Reviewing Energy Sources for Power Generation

JAKARTA, KOMPAS — The Indonesian government has been asked to review contracts and agreements with companies that will build coal-fired power plants as part of its ambitious 35,000-megawatt (MW) electricity generation program.

If the government maintains the domination of the coal energy, Indonesia will be locked into coal-fired power generation that pollutes the air for between 20 and 40 years.

From the 35,000 MW electricity program, 2,899 MW is already in operation. While 18,207 MW is still under construction and sale and purchase agreements have been signed for total 11,467 MW. The rest is still in planning and auction phase, according to Kompas.

"The fact the Paris Agreement has been ratified globally, including by Indonesia, shows that fossil fuels are heading toward the sunset," said Leonard Simanjuntak, the head of Greenpeace Indonesia, during a discussion titled "Review of Coal Economy vs. Renewable Energy, What Is the Policy of the Elected President?" held by the Institute for Economic and Social Research (LPEM) of University of Indonesia’s school of economics and business in Jakarta on Thursday.

The discussion featured a number of speakers, including Alin Halimatussadiah (the head of LPEM), Peter Kiernan (chief analyst on energy at The Economist Intelligence Unit), Arif Budimanta (representative of the Joko Widodo-Ma\'ruf Amin national campaign team), and Ramson Siagian (representative of the Prabowo Subianto-Sandiaga Uno national campaign team).

The government can begin reviewing the contract agreements to stop the construction of coal-fired power plants. The construction of the coal-fired power plants with excessive electricity capacity will reduce the interest in and competitiveness of renewable energy. Moreover, Indonesia still has much work to do to achieve its goal of 23 percent renewable energy in the country’s energy mix by 2025, as stated in the national energy plan.

The transition from fossil fuel energy to clean and renewable energy relies on the government\'s political commitment. On the one hand, there are a number of constraints to renewable energy development, such as funding support from banks and regulations that are still unfriendly to investment. On the other hand, there is potential for 400,000 MW, while current utilization is still less than 10,000 MW.

"Indonesia should not forgo the benefits of developing renewable energy, which is increasingly cheaper. If it does not start now, Indonesia will be left behind. Everything is dependent on the government\'s political commitment.” Alin said.

Indonesia still relies heavily on primary energy such as coal when, in fact, the potential for renewable energy is very diverse and abundant, such as solar, wind, geothermal and hydro.

In the power generation system, coal remains the largest source of energy, accounting for 60.5 percent in 2018, while gas accounts for 22.1 percent, renewable energy 12.4 percent, and oil fuel 5 percent. Fuel oil has seen a significant decline since 2014, dropping from 11.8 percent.

Dependency

Arif said the energy mix in Indonesia was still highly dependent on coal. This is because of the abundant availability of coal and its lower development costs compared to gas, fuel oil and renewable energy sources. However, the government has a strong commitment to continuing to increase the use of renewable energy and reducing the use of fossil energy.

"Coal does not need to be imported and the price is cheap. There are still many low-income people who need access to electricity at low prices. So, coal is an option," said Arif.

Ramson said that coal production was still cheaper compared to other primary energy sources. Therefore, the development of renewable energy requires policy support, such as by providing fiscal incentives. The development of renewable energy must also be on a large scale so that the economic value of the investment can be reached.

"In the future it will be necessary to revise contracts in the 35,000 MW power generation program so that coal can be switched to renewable energy sources," Ramson said.

In the context of pursuing a 23 percent mix target by 2025, an additional 4,000 to 5,000 MW of installed renewable energy capacity is needed per year. Without a strong commitment from the government, the target will be difficult to achieve. Throughout 2018, for example, only 400 MW of renewable energy capacity was added.