Driving the Energy Transition from the Sub-National Level

Semarang, 19 December 2023 – The annual Climate Summit (Summit) held in Dubai in November – December 2023 resulted in a number of global agreements, one of which was an agreement by 118 countries to transition and abandon fossil fuels. This agreement was born partly due to pressure from countries experiencing the impacts of climate change. 2023 was recorded as the hottest year in history.

In his opening speech for the Central Java Renewable Energy Acceleration Forum, Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) stated that the simplest thing to ensure the energy transition occurs is to add renewable energy capacity to the energy mix. To massively add renewable energy capacity requires significant investment costs and comprehensive enabling conditions.

“The complex and expensive energy transition can only occur if there are enabling conditions, including rules and regulations, support for public and private partnerships, community initiatives, and investment. Currently, to achieve the RUED target, regional funding capacity is still insufficient, so it is necessary to encourage investment,” said Fabby.

Head of the Central Java Province Energy and Mineral Resources Service, Boedyo Dharmawan, said that his party had contributed to achieving the target of 23% of the national renewable energy mix by 2025.

“In 2023, Central Java Province achieved a regional renewable energy mix of 21.2%. We will continue to encourage this capacity addition in the coming years. Apart from that, we also encourage energy conservation practices through energy and water saving movements, in government agencies and also in business entities, including energy audits,” he said.

Tavip Rubiyanto, Middle Expert Policy Analyst on Energy Substances and Mineral Resources, Directorate of SUPD I, Directorate General of Regional Development, Ministry of Home Affairs, highlighted the role of the entire OPD sector in matters of managing renewable energy in the regions.

“From the start, the ESDM Service had to coordinate with related agencies such as Environment, Transportation and Planning Services. So that RUED can be integrated into the RPJMD. “It does take effort to convince and provide understanding for Bappeda to support this EBT target, but that is what must be done,” said Tavip.

In terms of investment trends, Indonesia is becoming a global investment destination even though currently there are still several investment challenges. This was conveyed by Purwo Wiyatmanto, Head of Sub-Directorate for Promotion Strategy Analyst/ Middle Expert Investment Management, Ministry of Investment/BKPM.

“Investment in the new renewable energy sector is also increasing in demand. The increasing need for energy is also accompanied by an increasing share of renewable energy. Indonesia’s new renewable energy share of around 14.5% (below the ASEAN average) is a challenge in itself, but this is also an opportunity for growth,” he said.

From an industrial perspective, there is actually a need for clean electricity produced by sustainable energy sources. This need becomes stronger if an industry enters the global brand supply chain. Rudi Cahyono, Energy Carbon Manager, PT Selalu Cinta Indonesia (SCI) said this pressure was because his party was included in the supply chain of the footwear industry which is marketed globally.

“We are committed to using 100% renewable energy by 2030 as a consequence of our entry into the global supply chain. By 2024, the target is that we can reduce our carbon footprint by 99%,” said Rudi.

Sakina Rosellasari, Head of the Central Java Province One Stop Investment and Integrated Services Service (PMPTSP), added that her agency continues to actively promote projects that are ready to be developed by investors.

“Central Java is open to green investment, not only labor intensive, but also green economic management,” he said.

Apart from investment on an industrial scale, the use of renewable energy at the community level also needs to continue to be encouraged. Yanto, Head of Banyuroto Village (one of the Energy Independent Villages), Magelang Regency, stated that there is a lot of renewable energy potential on a small scale that can be utilized on a communal scale with the support of the local government.

“Future plans, we, the village government, are trying to increase the amount of biogas in the community, around 100 biogas digesters at least in the next 5 years and budget it in the (village fund) APBDes and are ready to collaborate with related agencies, campuses and other parties,” he said.

With 34 biogas digesters spread throughout almost the entire Banyuroto Village area, this digester has helped the welfare of the community since 2007, starting from cooking needs (reducing household cost), lighting without converters and zero waste from the results of the biogas process (solid and liquid fertilizer, bioslurry).

