Indonesia plans to setup renewable energy facility

The Indonesian Government is considering new steps to increase procurement of renewable energy as part of measures to achieve its stated renewable energy targets.

According to media reports, the Indonesian Government has expressed its intention to set up a new utility dedicated to procure electricity from renewable energy projects. The government is considering this measure after reports that the country’s main power utility, Perusahaan Listrik Negara (PLN), is opposed to buying power from renewable energy projects due to the high costs involved in the exercise.

The new utility would procure electricity from renewable energy projects and then supply to end users, including industry. Its operations may be similar to the Solar Energy Corporation of India (SECI) which conducts competitive auctions for solar power projects and then acquires electricity from these projects to sell to end-users, while also charging a small amount of commission for these transactions.

Indonesia has announced a medium-term target for increasing the share of renewable energy in total energy use to 25% by 2025, and furthermore set a target to increase the share of renewable energy in total energy mix to 19% by 2019.

The share of renewable energy in Indonesia’s total energy use, at present, stands at around 5% to 6%.

Geothermal energy is expected to be central to Indonesia’s renewable energy plans. Indonesia has an estimated geothermal energy potential of 29 GW — equivalent to about 40% of world’s total geothermal reserves. More than 1 GW of electricity generation capacity is operational or under development. The government is expected to speed-up development of additional geothermal energy assets.

Indonesia has also pledged to cut its greenhouse gas emission by 29% by 2030.

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