The political will of the government to develop renewable energy is important in order to achieve the targeted share in the national energy mix.
By
ARIS PRASETYO/KRIS RAZIANTO MADA/ICHWAN SUSANTO
·4 minutes read
JAKARTA, KOMPAS – The political will of the government to develop renewable energy is important in order to achieve the targeted share in the national energy mix. This must be reflected in the policies on taxation or incentives. Public participation and the involvement of other stakeholders are also needed.
Until 2020, the share of renewable energy in Indonesia’s energy mix was still just 11.5 percent, or half the 23 percent target for 2025. Fossil fuel energy, especially coal, remained dominant with a 66.3 percent share, followed by natural gas and petroleum making up 20.47 percent.
Irine Handika, an energy law expert at Gadjah Mada University’s Center for Energy Studies in Yogyakarta, said that the political will of the government would be decisive in guiding the formulation of Indonesia’s energy policies. Law No. 30/2007 on energy needed reviewing, she added, and issues concerning energy transition needed clearer regulation that was binding for all stakeholders.
“Funding for renewable energy projects should be allocated in the APBN [state budget]. In addition, it is necessary to regulate renewable energy feed-in tariffs. The development of renewable energy can succeed if the aspects of economic worthiness are met,” Irine said when she was contacted on Tuesday (16/3/2021).
Regarding the feed-in tariffs (FITs), Satya Widya Yudha of the National Energy Council said the government had drafted policies driven by political will in the form of Presidential Regulations (Perpres) that would be issued soon.
"If we can achieve certainty on the feed-in tariffs for renewable energy through the Perpres, I am optimistic that the 23 percent renewable energy target can be achieved by 2025 the massive development massive solar, geothermal, wind and hydro energy,” said Satya.
The feed-in tariffs so far have been based on the basic electricity generation cost (BPP) of power plants. In the case of renewable energy power plants with BPPs above the national rate, the selling price of electricity is a maximum 85 percent of the BPP.
This is the suggested benchmark for the selling price of electricity generated from renewable energy as based on the production cost.
Industry response
With fossil fuels producing 70 percent of greenhouse emissions, renewable energy offers an opportunity to reduce emissions further and is low-hanging fruit (easy to achieve).
According to a recent study by researchers from the University of East Anglia, Stanford University, and the Global Carbon Project, which was published in the 3 March 2021 issue of Nature journal, contributions to emissions reduction based on the initiatives of 64 countries in 2016-2019 still fell short of slowing the pace of climate change. The researchers recommend that emissions reduction be increased tenfold.
At the international level, large institutions switching their assets from fossil fuel investments include BlackRock, M&G, AXA, GPFG Norway, and Sweden\'s AP7. With assets totaling US$7.8 trillion, BlackRock is the largest investment management company in the world.
BlackRock CEO Larry Fink announced the company’s carbon emissions reduction plans to all partners and potential partners, and vowed to accelerate the divestment of partners that did not have plans to reduce their own carbon emissions.
We target a renewables capacity of 40 gigawatts by 2026.
GE Indonesia market development director Arka W. Wiriadidjaja said the worldwide trend in energy transition saw global energy players coming to the forefront in developing solutions for climate change challenges.
Oil and gas holding company PT Pertamina has also pledged its commitment to achieving the national energy mix by 2025.
According to president director Heru Setiawan of PT Pertamina Power Indonesia, apart from the power generation sector, new and renewable energy development was also being conducted through the government’s B30 biofuel program and the dimethyl ether (DME) coal gasification program.
“We target a renewables capacity of 40 gigawatts by 2026. Investment required totals around 15 billion US dollars," he said.