In 2023, the national government will make a number of important notes in the development of renewable energy. The revision of the National Energy Policy (KEN) document and the inauguration of the Cirata Floating PLTS are among the major points in the energy transition process this year.

Adimas Pradityo, Business and Commerce Development Manager, PLN Nusantara Power said that in 2024 there will be PLTS development in Central Java with a capacity of 140 MW in several locations including Batang and Pemalang. Adimas also shared PLN Nusantara Power’s experience in developing the Cirata floating PLTS.

“(One of) the challenges is explaining the PLTS concept to regulators. We really have a bottom up approach in licensing the development of the Cirata Floating PLTS,” he said.

Strengthening the Government’s Commitment in Mitigating Climate Change

Jakarta, 15 December 2023 – The Indonesian government continues to improve in terms of strengthening its commitment to climate change mitigation. Since starting to aggressively commit to climate mitigation in 2021, the Indonesian Government has continued to carry out follow-up actions through various assessments of funding commitments and creating decarbonization roadmaps in each sector.

Nurcahyanto, Policy Analyst for the Ministry of Energy and Mineral Resources (MEMR), said at the launch of the Indonesia Energy Transition Outlook (IETO) 2024 report organized by the Institute for Essential Services Reform that one of the efforts currently being carried out by the government through the Ministry of Energy and Mineral Resources is to carry out revision of the National Energy Policy (KEN). It is hoped that the results of the revised KEN will be more relevant to Indonesia’s current efforts to carry out comprehensive decarbonization, especially in the electricity sector.

“Target revision (KEN) is only a method based on numbers, but from an implementation perspective it must be supported by regulations and we need to optimize it. For example, in carrying out early retirement for PLTUs, a road map needs to be prepared, as well as consolidation with related ministries/institutions,” he said.

The issuance of Presidential Decree 112/2022 is one of the guiding documents for the decarbonization of Indonesia’s electricity sector, with the main point being to accelerate the cessation of coal-fired power plants.

August Axel Zacharie, Head of Energy Cooperation, Danish Embassy, said that in the global context, Indonesia’s position as a developing country (emerging economy) is an investment attraction in itself, but Indonesia needs to prepare a supportive ecosystem.

“Investment needs for the energy transition, which reach approximately 1 trillion USD until 2050, must be seen as not just building infrastructure, but within these cost requirements there are community aspects, job transition, quality of life, and other non-physical aspects,” added August.

Still related to the high need for investment in renewable energy, and the government’s obligation to guarantee energy security, the Indonesian Government provides energy subsidies. However, this policy is not a sustainable policy.

Evita Herawati Legowo, PYC Senior Fellow, stated that it is necessary to think about a more targeted method for providing energy subsidies.

“There needs to be involvement of all parties in this matter, not just collaboration but a clear division of tasks as to who does what, starting from industry, research, energy, as well as investors,” said Evita.

The Indonesian Government’s commitment to decarbonization is a binding guideline. Delivered by Unggul Priyanto, Main Expert Engineer, BRIN, especially after 2060, all energy sources must come from clean energy sources.

“(The use-ed) LNG, or natural gas, is one option during the transition. But after 2060, like it or not, it has to be replaced with a truly clean (energy source-ed),” he said.

Spurring the Electric Vehicle Battery Industry Sustainability

Farid Wijaya, Analis Senior Bahan dan Energi Terbarukan, Institute for Essential Services Reform (IESR)

Jakarta, December 19, 2023 – In recent years, energy transition has become a significant focus in various countries, including Indonesia. President Joko Widodo’s (Jokowi) has been promoting the shift from conventional energy sources to renewable energy. One of the strategic steps emphasized is the development of electric vehicles. This support is realized through various incentives, including tax breaks, to accelerate the growth of the electric vehicle industry and market expansion.

Farid Wijaya, Senior Analyst of Renewable Energy and Materials at the Institute for Essential Services Reform (IESR), explained that the battery is a crucial component in electric vehicles that enables high performance and efficiency. For this reason, nickel plays a critical role in producing electric vehicle batteries. According to the International Energy Agency (IEA), the shift towards sustainable energy will increase the demand for nickel in the global market, particularly for environmentally friendly vehicles that use electric batteries. By 2040, electric vehicles will account for 58 percent of global vehicles.

“Unfortunately, increased demand for nickel can result in greater reliance on natural resources. Nickel mining and refining processes can cause deforestation, water pollution, and ecosystem damage. Therefore, we must manage it responsibly and ensure it meets environmental impact analysis (AMDAL) and environmental standards. Additionally, we must also consider social justice aspects when managing nickel mining,” said Farid Wijaya at the Forum Group Discussion (FGD) with the title “Electric Vehicle Battery Supply Chain Electricity: Working Together to Build a Sustainable Supply Chain” organized by Traction Energy Asia on Tuesday (19/12). 

Farid mentioned that the nickel mining and refining industry has many issues related to human rights violations and environmental damage. According to IESR’s analysis, several things need to be considered to optimize nickel downstream through environmentally friendly industrialization. Firstly, the nickel mining and refining governance licensing process needs to be reviewed. License revocation and fines should be applied in cases of administrative, environmental, and social injustice issues.

“Secondly, creating a road map for each industry to decarbonize. Third, the development and implementation of Green Industry Standards (SIH) for nickel mining and refining,” said Farid Wijaya. 

Furthermore, Farid emphasized the improvements needed to optimize nickel downstream through environmentally friendly industrialization, such as using environmentally friendly clean technology, energy conservation, compliance with environmental standards, and analysis of AMDAL. There is also worker security and safety and stakeholder consultation. 

On the other hand, Farid explained that the world would be flooded with large lithium-ion batteries that have reached the end of their life and need to be disposed of as the number of electric vehicles on the road increases globally. Recycling is, therefore, essential to recover most of the battery’s active material. The International Energy Agency (IEA) estimates that by 2040, 10% of demand can be met by recycling used batteries.

“If used lithium-ion batteries (LIBs) are disposed of as such and stockpiled in large quantities, it can cause infiltration of toxic heavy metals into underground water, resulting in environmental pollution. Similarly, incinerating used LIBs as solid waste can generate various toxic gases, such as hydrogen fluoride (HF), from the electrolytes in LIBs, which can pollute the atmosphere. Therefore, proper waste treatment of these used batteries is crucial. Recycling is also essential to reduce dependence on imports,” said Farid Wijaya.

IETO 2024: Reviewing Progress in the Energy Transition in Indonesia

Jakarta, 15 December 2023 – In the last three years, there has been a number of advances in the energy transition in Indonesia. Since 2020, the Indonesian government has begun to include the energy transition agenda in the government’s agenda.

At the launch of the annual flagship report Indonesia Energy Transition Outlook 2024, Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) emphasized that this progress is important.

“In the last 3 years, Indonesia has attempted to consolidate renewable energy incentive policies. The results are not yet widely visible, but the energy transition issue is increasingly being discussed, has become an important issue, and is on the government agenda. The next stage, with a consolidated policy, Indonesia’s energy transition steps can be faster.”

Fabby added that in compiling the IETO 2024 report, the IESR team used four frameworks to analyze the development of the energy transition in Indonesia including (1) policy and regulatory framework, (2) funding and investment support, (3) implementation of technology, and (4) social impact and public support.

On the same occasion, Dadan Kusdiana, Secretary General of the Ministry of Energy and Mineral Resources (MEMR), stated that the consolidation carried out by the government at this time was not only carried out from a regulatory perspective, but was also carried out from a techno-economic one.

“In our opinion, one of the keys to the success of NZE (net zero emissions) in the power generation sector is the existence of a super grid that connects the islands in Indonesia,” said Dadan.

Indonesia’s decarbonization achievements during 2023 are considered less than encouraging, where in this one year the addition of renewable energy capacity only increased by around 1 GW, far from the 2021-2030 RUPTL target which set 3.4 GW target in the same period.

Alvin Sisdwinugraha, IESR Electricity Sector Analyst, said that Indonesia needs to immediately improve to pursue its decarbonization target, especially in developing renewable energy projects.

