ASEAN Grid Interconnectivity as the Start of Renewable Energy Security in the Region

press release

Jakarta, 13 June 2023 –  To reach energy security sustainably and to face challenges of global climate change, Indonesia’s chairmanship in 2023 needs to be a strong leader in the decarbonization efforts of the energy sector in Southeast Asia. region. Institute for Essential Services Reform (IESR) views that Indonesia can further its regional cooperation and collaboration on innovation, technology, renewable energy research, and push for clearer and enticing policies to boost investments in the renewable energy sector.

As a region, ASEAN has committed to reach a 23% energy mix target in primary energy and 35% capacity of renewable energy installed by 2025. Furthermore, to expand the regional electricity trade , integrate the region’s power grid, and to strengthen the reliability of the power grid, ASEAN is currently building the ASEAN Power Grid (APG).

The Executive Director of the Institute for Essential Services Reform (IESR), Fabby Tumiwa, explains that the project to interconnect ASEAN’s grid through ASEAN Power Grid (APG) could be a starting point for ASEAN member states to boost renewable energy capacity in the electricity sector and shift their dependency to fossil fuels. Indonesian chairmanship in ASEAN 2023 with one of its main focus being Sustainable Energy Security has to be utilized to push ASEAN member states to focus on efforts to decarbonize their energy systems. 

“Indonesia has the chance to lead ASEAN to transition their energy, amplifying the renewable energy mix, and to reduce fossil energy. Indonesia has given examples for other ASEAN member states to have a more ambitious target that aligns with the Paris Agreement. One of which is to push ASEAN member states to end CFPP operations before 2050 and to push agreements between ASEAN member states to build cell industries, solar modules, and energy storage (battery),” Fabby Tumiwa assessed. 

ASEAN itself has a capacity of 7.645 MW on the existing interconnecting grid in the ASEAN Power Grid project, according to a presentation from the Sub Coordinator of the Electricity Program MEMR, Yeni Gusrini, in the IESR Webinar titled Toward a Decarbonized ASEAN. In the future, the interconnection grid will be added in capacity to around 19.000 – 22.000 MW and covers a wider area.

“ASEAN Power Grid contributes towards the economic development in ASEAN by helping fulfill energy demand in ASEAN and to develop regional industry player’s growth. On the first phase, the electricity grid in Laos, Thailand, Malaysia, and Singapore has been connected through the Lao PDR, Thailand, Malaysia, Singapore Power Integration Project (LTMS-PIP), which has been the pioneer of the power trade mechanism that has transmitted 100 MW from Laos to Singapore, utilizing the existing interconnection,” Yeni explicated. 

IESR views that the development of an interconnection grid that accommodates the integration of renewable energy in Indonesia needs to be accelerated so that it aligns with the Paris Agreement to net zero emission (NZE) in 2050.

“Interconnection between the islands in Indonesia and between the countries in ASEAN is one of the enabling factors of renewable energy integration. The existence of this interconnection will help solve the problem of intermittency and to maximize renewable energy usage, so that if there’s an oversupply such as solar PV in the daylight built in another location, the electricity can be transmitted to another place. Before that, ASEAN member states have to keep refurbishing their renewable energy investment climate in their respective countries and regionally with a more interesting regulation framework,” explained Deon Arinaldo, Program Manager of Energy Transformation IESR. 

Deon says, Indonesia is a country with the biggest economy and energy consumption rates in ASEAN, and has a massive energy resource. With ASEAN chairmanship this year and a supportive process and regulations for energy transition at the national level such as JETP and New and Renewable Energy Bill, this will make Indonesia an example and trigger the acceleration of ASEAN’s transformation process.

IESR believes that the decarbonization efforts are not limited to the government, but also involves the participation of various stakeholders, including private sectors, civil society, and international agencies. In this spirit of collaboration, Indonesia needs to invite all parties to join in the effort to tackle climate change and create a sustainable future for ASEAN. 

