Three Principles of Equity in Indonesia’s Energy Transformation

Marlistya Citraningrum, Manajer Program Akses Energi Berkelanjutan dalam Sustainability Media Academy pada Kamis (30/11).

Jakarta, November 30, 2023 – Indonesia, like many other countries, faces a critical turning point amid the global climate crisis. As a nation with abundant energy resources, the transition towards renewable energy is urgently necessary. However, this shift must prioritize fairness and equality for all. The energy transition must not solely focus on technical aspects but also consider the social, economic, and moral impacts on the affected communities. In Indonesia, this transition is not just a technical step, but also a moral obligation to ensure that every individual has equal rights in this change.

“We must examine three principles to achieve justice in the energy transition. The first principle is justice at the local level, where we need to take a closer look at which parties directly benefit from and are affected by the energy transition at the local level. For example, we need to assess whether the community around the mine is reaping any benefits from the energy transition,” said Marlistya Citraningrum,  Program Manager of Sustainable Energy Access, at the Sustainability Media Academy on Thursday (30/11).

Furthermore, Marlistya Citraningrum mentioned another principle from the authority perspective. This means that the community needs to see how the local government authority manages the transition. This includes the policies and regulations implemented to ensure fairness for all parties involved. Long-term justice must also be considered, which consists of the community’s participation in managing the future once the mining industry ends. During this time, the community’s welfare must be considered while ensuring the continuity of the economy.

During the energy transition process, it’s crucial to consider the availability of affordable, sustainable, and reliable energy. The instability in energy supply can hinder the achievement of sustainable development goals. Hence, it’s essential to establish a dependable energy system by investing in energy storage technologies, reliable distribution networks, and diversification of energy resources.

“To achieve a successful energy transition, it is crucial for the government, private sector, and communities to work together collaboratively. Education and community engagement programs can enhance people’s understanding of the significance of affordable, sustainable, and dependable energy. By enabling communities to participate in this transformation actively, positive outcomes can be experienced locally,” Marlistya said. 

Marlistya also emphasized that the government must involve more stakeholders, including indigenous peoples, women, youth, and other marginalized groups, in the planning and decision-making processes. This will ensure that all groups are treated equally and included in the opportunities created by the just transition. Social inclusion is also important to ensure that vulnerable groups have fair access to these opportunities.

“In addition to evidence-based policies, equitable energy principles should be applied through the GEDSI approach that emphasizes empathy and involvement in decision-making,” said Marlistya.

Exploring Early Termination of Coal Power Plant Operations

press release

Jakarta, November 15, 2023 – The government is taking steps on Presidential Regulation (Perpres) No. 112/2022 concerning the Acceleration of Renewable Energy Development for Electricity Supply by drafting a road map for the operational termination of coal-fired power plants. The Institute for Essential Services Reform (IESR) views preparing a road map for the early termination of coal power plant operations as a first step to encourage renewable energy development. Furthermore, after the road map is determined,  the government should prepare a regulatory framework that can support the implementation of a financing structure or scheme for the operational termination of coal-fired power plants in Indonesia.

Deon Arinaldo, Program Manager of Energy Transformation at IESR, mentioned that there have been several proposed structures for terminating coal-fired power plants (CFPP) operations, such as write-offs or deletion of CFPP assets from company records because they are considered no longer economical or for example, spin-offs, namely the sale of assets to a new company to manage these assets with a shorter operating period. In addition, according to him, the government needs to make several pilot projects for the termination of the ongoing CFPP operations, such as the Cirebon CFPP, as a proof of concept and provide certainty to PLN and Independent Power Producers (IPP) as CFPP asset owners.

“Apart from a clear scheme or structure in the early termination of coal-fired power plant operations, a mechanism is also needed to allocate the funding obtained from the early termination of the power plant to renewable energy plants. The current regulations in Indonesia do not allow this. Therefore, it is necessary to conduct a thorough study and propose changes to allow the use of renewable energy funding, which is cost-effective, for retiring CFPP assets,” Deon said at the Enlit Asia panel discussion entitled “Leapfrogging to NZE: Accessing ASEAN readiness to retrofit or early retire coal fleets” (15/11).

Deon sees that a significant amount of work still needs to be done concerning the early retirement of CFPP. Some of the tasks include ensuring a legal framework that explicitly states that the early termination of CFPP operations is part of the country’s energy transition policy aimed at reducing emissions. Additionally, there needs to be regulations that permit modification of the power purchase agreement (PJBL) and other related tasks.

