Arrange a Strategy to Get Around the Impact of Coal Power Plant Shutdown

Jakarta, 27 September 2023 – Indonesia’s increase in climate commitments in the Enhanced Nationally Determined Contribution (E-NDC) brings a number of implications, including plans to stop coal-fired power plant operations early to reduce emissions. This plan has several impacts, including a decrease in the income of coal-producing regions as well as national income, the potential for massive layoffs, as well as other socio-economic impacts.

In a hybrid seminar, entitled “Sunset CFPP and the Coal Industry: Reviewing Multisectoral Direction & Impact in a Just Energy Transition” (27/9), Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) explained that the energy transition agenda for both Indonesia and the destination countries for Indonesian coal exports will have an impact on a number of aspects in Indonesia.

“There are three factors that can be seen from the energy transition in coal producing areas: the link between the local economy and coal, the readiness of existing human resources, and alternative economic options that can be developed in that area, and how mitigation plans can be prepared,” said Fabby.

In the presentation material delivered by Ilham Surya, IESR Environmental Policy Analyst, it was explained that the role of the coal industry in the economy of coal-producing regions is quite significant.

“The GRDP contribution is between 50% and 70% in Muara Enim and Paser, but the multiplier effect is not that big,” said Ilham.

Within the scope of national policy, the Ministry of PPM/Bappenas is currently preparing a Long Term Development Plan (RPJP), one of the points  is economic transformation.

“The energy transition is part of the green economic transformation, so in the latest draft of RPJP, what we meant by transition is not only seen from the energy sector,” explained Nizhar Marizi, Director of Energy, Mineral and Mining Resources, Bappenas.

Grita Anindarini, Deputy Director for Programs, Indonesia Center for Environmental Law (ICEL), emphasized the important role of the policy framework and implementation of various existing regulations.

“A just energy transition requires a very big policy transformation on employment, environment, energy, and financing. Currently there are several policy regulations regarding the energy transition, but their implementation still faces various obstacles,” explained Grita.

Haris Retno Susmiyati, Lecturer at the Faculty of Law, Mulawarman University, admits that economic dependence on coal commodities is not a good thing. She said that in 2015, when coal prices fell drastically, the economy of East Kalimantan also slumped.

“By regulation, the company’s obligation to pay royalties to the government is only 13.5% of that figure. The regional government only gets 5%, so it is not the coal producing regions that actually enjoy the profits from coal,” said Retno.

Having a similar context to East Kalimantan, Jambi province is also starting to prepare for transition. Ahmad Subhan, Head of Economy and Natural Resources, Bappeda Jambi, said that even though it is not the main coal producing area, the contribution of the coal sector to GRDP is quite significant.

“Coal is indeed significant for supporting the economy, but if there are substitutes that are more relevant to regional conditions, they can be explored further. For this transition, we in Jambi province are supportive but not drastic. We are also waiting for substitutions for economic transformation,” said Ahmad.

Implementation Check Methodology: a Much Needed Mechanism

New York, 21 September 2023 – The global community is urging global leaders to take serious actions to address climate change. During the COP 27 in Egypt, several countries renewed their commitment to reducing greenhouse gas emissions and achieving net zero emission status. However, there are still gaps between commitment and implementation of policy and action to seize the determined target. 

To assess, rate, and monitor a country’s progress during the policy implementation, Climate Transparency, a global partnership of research organizations and NGO in the G20 countries, has developed a methodology to review policy implementation across four categories: legal status, institutions & governance, resourcing, and oversight.  

Yvonne Deng, Energy and Climate Strategy Expert from the 7Gen Consulting, emphasized the importance of having monitoring instruments to review current policy and its role to seize the climate target. 

“We (Climate Transparency) analyze the gap and go deeper to the sectoral approach to recommend what sectoral policy a country should take to pursue the ambition,” said Yvonne.

