Senior researcher at Institute for Essential Services Reform (IESR), Raditya Wiranegara, in an interview on Sunday (1/1/2023), stated that 2023 is the year in which the effectiveness of implementing Presidential Regulation No. 112/2022, as well as its derivative regulations, will begin to be tested. In this case, PT Perusahaan Listrik Negara (Persero), the sole provider of upstream-to-downstream electricity in Indonesia, plays an important role.
Read more on Kompas.
The Executive Director of the Institute for Essential Services Reform (IESR), Fabby Tumiwa, advised the government to review the tender mechanism for geothermal working areas (WKP) this year.
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Jakarta, December 15, 2022 – The Institute for Essential Service Reform (IESR) launched the Indonesia Energy Transition Outlook (IETO) 2023 report. IETO 2023 is the 6th edition; previously, this report was titled Indonesia Clean Energy Outlook in 2017 but changed its name in 2020. Its transformation widens the analysis from initially focusing solely on clean energy developments to analyzing the energy system, including its funding system.
Deon Arinaldo, Manager of the Energy Transformation Program, IESR, stated that Indonesia’s energy transition had entered a new phase. It’s reflected in several published policies supporting adopting low-carbon and low-emission technologies, such as Presidential Decree 112/2022. In addition, the achievement of funding commitments for the energy transition Just Energy Transition Partnership (JETP) and infrastructure projects resulted from the G20 Summit. IESR also reviewed this topic in the IETO 2023 report.
“Funding is one of the keys to a successful energy transition in Indonesia. Furthermore, we also highlight the role of solar power in the energy transition and the development of electric vehicles,” he said.
Fabby Tumiwa, Executive Director of IESR, presented at the report’s launch and discussed the Indonesia Energy Transition Outlook (IETO) 2023 organized by IESR with the support of Bloomberg Philanthropies, explained that the earth’s temperature has increased by at least 1.1°C. Without intervention, the temperatures can reach 2.8°C. Furthermore, Fabby emphasized that a transition to renewable energy is crucial to limiting the increase in the earth’s temperature to more than 1.5°C.
“The IESR study shows that solar PV is coupled with a storage capacity of 50% and 100%, so renewable energy will be cheaper than operating a coal-fired power plant (CFPP) after 2032. That is, when we still maintain fossil power plants in the energy system, we will face an increase in much more expensive energy costs,” explained Fabby Tumiwa.
Fabby continued that enlarging the portion of renewable energy in Indonesia’s energy system is far more profitable than utilizing fossil energy or maintaining fossil energy with carbon capture technology, such as carbon capture and storage (CCS). However, 87% of the electricity consumed by Indonesia still comes from fossil energy and only 13% from renewable energy. For this reason, Fabby said three things needed to be done to encourage the energy transition.
“First, make the most of Indonesia’s renewable energy potential for the electricity, transportation, industrial and other sectors. Based on the latest ESDM study, Indonesia has far more than enough renewable energy potential to achieve 100% renewable energy to achieve net zero emissions (NZE). By increasing renewable energy, we also have to reduce coal power plants. Second, boost investment for the energy transition,” said Fabby.
The IESR study assesses that Indonesia will need USD 25-30 billion in investment from now until 2030 to support the achievement of net-zero emissions (NZE) by 2060 or sooner. A no-regrets policy is required to obtain investment, or once there is a policy, it cannot be revoked or terminated. Second, it is necessary to reform policies that hinder renewable energy. Thus, said Fabby, the government must review the domestic market obligation (DMO) for coal mining because this policy contradicts Indonesia’s efforts to promote renewable energy. Third, managing the energy transition process. The energy transition is a risky action because it will cause an increase in costs in the short term, and at the same time, we are still dependent on coal energy. Moreover, the energy transition process needs to be managed effectively so that the energy transition process will be smooth.
On the same occasion, the Secretary General of the Ministry of Energy and Mineral Resources (ESDM), Rida Mulyana, explained that the energy transition is one of the priority issues at the G20 Indonesia Presidency in 2022. It can be seen by the Bali Compact agreement, which can serve as a guide to achieving the NZE 2060 or faster. Furthermore, Indonesia already has a road map for the transition of new renewable energy (NRE) to net zero emission in 2060, created by the Ministry of Energy and Mineral Resources.
“Indonesia plans to build massive solar PV starting in 2030, followed by onshore and offshore wind power plants starting in 2027, and geothermal will also be maximized. Indonesia will optimize hydroelectric power plants, we will send the electricity to load centers on other islands, and nuclear power plants will operate in 2039,” said Rida Mulyana.
Akbar Bagaskara, IESR Electricity System Researcher, stated the electricity system is low-hanging fruit to reach NZE. The electricity system contributes 250 MtCO2 emissions, or about 40% of emissions in the energy sector. Renewable energy status in the energy mix is 12.67%, while the 2025 target is 23%. Thus, said Akbar, Indonesia needs to reduce its fossil capacity and seek alternative energy sources to achieve this target.
“At least Indonesia can use renewable energy that has not been maximized, such as solar and wind. Then, the transmission network (grid) must also be made flexible. However, regulations are needed regarding guidelines for operational systems and negotiations for generating units,” said Akbar.
In line with Akbar, Raditya Yudha Wiranegara, IESR Senior Researcher, explained that what can be done to provide renewable energy penetration is to operate CFPP flexibly. Technically, this operation requires changes in the main components of the CFPP.
“Flexible operation will require flexibility regarding power purchase agreements and fuel supply contracts. According to the IEA, by making these contracts more ‘flexible,’ there will be savings of 5% of the total operating costs for a year, or the equivalent of USD 0.8 billion. Grid Code should also be made more detailed. This is also necessary so that operators have guidelines for operating regulations in a flexible manner,” stated Raditya.
Julius Christian, IESR Clean Fuel Specialist Researcher, explained that until now, fossil energy consumption in transportation had reached 87%, the industry has reached 56%, and buildings have reached 41%. In the transportation sector, using electric vehicles is a crucial strategy for a low-carbon transportation system because it has higher energy efficiency and uses renewable energy. Julius explained that up to now, 199 buildings had been certified as green buildings in Indonesia, even though large buildings should already have green building certification.
“We need to focus on four things to accelerate the energy transition; 1) regulations encourage people and industries to switch to carbon-efficient technologies; 2) the government needs to socialize more to increase public awareness to switch to low-carbon; 3) incentives and financing schemes are also worth considering; 4) preparing the supporting ecosystem,” said Julius.
On the other hand, Martha Jessica, IESR Social and Economic Researcher, said the importance of collaboration between the central government and local governments to promote the energy transition and achieve NZE. Currently, 71.05% of provinces in Indonesia have established Regional Energy General Plans (RUED), in which each region sets its energy mix targets.
“One province that has shown a commitment to the development of renewable energy is Central Java. Interestingly, there is a new commitment to green recovery this year. This is defined as using public budgets to target the site level, especially for renewable energy development. Approximately IDR 8.9 billion has been budgeted for this commitment. This development has succeeded in increasing the income of its users by 2-3 times, where farmers get an easier water source through solar water pumps,” said Martha.
Handriyanti Puspitarini, the IESR Senior Researcher, said several essential things in Indonesia’s energy transition status, namely, fossil energy use, had increased this year due to the increasingly vibrant economy. Still, this condition is sure to change due to the large amount of foreign assistance to reduce emissions, especially in the electricity sector. She considered that regulations supporting renewable energy penetration need to be available. She gave an example that limiting the capacity of a rooftop solar PV by 15% would reduce people’s interest in utilizing it and suppress community participation regarding the renewable energy mix on a national scale.
“Thus, changes are needed, such as increasing financial support for rooftop solar PV project developers, clarifying tariff schemes and licensing processes, and increasing developer access to capital with lower interest rates. Implementation of President Regulation112/2022 also needs to be observed next year. Some people also think that this is the time for Indonesia to do an energy transition and utilize other energy sources such as solar, water, and wind,” said Handriyanti.
The Institute for Essential Services Reform (IESR) notes the energy transition investment is still falling short. During the 2017-2021 period, the average increase in investment realization on renewable energy was only US$ 1.62 billion. From January-September 2022, the completion was only US$ 1.35 billion, or 34 percent of the ambitious target of US$ 3.97 billion.
Read more on Tempo.
The Institute for Essential Services Reform (IESR) says that the electricity sector contributes 40 percent of greenhouse gas emissions in Indonesia. The Executive Director of IESR, Fabby Tumiwa, explained that the total emissions from the energy sector had reached 600 million tons.
Read more on CNN.
The writer of Indonesia Energy Transition Outlook (2023), a senior researcher at IESR, Handriyanti D Puspitarini, explained that Indonesia’s gross domestic product (GDP) grew 5.72 percent in the third quarter of 2022, in line with increased economic activity as before the pandemic. However, more budget allocations support fossil energy in the economic recovery program.
Read more on Kompas.
Semarang, December 8, 2022 – The energy transition has become urgent as the world responds to the challenge of building a more resilient energy system. Thus, there needs to be synergy between the government and the private sector. The Institute for Essential Services Reform (IESR) and the Central Java Provincial Government held the Central Java Stakeholder Gathering 2022 with the theme’ energy transition for low-carbon regional development’ to encourage the energy transition in Central Java.
Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) explained, Central Java has an important role as a beacon of energy transition in Indonesia. Fabby said that the rapid development of the energy transition in Central Java could be a lesson for other regions that leadership, regional innovation and collaboration are the keys to the success of the energy transition’s success toward low-carbon development.
“Overcoming the threat of the climate crisis is very relevant to what is happening in Central Java. Various practices of using renewable energy in Central Java have occurred and illustrate how the community is able to encourage the energy transition with their own efforts supported by the government to make innovations. This is what we call the Gotong Royong Energy Transition,” said Fabby Tumiwa.
Moreover, the Deputy Governor of Central Java, Taj Yasin Maimoen, stated that Central Java had made a Regional Energy General Plan (RUED) as a guideline for energy development. It has been implemented through Regional Regulation (Perda) Number 12/2018, stipulated on December 19, 2018. This regulation regulates energy conservation, conservation of energy sources, and energy diversification. The government is also pushing for energy autonomy in the villages and utilizing the energy potential in each town.
“In one village in Magelang, we saw a huge potential for renewable energy. It is impossible for the provincial government to work without the paradigm of its people. In their case, the farm has been centralized, owned by the community and made into one place. There are hundreds of goats whose feces need to be processed. Not only as fertilizer but can also be made as renewable energy,” said Taj Yasin.
Sujarwanto Dwiatmoko, Head of the ESDM Office for Central Java Province, explained that Central Java has made innovations related to renewable energy through projects such as Central Java Solar Province. This program is expected to help Central Java achieve an energy mix level of 23.32% in 2025.
“The most notable impact of Central Java Solar Province is the increase of capacity in rooftop solar power plants in Central Java from 0,1 MWp in 2019 to 22 MWp in 2022,” said Sujarwanto.
On the other hand, Widi Hartanto, Head of the Central Java Province Environment and Forestry Service (DLHK), his party is currently studying the reusability of wastewater and waste into new, renewable energy.
“This program aims to survey the characteristics of wastewater and garbage and hold focus group discussions related to waste management into renewable energy in cities such as Pati, Sukoharjo, Boyolali, Kab. Semarang, Karanganyar, Grobogan, Kab. Magelang, Magelang City, Temanggung, Klaten, Semarang City, Kab. Semarang, Kab. Karanganyar, Boyolali, Salatiga, and Kudus,” explains Widi.
To realize low-carbon development, M Arif Sambodo, head of the Department of Industry and Commerce in Central Java, emphasized that the industrial sector is the most significant contributor to carbon emissions. Thus, his party plans to strengthen partnerships with the local steel industry to supply solar panel production to reduce greenhouse gas (GHG) emissions.
“Currently, there are demands from consumers for the industry to start using new and renewable energy (NRE) so that it demands the industry to use NRE in its production process,” said Arif.
Meanwhile, Muhammad Iqbal, President Director of Jateng Petro Energi (JPEN) explained three strategies to support the energy transition: strengthening ecosystem institutions, solarpreneurship (creation of green jobs), and capacity building.
“JPEN is committed to encouraging a more massive energy transition, such as floating Solar PV, rooftop Solar PV, Solar PV training, carbon trading, and the construction of public electric vehicle charging stations (SPKLU) which are important parts of the electric vehicle ecosystem,” explained Iqbal.
