MEMR Regulation No. 2/2024 Limits Public Participation to Support Energy Transition through Rooftop Solar PV

press release

Jakarta, February 23, 2024 – The Indonesian government has officially issued Minister of Energy and Mineral Resources (MEMR) Regulation No. 2 of 2024 concerning Rooftop Solar Power Plants Connected to the Electricity Network of Holders of Electricity Supply Business License for Public Interest, which is a revision of MEMR Regulation No. 26 of 2021. 

In this new regulation, the net-metering scheme is abolished so that excess electrical energy or export of electrical power from users to State Electricity Company (PT PLN Persero) cannot be calculated as part of the reduction in electricity bills.  The regulation also stipulates a quota mechanism for rooftop solar power systems in the electricity system of owners of Electricity Supply Business License for Public Interest (IUPTLU) for five years. In addition, this regulation stipulates the registration period twice a year and the compensation provided by the state to PLN if the cost of electricity supply is affected due to the penetration of rooftop solar PV.

The Institute for Essential Services Reform (IESR) considers that the elimination of the net-metering scheme will make it difficult to achieve the National Strategic Project (PSN) target of 3.6 GW of rooftop solar PV by 2025 and the 23% renewable energy target in the same year. The impact of the elimination of this scheme is a decrease in the economic level of rooftop solar power plants, especially in the household segment, which generally experiences peak loads at night. 

Fabby Tumiwa, Executive Director of IESR said that household or small business customers will tend to delay the adoption of rooftop solar PV because their peak electricity demand occurs at night, while solar PV generates peak energy during the day. Without net-metering, rooftop solar PV investment becomes more expensive, particularly when users have to spend additional funds for battery energy storage.

“Net-metering is actually an incentive for household customers to use rooftop solar systems. With PLN’s controlled electricity tariffs, net-metering helps improve the economic viability of rooftop solar systems installed at a minimum capacity of 2 – 3 kWp for R1 category consumers. Without net-metering and the relatively high cost of batteries, this minimum capacity cannot be met, resulting in higher investment costs per kilowatt-peak unit. This will reduce the economics of rooftop solar systems,” said Fabby Tumiwa.

For rooftop solar PV with a capacity greater than 3 MW (three megawatts), this regulation requires users to provide weather forecast database settings that are integrated with the Supervisory Control and Data Acquisition (SCADA) system or distribution smart grid owned by the Holder of Electricity Supply Business License for Public Interest (IUPTLU).

“The regulation removes the obligation to pay parallel generation charges, i.e. capacity charges and emergency service charges previously applied to industry – equivalent to 5 hours per month. The elimination of this parallel charge adds to the attractiveness for industrial customers, but the obligation to provide weather forecasting for systems of more than 3 MW will also add to the installation cost component,” said Marlistya Citraningrum, Program Manager of Sustainable Energy Access, IESR.

Marlistya also highlighted the regulation of the term for submission of applications by prospective customers, which is carried out twice per year, namely every January and July.

“This arrangement and the determination of quotas per network system raise questions regarding the transparency of quota determination and approval, especially for industrial customers who want to install rooftop PLTS on a large scale, while the IUPTLU mechanism to add quotas when the system quota has run out is not clearly regulated in this regulation,” he continued.

This regulation guarantees that customers who have utilized rooftop solar power systems before this regulation is enacted, remain bound by the previous regulation, for the next 10 years. This includes still benefiting from the rooftop solar power export system.

“As an on-grid rooftop PV user, I actually have questions about this transitional rule – considering that during installation, rooftop PV exports are still calculated as equivalent to 0.65 of the electricity tariff based on Permen ESDM No. 49/2018, not 1:1 like Permen ESDM No. 26/2021. This transitional rule needs to be clearly informed to current rooftop solar power users,” said Marlistya.

IESR regrets that this regulation is too favorable to the interests of PLN, which can have an impact on hindering the participation of electricity consumers in supporting the government’s goal of accelerating Indonesia’s energy transition, efforts to reduce GHG emissions at low cost and not burdening the state because renewable energy investments are made by electricity consumers without the need for state subsidies.