South Africa, one of the countries receiving global attention lately as the first recipient of Just Energy Transition Partnership funding. Guy Cunliffe, Energy System Researcher of the University of Cape Town explained that as a country receiving international assistance, South Africa needs to showcase accountability during implementation. 

“An implementation monitoring is critical to showcase success of the implementation and as a beneficiary country it is also a way to display progress of the committed project,” he said.

Guy added that as the first JETP recipient, South Africa has increased its climate ambition and tried to integrate significant renewable capacity to its grid. However, during the implementation, the country is experiencing a glitch in terms of electricity supply. This glitch ‘forces’ them to adjust the plan and policy while rapidly changing the energy market. This is only possible with continuous policy monitoring. 

Similar to South Africa, Indonesia, as one of the biggest coal producers, has its electricity generation dominated by coal. In 2022, Indonesia renewed its emission reduction target in enhanced NDC, from 29% to 31.89% (unconditional) and 41% to 43.2% (conditional).

Wira Agung Swadana, Green Economy Program Manager at the Institute for Essential Services Reform (IESR), noted that during the transition away from coal-dependency, there are still conflicting interests among stakeholders, primarily due to the government’s lack of clear guidance on the transition’s meaning and direction transition.

“Though Indonesia has increased ambition and target in its NDC, the enabling environment for the renewable energy developers is not attractive enough yet. There is still no clear incentive for the investors as well as the lengthy process,” Wira explained. 

The in progress New and Renewable Energy Bill (RUU EBET), though believed to provide a robust policy framework, is to some extent attempting to prolong the use of fossil fuels by including CCS technology in the renewable options.

Pushing the Role of Civil Society Organizations in ASEAN Transformation

Jakarta, 16 Mei 2023 – Indonesia’s role in international diplomacy continued after successfully hosting the G20 meeting in November 2022. This year, Indonesia holds the ASEAN chairmanship. ASEAN itself is an important region as it accounts for the biggest economic growth. In terms of economic growth, ASEAN will have 4,3% of economic growth according to ADB. Challenges that linger around ASEAN currently are the effect of climate change and energy transition.

ASEAN countries other than Vietnam still have a high reliance on fossil fuels, especially coal in the energy system. It will take more effort as well as financing to transform the whole energy system in ASEAN into a low – carbon and sustainable one. 

Fabby Tumiwa, Executive Director at the Institute for Essential Services Reform (IESR), during the webinar titled “Making Energy Green and Low Carbon to Support Sustainable Growth” through Advancing the Role of Civil Society in Southeast Asia Energy Transition During Indonesia ASEAN Chairmanship 2023” mentioned that all stakeholders including the government and private sector need to work hand in hand to ensure that transformation toward a clean energy system is happening in ASEAN.

“We also need further collaboration at the grassroots level and the increasingly significant role of ASEAN’s CSO in the region and how ASEAN’s CSO either as an individual entity and group can contribute to “Making Energy Green and Low Carbon to Support Sustainable Growth” through Advancing the Role of Civil Society in Southeast Asia Energy Transition During Indonesia ASEAN Chairmanship 2023,” he said. 

Later on, Ridwan Budi Santoso, Investment and Electricity Cooperation Working Group Coordinator, Directorate General of Electricity MEMR explained that Indonesia ASEAN chairmanship will try to secure a deal on regional cooperation including power interconnectivity that is expected to boost the economic growth of the region. He said that his parties will have a joint declaration of 41tst Asean Ministers on Energy Meeting on sustainable energy through interconnectivity, and a joint statement for Brunei Darussalam – Indonesia – Malaysia – Philippines Power Integration Project (BIMP – PIP) as the deliverables.

“We expect the utilities (in those countries-ed) to sign the MoU for interconnectivity,” said Ridwan. 

In the policy-setting agenda, Indonesia aims to have a joint statement addressing the climate change impact in the region.

“Beside ASEAN joint statement on climate change, we will also have a study about ASEAN community-based climate action, which contains lessons learnt and best practices to be implemented at the community level,” Wisnu Murti, Directorate General of Climate Change Control, Ministry of Forest and Environment explained.

Responding to the explanation of Indonesia as ASEAN chair this year, Antony Tan, Executive Officer of the All-Party Parliamentary Group Malaysia on Sustainable Development Goals (APPGM-SDGs), highlighted that ASEAN’s presence in the international community is lacking. A little bit different from, for example, the European Union which has a special presence during international meetings.

“We see that for example, during the last COP 27. We (ASEAN) sit in a separate part and together only because of Loss and Damage,” he added.

In terms of renewable energy development in Malaysia, Antony said that currently, Malaysia focuses on solar PV and hydro. Malaysia aims to increase its renewables shares, excluding hydropower to 20% of the generation mix by 2025.

“We lifted the ban on renewable energy exports. This move is welcomed by Singapore, as it will benefit the neighboring country and boost the local renewable sector,” he concluded.

The previous ASEAN chair, Cambodia faced different challenges to bring decarbonization to the country. In overcoming the challenges, non-government organizations act as a bridge to make the vision clearer in accelerating the energy transition.

“When we talk about decarbonization, it means we need to talk about what kind of energy market reform, what enablers can be implemented, and we need to understand that the context between one place and another is quite different and we need to figure out a different approach,” explained Natharoun Ngo Son Executive Director, Energy Lab, Cambodia.

Chariya Senpong, Energy Transition Team Leader, Greenpeace Thailand highlighted the role of becoming a bridge for many stakeholders. Civil society organizations must empower people to move beyond the trans boundaries level.

“It is important to communicate the climate-related issue not only to people but also to the government, especially at the ASEAN level. On how we can get a quick policy shift to reach the net zero emissions level. CSO also needs to work in different levels of advocacy to influence and move the stakeholders to a more sustainable pathway,” she explained.

Aryanne De Ocampo, Advocacy, Networking, and Communications Officer, Center for Energy, Ecology and Development added that ASEAN is having the power to drive decarbonization globally.

“As ASEAN, we should be amongst the loudest of those who demand change from the governments and industries to commit to ambitious climate targets. For ASEAN to own up to its identity, it also needs to represent the most vulnerable parts of society, starting from its climate goals.”

Every year ASEAN puts out hundreds of joint statements and ASEAN needs to make sure that the statements related to climate change are manifested. This point is brought up by Esther Tamara, Director of the Climate Unit, Foreign Policy Community Indonesia.

“ASEAN needs to make sure that the joint statement regarding climate change does not stay only as statements. ASEAN community vision post-2025 has to be climate focused to create a green world. There are also words from the Cambodian government especially to create a Green Deal, but there has not been a lot of movement towards it,” she said.

Esther added that there should be an official mechanism for civil society organizations that allows a bottom-up discussion to happen in ASEAN.

Learning from the US How to Seize the Climate Opportunity

Jakarta, 13 September 2022 – To combat the climate crisis, our action today will determine the economic, and sustainability of mankind in the long run. The IPCC report has already told us that the remaining time we have to hold the global temperature at 1.5 degree Celsius is limited. Global commitment to address climate change has been pushed through international forums. 

After rejoining the Paris Agreement during the Biden – Harris administration, the United States (US) is actively encouraging global citizens to tackle climate change through policies and strategic planning. Recently, the US just released new regulations i.e Inflation Reduction Act (IRA) to boost the utilization of clean energy technology. The US’s target is to reduce 50-52% of GHG emissions by 2030 and use 100% clean electricity by 2035 before being net-zero emission in 2050. 

Nathan Hultman, director of the Center for Global Sustainability University of Maryland, during a public lecture session in collaboration with the Office of the President of Indonesia, and the Institute for Essential Services Reform said that he believes that we can achieve the 1.5-degree level.

“We are surely making some progress and are still on the 1.5-degree track. But our work is not done. We have more work to do especially through policy,” Nathan said.

