Renewable Energy Must Reign Supreme in Southeast Asia

Jakarta, March 27, 2024-Southeast Asia is a world’s fifth-largest economy region in 2022. However, this economic growth comes with a concerning projection: greenhouse gas (GHG) emissions in the region are expected to soar by 60 percent by 2050. Curbing these emissions is pivotal for global efforts to combat climate change. Unfortunately, current endeavors to promote renewable energy in Southeast Asia fall short of aligning with the Paris Agreement, which aims to limit global warming to below 1.5 degrees Celsius.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), stated at the Revision 2024 International Conference in Tokyo (14/3) that ASEAN countries have set a target to achieve a renewable energy mix of 23 percent by 2025. However, he emphasized that this target doesn’t align with the Paris Agreement’s objectives.

“To align with the Paris Agreement, the renewable energy mix needs to account for 55 percent, with variable renewable energy (VRE) contributing 42 percent. Except for Vietnam, Cambodia, and the Philippines, others have yet to reach 5 percent VRE penetration. The good news is that in 2023, ASEAN countries will have over 28 GW of operating utility solar and wind capacity, a 20 percent increase in operating capacity since last year. Currently, they make up 9 percent of ASEAN countries’ total electricity capacity. But in order for ASEAN countries to meet the goal, they need to install more renewable energy,” Fabby remarked.

Fabby further highlighted the relatively abundant renewable energy resources in Southeast Asia, which are estimated to be 40-50 times greater than the region’s current energy needs. He suggested that utilizing floating solar power plants could be a strategic move towards decarbonizing the energy system. He elaborated on the technical potential, with reservoirs boasting 134 to 278 GW and natural water surfaces such as rivers, lakes, and seas holding 343 to 768 GW. However, he stressed the importance of conducting detailed calculations of the technical, market, and economic potential, as well as site-specific assessments to develop floating solar power plants.

Additionally, he highlighted the need for Southeast Asian countries to adopt more ambitious policies, provide robust budget support and incentives, and enact policies that attract investment. The average annual investment in renewable energy capacity should be increased by five times to USD 73 billion per year.

Fabby emphasized that Southeast Asian countries must elevate their ambitions to meet the Paris Agreement targets. As an immediate step, ASEAN should aim for a 23 percent renewable energy mix by 2025 and 40 percent by 2030.

“Various studies have shown that decarbonizing the energy system with renewable energy in Southeast Asia is feasible; however, current policies and actions are insufficient to achieve significant decarbonization by 2050. While renewable energy resources are abundant and ample, substantial investment is needed. Each country must reform policies and manage risks associated with renewable energy projects to attract and mobilize investors further,” Fabby added.

He also cautioned against perpetuating a narrative that prioritizes fossil energy as a baseload generator under the guise of maintaining energy security, while sidelining renewable energy. Such a narrative, he argued, is counterproductive and contradicts the spirit of the Paris Agreement.

Civil Society Coalition: New Energy Sector Rules Set Back Energy Transition Commitment

press release

Jakarta, March 8, 2024 – The Renewable Energy Movement’s Civil Society Coalition is questioning the government’s commitment to the energy transition. They consider some regulations to be disincentives for switching to renewable energy. These regulations include the Energy and Mineral Resources (ESDM) Ministerial Regulation on solar PV, the Presidential Regulation (Perpres) on carbon capture and storage, and the Draft Government Regulation (RPP) on the National Energy Policy (KEN).

The Ministry of Energy and Mineral Resources (ESDM) has recently issued Regulation No. 2 of 2024, which outlines new rules for Rooftop Solar Power Plants. Unfortunately, these changes may discourage the public from installing rooftop solar power plants, particularly in households and micro, small, and medium enterprises (MSMEs). The first change is that excess rooftop solar power production can no longer be exported to PT PLN. Therefore, it won’t be counted as a bill reduction. The second change is that the development of rooftop solar PV will follow a quota system set by PLN. In addition, there will be only two registration periods per year. The problem is that the export of electricity to the PLN grid is the attraction of rooftop solar PV. With this provision, people can pay more to install batteries. Not only that, the payback period for rooftop solar power plants will also be extended to 9-10 years. In fact, with the 100% excess electricity export provision as in the current regulation, the cost of installing rooftop solar power plants can be recovered in four to five years.

“This regulation is a setback because it will reduce public participation in installing rooftop solar power plants. Not only does it hinder household consumers, but this new regulation also makes it difficult for industries that want to install rooftop solar power plants. This means that the new regulation shows that the government is getting further away from its commitment to energy transition,” said Jeri Asmoro, Digital Campaigner of 350.org Indonesia.