Fabby Tumiwa hopes that this new regulation can be implemented by paying attention to the benefits obtained by the state if rooftop solar PV is allowed to grow rapidly, namely increasing renewable energy investment, growing the solar PV industry, creating jobs, and reducing GHG emissions. For this reason, IESR urges an evaluation after a year of the Ministerial Regulation’s implementation to determine its effectiveness in encouraging the utilization of renewable energy in Indonesia. The government needs to openly revise it in 2025 as the threat of electricity overcapacity faced by PLN in Java-Bali decreases.

Steps to Achieve Bali’s Net Zero Emission by 2045 and Attain 100 Percent Renewable Energy in Nusa Penida by 2030

Denpasar, February 21, 2024 – Following its declaration in August 2023, the Bali Provincial Government has formulated and executed strategies to pursue Bali’s target of achieving net-zero emissions (NZE) by 2045 and to actualize Nusa Penida as a location powered entirely by renewable energy by 2030. Collaborating with non-governmental partners in the Bali Net Zero Emission Coalition (comprising the Institute for Essential Services Reform, WRI Indonesia, New Energy Nexus Indonesia, and CAST Foundation), a series of initiatives supporting Bali’s NZE 2045 goal have been underway, including the formulation of the Bali NZE 2045 roadmap and the Sustainable Energy Bali public campaign conducted last November 2023.

In the development of the Bali NZE 2045 roadmap, the Institute for Essential Services Reform (IESR) conducted an analysis focusing on Nusa Penida’s transition to 100% renewable energy by 2030, effectively transforming it into a renewable energy-based island.

Nusa Penida was selected for this initiative due to three primary factors: its abundant renewable energy potential, its geographical separation from mainland Bali, and the economic opportunities presented by the development of green tourism. Fabby Tumiwa, Executive Director of IESR, highlighted the significant potential for Nusa Penida to serve as a pilot island for renewable energy and even to supply energy to the rest of Bali. Furthermore, the adoption of renewable energy is expected to enhance Nusa Penida’s appeal to tourists, consequently bolstering the local economy.

“In the IESR study conducted for Nusa Penida, an increase in renewable energy generation would result in lower electricity production costs compared to diesel-powered plants. Presently, the production cost using Diesel Power Plants (PLTD) alone can reach Rp 4.5 thousand/kWh. With 100 percent renewable energy, the production cost can decrease by 30-40 percent,” stated Fabby during the Media Gathering event “100 Percent Renewable Energy in Nusa Penida,” organized by IESR.

Additionally, Fabby disclosed that the initial study for Nusa Penida’s transition to 100 percent renewable energy by 2030 is underway and is scheduled for launch on March 6, 2024. This marks the first step in testing the concept and conducting electricity system planning. Achieving Nusa Penida’s 100 percent renewable energy target by 2030 necessitates support from various stakeholders, including governmental bodies at both central and regional levels, development and non-governmental partners, the private sector, and the community.

According to analyses conducted by IESR and Udayana’s Center of Excellence for Community-Based Renewable Energy (CORE), Nusa Penida boasts a renewable energy potential exceeding 3,219 MW, comprising 3,200 MW of ground-mounted solar photovoltaic (PLTS), 11 MW of rooftop solar PV, and 8 MW of biomass, excluding wind energy, ocean currents, and biodiesel potentials. Moreover, to address the variability of renewable energy availability influenced by weather conditions, Nusa Penida exhibits potential for pumped hydroelectric storage (PHES) of up to 22.7 MW. The analysis also underscores the necessity of energy storage systems such as battery energy storage systems (BESS).

IESR’s modeling results indicate that achieving 100 percent renewable energy in Nusa Penida by 2030 primarily relies on solar photovoltaic systems due to their cost-effectiveness and abundance. Alvin Putra Sisdwinugraha, IESR’s Analyst for Electricity Systems and Renewable Energy, asserted the technical feasibility of a 100 percent renewable energy electricity system for Nusa Penida, capable of generating electricity at lower costs compared to diesel plants. Currently, the roadmap is undergoing finalization following input from various stakeholders.

“The initial phase towards achieving 100 percent renewable energy by 2030 involves transitioning to a diesel daytime-off system, maximizing the utilization of solar and BESS systems during daylight hours,” explained Alvin. “Simultaneously, further studies on alternative energy sources such as biomass production, biodiesel, ocean currents, and wind are necessary. This will enable the harnessing of these potentials to phase out diesel usage by 2030,” Alvin concluded.

