Indonesia
At present, Indonesia is realising lower than one per cent of its photo voltaic potential, with renewables comprising simply 13.1 per cent of the nation’s power combine in 2023.
Kaimuddin mentioned {that a} “made-in-Indonesia” home photo voltaic provide chain, together with the event of storage infrastructure, was wanted to allow the nation to lock in the advantages of a clear power economic system.
Energy-sharing offers with neighbouring Singapore present the early promise of Indonesia’s renewables ecosystem, whereas the Simply Vitality Transition Partnership (JETP), a funding package deal financed by rich donor nations and personal traders, may very well be used to construct transmission traces and renewables vegetation, he mentioned.
Coal manufacturing in Indonesia has elevated by 558 per cent between 2000 and 2021, largely to affect the archipelago. Indonesia alone was liable for greater than half of the decline within the variety of folks with out electrical energy in Southeast Asia since 2000.
Sihite mentioned that attaining its nationwide goal to scale back emissions to web zero by 2060, which might contain retiring coal vegetation, trusted funding that was presently “missing”.
A 2021 research by Indonesia’s planning ministry projected that decarbonising Southeast Asia’s largest economic system would value US$150 billion to US$200 billion per yr between 2021 and 2030, or 3.4 per cent to 4.5 per cent of GDP.
Edwin Nugraha Putra, president of the board of administrators for state utility PLN, mentioned that the nation would nonetheless be utilizing coal, which is reasonable and considerable, by way of to 2060, together with different lower-carbon applied sciences equivalent to biomass, hydrogen or ammonia.
“It’s unrealistic to anticipate a sudden phase-out of coal within the close to time period; we’ll see a phase-down strategy,” mentioned Gary Steward, regional head of service operations, Asia Pacific, Siemens Vitality. “Pure gasoline wil play a key function in Indonesia’s transition; it ticks bins of safety, affordability and sustainability. Renewables will kick in at a later date,” he mentioned.
Transition boundaries
Indonesia invested extra in renewables than any nation in Asean in 2023, in keeping with an evaluation from Bain, a consultancy. Nonetheless, quite a few obstacles are slowing clear power growth, together with subsidies for fossil fuels, which eat into the state price range for funding the transition, mentioned Kirana Sastrawijaya, accomplice at Umbra Strategic Authorized Options, a legislation agency.
This has put renewable power tasks in Indonesia at a aggressive drawback in comparison with conventional power sources equivalent to coal, oil and pure gasoline. Fossil gasoline subsidies in Indonesia have totalled US$12 billion this yr to this point.
Indonesia’s monopolistic power market construction , the place PLN is the only real dealer in power for your entire nation, has additionally made it tough for renewables to proliferate. Customers and companies have restricted means to buy power straight from renewables builders, as they need to undergo PLN, and funding within the clear power sector relies upon largely on nationwide renewables procurement planning, Sastrawijaya famous.
Ever-evolving power market rules have elevated the perceived threat and uncertainty for overseas traders seeking to fund renewables tasks, whereas rules have struggled to maintain up with the tempo of change in new applied sciences equivalent to hydrogen, inexperienced ammonia and battery storage, she added.
Native content material requirement rules, which require elements for photo voltaic panels and different renewables applied sciences to be manufactured in Indonesia, have additionally elevated the relative value of renewables, slowing the transition to scrub power.
Regardless of just lately downgrading its 2025 renewables goal from 23 per cent of power combine to 17 to 19 cent, the nation has elevated its 2050 clear power goal from 30 per cent of the power combine to 58 to 61 per cent and 70 to 72 per cent by 2060.
Siemens Vitality know-how transmits 40 per cent of Indonesia’s energy. The nation is aiming to construct an excellent grid to higher join renewable power sources throughout the archipelago. Picture: Siemens Vitality
What companies need
Salman Baray, Indonesia nation director for ACWA Energy, an power and water remedy agency, mentioned that financing was available for renewables tasks in Indonesia, however a “clear plan” was wanted from the federal government to spice up renewables adoption, together with extra massive tenders for renewables tasks that will assist push costs down.
“The know-how is there and the enterprise fashions are there – it’s simply in regards to the execution,” he mentioned.
Indonesia needs to be including a minimal of 4-6 gigawatts (GW) of renewables yearly to attain its 2060 web zero goal, he added.
Indonesian energy technology agency Medco Energy Indonesia has been engaged on optimising fossil gasoline vegetation to scale back emissions in addition to pursue clear power tasks amid the structural constraints of Indonesia’s power transition.
The corporate has labored with Siemens Vitality to transform the Panaran II Energy Plant in Batam right into a mixed cycle turbine, which implies no further gasoline is required and electrical energy tariffs decline.
“Indonesia is blessed with enormous renewable potential, however there is no such thing as a marketplace for it but,” mentioned Eka Satria, Medco Energy Indonesia’s CEO.
Medco, which has dedicated to attaining web zero emissions throughout Scope 1, 2 and three by 2060, is aiming to extend its inexperienced power capability to no less than 35 per cent by 2025, with a deal with photo voltaic, geothermal and hydropower, Satria mentioned.
The agency inked a take care of Singapore’s power authority to export renewable power to the city-state final yr.
Satria mentioned there was a necessity for a value on carbon to assist Indonesia realise its enormous renewable power potential and hasten the power transition.
Indonesia plans to introduce a carbon buying and selling system for coal-fired energy vegetation subsequent yr. The primary stage of the system covers 99 coal vegetation with an put in capability of 33.6 GW.
Indonesia’s regional power sharing potential
Indonesia’s plan to construct a “tremendous grid” to higher join the archipelago’s electrical energy community may assist to scale back intermittency points and help the nation’s ambition to turn out to be a serious regional dealer in renewable power.
Evy Haryadi, chairman of non-profit Indonesian Electrical Energy Society (MKI), mentioned Indonesia has the chance “to steer by instance” in clear power, however should first use elevated renewables capability in direction of the nation’s Nationally Decided Contributions (NDCs) to the Paris local weather accord.
Indonesia’s newest NDC dedicated to a 31.89 per cent unconditional discount in greenhouse gasoline emissions and a 43.2 per cent discount that’s depending on worldwide assist – together with funding.
“We perceive that Indonesia must transition. However affordability stays the important thing problem,” mentioned Medco’s Satria.
