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Jakarta Post

RI left behind in Asia’s renewable energy race

Although Indonesia began developing renewable energy long before its Asian peers, recent research by a local energy watchdog has found that the country has fallen behind by failing to show the same commitment that other countries have in phasing out the use of fossil fuels

Stefanno Reinard Sulaiman (The Jakarta Post)
Jakarta
Sat, August 4, 2018

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RI left behind in Asia’s renewable energy race

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lthough Indonesia began developing renewable energy long before its Asian peers, recent research by a local energy watchdog has found that the country has fallen behind by failing to show the same commitment that other countries have in phasing out the use of fossil fuels.

Indonesia began drawing up policies for solar energy in 1986, Institute for Essential Services Reform (IESR) executive director Fabby Tumiwa said. China, meanwhile, entered the field a decade later, while India started focusing on solar energy in 2003.

“However, China has outpaced us today by having 130 gigawatts [GW] in installed solar capacity, while we are still below 100 GW,” Fabby said recently during a soft launch of the Indonesian Clean Energy Forum (ICEF).

“India, on the other hand, has a clear goal of achieving 227 GW of solar capacity by 2022, a target that has proven to be safe from interference with the changing of thrones in the government.”

As of April, Indonesia’s installed solar capacity stood at a lowly 0.3 GW, according to Energy and Mineral Resources Ministry data. There are 200 GW of untouched potential in the sector.

Indonesia trailed China and its Southeast Asian counterparts in terms of annual average growth of renewable energy capacity from 2007 to 2017, posting growth of 4.5 percent, well below that of Thailand (9.8 percent), Malaysia (10.7 percent), China (15.4 percent) and Myanmar (15.5 percent).

Based on the data, Fabby said there was doubt over whether Indonesia could reach its target of having renewable energy comprise 23 percent of the national energy mix by 2025, as the current amount stood at 14 percent.

“While we seek to push for renewable energy, the growth of fossil-based power plants has still been dominant in the last decade. Therefore, we are actually stuck in neutral when it comes to the renewable energy goal,” he said.

Fabby cited several reasons behind Indonesia’s lack of growth in the renewable energy sector, such as the government’s failure to prioritize renewable energy over political interests, a lack of holistic renewable policies across all government institutions and a lack of an effective renewable-energy pricing policy.

With next year’s presidential election on the horizon, the government has focused on appealing to the masses by providing affordable fuel, such as Premium brand fuel, a cheap but dirty fuel produced by state energy holding Pertamina.

State-owned electricity firm PLN also stated that it would use the cheapest energy source —coal — for its power plants. Until 2027, the use of coal at PLN power plants is estimated to stand at 58.5 percent, while renewable energy-based power plants would only make up 20.4 percent.

Agora Energiewende, a German clean energy think tank, acknowledged that the initial cost of implementing renewable energy was expensive.

The Indonesian government has cited the issue of high costs to justify the lack of progress in renewable energy investment.

“But after six years of the increasing trend in electricity prices, the investment has paid off as, since 2013, we have had a stable price to date,” said Philipp Godron, a senior associate at Agora Energiewende who was present at the forum.

Responding to the issue of investment, Hidayat Amir, the acting head at the center of budget policy from the Fiscal Policy Office (BKF), acknowledged that the current government’s incentives to improve renewable energy investment were still ineffective, such as a tax holiday, which was unsuitable for investment in the sector.

Therefore, Hidayat said, one solution was to introduce a mini tax holiday to adjust with the characteristics of renewable energy investment, which had a value that was usually under Rp 500 billion.

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