Community enthusiasm for rooftop solar power installation in rural and urban areas is relatively high, according to Reka Maharwati, Coordinator of Enter Nusantara. For instance, the people of Sembalun Village in West Nusa Tenggara and the Al-Muharram Mosque community in Taman Tirto, Yogyakarta, have installed rooftop solar power to achieve their dream of energy independence.

“I’m sure many other communities want to install rooftop solar panels in their homes or even be empowered to work collectively in the community. The government should be able to collaborate with these enthusiasts and create new schemes more beneficial to the community,” said Reka.

Similarly, Hadi Priyanto, a Renewable Energy Campaigner of Greenpeace Indonesia, revealed that an equitable energy transition can only be realized if the community is involved. “Community participation is one of the keys to achieving the energy mix target, but various revisions to existing regulations show the government’s lack of seriousness in energy transition efforts. The principles of fairness and democratization of energy that have been echoed in the JETP program will only be a platitude without real steps to break away from fossil energy dependence,” he added. 

 

Similar to the updated regulations about rooftop solar PV, the draft RPP KEN containing a reduction in the renewable energy mix target from 23% to 17-19% in 2025 also hinders the acceleration of the energy transition. In the National Energy Council (DEN) document on the draft RPP KEN, the renewable energy mix until 2030 is targeted at 19-21% and will only increase in 2040 to 38-41%.

Deon Arinaldo, Program Manager of Energy Transformation, Institute for Essential Services Reform (IESR), explained that the draft KEN RPP only allows Indonesia to reach peak emissions in 2035, which is 7-10 years later than what is needed to limit the increase in global average temperature below 1.5°C, as recommended by the Intergovernmental Panel on Climate Change (IPCC) report. This puts the achievement of the Paris Agreement and carbon-neutral commitments by 2060 or sooner, which the government has aimed for, at risk.

The delayed peak emission in Indonesia means that the country will have to speed up its energy transition in a shorter time frame than previously anticipated, resulting in higher costs and more significant social impacts that will be difficult to mitigate. The draft policy has also affected the perspectives of various actors, including renewable energy investors and developers, regarding the government’s commitment to promoting renewable energy development.

“This also marks the reduction in primary energy mix targets in 2025 and 2030, especially the share of renewable energy such as solar and wind, which can hamper the cooperation of the energy transition. This is because renewable energy that can enable energy democratisation, such as solar energy, has a small portion. Greater support is given to large-scale projects such as fossil plants with carbon capture storage (CCS) or nuclear technology. So the draft KEN RPP does not favour energy transition with the community,” said Deon Arinaldo.

 

The plan to change KEN also contradicts Indonesia’s JETP Agreement commitment, which targets a renewable energy mix of more than 44% by 2030. It is feared that changes to KEN will impact the revision of the JETP commitment. In addition, as a large umbrella for national energy planning, the draft KEN RPP also has the potential to undermine efforts to transition to renewable energy that have been carried out in the regions.

Red Carpet for False Solutions

Not only does it disincentivize renewable energy development, but government policy encourages false solutions as an energy transition strategy. This step is fatal because it can lock Indonesia into fossil energy dependence, which leads to failure to achieve carbon neutrality.

 

In the revised KEN, for example, until 2060, the government still plans to operate fossil energy-based power plants and ‘green’ them with carbon capture and storage (CCS) technology. In addition, the government intends to operate nuclear power plants (PLTN) by 2032 and use gas fuel for transportation and households until 2060.

The government’s support for fake solutions is also shown by the issuance of Presidential Regulation No. 14 of 2024 concerning implementing Carbon Capture and Storage Activities. This regulation allows companies to inject and store carbon emissions into underground reservoirs. The IEEFA Report shows that out of 13 CCS projects with a total of 55% of the world’s capacity, seven projects performed poorly, two failed, and one stopped operations. The application of CCS technology is feared to be a greenwashing effort that perpetuates fossil energy-based power plants.

These three regulations raise questions regarding how serious the government is about encouraging renewable energy development. This is because the national renewable energy mix has always been below the target in the last five years. 

“Regulations will be a long-term legal basis to ensure that energy transition steps are carried out legally. If the legal basis is made exactly the opposite of the target stated by the government, then where is the commitment to the energy transition? If the regulations are continuously directed to continue utilising fossil energy, investors interested in doing renewable energy business will withdraw because they do not have legal certainty. Our problem is in legal certainty,” said Agung Budiono, Executive Director of the CERAH Indonesia Foundation.