November 10, 2023
MANILA – The three presidential candidates have expressed their intention to reduce Indonesia’s reliance on coal and increase the share of renewables as the government strives to secure external funding for its costly energy transition.
In the “Vision and Mission” statements published for their respective election campaigns, the candidate pairs all state the goal of reducing greenhouse gas emissions through the early retirement of coal-fired power plants, as well as boosting renewable energy development in Southeast Asia’s largest economy.
The government aims for the renewable energy percentage in the national energy mix to reach 23 percent by 2025. As of July this year, renewable energy made up around 15 percent of Indonesia’s installed electricity-generating capacity.
Surya Tjandra, a campaign team member of the presidential and vice-presidential ticket of Anies Baswedan and Muhaimin Iskandar, said they were prepared to proceed with the early coal plant retirement projects and offer incentives to increase renewable energy use.
“AMIN [Anies-Muhaimin] is committed not only to dealing with the people’s dependence on fossil fuels but also meeting overall emissions-reduction targets,” he said in a statement to The Jakarta Post on Friday.
Coal power currently accounts for around 43 percent of Indonesia’s electricity mix.
The country had 18.8 gigawatts of coal power under construction at the end of 2022, according to a 2023 report by Global Energy Monitor (GEM), which uses publicly available data on company plans.
That is nearly half of the nation’s current coal power capacity, which stands at 40.6 GW.
Meanwhile, Guswandi, a campaign team member representing presidential and vice presidential candidates Ganjar Pranowo and Mahfud MD, said they would support power wheeling and accelerate the growth of upstream and downstream renewable energy industrialization to spearhead their efforts in the energy transition.
“Quite a few investors are ready to invest in renewable plants, but PLN appears reluctant to allow for more involvement from private companies,” Guswandi said on Friday.
Power wheeling would let independent power producers (IPPs) sell electricity from renewable energy sources to distant end consumers through state electricity utility PLN’s electricity grid.
The government has removed provisions on power wheeling from the most recent draft of the new and renewable energy bill, citing fears that it would increase the need for subsidies and create an uneven playing field for IPPs.
Current rules require electricity produced by IPPs to be sold to PLN for distribution under the state-run monopoly, which involves terms that can limit the economic viability of clean energy projects.
Dahnil Anzar Simanjuntak, a campaign team member of the presidential and vice-presidential candidates Prabowo Subianto-Gibran Rakabuming Raka, explained that one of the pair’s focus areas would be agricultural reform to ensure food security, which would affect the use of biofuels.
“This program […] is one of the concrete efforts to reduce dependence on fossil fuels by encouraging the use of biofuels,” he said at an event hosted by CSIS Indonesia in Jakarta on Thursday.
When asked about financing the energy transition, both Surya and Guswandi said Indonesia could not depend solely on the budget but said state funding could support the country’s shift to clean energy.
Dahnil did not respond to the Post’s request for comment.
“In tandem with funding from the private sector, banks and international financial institutions, we hope that the decision to commit state funds to energy-transition projects will increase the financing feasibility,” Surya said, adding that foreign investors were key to helping Indonesia switch to clean energy.
Indonesia is estimated to need US$95.9 billion in investment between 2023 and 2030 to achieve its goal of capping annual carbon emissions from the on-grid power sector at 250 million tonnes of carbon dioxide by 2030, according to a strategy document for power sector planning released by the Just Energy Transition Partnership (JETP) secretariat.
Bhima Yudhistira, director of the Center of Economic and Law Studies (CELIOS), said that, while the three candidates had varying strengths and weaknesses in terms of their energy-transition programs, they did not explicitly include plans to recycle electric vehicle (EV) batteries.
“The energy transition does not always mean we can massively exploit critical minerals. The government should also encourage domestic recycling facilities to catch on,” he told the Post on Thursday.
Missing key strategies
Daymas Arangga, executive director of Energy Watch, said the three presidential candidates had to formulate strategies to overcome PLN’s electricity oversupply, which was one of the longstanding impediments to renewable energy growth.
“In fact, Energy Watch thinks that all three presidential candidates have yet to fully comprehend the current energy situation, as well as the renewable energy road map Indonesia has to date,” he told the Post on Thursday, saying that Indonesia would not be able to transition away from coal if core problems remained unaddressed.
The excess power generation capacity, which has been attributed to excessive plant development, poses a risk to PLN’s finances and hinders renewable energy from entering the electricity company’s grid.
An estimated 40.6 GW of capacity is planned for commercialization in the 2021-to-2030 decade, of which 34 percent, 13.8 GW, is expected to come from coal and 14 percent, 5.8 GW, from gas and diesel.
Such capacity additions were incompatible with an ambitious net-zero emissions goal and would likely increase oversupply.
“The issue of energy subsidies […] is also something that must be discussed, as it is closely related to the energy-transition planning.”