Discussion and Introduction to the Indonesian Green Hydrogen Community (KHHI) – Realizing a Green Hydrogen Ecosystem in Indonesia

Replay Event

Registration Link Komunitas Hidrogen Hijau Indonesia (KHHI)

Background

Indonesia has set an ambitious target of decarbonizing its energy system by 2060 or sooner. Utilizing renewable energy, reducing fossil energy consumption and decarbonizing the transportation and industrial sectors are the main strategies to achieve this goal. However, the energy transition is not without challenges. Renewable energy growth is below the planned target. Renewable energy capacity only increased by 3 GW between 2014 and 2023. For this reason, it is necessary to accelerate the development and utilization of renewable energy to achieve the energy transition target, including the use of renewable energy to produce green hydrogen, which is a molecule that plays an important role in decarbonizing industry and transportation.

The Green Energy Transition Indonesia (GETI) program, led by the Institute for Essential Services Reform (IESR) with the support of the British Embassy in Jakarta, aims to increase investment in renewable energy to produce green hydrogen through the Indonesia Green Hydrogen Accelerator initiative. The Indonesia Green Hydrogen Accelerator aims to build a green hydrogen business ecosystem to support the implementation of the National Hydrogen Strategy (SHN), which has been published by the Ministry of Energy and Mineral Resources (ESDM) in December 2023. Green hydrogen is expected to support decarbonization in the industrial, transportation, and power generation sectors.

The International Energy Agency (IEA) projects that by 2050, global hydrogen demand will increase by 7.5 times, or reach 520 million tons. In Indonesia, the Ministry of Energy and Mineral Resources (2023) projects that low-carbon hydrogen utilization will increase to 609 PJ by 2060, a 300-fold increase from the projected demand in 2030. This growth is driven by an increase in hydrogen utilization in various sectors other than industries that currently use it, such as industrial heating, transportation, and power generation. Currently, hydrogen production in Indonesia from natural gas is mostly focused on producing ammonia to meet the needs of the fertilizer industry.

Currently, the cost of hydrogen production, particularly green hydrogen, remains a major challenge as it directly affects the viability and competitiveness of green hydrogen as a clean energy source. Gray hydrogen, which is derived from natural gas, has a production cost of $0.98-$2.93 per kilogram. Blue hydrogen, which is produced from fossil fuels but equipped with carbon capture technology, costs $1.8-$4.7 per kilogram. Meanwhile, green hydrogen, which is produced through electrolysis of water using electricity from renewable energy, has the highest production cost of $4.5-$12 per kilogram (BNEF, 2023).

Increased renewable energy capacity and falling electricity prices from solar and wind farms, as well as falling global electrolyzer prices will accelerate the decline in green hydrogen production costs. For this reason, regulatory support and government incentives are needed to accelerate the decline in green hydrogen production costs to make it more competitive.

The National Hydrogen Strategy (SHN) has identified the period 2025-2030 as an important phase in building the foundation of the hydrogen ecosystem in Indonesia, including the development of hydrogen standards, regulations, and certifications to drive market development. Stronger efforts are needed to accelerate the development of low-carbon hydrogen and ammonia to maximize the potential of the future hydrogen market, by improving the enabling conditions for increased demand and supply of clean hydrogen, as well as policy and regulatory support.

The potential of green hydrogen to significantly reduce carbon emissions in our energy system is considerable, but challenges in infrastructure, financing, regulatory challenges, and workforce readiness still need to be addressed together. On the other hand, increasing demand through the use of green hydrogen is a crucial step in supporting decarbonization in various industries.

To accelerate the competitiveness and production of green hydrogen IESR, as a think tank focused on energy transition, intends to hold a focus group discussion to discuss strategies, opportunities, and challenges in building a sustainable and competitive green hydrogen ecosystem and community in Indonesia.

Objectives

To identify challenges and opportunities in developing a green hydrogen ecosystem in Indonesia.
To encourage cross-sector collaboration in utilizing green hydrogen as a decarbonization solution.
Introducing the Green Hydrogen Community as a cross-stakeholder collaboration platform as part of Indonesia’s green hydrogen ecosystem.