South Sumatra Journalists Form Energy Transition Journalist Network

press release

Palembang, February 20, 2024 – The Alliance of Independent Journalists (AJI) Palembang together with the Institute for Essential Services Reform (IESR), a leading think tank in Indonesia that focuses on energy and the environment and the Society of Indonesian Environmental Journalists (SIEJ) took the initiative to form the “South Sumatra (South Sumatra) Just Journalist Network” to build public awareness of the energy transition through quality journalistic work.  Through this Just Journalist network, it is hoped that there will be more quality news related to the issue of energy transition so as to increase public understanding and trigger the acceleration of the transition from fossil energy to renewable energy at the regional level.

Based on data in the report “Insights on energy transition news in the electricity sector in Indonesia from 2020-2022” published by CASE Indonesia in 2023, national media dominated the news about energy transition in the electricity sector. Meanwhile, regional media has yet to make a significant contribution. IESR views that optimizing the role of media in the regions is crucial to reach public participation in supporting the energy transition process and greater use of renewable energy.

Chairman of AJI Palembang, M. Fajar Wiko, said that journalists who are members of the South Sumatra Just Journalist Network can shape public opinion on energy transition, identify challenges and opportunities in covering complex issues related to renewable energy, and identify the economic, social and environmental impacts of the energy transition program effectively to communicate to the public.

“The establishment of this Network is expected to clarify the role of the media in providing explanations about renewable technologies, government policies, and private sector initiatives in the energy transition, as well as encouraging better public understanding to actively participate in supporting the energy transition, and encouraging the role of stakeholders to create a more favorable environment for renewable energy, to motivate collaboration between the media, government, private sector and society to design the best solution,” said Wiko. 

Forum Jurnalis Sumsel

Marlistya Citraningrum, the Program Manager of Sustainable Energy Access, IESR, mentioned that the energy transition is happening in various parts of the world, including Indonesia has diverse contexts at the regional or subnational level. The shift from fossil fuel to renewable and more sustainable energy systems is demonstrated by the trend of retiring and early retirement of coal-fired power plants around the world – as well as in Indonesia under the Just Energy Transition Partnership (JETP) plan. This will have a direct impact on Indonesia’s coal-producing provinces and districts, particularly in the economic and development sectors. Subnational governments need to anticipate this trend in advance, including to boost the alternative economy sector and optimize the use of renewable energy. The media can play a role in educating the public to immediately switch to low-emission energy.

“IESR’s studies in several coal-producing regions show that although regional income depends on the coal economy, the economic multiplier effect is not directly enjoyed by surrounding communities in the form of infrastructure, economic improvement, or basic services such as education and health. In Muara Enim, around 78% of profits are absorbed by mining companies, in addition to local laborers working more freelance for contractors or vendors of mining companies instead of professional workers in the company,” said Marlistya.

Aryansyah, Head of Energy Division, Energy and Mineral Resources Agency of South Sumatra Province, said that the province has a renewable energy potential of around 21,032 MW with an installed capacity of renewable energy of around 989.12 MW or around 4.70%.

“In the future, the utilization of clean energy based on renewable energy in South Sumatra can be further developed to all levels of society. Some of the strategies we carry out to encourage the use of renewable energy, including providing energy for regional needs by increasing exploration of the potential for new renewable energy, utilizing new renewable energy such as solar energy, water, geothermal and others, as well as conserving and diversifying energy,” said Aryansyah.

Civil Society Recommendations for the Development of Indonesia’s Second NDC

press release

Jakarta, February 2, 2024 – Indonesia, under the coordination of the Ministry of Environment and Forestry (MoEF), has initiated the drafting process for its Second National Determined Contribution (SNDC) aimed at emissions reductions by 2030 and 2035. The MoEF intends to submit the SNDC to the UNFCCC in 2024.

The Institute for Essential Services Reform (IESR) along with several civil society organizations have requested for revisions in the SNDC, proposing updated scenarios and targets aligned with the objective of limiting global warming to below 2 degrees Celsius. They advocate for striving to achieve the ambitious goal of 1.5 degrees Celsius, as set forth by the Paris Agreement and reinforced by the Global Stocktake decision at COP 28.

IESR also urges the government to engage public participation in the preparation process of the SNDC. Furthermore, it is essential for the government to adhere to the principles outlined in Article 4, Line 13 of the Paris Agreement and the provisions of the COP series during SNDC preparation.

Currently, the government continues to utilize the business-as-usual (BAU) scenario for calculating emission reductions. However, civil society deems this scenario irrelevant as a basis for emission calculations. Indonesia must transition to a more accurate calculation system that references relative emissions in a given year, considering a realistic trajectory of global and Indonesian economic growth.

“While the emission reduction target in the Enhanced NDC (ENDC) appears to be increasing, it still does not align with the goal of limiting temperature rise to 1.5 degrees Celsius. Presently, the ENDC target only aims for a 31-43 percent reduction below BAU. If using the BAU calculation method employed thus far for setting emission reduction targets in the NDC, Indonesia’s target should be at least a 60 percent reduction from BAU for unconditional efforts and a 62 percent reduction from BAU for conditional efforts with international assistance. These figures do not include emission reductions from the agriculture, forestry, and land sectors,” remarked IESR Executive Director Fabby Tumiwa.

According to the analysis conducted by IESR, using 2022 emissions as the benchmark for target setting, Indonesia must establish an unconditional emissions reduction goal of 26 percent, equivalent to 859 MtCO2e by 2030, and a conditional reduction target of 28 percent, amounting to 829 MtCO2e with international assistance. These targets are crucial for contributing to the objective of limiting temperature rise to 1.5 degrees Celsius.

In addition to increasing emission reduction targets, Indonesia must also diminish the reliance on fossil energy sources such as coal and gas within its energy system. Based on calculations from the Climate Action Tracker (CAT), the coal component in Indonesia’s electricity system should be reduced to 7 to 16 percent by 2030, with the phasing-out of PLTU operations before 2040. Similarly, gas usage needs to be curtailed to 8 to 10 percent by 2030, with phasing-out operations by 2050.

Deon Arinaldo, IESR’s Energy Transformation Program Manager, emphasized that the reduction in the fossil energy mix should be accompanied by an increase in the share of renewable energy, ranging from 55 to 82 percent by 2030. However, it is worth noting that the target listed in the ENDC pertains to the installed capacity of renewable energy rather than the actual mix. IESR contends that solely focusing on installed capacity does not adequately reflect the relationship with emission reduction objectives.

“With the clarity of the renewable energy mix target in the electricity sector, it becomes possible to anticipate and even calculate the emission intensity of the electricity sector by 2030 to achieve the SDNC target. Furthermore, a significant presence of renewable energy will offer a clearer roadmap for electricity planning, specifying the types of renewable energy that should be prioritized to bridge the existing gap. With only 7 years remaining, it’s evident that solar and wind power plants, known for their shorter construction periods, should take precedence in development efforts to meet the mix target. Additionally, interventions are necessary for fossil fuel power plants, emphasizing the importance of reducing the reliance on fossil energy through various strategies such as terminating the operation of PLTU or reducing its utilization,” stated Deon.

Furthermore, IESR and other civil society organizations criticize the ENDC document for neglecting to incorporate the principle of climate justice. Civil society advocates for the SNDC preparation process to be more inclusive, ensuring climate protection for vulnerable groups and transparency throughout.

Wira Swadana, IESR Green Economy Program Manager, emphasized that the government must ensure fair distribution of the burden of emission reduction.

“Entities responsible for the highest emissions must shoulder a larger portion of the emission reduction efforts. Furthermore, the formulation of the SNDC should prioritize the principle of climate justice, which aims to mitigate both short-term and long-term risks while ensuring fair distribution of benefits, burdens, and risks, particularly for marginalized communities,” remarked Wira.

IESR and other civil society groups have outlined six recommendations for the preparation of the SNDC. First, the government should adhere to the principles of the Paris Agreement as outlined in Article 4, Line 13, and the guidelines set forth by the COP. Second, there should be a focus on integrating measurement, reporting, and verification (MRV) systems tailored for developing country parties. Third, the government should abandon the use of the BAU scenario as the basis for emission reduction calculations and instead adopt a method based on relative emissions in a given year, which takes into account more precise global and Indonesian economic growth projections. Fourth, climate targets should be established in alignment with the Paris Agreement. Fifth, there should be transparent and publicly accessible monitoring and evaluation mechanisms put in place. Sixth, principles of climate justice should be incorporated and implemented throughout the process. These recommendations for the preparation of the Second NDC have been submitted to relevant ministries and institutions.