“The government can implement a number of strategies including reviewing the project preparation phase, increasing project attractiveness, improving the domestic renewable energy supply chain, and immediately improving electricity network infrastructure,” he said

Alvin also highlighted the biomass development strategy, which is closely related to the availability of land for the feedstock. Considering the limited availability of land, he said. It would be good if the use of biomass is focused on hard-to-abate sectors.

Apart from the electricity sector, other sectors that consume energy are industry and buildings. The industrial sector is the trigger for a significant increase in energy consumption in Indonesia, or around 81%. In 2022, there will be the addition of 5 commercial smelter units, which could have an impact on the potential to double energy consumption by 2023.

Fathin Sabbiha Wismadi, Energy Efficiency Analyst in Buildings, IESR, said that the existence of binding regulations would be an acceleration of energy efficiency.

“We have 6 things that can contribute to reducing energy intensity in Indonesia, first, electrification. Second, energy efficiency, third, regulations regarding energy consumption and energy efficiency, fourth, ecosystem and infrastructure such as charging locations, fifth, incentives and sixth, increase awareness of the Indonesian people,” said Fathin.

From the supply side, at the sub-national level, a number of provinces in Indonesia have completed General Regional Energy Plans (RUED). Anindita Hapsari, Agricultural Analyst, Forestry, Land Use and Climate Change IESR highlights the need for assistance in each region in accelerating the adoption of renewable energy.

“The capabilities of each region are different, requiring assistance in the form of regulations and schemes, both financial and non-financial,” said Anin.

Availability of financing is one of the issues that hinders the acceleration of renewable energy. One reason is that the perception of renewable energy investment is still relatively low. Martha Jessica, IESR Socioeconomic Analyst conveyed that investment in renewable energy generation is still considered a high-risk investment.

“The realization of investment in renewables is also still low. The trend is very far from ideal, in which this year and last year did not reach the target, namely the investment target of USD 1.8 billion in 2023, but last semester only around 30% was achieved,” she said.

The electricity sector is the leading sector in Indonesia’s decarbonization agenda, because it already has a decarbonization roadmap. However, targets in the electricity sector are still not easy to achieve.

His Muhammad Bintang, Energy Storage and Battery Technology Analyst, IESR, said there are at least three things that need to be encouraged to ensure the electricity sector decarbonization target is achieved.

“First, we need to build a clean energy ecosystem, secondly physical and non-physical infrastructure, and prioritize interventions that have been proved,” he said.

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Increase Collaboration and Investment for Renewable Energy Utilization in Central Java

 

Fabby Tumiwa, Direktur Eksekutif IESR dalam acara Forum Akselerasi Energi Terbarukan Jawa Tengah (19/12).
Fabby Tumiwa, Direktur Eksekutif IESR dalam acara Forum Akselerasi Energi Terbarukan Jawa Tengah (19/12)

Semarang, December 19, 2023 – The Central Java Provincial Government is seeking to encourage collaboration and synergy to accelerate the energy transition and achieve the target of a 21.32% renewable energy mix in the region by 2025, as set in its Regional Energy General Plan (RUED). However, the renewable energy mix in the region only reached 15.76% in 2022, according to data from the Central Java Energy and Mineral Resources Agency (ESDM). With only two years left to achieve the target, the Central Java Provincial Government must pursue the remaining 5.56% of the renewable energy mix.

The Institute for Essential Services Reform (IESR) has been collaborating with Central Java since 2019 to speed up the implementation of renewable energy in the region. To accelerate the transition towards renewable energy and attain the RUED target, it is necessary to establish supportive conditions such as regulations, community initiatives, public-private partnerships, and foster investment. IESR believes that the regional funding capability must be enhanced to achieve the RUED target and attract more renewable energy investment.

“Central Java has a vast potential for renewable energy, including 194 GW of solar energy and 3.5 MW of wind energy. To accelerate the utilization of these resources, several measures need to be taken, such as disseminating information and building capacity related to renewable energy development, promoting investment ecosystems that prioritize green funding, and setting up monitoring, reporting, and evaluation platforms to encourage public participation,” said Fabby Tumiwa, Executive Director of IESR at the Central Java Renewable Energy Acceleration Forum (19/12).  

