Jakarta, 15 July 2021- In the last two decades, renewable energy has developed very rapidly in terms of technology and economies of scale, therefore, many countries in the world are increasing the use of renewable energy. Between 2000 and 2020, the worldwide renewable power generation capacity increased 3.7 times, from 754 gigawatts (GW) to 2,799 GW. The rapid development in the last decade at the global level was mainly driven by the construction of solar power plants and wind power plants. In the same period, the cost of electricity from utility-scale photovoltaic (PV) fell by 85% (IRENA, 2020)..
Having diverse and abundant renewable energy sources, especially its solar technical potential of up to 20 thousand GWp, based on a recent report entitled “Deep decarbonization of Indonesia’s energy system: A pathway to zero emissions by 2050” by the Institute for Essential Services Reform (IESR) that Indonesia as a whole technically and economically able to achieve zero-emission in the electricity sector in 2045, much faster than the transportation and industrial sectors which will achieve the same condition in 2050.
“Compared to the transportation and industrial sectors, the electricity sector is the low hanging fruit in the effort to decarbonize Indonesia’s energy system. That’s why this one decade is very decisive. Four things need to happen in the next decade: (1) renewable energy acceleration, (2) stop the construction of new coal-fired power plants before 2025, (3) plan to accelerate the termination of steam power plants, especially subcritical types, and (4) modernize the grid,” said Fabby Tumiwa, Executive Director of IESR.
The electrification of the transportation sector (acceleration of the use of electric vehicles/EVs) and industry (electrification of industrial processes) also started along with a deep decarbonization process in the electricity sector. As a result, reducing GHG emissions in the power sector will contribute to significant emission reductions in the transportation and industrial sectors. Using the Best Policy Scenario (BPS), IESR shows that electricity demand from the transportation and industrial sectors will continue to increase towards 2050. Around 50% of electricity will be produced by renewable energy in 2030 from 140 GW of renewable energy power generation, before finally reaching 100% renewable energy in 2045. In this scenario, the Levelized cost of electricity (LCOE) can decrease from 79.52 USD/MWh in 2020 to 40.59 USD/MWh in 2050 so that the cost of electricity generation of renewable energy in Indonesia is becoming increasingly competitive.
By relying on solar energy (photovoltaic), IESR modeling shows that electricity supply is guaranteed even though the variability of solar power generation is quite high. To balance the load requirements and solar power generation, it can be done by charging batteries & utilizing pumped hydro energy storage, utilizing electricity to produce clean fuel, utilizing electricity for transportation (EV charging), utilizing electricity to produce thermal energy, and exporting and importing electricity between regions. Hydroelectric power plants can also be operated flexibly during this period to help balance the system, while geothermal operate as baseload.
Integrating the transportation sector and the industrial sector through electrification, indeed, requires a massive expansion of the electricity network covering all regions in Indonesia. The BPS scenario shows that nearly 760 TWh of electricity is distributed throughout the country by 2050, with Java Island as the main energy consumer in Indonesia consuming 80% of the country’s total energy. To meet its energy needs, Java Island will import 4.6% of electricity in 2030, 45.5% in 2040, and 82.1% in 2050 from the islands of Sumatra and Nusa Tenggara.
IESR recommends to the government to increase the capacity of Indonesia’s electricity grid to support the inter-island power grid interconnection system and optimize renewable energy resources spread across various islands. The Java-Sumatra interconnection is important to supply electricity to Java by up to 50 percent by 2050. In addition, the interconnection between East Java and Bali needs to be expanded to Nusa Tenggara to meet the electricity needs of other small islands. The results of the IESR model even show that by 2050, a transmission capacity of 158 GW needs to be built to connect Indonesia from west to east.
“The government needs to make a decision today because it will affect the speed at which we transition and the costs we will incur. If we continue to develop coal-fired power plants even though there have been many studies that have revealed it will become a stranded asset, it will become an economic burden for Indonesia. Deep decarbonization of the energy system to achieve zero emissions is beneficial for Indonesia,” said Pamela, lead author of the report “Deep decarbonization of Indonesia’s energy system: A pathway to zero emissions by 2050”.
Planning for the construction of inter-island transmission and interconnection networks that can support Indonesia to achieve the zero-emission target in 2050 is very crucial to be carried out as soon as possible. It is because the construction of transmission network projects usually takes a long time. Undoubtedly, it takes a firm commitment from the government, policymakers, regulators, and the State Electricity Company (PLN) as the main operator of transmission and distribution lines.
However, at the Hearing Meeting in the House of Representatives, May 2021, PLN stated that it is currently preparing a strategic plan with the Ministry of Energy and Mineral Resources to achieve carbon neutrality by 2060. However, this is incompatible with the target of the Paris Agreement for net zero emissions by 2050.
“PLN’s plan is still not ambitious enough to achieve the target of the Paris Agreement. The IESR study shows that the electricity sector can achieve zero emissions by 2045 by utilizing renewable energy. The plan will risk causing an increase in the cost of providing electricity, stranded assets & lost opportunities for the use of cheaper renewable energy technologies,” said Fabby Tumiwa.
The report “Deep decarbonization of Indonesia energy system: A pathway to zero-emission by 2050” is a study by IESR in collaboration with Agora Energiewende, and Lappeenranta University of Technology (LUT). The report can be downloaded at the following link:
