Indonesia: Renewable energy targets difficult without private sector

Indonesia: Renewable energy targets difficult without private sector

Life may be a beach in the archipelagic country of Indonesia, but hot sun,
cool breeze or rushing waters alone is not enough to develop renewable
energy sector without private sector's involvement.

Energy and Mineral Resources Ministry's new and renewable energy director
general Rida Mulyana said recently that the government's desired energy mix
would be hard to realize with only limited funds in the state budget for the
development of renewable energy.

The government has set a goal to supply 23 percent of the national energy
mix from renewable sources by 2025 in order to cut down on carbon emissions
and wean itself from fossil fuels.

To reach the target, the General Planning for National Energy (RUEN)
stipulates that renewable energy must make up at least 11 percent of the
energy mix by 2017 or equal to 25.5 million tons of oil equivalent (mtoe).

However, the New and Renewable Energy Directorate General is facing a tight
budget with Rp 900 billion (US$66.32 million) removed this year due to
unexpected tax shortfalls, leaving only Rp 1.7 trillion in its coffers.

"The budget is not a large enough fund to reach the energy mix. The energy
mix can only be achieved with the help of private sector investors," Rida
said.

The uphill battle to develop the renewable energy sector has become more
challenging recently. Several months ago, the government proposed a Rp 1.2
trillion subsidy in next year's state budget to cover the price gap that
state-owned electricity company Perusahaan Listrik Negara (PLN) had to bear
in its operations.

The proposal was rejected by the House of Representatives' Budget Committee,
which argued that PLN could not be subsidized as a corporation.

The ministry has promised to issue a new regulation that would set a fixed
feed-in tariff for geothermal power to clear uncertainties for investors and
drive their investments higher.

Data from the ministry shows that as many as $1.198 billion worth of
investments were recorded in the renewable energy sector from January to
September, making up for 87.4 percent of this year's target.

A majority of investments went to geothermal energy at $840 million, equal
to almost 90 percent of what is expected throughout this year.

By the end of the third quarter, the total national electricity capacity
from geothermal energy reached 1,513.5 megawatts (MW), supported by the
installation of four new power plants.

The government is also waiting for developed countries to follow through on
their commitments to establish a $100 billion climate fund, following the
Conference of Parties 22 ( COP22 ) in Marrakech, Morocco, recently.

Once established, Indonesia will submit a funding proposal for several
programs to conserve and develop renewable energy, including the Indonesia
Terang (Bright Indonesia) program, which hopes to light up more than 12,000
villages across the nation with renewable energy.

Meanwhile, Private Electricity Producers Association (APLS) chairman Ali
Herman Ibrahim said that despite the country's vast resources, many
investors were reluctant to develop renewable energy sources due to piling
red tape.

"There needs to be a national consensus on developing renewable energy
because sometimes companies find it difficult to get things signed off on in
the regions," he said.

The Indonesian Renewable Energy Society (METI) chairman Surya Darma said
renewable energy in Indonesia is "always connected to lower cost pricing
policy, with a limited off-taker. This means there will be no market if PLN
does not buy electricity to distribute to the people".

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Link to Original Article:
http://www.thejakartapost.com/news/2016/11/28/renewable-energy-targets-diffi
cult-without-private-sector.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com