Draft Government Regulation on National Energy Policy (RPP KEN) Slashes NRE Target to 19 Percent in 2025

press release

Jakarta, January 31, 2024 – The National Energy Council (DEN) is working on updating Government Regulation (PP) Number 79 of 2014 concerning the National Energy Policy with a new draft policy (RPP KEN) that is being discussed with the DPR. DEN schedules the RPP KEN to be completed by June 2024. The new and renewable energy (NRE) targets summarized in the RPP KEN are based on the assumption of an economic growth rate of 4-5 percent to adjust post-COVID and equalize nuclear energy as renewable energy. As a result, the Draft Government Regulation on National Energy Policy (RPP KEN) set the NRE mix target in 2025 down from the previous 23 percent to 17-19 percent. Meanwhile, the NRE target in 2050 increases from 30 percent to 58-61 percent and at 70-72 percent in 2060.

The Institute for Essential Services Reform (IESR) views that the reduction in the renewable energy mix target to 17-19 percent in 2025 and 19-21 percent in 2030 implies a weak commitment to energy transition and a strong interest in maintaining fossil energy. IESR believes that the years 2025 to 2030 should be an important milestone to take off the energy transition in Indonesia with the achievement of renewable energy targets of more than 40 percent and peak energy sector emissions in 2030. Achieving an ambitious renewable energy mix in this decade is important in order to align Indonesia’s GHG emissions with the Paris Agreement target to limit the increase in average global temperature to below 1.5 degrees Celsius.

Meanwhile, delays in boosting the renewable energy mix to 38-40 percent by 2040 will prevent Indonesia from reaping greater benefits from renewable energy development, including cheaper and more competitive electricity prices in the long term, lower electricity emissions on the grid that attract investment, the development of a domestic renewable energy manufacturing industry and supply chain and the creation of greater renewable energy employment opportunities. The low renewable energy mix towards 2030 could also reduce the attractiveness of foreign investment to Indonesia, as industries and multinational companies are now keen to ensure their energy needs are supplied from a low-emission electricity system. 

Fabby Tumiwa, the Executive Director of IESR, said that the setting of low renewable energy mix targets in 2025 and 2030 is not in line with the renewable energy mix target in the Just Energy Transition Partnership (JETP) agreement which aims for 44 percent by 2030.

“The JETP has agreed on a renewable energy mix target of above 34 percent in 2030, and this target is in line with the RUKN plan discussed at the same time as the Comprehensive Investment and Policy Plan (CIPP) last year. The renewable energy mix target proposed by DEN has cast doubt on the credibility of Indonesia’s energy transition policy direction by investors and the international community.  Instead of lowering the target for realistic reasons, DEN should be more progressive in making the energy transition. As an institution led by the President, DEN can dismantle barriers to coordination, overlapping policies and priorities to make renewable energy and energy efficiency accelerate,” said Fabby Tumiwa.

IESR views that the strategies in the RPP KEN, such as the operation of a 250 MW nuclear power plant in 2032 and the use of CCS/CCUS in power plants still operating in 2060, have not been based on technical and economic feasibility in Indonesia to date. NPP with a small capacity of 300 MWe, small modular reactor, is still not available technology that is proven safe and economical. Indonesia itself still has to build institutional infrastructure (NEPIO), regulatory readiness, safety standards, as well as the availability of proven SMR technology, as well as public approval, before starting to build nuclear power plants. 

The application of CCS/CCUS in CFPP is still an expensive and ineffective solution to capture carbon, even though this technology has been developed for decades. Examples of CCS projects at Boundary Dam in Canada and also at Petranova power plant in the US show technical problems to meet the carbon capture target and the economics are not feasible.

Deon Arinaldo, the Program Manager of Energy Transformation, IESR, mentioned that Indonesia will be burdened with the cost of implementing CCS in CFPP which is expensive, operational costs that are prone to volatility and unsustainable. Meanwhile, the construction of nuclear power plants is anticlimactic amidst the decline in the world’s nuclear power plant capacity after the nuclear tragedy in Fukushima.

“In this decade, Indonesia’s GHG emission mitigation strategy in the energy sector should be focused on the development of renewable energy and energy storage technologies that have been proven to provide energy at a cost competitive with coal-fired power plants that can still be subsidized. Solar energy and wind energy in terms of construction time can be done quickly, so the homework that needs to be improved is how to prepare a pipeline of projects that are ready to be invested in and the procurement process at PLN,” Deon explained.

