Exploring the Implementation of Renewable Energy in Industries and Communities of East Kalimantan

Balikpapan, September 6, 2023 – The Institute for Essential Services Reform (IESR) is organizing the Energy Exploration in East Kalimantan Province in collaboration with the Clean Affordable and Secure Energy in Southeast Asia (CASE) program and the East Kalimantan Province Energy and Mineral Resources (ESDM) Service. The main objective of this initiative is to assess the readiness of institutions and regional actors to support Indonesia’s energy transition, identify the potential and community-based innovations that emerge, and study them for replication in other areas. The East Kalimantan Energy Exploration series started with a workshop on Tuesday, September 5, 2023, followed by two consecutive field visits.

On the first day of the field visit, the trip began by visiting the rooftop solar power plant (solar PV) of PT Pertamina Hulu Mahakam (PHM). They have been using a 100 kWp on-grid rooftop solar PV (connected to the PLN network) since 2014 to fulfill their office’s operational electricity requirements.

“430 solar panels and five inverters are installed in this rooftop solar PV system. In a day, energy production from rooftop solar PV can reach 34.4 KWh, whereas the building unit’s electricity needs to reach 21 KWh. Our rooftop solar PV operates from 6.00-18.00 WITA. From emission efficiency, we have been able to reduce CO2 emissions by 861.1 tons of CO2e since the solar PV was installed,” said Responsible for Safety & Environment on Site Balikpapan Based Office, Ruslan Rahim.

Solar PV
Solar PV PT Pertamina Hulu Mahakam

The team recently visited Balikpapan’s Manggar Final Waste Processing Site (TPAS). They learned about the process of decomposing organic waste to produce methane gas, which can be used as a source of cooking gas for daily needs. To decompose the organic waste, it is stacked and compacted in certain areas and left for a while. Eventually, the rotting waste will release liquid and methane gas. This methane gas can be used as an alternative energy source.

“The community around the Balikpapan’s Manggar Final Waste Processing Site can utilize methane gas from this waste, and there are 300 houses with a reach of 7 km from the Manggar TPAS that have received this environmentally friendly energy source. The distribution of methane gas to residents’ homes relies on several pipes connected to gas flow dividers and separators, which reduce the water content in the methane gas,” explained the Head of the Balikpapan’s Manggar Final Waste Processing Site, Muhammad Haryanto.

Rombongan Jelajah Energi Kalimantan Timur mengunjungi TPAS Manggar

The Energy Exploration in East Kalimantan field visit’s first day concluded with a visit to PT PLN Nusantara Power UP Kaltim Teluk to witness the cofiring program at the facility of Balikpapan coal-fired power plants (CFPP). Dhidhik K. Laksono, the Assistant Operations Manager for PT PLN Nusantara Power Generation Unit (Unit Pembangkitan/UP) Kaltim Balikpapan, mentioned that the CFPP facility uses a co-firing mixture of 3% wood chips or chopped wood as part of its total fuel requirement. However, the implementation of co-firing with chopped wood is still facing hurdles in sourcing raw materials.

“To overcome wood chip supply constraints, we have made several efforts to address them, including proposing to procure a new contract with PT PLN Energi Primer Indonesia, opening opportunities for testing other types of biomass, and encouraging the fulfillment of biomass supply commitments from partners who have collaborated,” explained Dhidhik.

Mitigate the Impact of the Energy Transition in Coal-Producing Regions with Economic Transformation

press release

Jakarta, September 1, 2023 – The Institute for Essential Services Reform (IESR), a leading energy and environmental think tank based in Jakarta, Indonesia, released a report on the potential impact of the energy transition on coal-producing regions in Indonesia. This report, entitled Just Transition in Indonesia’s Coal Producing Regions, Case Study Paser and Muara Enim, finds that economic diversification and transformation must be immediately planned to anticipate the social and economic impacts of the decline in the coal industry along with plans to end coal-fired power plants (CFPP) operations and increased commitments to energy transition and emissions mitigation, from countries that have become coal export destinations so far.

IESR recommends that the central and regional governments realize the potential impact of the energy transition on the economy and development of coal-producing areas and start planning for economic transformation as soon as possible in these coal-producing areas.

A recent study conducted in Paser Regency, East Kalimantan Province, and Muara Enim Regency, South Sumatra Province, has recommended the utilization of coal’s revenue sharing (dana bagi hasil, DBH) CFPP and corporate social responsibility (CSR) programs to plan and support economic transformation. The study also highlighted the importance of expanding public access and participation to ensure a just transition. In 2023, Coals’ revenue sharing fund (DBH) is projected to account for 20% of the total revenue budget of the Muara Enim government. Similarly, between 2013-2020, it accounted for 27% of the total revenue of the Paser government.

“The importance of prioritizing economic activities that benefit local communities and have a greater multiplier effect towards post-coal mining economic transformation. It is equally important to factor in the potential impact of a decrease in coal production on the informal economy sector, which has not yet been included in macroeconomic analysis,” mentioned Executive Director of IESR, Fabby Tumiwa.

According to a recent study, the coal mining industry has contributed 50% to 70% of GRDP in Muara Enim and Paser over the last ten years. However, despite this significant economic contribution, coal industry workers earn little. Only around 20% of the added value is allocated to workers, while as much as 78% becomes company surplus. This means that the enormous economic value generated by the coal mining industry contributes little to the income of its workers.

“The coal mining industry has also caused significant social and environmental impacts on the surrounding communities. These impacts include degradation of air and water quality, changes in people’s livelihoods, economic inequality, and increased consumerism and rent-seeking,” stated Julius Christian, the leading author of this study and also the Research Manager of IESR.

According to him,  different parties in the region are responding to the trend of energy transition in various ways based on their interests, knowledge, and access to information. Coal companies are more aware of the energy transition risks posed to their businesses than governments and ordinary citizens.

“Both companies and local governments are starting to carry out various economic transformation initiatives. However, local people are more skeptical about the potential decline in coal because they have seen increased production recently,” said Martha Jesica, Social and Economic Analyst at IESR.

However, according to her, changes in perspective are occurring in both society and coal industry companies. The local community has called for economic diversification, and coal companies have started branching into other fields. She hopes that various stakeholders and the government can work towards raising awareness and implementing structural changes to drive economic transformation efforts.

The report “Just Transition in Indonesia’s Coal Producing Regions: Case Studies Paser and Muara Enim” by IESR suggests that to achieve sustainable development in coal-producing regions, firstly, there needs to be a comprehensive plan for economic diversification and transformation that involves stakeholders and community participation. Secondly, utilizing DBH funds and CSR programs to finance the financial transformation process, which can attract more investment into sustainable economic sectors. Thirdly expanding access to education and training to prepare a competitive workforce in the sustainable industry and increasing financial literacy for the community. Fourthly, expanding the participation of all elements of society, especially vulnerable groups, in regional planning and development.

“All matters related to the transition in coal-producing areas should be included in the respective central and provincial governments’ Medium Term Development Plan (RPJM). This will provide clear support and direction for local governments,” said Ilham Surya, Environmental Policy Analyst IESR.