Jakarta, July 3, 2024- To limit the rise of the earth’s temperature that causes a climate crisis, Indonesia needs to accelerate using renewable energy as a greenhouse gas emission reduction strategy to achieve net zero emissions (NZE) by 2060 or sooner. However, the Institute for Essential Services Reform (IESR) believes that achieving the renewable energy mix target will be slow if Indonesia only relies on current policies without a measurable strategy, and Indonesia will not exceed 30 percent by 2060.
IESR assesses that to achieve the renewable energy mix target and a significant reduction in energy sector emissions, policy updates such as KEN, RUEN, RUKN, RUPTL, and the finalization of the Draft Law on New Energy Renewable Energy (RUU EBET) must include an increase in emission reduction targets and schemes that support these achievements in a measurable manner.
His Muhammad Bintang, Coordinator of the Energy Resources and Electricity Research Group, IESR, said that the slow growth of the electricity sector, which is expected to encourage an increase in the renewable energy mix, can be seen from the renewable energy generation that has only reached around 1 GW by 2023, far from the initial target of 3.4 GW set in 2021.
“There are several reasons for the slow implementation of renewable energy. First, energy demand is lower than projected. Second, an unequal playing field, renewable energy plants are forced to compete with coal-fired power plants with Domestic Market Obligation (DMO) regulations. Third, the integration of variable renewable energy such as solar and wind farms faces technical challenges from the current condition of the electricity grid system. Fourth, some regulations such as the level of domestic components (TKDN) are not in accordance with current conditions and affect the development of renewable energy projects,” said Bintang in a joint media discussion entitled Update on Energy Transition Issues and Policies in Indonesia organized by IESR on Wednesday (3/7/2024).
Currently, the government is updating several regulations and policies in the energy sector. For this reason, according to Bintang, industry players, media, civil society, and various other parties need to oversee and provide input so that the update can solve the obstacles to renewable energy development so far.
On the other hand, the opportunity to increase the renewable energy mix is wide open with growing energy demand, especially in the industrial sector. Additionally, the trend of energy transition in various countries will provide a risk of disrupting the renewable energy technology supply chain. Therefore, Indonesia needs to immediately increase independence to meet the energy transition needs by developing a domestic renewable energy industry.
Bintang also underlined the importance of capturing buyer’s demand for green products. In addition, world energy geopolitics dynamics affect Indonesia’s investment competitiveness. Carbon regulations and taxes (such as the Carbon Border Adjustment Mechanism (CBAM) and Inflation Reduction Act (IRA)) affect investment flows to Southern countries, including Indonesia. Corporate demand for renewable energy is essential for Indonesia to accelerate its development and remove barriers for companies and individuals to use renewable energy.
Currently, 121 RE100 Global members have reported their operations in Indonesia. Based on RE100’s assessment, Indonesia has the potential for rapid growth with abundant renewable energy resources, yet the potential has not been fully utilized. For this reason, the RE100 initiative views Indonesia as a strategic region to expand advocacy activities to accelerate change towards a large-scale zero-carbon emission electricity grid.
“The Climate Group RE100 assessment shows that Indonesia is among the “stragglers” in renewable energy development. The increasing demand for sustainable products triggers a huge demand for renewable energy at the company’s operation sites,” said Bintang.
Director of Energy Conservation, Ministry of Energy and Mineral Resources (MEMR), Hendra Iswahyudi, stated that to optimize the condition of Indonesia with renewable energy resources widely spread throughout the country, an innovative and integrated grid modernization is needed nationally to build a resilient and reliable domestic transmission infrastructure.
“Referring to the National Electricity General Plan (RUKN), solar power plants (solar PV) will be developed massively in 2030 followed by the development of wind power plants (PLTB) in 2037,” Hendra said.
Hendra explained that solar energy is prioritized for development with the support of declining costs. The solar PV development plan involves developing rooftop solar PV with a 2025 target of 3.61 gigawatts (GW). Meanwhile, large-scale solar PV is targeted to reach 4.68 GW by 2030. Meanwhile, the potential for developing floating solar power plants is 89.37 GW.