The Decline of Indonesia’s Climate Policy and Action Rating in 2023

Delima Ramadhani, Climate Policy Project Coordinator, IESR presents the results of the CAT assessment of Indonesia’s climate policies, targets and actions

Jakarta, January 31, 2024 – According to the Climate Action Tracker (CAT) report, the climate policies, actions, and targets outlined in Indonesia’s 2023 Nationally Determined Contribution (NDC) document as “critically insufficient” to limit global temperatures  to below 1.5 degrees Celsius. This represents a decline from 2022 when Indonesia was rated as “highly insufficient.”

The Institute for Essential Services Reform (IESR), a collaborator with CAT, has disclosed that Indonesia, rated as “critically insufficient” under the Enhanced NDC target, could potentially release greenhouse gas emissions of 1,800 million tons of carbon dioxide equivalent for the unconditional target and 1,700 million tons of carbon dioxide equivalent for the conditional target by 2030. This estimation excludes emissions from the forestry and land sectors.

Fabby Tumiwa, Executive Director of IESR, attributed Indonesia’s downgrade to “critically insufficient” to the escalating use of coal in downstream mining. He stressed that the lowest CAT rating implies that the existing climate targets and policies would result in global emissions surges surpassing 4 degrees Celsius.

“Indonesia requires concrete and measurable actions to transition from fossil energy and expedite the shift to renewable energy in the coming decade,” Fabby stated during his remarks at the launch of the Climate Action Tracker Assessment Indonesia and Climate Transparency Implementation Check reports, organized by IESR on January 30. 

Throughout the 2022-2023 period, the Indonesian government has made progress in climate mitigation actions, notably by promoting the development of renewable energy through Presidential Regulation (Perpres) No. 112/2022 concerning the Acceleration of Renewable Energy Development for Electricity Supply. Additionally, the government has made positive commitments to achieving the 2030 net zero and FOLU net sink targets. Ambitious policies are needed to realize them.

The rise in emissions in 2022 amounts to approximately 200 million tons of carbon dioxide equivalent, with increased coal consumption being a contributing factor. Emissions from captive power plants, those operated by utility companies outside of PLN, are anticipated to contribute to a further increase of around 100 million tons by 2030. Indonesia’s current climate policy would result in the country reaching an emissions level of 1,487-1,628 MtCO2e (excluding the forest and land sector) by 2030.

Moreover, Indonesia has committed to the Just Energy Transition Partnership (JETP), aiming for a renewable energy mix exceeding 34% by 2030. However, it is noted that the JETP falls short of aligning Indonesia with the targets set in the Paris Agreement.

Delima Ramadhani, Climate Policy Project Coordinator at IESR, explained that to meet the Paris Agreement standards, emissions from the electricity sector must decrease to 140-150 million tons of carbon dioxide equivalent by 2030, ultimately reaching zero emissions by 2040.

“Indonesia needs to adopt key reforms as outlined in the comprehensive investment planning and policy (CIPP) document of the Just Energy Transition Partnership (JETP) and formulate and implement an ambitious decarbonization pathway for off-grid (captive) power plants,” explained Delima.

Considering the significance of the electricity sector and its potential for strategic decarbonization, IESR also assessed the implementation of the National Electricity General Plan (RUKN) policy. This policy serves as Indonesia’s primary reference for domestic electricity development and can be utilized for monitoring and evaluating renewable energy progress. Akbar Bagaskara, IESR’s Electricity System Analyst, explained that the overall assessment of the RUKN is “medium,” indicating that while it has a clear legal basis, namely MEMR Regulation No. 143/2019, there are numerous implementation challenges, including the consistent failure to achieve the annual renewable energy mix target.

“Indonesia’s challenges in meeting the annual targets for the renewable energy mix should prompt the government to conduct a thorough evaluation and address this issue with a sense of urgency. It is crucial for the government to formulate progressive strategies and innovations aligned with the Paris Agreement,” stated Akbar.

He elaborated on several actions the government should take to enhance the implementation of renewable energy development in Indonesia. Firstly, there is a need to increase the presence of supportive laws to foster a more conducive environment. Secondly, clear and comprehensive instruments should be provided, covering the entire spectrum from planning and procurement to reporting processes, especially for entities beyond PLN. Thirdly, a new revenue model for PLN should be established. Lastly, there is a necessity to refine PLN’s sustainable finance framework to attract a broader range of financing sources.