In 2022, as the COVID-19 pandemic began to subside, the global economy began to return to normal. As a result of increased economic activity, energy demand has returned to growth to pre-pandemic levels. Several extraordinary events also occurred in 2022 that affected the energy commodity market, mainly the war conflict between Russia and Ukraine, which pushed up the prices of all commodities. Indonesia is also a country that feels the impact. The increase in the price of fossil energy commodities has affected the subsidy and compensation budget in 2022, which has increased up to three times and prompted the government to set an increase in fuel prices and basic electricity tariffs for several customer groups.
Indonesia as a country that has ratified the Paris Agreement through Law no 16/2016, has confirmed its position to achieve net zero emission in 2060 or earlier. Furthermore, as the G20 presidency this year, Indonesia has also determined the energy transition as one of the three focuses of the G20 discussion. After going through discussions and various meetings, Indonesia and several donor countries that are members of the International Partner Group agreed on a Just Energy Transition Partnership (JETP) which stated a funding commitment of up to 20 billion dollars in the next 3-5 years to support the energy transition in Indonesia, especially in the electricity sector. As a follow-up, this funding support needs to be put in the form of an investment plan and a policy change plan that needs to be prepared by the Indonesian government.
Apart from the electricity sector, Indonesia’s energy transition also needs to be encouraged and accelerated in various other energy sectors such as transportation and industry. Based on the IESR Deep decarbonization of the energy system study (2021), the electrification of transportation and industry is a key strategy while also encouraging energy efficiency. Several government programs that have been encouraged include setting targets for electric vehicles and their infrastructure as well as the electric motorbike conversion program. In the industrial sector itself, initiatives such as the Net Zero Hub, initiated by the Indonesian Chamber of Commerce and Industry (KADIN) show a similar movement from business and industry players to reduce greenhouse gas emissions and even reach net zero sooner than 2060.
These developments show that Indonesia’s energy transition is entering the take-off phase. The next question is, is the current energy transition process in line with the targets of climate crisis mitigation and sustainable development? If not, what options can Indonesia focus on in accelerating the energy transition soon?
The progress and development of the energy transition in Indonesia are specifically reviewed in one of the flagship IESR reports which are launched at the end of each year: Indonesia Energy Transition Outlook (IETO). The IETO, which has been published since 2017, previously entitled Indonesia Clean Energy Outlook (ICEO) aims to monitor the development and progress of the energy transition in Indonesia as a whole, as well as identify challenges and opportunities in the following year. This report includes an analysis and review of policies, developments in the status of technology, and the energy transition ecosystem.
Over the years, IESR has attempted to increase the scope and rigour of the IESR analysis in this report. The sixth edition of the IETO also collects various perspectives from stakeholders in the energy sector and curates them with in-depth studies to present a strategic analysis of how to transition energy and transform towards a low-carbon energy system in the country. The launch of this year’s IETO was also preceded by several special reports highlighting the energy transition process from the perspective of energy transition finance (Indonesia Sustainable Finance Outlook/ISFO) and also solar energy (Indonesia Solar Energy Outlook/ISEO). A follow-up report that will focus more on the development of electric vehicle implementation, the Indonesia Electric Vehicle Outlook/IEVO will complement this year’s IESR IETO report series.
Through the IETO, IESR intends to inform policymakers and all stakeholders in the energy sector regarding the effectiveness of policies and improvements needed to help accelerate the development and transition of clean energy in the country. By doing this, he hopes, Indonesia can ensure energy security, a competitive economy, and a transition to a sustainable energy system shortly.
IETO 2023 will be launched in a special meeting which is also intended to obtain views/perceptions from policymakers and actors on trends that will occur in the coming year in the energy transition. The discussion at this meeting will highlight the energy transition processes that are occurring in various energy sectors in Indonesia and will be followed by an analysis of the energy transition readiness framework in Indonesia’s electricity sector as well as various lessons learned in 2022 to overcome challenges in driving the energy transition in 2023.
The Indonesia Energy Transition Outlook (IETO) 2023 launch meeting and discussion were held with the aim of:
Shahnaz Nur Firdausi, Energy and Climate Researcher at the Institute for Essential Services Reform (IESR), said that electric vehicle emissions are lower than gasoline vehicles, even though currently, electricity still comes from the power plant.
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