During the same event, IESR announced a partnership with the Central Java Province Investment and One Stop Integrated Service (DPMPTSP) Office to promote green investment, especially in renewable energy in Central Java.

IESR meresmikan kerja sama dengan Dinas Penanaman Modal dan Pelayanan Terpadu Satu Pintu (DPMPTSP) Provinsi Jawa Tengah untuk mendorong investasi hijau dan khususnya energi terbarukan di Jawa Tengah

Sakina Rosellasari, the Head of Investment and One-Stop Integrated Service (DPMPTSP) in Central Java Province, has recently announced that her office has been actively promoting green investment in the region. To achieve this, they have taken several measures, such as compiling a list of investment-ready projects (known as Investment Project Ready to Offer or IPRO) that focus on circular economy projects such as waste treatment, mini-hydro, sustainable product processing, and waste processing into refused derived fuel (RDF). The DPMPTSP has also created promotional videos, met with various stakeholders, and signed cooperation agreements to encourage green investment in Central Java.

“The preparation of IPRO is important to attract potential investors and provide confidence that Central Java Province is the right location to invest. The IPRO in Central Java covers three sectors: infrastructure, agriculture, and tourism. Within the infrastructure sector is the construction of the Banjaran and Logawa mini hydro power plants in Banyumas Regency and the Tegal city B3 medical waste treatment and industrial development,” Sakina said.

The central government has issued Presidential Regulation No.11/2023 through the Ministry of Home Affairs. This regulation empowers local governments to manage and provide biomass, biogas, and new renewable energy. District and city governments have been granted the authority to support renewable energy development through Kepmendagri 900.1.15.5-1317 of 2023. Some examples of the district and city governments’ authority include waste management, provision of road equipment on district/city roads, empowerment of small fishermen in district/city areas, and provision of electrical/lighting installation components in office buildings.

Tavip Rubiyanto, an Associate Expert Policy Analyst for Energy and Mineral Resources Substance at the Directorate SUPD I of the Directorate General of Regional Development for the Ministry of Home Affairs, states that the development of renewable energy by regions is crucial to achieving the national renewable energy mix target of 23% by 2025.

Tavip explained that the rules regarding the discretion of regional authority in the management of new renewable energy will be effective from 2024. He hoped the regions would start budgeting to achieve these targets. Matters related to regional authority will be financed through the APBD.

To achieve the renewable energy targets at the regional level, Boedyo Dharmawan, Head of the Energy and Mineral Resources Office of Central Java Province, emphasized the need for cooperation between sectors. Coordination between the ESDM, environment, transportation, and planning agencies must be strengthened.

Boedyo Dharmawan also shared Central Java’s achievements in renewable energy, exceeding the annual target of 2022. These achievements include PLTS with a total capacity of around 25 MW, 6 MW micro hydropower plants (PLTMH), 31 MW mini hydro power plants (PLTM), and 322 MW hydropower plants (PLTA).

“Not only in terms of regulation, the government is also committed at the implementation level. To succeed in the energy transition towards the renewable energy era, the provincial government is also trying to control greenhouse gas emissions through the battery-based electric motor vehicle program,” said Boedyo.

Community initiatives that adopt renewable energy can significantly contribute to increasing the renewable energy mix in the region. This initiative can play an essential role in advancing the community’s welfare. Yanto, Head of Banyuroto Village, Sawangan District, Magelang Regency, and an Energy Independent Village, recognizes this fact.

Yanto explained that with a population of 930 cows and the assistance of various parties from the government, community, and non-governmental organizations, his village had developed around 34 biogas processing units from 2023 to 2027. This biogas helps to save the kitchen needs of 44 households in his village. Additionally, biogas can be used to fuel lighting lamps (petromak). The solid and liquid waste from cow dung is also helpful for organic fertilizer, which can fertilize agricultural soil.