“It is even better if the strategy at the CFPP is part of an energy transition effort that wants to integrate renewable energy on a large scale to reduce GHG emissions. If the goal is like that, CFPP assets will be optimized to ensure renewable energy can enter the electricity mix quickly and cheaply. For example, instead of waiting to be retired, CFPP can be operated flexibly to help maintain system stability and reliability as the mix of intermittent solar and wind power increases,” Deon added.

IESR: Indonesia Needs a New Strategy to Achieve 23% Renewable Energy Mix by 2025

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Jakarta, July 27, 2023 – In facing the challenges of climate change and striving for sustainable national growth, the Institute for Essential Services Reform (IESR) assesses that accelerating renewable energy development has become necessary. Through the National Energy Policy (KEN), the Indonesian government has set a target of increasing the share of primary renewable energy to 23% by 2025 as one of the benchmarks.

Based on data from the Ministry of Energy and Mineral Resources (MEMR), the utilization of national renewable energy in 2022 only reached 12.3% of the target of 23% by 2025. IESR sees the electricity sector as having the most significant potential to support the achievement of renewable energy targets. According to the National General Energy Plan (RUEN), it is necessary to have 45.2 GW of electricity sourced from renewable energy by the year 2025. However, renewable energy development needs to be faster, with a growth rate of around 400-500 MW per year over the past five years. This growth is also far from the government’s target of increasing renewable energy by 2-3 GW per year in the last five years.

Deon Arinaldo, the Manager of the Energy Transformation Program at IESR, revealed that the Indonesian government needs to prepare a new strategy to promptly achieve the 23% renewable energy mix target by 2025 and consistently increase the renewable energy achievement targets. 

“The National Energy Policy (KEN) aspiration is to achieve national energy independence and resilience that supports sustainable development. Therefore, Indonesia must remain optimistic and ambitious in increasing its renewable energy mix. Even while updating the KEN document, the target for the renewable energy mix needs to be maintained or even raised. What is needed is a new strategy that considers technological advancements, current economic growth, and can be implemented quickly, such as how to accelerate rooftop solar PV installations optimally in the next two years,” Deon emphasized during the Road to Indonesia Energy Transition Dialogue (IETD) 2023, Expert Discussion Webinar on Thursday (July 27, 2023).

His Muhammad Bintang, a Researcher in Energy Storage Technology and Battery Materials at IESR, stated that based on IESR’s study in 2023, power plants contribute more than 40% of Indonesia’s total energy sector emissions. To support the achievement of a 23% renewable energy mix and to consider the realization of lower energy demand growth than the RUEN projections, it is required to have at least 24 GW of installed renewable energy generation capacity that needs to be in place by 2025 or an additional 13 GW should increase it within the next two years. This means that the growth of renewable energy generation needs to reach 5-7 GW per year.

“To achieve the net zero emission target (NZE) by 2060 or earlier, several concrete strategies are needed. According to IESR’s study, some of the identified strategies in the electricity sector include increasing the success of Commercial Operation Date (COD) for geothermal power plants by 1.4 GW and hydropower plants by 4.2 GW, increasing the capacity of the de-dieselization program for scattered diesel power plants from 588 MW to 1.2 GWp of solar power plants and batteries, constructing 4.7 GW of solar PV power plants and 0.6 GW of wind power plants. Additionally, the implementation of biomass co-firing in PLN’s coal-fired power plants with an average share of 10% for Java-Bali and 20% for non-Java-Bali power plants, and the early retirement plan for certain coal-fired power plants. Among the various technology options, expanding solar PV power plant capacity can become a viable solution to achieve the 23% renewable energy mix target quickly. Compared to other power generation technologies, solar PV plant development is relatively faster,” Bintang explained.

Bintang explained that accelerating the development of renewable energy requires the readiness and flexibility of the electricity system to increase the penetration of various renewable energies (variable renewable energy, VRE). To meet the NZE target, the role of VRE power plants needs to be enhanced, from the current 0.4% to around 4% by 2025 and increasing to 77% by 2060. Moreover, investments are required for constructing power plants and developing infrastructure to accommodate the penetration of variable renewable energy (VRE).

IESR encourages Indonesia to smoothen and accelerate the energy transition. Through the organization of the Indonesia Energy Transition Dialogue (IETD) 2023, IESR will involve numerous experts to delve deeper into efforts to transform the operation of the electricity system as a strategy for increasing the share of renewable energy. IETD 2023 marks the sixth edition since its first inception in 2018. This year, IETD adopts the theme “Enabling Rapid Power Sector Transformation” and will take place over three days from September 18-20, 2023, held in hybrid form in Jakarta and online. Follow IETD 2023 by visiting the website and take advantage of attractive ticket discounts by registering from July 22 to 28, 2023.