5 Facts About Renewable Energy Investments in Indonesia

Indonesia is pushing renewable energy investments to other countries to create new and fresh business opportunities.

Indonesia shows great intent to transition to renewable energy through various attempts and strategic moves, one of which has been explicitly mentioned by President Joko Widodo, also known as Jokowi.

Jokowi has invited G7 countries to invest in Indonesia to smoothen the energy transition plan that spans the next eight years. He continues to emphasize and promote the extraordinary potential of Indonesia below the sea and earth within the Indonesian territory.

Retno Marsudi, the Minister of Foreign Affairs, has shared that Indonesia has an apparent and concrete commitment to tackle climate change through the energy transition.

She further goes on to share that large amounts of investment are needed to fully recognize Indonesia’s potential. Alongside this, technology transfer is also integral in ensuring success.

Thus far, the President elucidates that the transition optimization will help to enhance economic growth, open up business opportunities, and create new jobs. Furthermore, Jokowi has also held at least nine bilateral meetings with various countries, including India, France, and Germany.

He has also met with British Prime Minister Boris Johnson, Canadian Prime Minister Justin Trudeau, Japanese Prime Minister Kishida Fumio, and IMF Managing Director Kristalina Georgieva.

The Challenges Behind Renewable Energy Investments

One of the primary obstacles in transitioning to green energy is the economic value. In terms of investment, energy projects are not economically justified.

Due to this, investments in this sector are not as attractive as those in other sectors. Therefore, to ensure that the transition continually occurs, a partnership is an integral part.

This is seen through several pilot projects that have begun in Indonesia by big Asian companies. The green industry and projects cannot be treated as usual projects and need special attention in their development.

The government can realize the development as Indonesia’s economy progresses and its GDP rises. Consumers can therefore absorb clean energy.

Plans of exporting green energy are also in motion despite the products not being cheap yet. The realization target sets for the next 5 (five) years.

5 Facts about Renewable Energy in Indonesia

1. Serious Steps for Transition

There are 24 Indonesian provinces that have completed the Regional Energy General Plan. Aside from that, three provinces are also in the process of registering the legislation. One region is currently in discussion with the Ministry of Home Affairs. At the same time, the other three provinces have just started talks with the Regional House of Representatives.

2. Overcoming Challenges

The global energy supply is currently disrupted due to current socio-political conflicts that continue to occur. There is a high importance placed on protecting the regional supplies in various regions.

3. Strong Conditions of the Renewable Sector

Indonesia is strategically located on the equator, which means that the nation is exposed to abundant sunlight. Indonesia has a lot of wind energy that can be captured by wind power plants and converted into electricity. Indonesia also has a surrounding coastline which can also be developed into electricity.

4. Green Bonds

The Indonesian government issued regulations on the usage of greed bonds in 2017, followed by the issuance of the bonds for USD 3 billion in 2018.

5. Low Capacity Green Energy Utilization

Indonesia has an abundance of alternative capacity due to the large reserves of geothermal, solar, and wind energy. However, the utilization levels remain low. An example can be seen through Indonesia’s geothermal energy reserves, which have reached 400 gigawatts, but a mere 2.5% has been utilized so far.

Energy Investments for Indonesia’s Economy

Jakarta is said to have considerable potential from utilizing and managing waste that is then transformed into electricity. The demand for power and electricity in Indonesia continues to increase as the economy grows.

The Head of Socio-Economic and Policy at the International Renewable Energy Agency (IRENA) reveals that there is a dire need for policies to be holistic such that they are focused on deploying renewable technology and integrating it with transitional policies and the civil society.

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Pandu Biasramadhan

Pandu is the Consulting Manager at Cekindo. He has extensive experience in working with government agencies. Notably, he has provided market-entry solutions for enterprises in Indonesia and managed regional partnership channels in Southeast Asia. At Cekindo, Pandu aspires to lead the consulting team to provide top-quality market-entry services and maintain a portfolio of global clientele. His specialty is market-entry advisory and business process outsourcing.