Supports and challenges in implementing renewable energy policy in Indonesia


Nowadays the discussion of the implementation of renewable energy policy in Indonesia has become the main topic, whether from the government and business investors as well as from the society. As we know, in compare with other countries, Indonesia has abundant renewable energy resources such as biofuel, biomass, geothermal, hydropower, wind, solar energy, the tide, tidal energy and nuclear. Even though the percentage of people who use renewable energy still not as high as those who use fossil fuels (e.g. coal, oil and gas), the government keep making decisive efforts to increase the potential of available energy resources in achieving its national interests in energy sector. Indonesia’s national interests about the implementation of renewable energy policy has been stated in the General Planning for National Energy (RUEN) which saying that renewable energy resources should account for at least 22.5% of the country’s total energy consumption in 2025. This statement also had been set up by the state-owned electricity firm PT PLN’s latest electricity procurement business plan (RUPTL), spanning from 2017 to 2026. Therefore it is really necessary for the government to cooperate together both with the local and foreign investors in “converting” several crucial spots in Indonesia to become renewable energy resources, mainly from its forests.

Initially, the government prefers to prioritize their decision first in improving the use of geothermal energy to become the country’s main renewable energy resources, where based on the research Indonesia has massive potential in geothermal reserves in almost 330 fields across the nation that estimated could produce electricity 28,617 megawatts, due to its strategic location which sitting on the ring of fire. Most of the field are coming from the conservation forest, protected forest and production forest. Thus it is really important for the government to preserve the forest in order to create an opportunity for them in establishing a green economy for the society that will determine its national economic growth in the future.

The development of Sarulla geothermal power plant project (PLTP) in North Tapanuli, North Sumatra could be seen as a sample of Indonesian government support for implementing its renewable energy policy. This project has been supported initially by Indonesian House of Representative members (DPR). Another form of the government support for the policy coming from the agreement with the French government in signing COP21, United Nations climate conference in Paris, which means that Indonesia also will be responsible in creating an eco-friendly energy resources. Aside from that, the government also has made a deal to sign an agreement to cooperate in supporting the use of the country’s geothermal reserves as part of its renewable energy resources during the Senior Official Meeting (SOM) in DPR. The meeting was attended by Energy and Mineral Resources Minister, Finance Minister, Environment and Forestry Minister, Research, Technology and Higher Education Minister, State Minister for State Owned Enterprises and Head of State Minister for Chairperson of the National Development Planning Agency.

While from the foreign investors, with the approval and cooperation from Indonesian government, so far most of them who are coming from energy sector has expanded their business in supporting the development of Indonesia’s renewable energy policy. From US, the government of both countries has established executive (entrepreneurs) exchange program which sponsored by the USAID as part of their support. Besides the US, the French government also showed its support on the policy by signing several business agreements between entrepreneurs from both countries in terms of business cooperation for improving renewable energy sector in Indonesia. There was also an agreement that had been signed and dealt by French government and 40 businessmen on their commitment to plant their investment at least US$2.6 billion or Rp34.5 trillion, where part of it goes for renewable energy sector. The agreement was made during state visit of French President Francois Hollande to Indonesia on Wednesday, March 29th 2017. As from the UK, its prime minister and Indonesian government had made a cooperation in conducting a research about renewable energy resources by providing financial aid around 14.5 million pound sterling or Rp250 billion for the research itself. The research would involve some of Indonesia’s famed universities and institutions (e.g. ITB, IPB, University of Indonesia and Padjajaran University) along with several famed colleges in England like the Oxford University. Then, another opportunity to support Indonesia’s renewable energy policy was coming from Swedish government. The government of both countries has made a deal to sign MoU in developing renewable energy business sector in Indonesia, mainly in terms of hydropower and wind energy resources. The implementation of both countries’ cooperation could be seen from the construction of biogas-fueled power (PLTBg) plants in 2015 which located in Palu, South Sulawesi.

Even though the implementation of Indonesia’s renewable energy policy has been supported by both the government and business investors, there are also several challenges faced by both parties that will prevent them in achieving the goals. Most of those challenges are coming from the financial support, land acquisition, the government permission process and standardization of renewable energy power price. In here, the main problem where still not being solved yet in terms of the use of renewable energy power price. Based on the Energy and Mineral Resources Ministry Regulation (Permen) No. 12/2017, it stipulated that the maximum tariff for electricity that generated from solar, wind, hydropower, biomass, biogas, waste and geothermal energy must be at least 85 percent from the basic cost of production (BPP) in purpose to reduce the power price that going to be purchased by public society. However, the result of the decree is not what had been expected. Instead, it only made the state-owned electricity firm PT PLN and public society to purchase the electricity price from those who developed the energy production with a high price. The situation happened due to the worst condition of several places in the country that mostly located in remoted areas and insufficient transportation facilities, which made it difficult to distribute the power electricity. After what had happened there are several parties who asked for the government to revise the regulation in order to prevent the investor’s discouragement on the investment in renewable energy and also preparing another incentive for those investors.


Author: yatipakpahan

I'm just an ordinary woman who's full of sarcasm to other people I despise so much,so embrace yourself with my new attitude~~

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