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Renewable Energy

As a maritime country, Indonesia has numerous seas that can be used as offshore wind power plants and provide  the opportunity to build hydro power plants.

  • Indonesia has a large new and renewable energy potential.
  • The Asian Development Bank (ADB) has signed a US$350 million financing package supporting the construction of the 320 megawatt Sarulla Geothermal Power Development Project in North Sumatra.
  • In 2013, hydroelectricity contributed for 8.78 percent of the country’s installed capacity of 46,428 megawatts.
  • Total private sector investment in new renewable power plants by Independent Power Producers (IPPs) will reached US$11.11 billion in 2014
  • The Government will increase the percentage of renewable energy to reach 17% of total national energy by 2025.

Renewable energy investments ASEAN

Still today, however, Indonesia heavily relies on fossil-based energy sources, from transportation fuels to electricity sources. Indonesia has great potential to develop renewable energy. In 2013, hydroelectricity contributed 8.78 percent of the country’s installed capacity of 46,428 megawatts, according to the Energy Ministry. Its more than 17,000 islands still have many idle areas that could be used to build onshore wind power plants.

Besides wind and hydro power, Indonesia can develop other potential renewable energy sources such as biomass/bio-residues given the fact that it still has many agriculture areas. An added advantage is that Indonesia receives sunshine throughout the year. This enables Indonesia to develop solar photovoltaic and solar thermal power.


Potential of Renewable Energy

According to the Ministry of Energy and Mineral Resources, the country has great potential for new and renewable energy. These includes 450 MW of mini/micro hydropower, 50 GW of biomass, 4,80 KWh/m2/day solar power, 3-6 M/sec wind power, and 3 GW of nuclear energy. According to Energy Policy Review Indonesia, solar power has the potential to yield 4,8 kWh/m2/day, biomass 49810 megawatts, wind power 9290 megawatts, hydro power 75670 megawatts and geothermal energy 27000 megawatts as noted.

Geothermal energy is another potential renewable energy source because Indonesia has a volcanic geology. As home to 240 million people,  Indonesia has a high energy consumption rate that predominantly depends upon burning fossil fuels. The Asian Development Bank (ADB) signed a US$350 million financing package. This is signed for supporting the construction of the 320 megawatt Sarulla Geothermal Power Development Project in North Sumatra, Indonesia. It is the largest single-contract geothermal power project to date and its consortium. And these includes PT Medco Energi International (27.5%), US-based Ormat Technologies (12.75%), and Japan-based Itochu (25%) and Kyushu Electric (25%). It has a joint operating contract with the concession holder, Pertamina Geothermal Energy. Construction began in 2014 and commercial operation is expected in 2016.

Renewable energy seems to have great potential and many advantages. But its development in Indonesia can be considered sluggish because the installation rate is still far from high. The installation rate for hydropower is only 4200 megawatts, geothermal – 1052 megawatts, biomass – 86 megawatts, solar – 12 megawatts and wind – 0.6 megawatts.


Renewable Energy as a Potential Sector

By 2014, with 55% of new production being slated toward renewable power generation. Total private sector investments by Independent Power Producers were expected to reach US$11.11 billion. The government also committed to reducing carbon dioxide emissions from energy consumption by 26% from 426.8 million metric tons in 2011. Regarding national energy policy, in 2025 17% of national energy will be a mix of new and renewable energy. And it’s consisting of 5% biofuel, 5% geothermal power, biomass, nuclear, hydro, and wind, as well as liquefied coal at 2%.

Indonesia aims to install 6.7 gigawatts of new renewable energy capacity by increasing the proportion of renewable energy from 7 percent to 15 percent of total energy production. The budget required for the development of new renewable energy sources by 2025 is estimated to be US$ 13,197 million. The start-up cost of renewable energy, inevitably, will be very high but its maintenance cost can be almost zero.

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Cultural issues of doing business in Indonesia

Czech companies at InaGreen Tech fair in Jakarta, Indonesia

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