Today, renewable energy has become a desirable asset to be sought-after. Energy is considered renewable if it neither can run out nor be replaced. In contrast to fossil fuel’s finite source, they are boundless and will not pollute our environment.
Indonesia has tremendous potential for renewable energy sources. Yet, the country currently lacks adequate clean energy supplies to meet its growing demands and relies mainly on fossil fuels for most of its energy supply, with approximately 38% coming from oil, 22% from coal, and 17 % from gas. Renewable energy sources make up not more than 23% of Indonesia’s energy supply, this becomes less than 5% of traditional biomass used for cooking (heating excluded). The urgency of Indonesia’s need to develop its renewable energy sector from alternative sources is higher than ever, as the country went from being a petroleum exporter to becoming a petroleum importer during the last decade. This transition was mainly due to the nation’s lack of exploration and investments in the energy sector.
Fortunately, Indonesia’s strategic location, growing energy consumption, and the government’s interest in boosting its domestic supply of energy present an outstanding opportunity for development in renewable energy, particularly solar power, hydropower, and geothermal power. Currently, the solar power sector remains underdeveloped, and according to a report in 2019 by Institute for Energy Economics and Financial Analysis (IEEFA), Indonesia’s installed solar energy capacity is merely 24 MW. This is because most plants are located in remote places in Java where the energy demand is low. Hydropower, with roughly 4.4 GW installed capacity, has, on the other hand, the greatest potential and is the most developed alternative energy resource in Indonesia. Furthermore, geothermal energy in Indonesia has the greatest potential with its 127 active volcanoes; however, only 1.6 GW of this type of energy has been installed since 2013. Lastly, wind power is a comparatively new and underdeveloped source of renewable energy in Indonesia. Currently, 12 wind farms have been built, but by 2025, the government plans to reach 970 MW of installed wind capacity. Another report by the International Energy Agency (IEA) in 2015 has estimated a 75 GW of hydropower potential and 28 GW, or 40 percent, of global geothermal reserves. The report also states that the archipelago holds a solar energy potential of approximately 1,200 GW.
The Indonesian government still is optimistic to reestablish the power of its oil sector to its former glory, mainly because the country still holds large oil reserves and increasing demand for oil. Fortunately, the Indonesian government has started to realize the necessity to invest in the renewable energy sector. In 2014, the Government Regulation 79/2014 National Energy Policy set an ambitious target to increase the provision of primary energy in Indonesia by 2025 to 400 MTOE with 23% from new and renewable energy with a growth of 17% for the next 10 years. To achieve this, an investment of 1,600 trillion IDR will be required.
In order to reach these ambitious targets and meet the upcoming challenges in this sector, business patterns have to be reformed. An innovative change is required in terms of integrated models of funding, planning, technology development, and monitoring. Undeniably, an exciting time lies ahead for Indonesia in its attempt to unlock the energy potential of its natural sources.
1. Ministry of Energy and Mineral Resources
2. Optimizing the Renewable Energy Potential Towards a Sustainable Energy Future: http://there4i.org/
3. Indonesia Energy Policy, Laws and Regulation Handbook Volume 1 Strategic Information and Basic Laws
4. Elrika Hamdi, Institute for Energy Economics and Financial Analysis (IEEFA)