Nathan emphasizes the need for a multi-stakeholder approach in addressing climate emergencies through the energy transition. He explained that the national government is an important stakeholder in determining the energy transition. However, in energy transition we cannot rely solely on the national government since the idea of energy transition must be embraced by many actors including the sub-national level government and even the private sectors.

“For example, in the US during the Trump administration there are not so many things (climate policy) happening, but there is some progress at the sub-national level that pushes national policy in the upcoming administration,” he explained.

Realizing that most democratic countries have similar stakeholders, this ‘All in’ approach can be duplicated in other countries. Every country is different, but each of us has the opportunity to do more.

Playing a strategic role as a G20 leader this year, Indonesia has a critical point in achieving global climate goals. By proposing a more ambitious climate pledge, accelerating renewables into the system, and adopting EVs in massive numbers, Indonesia can inspire other countries to show concrete action in addressing the climate crisis.

Every country needs to figure out its strategic way to do the transition but learning from others is a need indeed. Global commitment to support funding for energy transition must be fulfilled to assist developing countries in running the transition smoothly.

Hageng Nugroho, the Executive Staff Office of the President of Indonesia emphasizes the role of global collaboration to achieve the net zero target.

“Indonesia pledge to be net zero on 2060, and in achieving it we encounter several obstacles from technology till funding. There are at least four things that must be done by a country to avoid the harsh effects of the climate crisis. First, comply the NDC target, encourage citizen and potential stakeholder to participate’, strengthen the global partnership, and boosting the green economy development,”

Hageng added that the most important point is ensuring that the commitment is manifested into action rather than staying at policy level only.

Public Lecture on “The US All-in Climate Policy and Action & Indonesia’s Priority Programs”

Institute for Essential Services Reform (IESR), in collaboration with the Executive Office of the President, will hold a public lecture/seminar on the US All-In Climate Policy and Indonesia’s Development Priority and how the US-Indonesia relationship could serve both nations. The public lecture would invite Prof. Nathan Hultman, Ph.D. from the Center for the Global Sustainability University of Maryland, and Experts from The Executive Office of the President.

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What can the G20 Power Utility Companies do to Address the Climate Crisis?

Bali, 29 August 2022 – The electricity sector is one of the biggest emitters after the forest and land use sectors. As the window of opportunity to keep the global temperature at the 1.5 degrees level is getting tighter, the urge to decarbonize the electricity sector is becoming more and more crucial. Power utility companies will be the main driver of the decarbonization effort to reach net zero emissions. 

Philippe Benoit, Adjunct Senior Research Scholar Center on Global Energy Policy, Columbia University, during the seminar “The Role of G20 Power Utilities in Climate Mitigation Effort” hosted by C20, emphasizes the importance to reform state-owned power companies (SPC), realizing its roles as power producers, power purchasers, and network owner/operator to accelerate the energy transition.

“SPCs are multidimensional. When we talk about decarbonization we have to think about SPC as they are the ones who will set the pace of decarbonization,” he said.

Philippe continued that market-based scenarios such as carbon tax, carbon trading, and regulatory pricing can be an instrument to influence SPCs to decarbonize. Moreover, the government can also make resources available to SPCs by supporting them, doing advocacy and directly exercising government shareholder power.

Mahmoud Mohieldin, High-Level COP 27 Champion Egypt, proposed several points to address, including the comprehensive energy policy covering fossil fuel phase-out, energy access and the development of green hydrogen. 

“The budget of the state should reflect the priority of the climate agenda in SDGs development framework.”

On the same occasion, Joojin Kim, Managing Director of Solution for Our Climate (SFOC), South Korea, presented the fact that currently, renewable energy is facing some curtailments in several regions to avoid ‘unsold’ energy.

“Globally, there is a significant increase of renewable capacity but mostly built in either the US or Europe. To keep the balance between supply and demand in electricity, some areas start to apply curtailment to renewable energy,” he said.

Joojin said that this condition is not conducive to reaching the net zero target. To align with the 1.5-degree Celcius pathways, the G20 country must have 75% renewable energy in 2040. According to him both South Korea and Indonesia are not in a good situation to reach that if there is no urgent action taken.

According to Dennis Volk, Head of Division Bundesnetzazagenturn (BNetZa), Germany, political will from the government is the key to decarbonising the electricity sector.

“A strong political commitment is needed to drive the electricity sector to the decarbonization path. The second important thing is the supporting scheme including financing,” said Dennis.

Youngjin Chae, Vice President of Strategy and Planning Korea Power Exchange (KPX), South Korea, explained that currently there are around 19% of renewables in South Korea. Issues related to flexibility, storage, and feasibility are what become a concern as renewable energy is locally concentrated.

Indonesia is planning to achieve carbon neutrality in 2060 or sooner. PLN as the nation’s power utilities company, through its Director of Corporate Planning, Evy Haryadi, said that PLN needs to build 413 GW of power capacity with around 75% renewables and 19 GW of interconnection for net zero in 2060.

“We (PLN) think that at least five major things should be transformed, from the battery storage system, interconnection, green industry cluster, coal retirement mechanism, to new technology development,” Evy concluded.

A couple of serious challenges are faced by countries in developing renewable energy. Considering each situation, every country must figure out the solution as the IPCC has warned that our carbon budget is limited.

“Every country must be able to answer the issue of solving climate change, customer demand for reliable and affordable electricity, workforce needs to upgrade their skills, regulation from the government, and more technology to provide green energy,” Fabby Tumiwa, the Executive Director of IESR concluded.

Indonesia Needs not only Energy Transition, but The Accelerated One

Jakarta, May 31, 2022 – The geopolitical conflicts that have occurred in the last few months have affected a number of global situations, one of which is the condition of energy supply. European Union countries that feel the impact of the disruption in energy supply have begun to look for various alternatives, both in the short and long term. As a long-term solution, the European Union issued a new energy policy entitled “REpower EU”. Under this policy, the European Union plans to increase its renewable energy capacity to 740 GWdc by 2030 to reduce their dependence on Russia’s fossil energy and ensure its energy security.

Fabby Tumiwa, Executive Director of IESR, at the MGN Media Summit on Tuesday, May 31, 2022, stated that the current global geopolitical situation is indeed not favorable for the energy transition not only in Indonesia but in various countries in the world. However, after several months of ongoing geopolitical tensions, a number of countries have begun to use this momentum to break away from dependence on fossil energy and accelerate their renewable energy. Indonesia should also be able to do the same thing for instance by ensuring that the regulations made to support the acceleration of renewable energy such as the Minister of Energy and Mineral Resources Decree number 26/2021 are implemented.

“The weakness of this country is that the plan has been made but its implementation and enforcement is still weak, for example the Minister of Energy and Mineral Resources Regulation 26/2021 regarding rooftop PV,” Fabby explained.

Fabby explained that the MEMR Ministerial Regulation number 26/2021 had not yet been implemented by PLN because several issues were still hampered, one of which was the Ministry of Finance’s compensation for PLN, whose regulations had not yet been made.

“Then maybe the DPR RI can summon the Minister of Finance and the Minister of Energy and Mineral Resources to explain the situation and ask them to immediately design a compensation scheme for PLN,” he added.

The energy transition situation in Indonesia itself is not very encouraging. Having a renewables mix target of 23% in 2025, data from the Ministry of Energy and Mineral Resources in February 2022 shows that the target has only been achieved around 11.5%. Sugeng Suparwoto, Chairman of Commission VII DPR RI which handles energy, admitted that it was difficult to pursue the renewable energy mix target, but that did not mean it was impossible.

“I have to admit this is hard, but with our extra hard work together, I am still optimistic that we can achieve it,” explained Sugeng.

PLN as a key actor, especially in accelerating renewable energy, stated that apart from providing energy, the demand side for energy must also be ensured.

“We also need to ensure that the demand for renewable energy is available. PLN itself will rely heavily on existing technology to pursue net-zero emission (NZE) and energy mix targets,” Cita Dewi, EVP Planning & Engineering for EBT at PT PLN (Persero), explained.

Cita added that his party cannot work alone to execute the acceleration of renewable energy on its own. It takes collaboration of various parties to ensure this energy transition runs.

Daniel Purba, Senior Vice President, Strategy & Investment, PT Pertamina (Persero) stated that our fossil reserves are not as large as they used to be. In terms of consumption, even though at this time fossils still dominate, in the future it will definitely change.

“Even though now, for example, fuel dominates people’s consumption, in the future electric vehicles and alternative fuels such as hydrogen will be widely used,” he said.

With this phenomenon, corporations have a need to diversify and even transform their business so that the company can be sustainable, and gain the trust of both investors and consumers.

“Pertamina itself has started to diversify its business by starting to develop hydrogen and using solar power in our operational offices,” added Daniel.

Highlighting energy policy in Indonesia, Djoko Siswanto, Secretary General of the National Energy Council, stated that Indonesia has quite complete policy instruments, starting from road maps, targets, and plans. However, according to him, it is important to measure whether we are on the right path of the various policy instruments that exist in Indonesia and if Indonesia energy security is resilient.

“Various policy schemes that currently exist put our energy security index in the ‘resistant’ category. We haven’t been able to reach the ‘very resilient’ category because of several things, including our energy (oil) imports are still high, our energy infrastructure (grid) still needs to be improved, and our NRE mix is ​​still low,” Djoko explained.

Djoko added that the government needs to resolve these issues to ensure Indonesia’s energy security and to reduce GHG emissions from the energy sector. In this way, Indonesia’s commitments to various international agreements are fulfilled.

C20 Indonesia Urge for a Just Energy Transition

Jakarta, 30 June 2022 – Energy transition is one of the priority issues of Indonesia’s 2022 G20 presidency. This role as the leader of the G20 countries is certainly a strategic momentum for Indonesia to show its commitment to the energy transition. The Paris Agreement in 2015 agreed to limit the earth’s temperature increase to no more than 2 degrees Celsius, even trying to keep it at the level of 1.5 degrees. For this reason, all parties must reduce their emissions from high-emission sectors such as energy and achieve carbon neutral status by the middle of this century.

To explore various perspectives on energy transition, the Civil 20 engagement group held a workshop entitled “Making a Just Energy Transition for All” inviting other engagement groups i.e: Think 20 (T20), Science 20 (S20) and Business 20 (B20). Also present as a panelist, Widhyawan Prawiraatmadja, former governor of Indonesia for OPEC.

From the ongoing discussion, all the speakers agreed to put the human aspect as the axis of the energy transition. Vivian Sunwoo Lee, International Coordinator of C20, said that C20 continues to urge the importance of immediately shifting from fossil-based energy systems to renewable energy-based energy systems.

“There are a number of risks, especially from a financial and economic perspective, from fossil energy infrastructure that has the potential to become a stranded asset if we don’t hurry to make the energy transition,” he said. Vivian also highlighted the large fossil energy subsidies that are still being provided by the G20 countries.

Professor Yunita Winarto, co-chair of Task Force 5 S20 stated the importance of an interdisciplinary approach in planning and implementing energy transitions.

“The interdisciplinary approach will shift the paradigm from exploitative-extractive to environmentally friendly-resilient, from a linear economy to a circular economy, and from good governance to proper governance. That way, a balance will undoubtedly be created according to the principles of the planet, people, & prosperity for all,” Yunita explained.

Moekti H. Soejachmoen, Lead co-chair of Task Force 3 T20, explained the importance of the carbon economic value instrument in the context of energy transition.

“The growth in energy demand will definitely continue to grow. It is inevitable, so we have to look for various ways to fulfill this energy need, but on the other hand our need to reduce emissions is also achieved. So this carbon economic value instrument is important,” explained Moekti.

Moekti also added that it was important for Indonesia to ensure that the issues pushed in this year’s G20 presidency would still be discussed in the following years. Given the energy transition is a long process and takes years.

The energy transition will completely change the face of Indonesia’s energy sector. Oki Muraza, Policy Manager of the Task Force Energy Sustainability and Climate, B20, explained that the affordability factor should be one of the main considerations in making the energy transition.

“We have to ensure that the affordability factor of energy during this transition process can be maintained. In addition, we also need to pay attention to people who are currently working in the hydrocarbon sector, how they can be trained so they don’t lose their jobs in the energy transition,” explained Oki.

Widhyawan Prawiraatmadja reminded that it is necessary to harmonize perceptions, rules and policies at the ministry level related to energy transition and the achievement of Indonesia’s commitments in the international level such as NDC. This is in addition to accelerating the achievement of national and international targets, as well as to give the same signal to investors.

“If the signals sent to investors are mixed, the perception of investors is that the risk of investing in Indonesia is high, and it is not impossible to make them reconsider investing,” said Widhyawan.

Indonesia Needs Inter-island Electricity Interconnection for 100 Percent Renewable Energy Development

Jakarta, 26 January 2022 – The energy sector which is dominated by fossil energy accounts for ⅔ of global emissions. In order to reduce greenhouse gas (GHG) emissions exponentially, massive use of renewable energy is an important thing to do. One of the efforts to empower 100 percent of the technical potential of renewable energy, which is widely spread across all provinces in Indonesia, is the construction of an interconnection of the archipelago’s electricity network. 

Jisman Hutajulu, Director of Electricity Program Development at the Ministry of Energy and Mineral Resources, in the HK Experts webinar (26/1/2022), stated that the government through the Ministry of Energy and Mineral Resources has plans to connect the grid system between islands in Indonesia.

“This is to support the 2060 net-zero emission plan. One of the things we want to encourage is the use of NRE, but many NRE sources are far from the many demand sources in Java. So we have to transmit that energy to our load center,” Jisman explained.

Jisman said that his party encouraged PLN to complete interconnections within major islands in Indonesia, which is expected to be fully completed in 2024, later to be connected between islands gradually.

Jisman admits that building this transmission system takes a lot of investment. So the ministry is making a study about priority, to analyze and determine which transmission will be built first. Furthermore, Jisman also mentioned the potential inclusion of this transmission development plan in the Problem Inventory Draft (DIM) of the NRE Bill to ensure the priority of the work.

On the same occasion, Fabby Tumiwa, Executive Director of IESR, believes that this interconnection system should be seen as an investment, not a burden from the choice of shifting to clean energy.

“According to IESR, Indonesia has abundant renewable energy potential. For solar alone, the potential can reach 7,700 GW with the largest potential based on land suitability, located in East Kalimantan, Central Kalimantan, and South Kalimantan,” said Fabby. 

Fabby also revealed that the initial investment needed for grid interconnection development until 2030 is still relatively small, around USD 3.3 billion because there is no inter-island integration yet. However, the required investment will increase in 2040 and 2050, respectively at USD 34.8 billion and USD 53.9 billion.

Other benefits that Indonesia can enjoy from inter-island grid interconnection include increased reliability and concentrated power reserves.

“For instance, excessive power reserves in Sumatra can be sent to Bangka, and vice versa,” said Fabby.

In addition, an integrated inter-island network can reduce investment requirements for developing new power generation. According to him again, the interconnection of the grid will create a diversity of generation mix and supply security, which is different from fossil energy systems that only come from one energy source. Furthermore, Fabby explained that if this interconnection system is already running, the cost of generating renewable energy will decrease by 18% – 46% by 2030.