COP 27: Indonesia Needs to Attract International Support for Energy Transition with Ambitious CFPP Retirement Targets and Renewable Energy Development

Jakarta, 8 November 2022- Indonesia delivered its national statement at the Conference of the Parties 27 Summit (COP27) in Sharm El-Sheikh, Egypt, through Vice President Ma’ruf Amin. He mentioned various climate commitments that Indonesia had made, including increasing climate ambition by submitting Enhanced Nationally Determined Contributions (NDCs) documents last September. Moreover, Ma’ruf emphasized that the climate agreement needs to be implemented immediately with clear international support at the national level in climate action funding, creating carbon markets and investing in the energy transition.

The Institute for Essential Services Reform (IESR) views that apart from needing to further increase Indonesia’s climate ambitions, to accelerate the implementation of the energy transition, Indonesia needs to encourage the inclusion of international financing support for climate change mitigation through strengthening renewable energy development plans, energy efficiency, strengthening clean energy systems, and preparation of bankable projects. This needs to be supported by policies and regulations that provide investment certainty with low risk and information transparency for the public and encourage community involvement.

In the Enhanced NDC, Indonesia has increased its GHG emission reduction target from 29% in the Updated NDC document to 31.89% in 2030 with its efforts (unconditional) and from 41% to 43.2% with international assistance (conditional). Although it is a step forward, IESR considers that this target is still not in line with the Paris Agreement, which encourages more ambitious efforts for countries to limit the earth’s temperature below 1.5 degrees Celsius.

One of the factors contributing to the increase in the emission reduction target is the increase in the emission reduction target in the energy sector from 11% in the Updated NDC to 12.5% ​​(unconditional) and from 13.9% to 15.5% (conditional).

“To be aligned with the targets of the Paris Agreement, Indonesia needs to increase its renewable energy mix target to 42% in 2030. Meanwhile, in the 2050 Long Term Low Carbon and Climate Resilience Strategy (LTS-LCCR), which is the basis for this Enhanced NDC, the renewable energy mix is ​​only 43 % in 2050,” said Fabby Tumiwa, Executive Director of IESR.

He said the opportunity to increase the renewable energy mix target is wide open with the implementation of the early retirement commitment of 9.2 GW of coal-fired power plants.

Through Presidential Decree 112/2022, the government opened up the opportunity to accelerate the termination of PLTU operations before 2050. At this COP, this commitment must be echoed, and the need for funding for early retirement for CFPP, which has an average age of 13 years, and financial support from developed countries must be met and delivered straightforwardly, followed by ambitious targets. Currently, the government has not agreed on the certainty of the CFPP early retirement target before 2030, and it still uses PT PLN’s target, which is different from the target of 9 GW set by the Ministry of Energy and Mineral Resources,” said Fabby.

Based on the IESR “Financing Indonesia’s Coal Phase-out” study with the University of Maryland, in 2030, it will cost around USD 4.6 billion to close 9.2 GW PLTU and USD 27.5 billion by 2045 for all CFPPs. Meanwhile, to decarbonize the energy system in Indonesia, at least a total investment of USD 135 billion is required by 2030. Even though the amount looks large, the benefits to be gained from the early retirement of CFPP are far greater in terms of economic, social and environmental aspects.

“The cost of generating electricity from renewable energy such as solar energy is already cheaper than building a new CFPP, and even in the next decade, it will be cheaper than operating an existing CFPP. Economically, the benefits of retiring a CFPP and replacing it with renewable energy can reduce the average electricity generation cost in the long run. In addition, health benefits are available, increasing the availability of green jobs on the social side, as well as on the environment, can avoid air pollution, control retrofit costs, improve air quality, save water and water quality, and reduce GHG emissions,” explained Deon Arinaldo, Manager of the Transformation Program. Energy, IESR.

Investment needs for decarbonizing Indonesia’s electricity system reaching USD 135 billion towards 2030 and increase to USD 455 billion and USD 633 billion in the following decades respectively. This investment is to build renewable energy to meet the growing demand for electricity, storage systems, energy efficiency investments, as well as the development of transmission and distribution networks. Therefore, the focus of public financing as well as international financing support must be directed towards creating a positive investment climate for clean energy systems.