COP 29, Prabowo reaffirms commitment to green energy development
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Prabowo tegaskan komitmen pengembangan energi hijau
13 November 2024
By Rangga Prakoso
Jakarta, ID – Indonesia has reaffirmed its commitment to energy transition by planning to build 75 gigawatts (GW) of renewable energy power plants. This capacity is part of a larger goal to develop 100 GW within the next 15 years, with an investment value reaching up to US$235 billion.
Indonesia's Special Envoy, Hashim Djojohadikusumo, stated this during the opening of the Indonesian Pavilion at the Conference of the Parties (COP) 29 on Monday (11/11/2024). The COP is being held in Baku, Azerbaijan, from 11 to 24 November 2024.
Indonesia's Special Envoy to COP 29, Hashim Djojohadikusumo, mentioned that under President Prabowo Subianto's leadership, Indonesia is fully committed to honouring all the previous administrations' commitments to the energy transition programme, in alignment with climate change mitigation efforts.
"We will continue to meet these commitments. President Prabowo and his administration will introduce new programmes to the world. One of the government’s initiatives is to add 100 GW of power plants over the next 15 years, with 75% or 75 GW coming from new renewable energy sources, requiring an investment of US$235 billion," Hashim said in his statement in Jakarta on Tuesday (12/11/2024).
Hashim stated that Indonesia is rich in renewable energy sources. Western Indonesia, including Aceh and West Sumatra, has abundant hydropower resources. The islands of Sumatra and Java possess significant geothermal potential that can be developed. Similarly, Kalimantan has hydropower resources. "The government will continue its partnership programme with both private and foreign entities. These are all international initiatives, and we must realise collaboration between Indonesia and other countries," he said.
He noted that developing renewable energy is now more affordable. Technological advancements have even managed to minimise the intermittency, which is characteristic of renewable energy sources such as solar and wind power. The technology that addresses this issue is the battery energy storage system.
“Currently, we have new technologies from various sources, one of which is the battery energy storage system. It is now affordable. We have been offered four cents per kilowatt. Four years ago, Tesla offered 14 cents, whereas others are now offering four cents, even approaching three cents. I believe the renewable energy transformation has become very affordable and inexpensive,” he said.
According to records from Investor Daily, the Indonesian government's commitment to developing up to 75 GW of renewable energy dates back to the era of President Joko Widodo. However, to date, there has been no written document in the form of an Electricity Supply Business Plan (RUPTL) or the issuance of a revised Government Regulation Number 79 of 2014 concerning the National Energy Policy.
Energy and Mineral Resources Minister Bahlil Lahadalia previously mentioned that the RUPTL preparation mechanism with PLN is being carried out in more detail. He emphasised that meeting electricity needs correlates with economic growth. "We break it down, considering how much capacity we need for economic growth, in which regions, where renewable energy sources are, and whether an existing network is already available. If there is no network, PLN must invest in building the network first, rather than constructing the power plant without ensuring payment. This ensures PLN’s profitability is not compromised by paying for unused goods," Bahlil said at the BNI Investor Daily Summit 2024 at the Jakarta Convention Center (JCC), Senayan, Jakarta on Wednesday (9/10/2024).
Bahlil explained that this plan is being implemented because the old RUPTL was unable to increase the energy mix. The National Energy Policy sets the target at 23% by 2025. To achieve this target, green energy plants with a capacity of up to 8.1 GW are needed. He said that one of the reasons for the low energy mix is the lack of transmission networks. As a result, green energy sources cannot be distributed to other regions. He cited an example in South Sumatra, where there is a renewable energy source of 350 megawatts. However, it is constrained by the electricity transmission network.
" Honestly, the RUPTL was not designed comprehensively but partially. The electricity is available, but the network is not. As a result, PLN is burdened with a 'take or pay' clause of 80%," he explained.
Another reason, Bahlil continued, is the higher selling price of renewable energy compared to fossil energy. He introduced a breakthrough by applying a tiered electricity purchase price scheme. According to this scheme, in the first 10 years, PLN purchases electricity at a higher price to attract investors and secure funding from banks. However, in the second and third 10-year periods, the purchase price gradually decreases.
"Initially, it was 20 years. I said, make it 30 years, so the investors are willing to commit. Now, for renewable energy businesses, there is no longer a reason to claim it is not economical because the terms are clear. Recently, several companies have already signed up for this scheme. This is practical knowledge, not just desk-bound thinking," he concluded.
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