Challenges in meeting renewable power target
JAKARTA: Indonesia is expected to make more commitments to the adoption of renewable energy (RE) following discussions about the new electricity procurement plan, but experts expect realising such ambitious goals will remain challenging because of the country’s inability to attract large investments.

State-owned electricity company PLN plans to build an additional 33.2 gigawatts (GW) of renewable power capacity between 2024 and 2033, according to the latest draft of the long-term electricity procurement plan (RUPTL) seen by The Jakarta Post this April.

That is equivalent to 70.64% of the planned 47GW of additional electricity capacity, with the rest to be powered by coal and gas plants.

The latest figure marks a shift from PLN’s 2021to 2030 RUPTL, which strived to reach 51% renewables out of a planned 40.5GW of additional electricity capacity.

It also shows a slight improvement from the previous 2024 RUPTL draft shown in November last year that aimed for a 68% share of renewables in the planned additional electricity capacity, according to a PLN presentation to the House of Representatives.

When asked about the latest development of the plan, the Energy and Mineral Resources Ministry’s electricity director- general Jisman Hutajulu, said that “there is yet to be a proposal from PLN.”

PLN did not immediately respond to the Post’s request for comment on the matter.

RE sources only constituted 13% of the country’s energy mix last year with the rest powered by coal, oil and gas, energy ministry data shows. Indonesia has continued to miss its renewable investment targets in past years. Last year, it only attracted US$1.48bil in new and renewable energy investments, falling short at 82% of the US$1.8bil target set for the year.

Between 2017 and 2023, Indonesia only attracted between US$1.1bil and US$1.6bil each year, according to energy ministry data. Meanwhile, the latest RUPTL draft showed that Indonesia would need 1.16 quadrillion rupiah (US$71.36bil) for the 10-year plan.

Putra Adhiguna, managing director of Jakarta-based think tank Energy Shift Institute, said that introducing more renewables would only be possible if the country could solve its electricity oversupply problem while ensuring a reasonable tariff for renewable electricity to convince investors. “A large aggregate renewable energy capacity means little if, in the short-term, the government still prioritises fossil fuel-based power plants,” he told the Post.

The upcoming 2024 RUPTL draft showed hydropower would make up 28.72 % of the planned additional capacity, followed by solar and wind at 28.09% and geothermal at 11.91%.

Hydropower had been previously set to contribute 25.68% of the total planned additional capacity in the 2021 to 2030 RUPTL, followed by solar and wind 12.35% and geothermal 8.4%.

Dinita Setyawati, the Asean electricity senior analyst at London-based climate and energy think tank Ember, said if done correctly, a larger renewable share in the 2024 to 2033 RUPTL would help Indonesia expedite the energy transition.

However, RE adoption must be carried out simultaneously with increasing network flexibility, she noted, to avoid restricting the flow of renewables in the electricity network.

“The government must also determine emissions limits for the electricity sector, including captive coal plants, to achieve peak emissions and accelerate decarbonisation efforts,” she told the Post.

Dinita named the electricity generation costs (BPP) of renewables, which are still higher than those of coal, as one of the disincentives for PLN to source from renewables.

“Meanwhile, if there is no large demand from PLN or at least a certainty about purchasing renewables in large quantities, it would be difficult for renewables to catch on in Indonesia,” she said.

She attributed the coal-fired plants’ lower electricity costs to favourable government policies, such as the domestic price obligation rule that capped the coal price for electricity at US$70 per tonne.

Currently, Indonesia’s electricity price has remained unaffected by the rupiah’s volatility against the United States dollar and the international oil price, as the government has used the implementation of the tariff adjustment to create favorable economic conditions.

Dinita suggested that the government provide incentives to renewable energy projects, such as tax breaks, subsidies and infrastructure management.

This would ensure that the economic value of the project would still be attractive to business actors.

Eka Satria, head of energy and mineral resources at the Indonesian Employers Association, told the Post last Friday that the association supports the government’s move to increase RE capacity in the upcoming RUPTL. — The Jakarta Post/ANN
Energy,Indonesia,RenewableEnergy,ElectricityPlan,Investment,Coal,Hydropower,SolarWind,Decarbonisation
Indonesia is expected to make more commitments to the adoption of renewable energy (RE) following discussions about the new electricity procurement plan, but experts expect realising such ambitious goals will remain challenging because of the country’s inability to attract large investments.