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.