Indonesia: Incentive cut discourages investment in renewable energy

Indonesia: Incentive cut discourages investment in renewable energy

A plan by Energy and Mineral Resources Minister Ignasius Jonan to cut
incentives for the development of new and renewable energy sources is being
criticized because it will discourage investors from putting their money
into this sector.

"The objective of the subsidy is to encourage the growth of new and
renewable energy. Even with the current subsidy, the progress of new and
renewable energy is sluggish," said ReforMiner Institute executive director
Komaidi Notonegoro on Sunday.

The government would not significantly curb its overall spending by cutting
the renewable energy subsidy because renewable sources only satisfy some 14
percent of the total energy demand in the country, he added.

If the government wants to cut subsidies to make itself more efficient, it
should cut the diesel fuel subsidy instead, he said, adding that the price
of electricity from a geothermal plant is Rp 1,200 (1 US cent) per kWh,
while the price of electricity from a diesel-fired plant is between Rp 3,400
and Rp 4,000 per kWh.

"If the government cuts the diesel fuel subsidy and shifts it to new and
renewable energy, it will significantly encourage the development of new and
renewable energy," Komaidi said as reported by tribunnews.com.

He said hydroelectric dams supplied 8 percent of renewable energy, making
them the largest contributors because hydroelectricity has been developed
for a long time, followed by geothermal plants that contribute 4 percent,
while the remainder comes from other new and renewable sources.

Jonan previously said that the industry does not need incentives to develop
the new and renewable energy sources that are expected to meet 23 percent of
the country's energy needs within a few years.

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Link to Original Article:
http://www.thejakartapost.com/news/2017/01/30/incentive-cut-discourages-inve
stment-in-renewable-energy-expert.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com