South Sumatra Journalists Form Energy Transition Journalist Network

press release

Palembang, February 20, 2024 – The Alliance of Independent Journalists (AJI) Palembang together with the Institute for Essential Services Reform (IESR), a leading think tank in Indonesia that focuses on energy and the environment and the Society of Indonesian Environmental Journalists (SIEJ) took the initiative to form the “South Sumatra (South Sumatra) Just Journalist Network” to build public awareness of the energy transition through quality journalistic work.  Through this Just Journalist network, it is hoped that there will be more quality news related to the issue of energy transition so as to increase public understanding and trigger the acceleration of the transition from fossil energy to renewable energy at the regional level.

Based on data in the report “Insights on energy transition news in the electricity sector in Indonesia from 2020-2022” published by CASE Indonesia in 2023, national media dominated the news about energy transition in the electricity sector. Meanwhile, regional media has yet to make a significant contribution. IESR views that optimizing the role of media in the regions is crucial to reach public participation in supporting the energy transition process and greater use of renewable energy.

Chairman of AJI Palembang, M. Fajar Wiko, said that journalists who are members of the South Sumatra Just Journalist Network can shape public opinion on energy transition, identify challenges and opportunities in covering complex issues related to renewable energy, and identify the economic, social and environmental impacts of the energy transition program effectively to communicate to the public.

“The establishment of this Network is expected to clarify the role of the media in providing explanations about renewable technologies, government policies, and private sector initiatives in the energy transition, as well as encouraging better public understanding to actively participate in supporting the energy transition, and encouraging the role of stakeholders to create a more favorable environment for renewable energy, to motivate collaboration between the media, government, private sector and society to design the best solution,” said Wiko. 

Forum Jurnalis Sumsel

Marlistya Citraningrum, the Program Manager of Sustainable Energy Access, IESR, mentioned that the energy transition is happening in various parts of the world, including Indonesia has diverse contexts at the regional or subnational level. The shift from fossil fuel to renewable and more sustainable energy systems is demonstrated by the trend of retiring and early retirement of coal-fired power plants around the world – as well as in Indonesia under the Just Energy Transition Partnership (JETP) plan. This will have a direct impact on Indonesia’s coal-producing provinces and districts, particularly in the economic and development sectors. Subnational governments need to anticipate this trend in advance, including to boost the alternative economy sector and optimize the use of renewable energy. The media can play a role in educating the public to immediately switch to low-emission energy.

“IESR’s studies in several coal-producing regions show that although regional income depends on the coal economy, the economic multiplier effect is not directly enjoyed by surrounding communities in the form of infrastructure, economic improvement, or basic services such as education and health. In Muara Enim, around 78% of profits are absorbed by mining companies, in addition to local laborers working more freelance for contractors or vendors of mining companies instead of professional workers in the company,” said Marlistya.

Aryansyah, Head of Energy Division, Energy and Mineral Resources Agency of South Sumatra Province, said that the province has a renewable energy potential of around 21,032 MW with an installed capacity of renewable energy of around 989.12 MW or around 4.70%.

“In the future, the utilization of clean energy based on renewable energy in South Sumatra can be further developed to all levels of society. Some of the strategies we carry out to encourage the use of renewable energy, including providing energy for regional needs by increasing exploration of the potential for new renewable energy, utilizing new renewable energy such as solar energy, water, geothermal and others, as well as conserving and diversifying energy,” said Aryansyah.

Draft Government Regulation on National Energy Policy (RPP KEN) Slashes NRE Target to 19 Percent in 2025

press release

Jakarta, January 31, 2024 – The National Energy Council (DEN) is working on updating Government Regulation (PP) Number 79 of 2014 concerning the National Energy Policy with a new draft policy (RPP KEN) that is being discussed with the DPR. DEN schedules the RPP KEN to be completed by June 2024. The new and renewable energy (NRE) targets summarized in the RPP KEN are based on the assumption of an economic growth rate of 4-5 percent to adjust post-COVID and equalize nuclear energy as renewable energy. As a result, the Draft Government Regulation on National Energy Policy (RPP KEN) set the NRE mix target in 2025 down from the previous 23 percent to 17-19 percent. Meanwhile, the NRE target in 2050 increases from 30 percent to 58-61 percent and at 70-72 percent in 2060.

The Institute for Essential Services Reform (IESR) views that the reduction in the renewable energy mix target to 17-19 percent in 2025 and 19-21 percent in 2030 implies a weak commitment to energy transition and a strong interest in maintaining fossil energy. IESR believes that the years 2025 to 2030 should be an important milestone to take off the energy transition in Indonesia with the achievement of renewable energy targets of more than 40 percent and peak energy sector emissions in 2030. Achieving an ambitious renewable energy mix in this decade is important in order to align Indonesia’s GHG emissions with the Paris Agreement target to limit the increase in average global temperature to below 1.5 degrees Celsius.

Meanwhile, delays in boosting the renewable energy mix to 38-40 percent by 2040 will prevent Indonesia from reaping greater benefits from renewable energy development, including cheaper and more competitive electricity prices in the long term, lower electricity emissions on the grid that attract investment, the development of a domestic renewable energy manufacturing industry and supply chain and the creation of greater renewable energy employment opportunities. The low renewable energy mix towards 2030 could also reduce the attractiveness of foreign investment to Indonesia, as industries and multinational companies are now keen to ensure their energy needs are supplied from a low-emission electricity system. 

Fabby Tumiwa, the Executive Director of IESR, said that the setting of low renewable energy mix targets in 2025 and 2030 is not in line with the renewable energy mix target in the Just Energy Transition Partnership (JETP) agreement which aims for 44 percent by 2030.

“The JETP has agreed on a renewable energy mix target of above 34 percent in 2030, and this target is in line with the RUKN plan discussed at the same time as the Comprehensive Investment and Policy Plan (CIPP) last year. The renewable energy mix target proposed by DEN has cast doubt on the credibility of Indonesia’s energy transition policy direction by investors and the international community.  Instead of lowering the target for realistic reasons, DEN should be more progressive in making the energy transition. As an institution led by the President, DEN can dismantle barriers to coordination, overlapping policies and priorities to make renewable energy and energy efficiency accelerate,” said Fabby Tumiwa.

IESR views that the strategies in the RPP KEN, such as the operation of a 250 MW nuclear power plant in 2032 and the use of CCS/CCUS in power plants still operating in 2060, have not been based on technical and economic feasibility in Indonesia to date. NPP with a small capacity of 300 MWe, small modular reactor, is still not available technology that is proven safe and economical. Indonesia itself still has to build institutional infrastructure (NEPIO), regulatory readiness, safety standards, as well as the availability of proven SMR technology, as well as public approval, before starting to build nuclear power plants. 

The application of CCS/CCUS in CFPP is still an expensive and ineffective solution to capture carbon, even though this technology has been developed for decades. Examples of CCS projects at Boundary Dam in Canada and also at Petranova power plant in the US show technical problems to meet the carbon capture target and the economics are not feasible.

Deon Arinaldo, the Program Manager of Energy Transformation, IESR, mentioned that Indonesia will be burdened with the cost of implementing CCS in CFPP which is expensive, operational costs that are prone to volatility and unsustainable. Meanwhile, the construction of nuclear power plants is anticlimactic amidst the decline in the world’s nuclear power plant capacity after the nuclear tragedy in Fukushima.

“In this decade, Indonesia’s GHG emission mitigation strategy in the energy sector should be focused on the development of renewable energy and energy storage technologies that have been proven to provide energy at a cost competitive with coal-fired power plants that can still be subsidized. Solar energy and wind energy in terms of construction time can be done quickly, so the homework that needs to be improved is how to prepare a pipeline of projects that are ready to be invested in and the procurement process at PLN,” Deon explained.

Pursuing the Target of a 23% Renewable Energy Mix in 2025 Requires an Acceleration Strategy and Political Commitment

press release

Jakarta, January 15, 2024 – The realization of new renewable energy in 2023 was only 13.1% of the target of 17.9% to reach 23% by 2025. Minister of Energy and Mineral Resources, Arifin Tasrif, when presenting the Achievements of the Energy and Mineral Resources Sector in 2023 & Work Program in 2024 put forward eight strategies, including the construction of 10.6 GW of new renewable energy plants, the construction of 3.6 GW of rooftop solar power plants, the implementation of the 13.9 million kL B35 program, and biomass co-firing of 10.2 million tons in 2025 to achieve the target. 

The Institute for Essential Services Reform (IESR) views the progress made in renewable energy by 2023 starkly contrasting the ongoing increase in fossil fuel production and usage. This trend goes against the essence of the energy transition towards net-zero emissions that the government has been advocating since 2021.

IESR assesses that the low achievement of the renewable energy target mix is systemic, caused by various factors, including the delay in the auction of renewable energy plants by PLN since 2019, constraints on the execution of projects that have been contracted due to bankability, the increase in financial interest rates in the last two years, and the COVID-19 pandemic. 

Some renewable energy projects, especially hydropower and geothermal power plants that are the mainstay of the government, such as Batang Toru Hydropower Plant, Baturaden Geothermal Power Plant, and Rajabasa Geothermal Power Plant, which have been delayed in completion, are suspected of contributing to the low achievement of the renewable energy mix in 2023. Likewise, the protracted process of revising Permen of ESDM No. 26/2021 has hampered the implementation of rooftop solar power plants. Therefore, the 3.6 GW rooftop solar power plant PSN needs to be fixed.

The government plans to pursue the development of large-scale renewable energy plants, including floating solar power plants and wind farms. A rooftop PV roadmap has also been prepared with a target of 900 MW in 2023 and 1800 MW in 2024. However, according to Fabby, the unfinished rooftop PV regulation has caused rooftop PV adoption to drop in the residential and business sectors by 20% and 6%, respectively. As a result, based on IESR’s analysis, by the second quarter of 2023, the cumulative installed capacity of rooftop PV only reached 100 MW, far below the target of 900 MW by 2023.

“The government still has two years to pursue the 23 percent renewable energy mix target, but political commitment, PLN support, and extraordinary steps must be needed. There are several ways, including accelerating the execution of projects that have been contracted, especially from Independent Power Producers (IPP). In addition, the government should urge PLN to conduct regular auctions of large-scale power plants this year and simplify the negotiation of Power Purchase Agreements (PPAs) to execute these projects this year. To pursue the target of 10.6 GW in two years, the government must rely on floating, ground-mounted, and 3.6 GW of rooftop solar PV installed capacity. Therefore, the implementation of the revised Permen No. 26/2021 should no longer be delayed,” explained the Executive Director of IESR, Fabby Tumiwa.

Regarding renewable energy investment, from a target of USD 1.8 billion, only USD 1.5 billion was achieved. Meanwhile, in 2024, the government targets USD 2.6 billion. This amount is still far from the need for renewable energy funding of USD 25 billion annually until 2030 to achieve NZE by 2060. To accelerate renewable energy investment growth, the government needs to help prepare renewable energy projects that can be implemented and are feasible to finance.

Fabby suspects that structural problems have caused the renewable energy investment target never to be achieved during the era of President Jokowi’s administration. In contrast, in the world, renewable energy investment has increased and surpassed fossil energy investment in the last five years. For this reason, Fabby proposes a severe evaluation of this issue so that the government can quickly improve the enabling environment for enhancing the renewable energy investment climate, one of which is a review of coal subsidies through the DMO scheme and domestic coal pricing obligations for coal-fired power plant’s (CFPPs) of National Electricity Company (PLN).

Accelerated renewable energy development is necessary to achieve the high mix target in 2030, as stated by the JETP target, and to support Indonesia’s low-carbon development. Contrary to popular belief, renewable energy electricity prices are much cheaper and competitive with fossil fuels.

“From this MEMR achievement report, the minister of energy and mineral resources has acknowledged that renewable energy costs and integration costs for solar and wind power plants can already be competitive with new power plants. There should be no more hesitation in supporting the acceleration of renewable energy. It is necessary to pay attention to gaps and delays in renewable energy development from upstream to downstream and try to build a strategy. This includes the identification and development of early renewable energy project candidates, the process of entering candidates into PLN’s planning, how the renewable energy procurement process in PLN, as well as a clear risk allocation between PLN and IPP for renewable energy developed by the private sector,” said Deon Arinaldo, Program Manager of Energy Transformation, IESR.

In contrast to the low achievement of the renewable energy mix, the MEMR said there was a reduction in GHG emissions in the energy sector in 2023 of 127.67 million tons of carbon dioxide from the target of 116 million tons.

“The achievement of energy sector emission reduction exceeding the target should be appreciated. However, it should also be noted that the energy sector emission reduction target is based on Indonesia’s enhanced NDC target, which, unfortunately, is not yet compatible with the 1.5 C pathway according to the Paris Agreement. The government needs to explore new strategies involving other energy sectors such as the energy consumption sector in the industrial, transportation, and building sectors and even those interconnected between sectors (sector coupling),” said Deon.

According to IESR, Indonesia’s electricity emission intensity is still high compared to other countries in the region. This could hamper investment interest from multinational industries that require low-emission electricity and easy access to renewable energy.

“The government must try to reduce the intensity of GHG emissions in the electricity system by reducing fossil energy generation and increasing renewable energy generation. One option is the early retirement of PLN power plants over 30 years old by 2025, which can also encourage the acceleration of renewable energy generation,” Fabby said.

Comprehensive Action for Indonesia’s Energy Transition

Jakarta, 12 December 2023 – The energy transition journey in Indonesia in 2023 is entering a consolidation phase, which means that a number of policies that emerged in the 2020-2023 period need to be synchronized so that their implementation can accelerate steps towards one big goal, namely limiting the increase in earth’s temperature to level 1 .5 degrees Celsius aligned with the Paris Agreement pathway.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), in an online media briefing (12/12) held by IESR, stated that there are a number of enabling conditions that determine the success of the energy transition.

“There are 4 enabling conditions for a successful energy transition, namely, policy & regulatory framework, funding & investment support, technology application, as well as social impact & community support,” said Fabby.

Fabby also added that there have been a number of energy transition initiatives since 2020, such as RUPTL 2021, the Energy Transition Mechanism (ETM) agreement, and the Just Energy Transition Partnership (JETP). The existence of these various agreements is good considering that until 2020, there were no regulations regarding the energy transition, but the most important thing is the implementation of these various policies.

Pintoko Aji, IESR renewable energy analyst, said that the energy transition (in Indonesia) must be carried out comprehensively in all sectors, not limited to the power sector alone.

“The ultimate goal of this energy transition is to reduce emissions, so energy transition efforts must be comprehensive, not limited to the power sector alone. Industry and transportation, for example, also need to start working on it because currently there are not many concrete (actionable) policies in that sector,” said Pintoko.

Yunus Saefulhak, Head of the Energy Policy and Conference Facilitation Bureau, National Energy Council (DEN), in the same forum also explained that currently DEN is working on a revision of the National Energy Policy (Kebijakan Energi Nasional, KEN) to align various national targets with developments in international energy transition commitments and the strategy.

“This revision is urgent to carry out because energy policy needs to be in line with climate change policy, and a grand national energy strategy has also been prepared as input for KEN & RUEN updates,” said Yunus.

One of the KEN renewal points is that the new renewable energy mix in 2025 will reach 17 – 19 percent, and in 2060 it will reach 70-72 percent.

Various policy developments and adjusted targets need to be continuously monitored and guarded. The Institute for Essential Services Reform has monitored various developments in the Indonesian energy sector since 2017 and outlined them in a main report entitled Indonesia Energy Transition Outlook. In 2023, IESR will return and launch the Indonesia Energy Transition Outlook 2024 report, on December 15 2023. Follow the launch either in person (limited capacity) or online by registering at s.id/IETO2024

Kompas | One Year Passes the Promise of IDR 300 Trillion JETP Program

About a year ago, in the series of the G20 Summit in Bali, Indonesia “was showered” with funding commitments for the energy transition of 20 billion US dollars in the Just Energy program. Transition Partnership or JETP. We continue to try to fulfill this commitment. On the other hand, the portion of grants in JETP is very minimal and is dominated by soft loans.

Read more on Kompas.

The ‘Just’ Principle in Financing Just Transition in Indonesia

Johor Bahru, Malaysia, 16 November 2023 – Leading up to COP28 in the United Arab Emirates, there is a growing focus on climate financing efforts. Climate financing has become a critical focus to support a fair transition towards a sustainable, low-carbon economy.

The transformation towards a low-carbon economy and financing for a just transition requires government leadership. Governments can seize opportunities in funding energy transition by ensuring the fair execution and accountability of energy transition. For instance, the funding from the Just Energy Transition Partnership (JETP) supported by developed countries aims to expedite the energy transition. The ‘just’ aspect must take precedence in every energy transition funding agreement.

Wira Agung Swadana, the Green Economy Program Manager at the Institute for Essential Services Reform (IESR), stated that the energy transition is not solely about closing coal-fired power plants and shifting towards renewable energy plants. Instead, a broader perspective is needed to understand the impacts that will arise from the energy transition.

“The funding for the energy transition is not solely confined to infrastructure development; rather, every aspect of a just transition should also be taken into consideration. Just transition itself is not only about the affected workforce but also involves the broader community surrounding coal mining areas,” Wira expressed during the Asia-Pacific Climate Week 2023.

Furthermore, Wira also assesses that the funding for JETP is still very limited and insufficient to meet the set targets. This funding source is still predominantly dominated by loan-based financing.

“IESR is part of the technical working group with the JETP Secretariat. JETP funding still heavily relies on loans, and some of these are not new commitments from donor countries. Only about 1.62% of what we receive comes in the form of grants for a fair transition. There’s still a shortfall in funds, which I find quite ironic. Grants need to be increased rather than relying solely on loans,” he emphasized.

The funding for energy transition should encompass a comprehensive approach, including the early retirement of coal-fired power plants, addressing coal-producing regions, increasing the use of renewable energy, and managing transitions in mining locations. Wira believes that JETP still lacks a comprehensive and holistic approach.

“The funding for energy transition should ideally serve as the starting point. Currently, Indonesia is in the process of implementing the National Medium-Term Development Plan (RPJMN), utilizing domestic commitments and striving to align it with JETP and the Energy Transition Mechanism (ETM). The Indonesian government needs to address various challenges at the domestic, national, and international levels,” added Wira.

Tiza Mafira, Director of the Climate Policy Initiative (CPI), revealed that there are debates within some financial institutions regarding financing for a just transition.

“The issue lies in debates within financial institutions about whether financing for a just transition is part of financing for energy transition. When we discuss the ‘just’ aspect, we’re talking about several critical projects within the energy transition. It’s not just a few projects but an overall significant change in the economy. If not managed properly, this will have a significant impact on a large scale,” explained Tiza.

Kompas | Grants Only 1.4 Percent, Energy Transition Potentially Hampered

The grant portion in the Just Energy Transition Partnership or Just Energy Transition Partnership/JETP is currently only 300 million US dollars or 1 .4 percent of the total committed funding which reached 21.5 billion US dollars. The portion of grants which is much smaller than loans is considered to have the potential to become a burden in implementing JETP.

Read more on Kompas.