Smelters are not the Ultimate Objective of Downstream Activities

Jakarta, January 26, 2024– Downstreaming has recently become a hot topic of discussion. This topic is strengthened along with the the presidential and vice-presidential candidates’ emphasis on the downstream agenda. According to the Big Indonesian Dictionary (KBBI), downstreaming refers to the process of converting raw materials into finished goods.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) in “Katadata Forum – After the 4th Presidential Election Debate 2024 “Mining Downstream Dilemma: Restricted or Expanded?” (25/1/2024) revealed that various forms of natural processing must remain rooted in three adhere to three crucial points: clarity and law enforcement, maximizing economic benefits, and long-term planning for post-extraction and depletion of reserves.

” Regardless of the incoming president, the focus should be on discussing long-term plans for the utilization of natural resources. We cannot allow resources to be extracted, only to result in environmental damage and the absence of a new economy, potentially leading to an increase in poverty rates. This mitigation strategy must be incorporated into our National Medium-Term Development Plan (RPJMN),” said Fabby.

Discussing mining downstream, Fabby highlighted nickel is a critical mineral in renewable energy technology. He explained that nickel is classified into two processed categories: first-class nickel for electric vehicle battery raw materials and second-class nickel for stainless steel products. Fabby observed that since the enactment of Law Number 4 of 2009 concerning Mineral and Coal Mining, which mandates domestic mineral processing, downstreaming has been encouraged, leading to the growth of planning on smelter projects or processing facilities for mining products. By 2024, there are plans to build 48 critical mineral smelters

“The more smelters, the more extraction. Merely stopping at the smelter is not the goal of the downstream process. Instead, there is a need to actively seek optimal benefits and promote sustainable job creation by establishing a battery industry for electric vehicles and various other renewable energy sectors in Indonesia,” he added.

IESR also delved into the development of the battery industry supply chain in Indonesia, which can be read in the Indonesia Energy Transition Outlook 2024 report.

Galvanizing Mining Business Actors for a Just Energy Transition

From left to right Wira Swadana, Green Economy Program Manager, Yulfaizon, General Manager, PT Bukit Asam Tbk Ombilin Mining Unit, Farah Vianda, Sustainable Financing Coordinator, and Y. Sulistiyohadi, Associate Mining Inspector/Coordinator of Civil Servant Investigator Mineral and Coal

 

Jakarta, January 25, 2024 – Mitigating the impact of the declining demand for coal in Indonesia is crucial, particularly in regions heavily dependent on coal production, amidst the global push for a robust energy transition. The Institute for Essential Services Reform (IESR) emphasizes that companies and business entities within the coal industry can play a pivotal role in revitalizing post-mining areas and facilitating economic development within communities once coal operations cease.

Wira Swadana, the Green Energy Program Manager at IESR, asserts that a just energy transition must actively involve various stakeholders, with a special focus on companies and business actors.

“While private entities and coal industry actors are often perceived as adversaries due to the negative impacts on mining areas, in the context of an inclusive and just transition, these mining companies assume a significant responsibility for post-mining endeavors and preparing communities for socio-economic activities, steering them away from a reliance on mining,” Wira explained during the Just Transition Dialogue: Identifying the Role of the Private Sector in Socio-Economic Empowerment of Communities (24/1/2024), an event organized by IESR.

Wira Swadana emphasized the need for business actors to fulfill their responsibilities in land reclamation and post-mining activities, as mandated by Law No.3/2020. He underscored that the government must actively oversee the implementation and take decisive action against mining companies neglecting their obligations in reclamation and post-mining endeavors.

Sulistiyohadi, Associate Mining Inspector/Coordinator of Civil Servant Investigator Mineral and Coal, elucidated the distinction between mining reclamation and post-mining activities. Functionally, reclamation involves enhancing the quality of the environment and ecosystem to restore their intended functionality. On the other hand, post-mining activities focus on the comprehensive restoration of the natural environment and social functions, tailored to the specific conditions of the mining area.

“Reclamation becomes obligatory during the exploration stage, and as production operations commence, a post-mining plan is formulated after meeting the economic and technical feasibility criteria,” Sulistiyohadi explained. He noted that both reclamation and post-mining plans require guarantees for their respective activities.

Moreover, PT Bukit Asam Tbk Ombilin Mining Unit has carried out reclamation and post-mining processes. The post-mining activities are concentrated on establishing a sustainable economy by repurposing the former mining area for various purposes, including the creation of an animal protection zone, zones for crop and livestock cultivation, and utilization for tourism, sports, education, and cultural activities.

Yulfaizon, General Manager at PT Bukit Asam Tbk Ombilin Mining Unit, expressed optimism that the completed post-mining activities at the Ombilin mine will serve as a national exemplar. These efforts align with Sawahlunto’s vision and mission, aiming to transform the former mine into a center for study, job training, and a noteworthy destination in the Sawahlunto region.

The West Java Energy Exploration: Echoing the Spirit of Energy Transition

press release

Jakarta, January 23, 2024 – The Institute for Essential Services Reform (IESR), through the Energy Transition Academy in collaboration with the West Java Energy and Mineral Resources Agency (ESDM) and the Society of Renewable Energy University of Indonesia (SRE UI) has been held The West Java Energy Exploration on January 23-26, 2024. The initiative is to support and promote the implementation of renewable energy in West Java Province to become an example for other regions in Indonesia.

West Java Province was selected as the location for The Energy Exploration (Jelajah Energi) because it has abundant potential for renewable energy sources that can be utilized effectively and sustainably to achieve the net zero emission target by 2060 or earlier. Furthermore, the renewable energy mix in West Java has already reached 25.81% as of 2023, which exceeds the target of 20% set in the Regional Energy General Plan (RUED) for 2025.

Head of the Energy and Mineral Resources Agency (ESDM) of West Java Province, Ai Saadiyah Dwidaningsih, said that the province has renewable energy potential consisting of solar, biomass, geothermal, water, and wind energy of around 192 GW. Despite achieving a high renewable energy mix in 2023, only about 2% of the potential (around 3.41 GW) has been utilized. 

“There are several challenges to the implementation of the energy transition in West Java, including the limited authority of energy affairs in the regions, both provincial and district/city, the oversupply condition of the Java Madura Bali power plant, as well as the concept of renewable energy and energy conservation, is also not widely recognized by the public,” said Ai Saadiyah Dwidaningsih in her remarks at The West Java Energy Exploration. 

Reflecting on these challenges, Ai Saadiyah Dwidaningsih emphasized the importance of cross-sector collaboration in efforts to campaign for energy transition. For this reason, West Java Province has established a Regional Energy Forum. This forum is a forum to discuss strategic issues in the field of energy resources from various perspectives to provide input for policies by the Regional Energy General Plan (RUED) and national energy policies.

“We continue to encourage cross-sector collaboration to echo the energy transition. We see that the energy transition is important because the condition of our earth has entered the era of global boiling, no longer global warming. Without taking concrete steps to reduce emissions, the situation will only deteriorate further,” said Ai Saadiyah Dwidaningsih.

Deon Arinaldo, Energy Transformation Program Manager, IESR, explained that the West Java Energy Exploration is expected to increase public understanding of the benefits and potential of renewable energy. He believes that a wider audience can be reached by visiting areas that utilize renewable energy and sharing stories of successful initiatives from the community, industry, and government. This approach will inspire and encourage independent initiatives from various actors, including the general public, to promote sustainable energy transformation in Indonesia.

“Renewable energy is accessible to everyone and should be utilized. Therefore, we encourage all parties to collaborate in the energy transition. This collaboration should begin with understanding renewable energy and its benefits for the environment and economy. With this knowledge, it is hoped that the community can fully support the implementation of clean energy-based solutions,” said Deon Arinaldo. 

Deon mentioned that to increase public knowledge, IESR has provided an energy transition learning platform called the Energy Transition Academy that can be accessed openly by the public.

 

“Various easily digestible energy transition classes are available at the Energy Transition Academy. Even in the future, there may be various stories of good practices in using renewable energy, including the experience of the West Java Energy Exploration, documented there,” added Deon.

The West Java Energy Exploration team plans to visit nine strategic locations to see the positive impact of utilizing renewable energy. The destinations include PLTSa TPST Bantar Gebang, Cirata Floating Solar PV, Cirata Hydroelectric Power Plant, Gunung Halu MicroHydro, Cofiring and Solar PV PT Kahatex Majalaya, Surya Energi Indonesia, Geothermal Power Plants Kamojang, Biogas & Solar PV Producer Cooperative Karya Nugraha Jaya, and Cirebon Mangrove Ecotourism.