The Russia-Ukraine Conflict and Its Impact on Indonesia’s Energy Sector

Jakarta, April 14, 2022 – The military conflict involving Russia and Ukraine is still ongoing. A number of direct and indirect impacts have begun to be felt by a number of countries, especially European countries because Russia is one of the main suppliers of gas and oil for a number of European countries.

Russia’s political attitude which continues to carry out military action has put the ‘customers’ of Russian oil and gas in a dilemma. If they continue to buy oil and gas from Russia, they are indirectly contributing to the financing of the war. If they don’t buy the oil and gas, their energy security is threatened. Gas and oil currently available have also increased in price, which means higher costs.

Will the Russia-Ukraine war situation have an impact on Indonesia? The Clean, Affordable, and Secure Energy for Southeast Asia (CASE) project held a public discussion entitled “The Geopolitics of Energy Transition” to examine the impact of the Russia-Ukraine war on the global energy system and lessons learned for Indonesia’s energy transition.

Fabian Hein, analyst of energy statistics and scenarios, Agora Energiewende explained that currently European Union countries such as Germany, are trying to reduce dependency on fossil energy, especially gas.

“There are two approaches to dealing with this crisis. The first is a short-term approach by replacing gas with coal and oil. Second is a long-term strategic plan by increasing the capacity of renewable energy in the energy system,” Fabian explained.

Dependence on fossil energy does not only occur in Germany, or the European Union countries. Indonesia also has a large dependence on fossil energy for both electricity generation and fuel for the transportation sector.

Widhyawan Prawiraatmadja, a lecturer at SBM ITB, warned Indonesia to be careful in viewing and responding to this geopolitical issue.

“The issue of the current energy crisis is not only an imbalance between supply-demand, but there are other factors, namely war, so that energy commodity prices fluctuate and in the Indonesian context the government is in a difficult choice between providing more subsidies or increasing energy prices such as fuel,” Widhyawan explained. .

The choice of the Indonesian government to maintain the share of fossil energy and even provide subsidies through various policies is increasingly irrelevant in these times. The Executive Director of the Institute for Essential Services Reform, Fabby Tumiwa, stated that the lesson that can be drawn from the impact of the Russia-Ukraine conflict mainly on European countries is that dependence on one commodity is a threat to the energy security of a region.

“The IEA also criticized that European countries failed to implement the first principle of energy security, namely supply variation. Apart from depending on one type of commodity, Europe is also very dependent on one country as a supplier, this is vulnerable to the security of energy supply there,” he said.

Fabby continued, that the Russia-Ukraine conflict had a significant global impact on energy development. Renewable energy is more resilient in terms of price and supply due to its local nature. So developing renewable energy in Indonesia is increasingly becoming a necessity in the future to ensure energy security.

Energy Crisis Or Fossil Energy Crisis?

Jakarta, October 11, 2021 – In recent months, many media have reported on the energy crisis in Europe. In the UK, for example, many electric and gas utility companies went bankrupt and were forced to close. People are also seen queuing at gas stations to buy fuel. This phenomenon shows us that even countries with strong economies are still quite vulnerable to energy security issues.

CASE for Southeast Asia Project held a discussion entitled “Energy Crisis in UK and Europe: Lessons Learned for Indonesia’s Energy Transition” which invited speakers from the UK and Europe (11/10/2021). In this discussion, the public in Indonesia is involved in the discussion to find out various important facts and findings related to the issue of the energy crisis that is currently happening in the UK and Europe.

In the UK the, industrial and household sectors are quite dependent on natural gas. With the winter season is approaching, the demand for gas is increasing as the need to warm homes also increases. This condition, when a country relies heavily on energy sources that are vulnerable to global markets, does raise a question: is this really an energy crisis, or is it a fossil energy crisis?

William Derbyshire, Director of Economic Consulting Associates (ECA), UK, on this occasion gave an explanation regarding the fact that the primary energy mix in the UK relies on natural gas as much as 42%. Furthermore, William also showed data that illustrates that since 2017, the price of natural gas has gradually increased until 2021, which has resulted in an increase in the selling price of electricity.

“If high fossil fuel prices are the problem, then the answer is reducing dependence on coal and gas, not adding more fossil fuels,” William said.

Based on this conclusion, renewable energy is a good solution to reduce dependence on fossil energy. But not without challenges, the UK, which has 16% of wind power plants in its power generation mix, has several important points to note. For example, Gareth Davies, Managing Director of Aquatera explained that wind farms in the UK have a fairly high variability scale.

Responding to this challenge, Gareth conveyed the need to conduct spatial analysis and planning related to areas that have sufficient wind gust potential, also taking into account the historical climate data.

“By distributing wind power production over a wider geographic area, it will help improve energy security and balance the UK’s energy supply through renewable energy,” said Gareth.

In line with William’s statement regarding the importance of making an immediate energy transition, Dimitri Pescia, Program Manager Southeast Asia of Agora Energiewende explained the fact, for example, in Germany, the investment cost to build renewable energy power plants is much cheaper than to build fossil power plants. In this context, Dimitri explained that investment in renewable energy can be considered as a hedging strategy to minimize the risk of using fossil energy in the energy transition period over the next few years.

From this discussion, the public is being helped to understand the real situation and the lessons that can be drawn for the energy transition process in Indonesia. Fabby Tumiwa, Executive Director of IESR said that Indonesia needs to quickly adopt the use of renewable energy to minimize the risk of an energy crisis due to dependency on fossil energy. Fabby added that the development of these abundant potentials of renewable energy in Indonesia needs to be accompanied by energy efficiency, development of energy storage technology, as well as inter-island interconnectivity.

“It should be remembered that the current energy crisis is a fossil energy crisis. The volatility of fossil energy prices is very high. The increase of fossil energy prices will have an effect on other aspects,” said Fabby, emphasizing the real cause of the energy crisis in the UK and Europe.

Closing this discussion, Fabby expresses the urgency for the public to know this issue contextually so that there would be no panic in the community. “Indonesia itself does not need to worry about energy crises that occur in Europe, China, Britain, India, because Indonesia has the advantage of a better energy transition planning towards decarbonization way earlier,” concluded Fabby.


Watch again the discussion here: