Most of Indonesia’s electricity currently produced by coal plants, with 140 806 GWh (56%) capacity in 2016. The coal power plant is long-lived, can reach age of 40 years as Kamojang power plant. Long life is also reflected in the power purchase agreement between PLN and power generation company’s 30-year as stipulated in the Energy and Mineral Ministerial Regulation No. 19 Year 2017 on Coal Utilization for Power Generation and Power Purchase Excess (Excess Power). Thus, once it is decided to build a coal power plant, then the energy system area with this electric generator will be locked long enough with plant this type. The other hand, electricity Indonesia is currently only containing 1% renewables (PLN RUPTL 2016-2025).
Indonesia government has issued the National Energy Policy (KEN), that targeting new and renewable energy by 2025 as much as 23%. KEN targets have been incorporated into a carbon emissions reduction program components, described in the document NDC (Nationally Determined Commitment) that has been agreed in Paris 2016. The government has ratified the Paris climate deal through Law No. 16 Year 2016 on Ratification of the Paris Agreement to the United Nations Framework Convention on Climate Change. Indonesia’s contribution to emissions reduction is 29% by its own efforts and to 41% if there is international cooperation in 2030 compared to business as usual. Part of this target will be achieved through energy sector.
However, several new policies in the energy sector today potentially deviate path to achieve the commitment targets to mitigate climate change, as well to achieve renewable energy targets in KEN.
Java island, as the biggest sub system of Indonesia power generation (75% of PLN’s electricity in 2015) is dominated by coal plants. This sub system already has a high enough reserve capacity, i.e. 31%, with larger potential of oversupply as several coal power plants is being built in pipeline. As a result, the space for the development of renewable energy is very limited in Java.
Sub system of energy grids that open to new electric generation are located outside Java, especially in eastern Indonesia that still lack of electricity supply. Its contribution to the KEN’s target actually not big considering regional electricity consumption only 6% of the national energy demand in 2015. However, still with low of electrification ratio, the development of renewable energy in the eastern part of Indonesia is urgent. But this was not supported by the regulations. The new policies issued instead giving space of affirmation for coal power plant fuel not to renewable energy. The cost of supply (BPP) power generation of the eastern Indonesia, such as NTB, Papua, Maluku and East Nusa Tenggara are more than doubled compared to the average cost of the national which is 7 US cents per Kwh. These areas are relatively far from the coal source located in Kalimantan and South Sumatra. The areas have potential for renewable energy development such as wind and solar renewable energy, but still not empowered by policies.
Regulation of the Minister of Energy and Mineral Resources No. 12 Year 2017 on Utilization of Renewable Energy Sources for Electricity Supply established a mechanism of price caps for solar and wind power technology but not for non mouth of the mine coal plants, making both types of renewable energy will be difficult to develop in the east area. Regulation of Minister No. 12 of 2017 makes solar power and wind as the last choice in power generation after there are no other primary energy sources. Also, renewable energy is tasked to reduce the cost of electric supply. When local BPP above average national generation, then the purchase price of electricity from solar and wind power are limited to a maximum of 85% of BPP local plants.
Stark advantage is given to coal power plant under Regulation Minister No. 19 of 2017. In an area that has BPP higher than the average national plant (generally applicable to all the provinces of Eastern Indonesia), for generating power less than or equal to 100 MW allowed to be auctioned. Data on 35,000 MW program, the first FTP (Fast Track Program) and the second FTP II showed all coal power plant in the eastern region under 100 MW. Given the coal power generation technology has matured, and developed countries began to leave this kind of technology due to restriction related to environmental pollution, and also restrictions on new coal power plant in India and China (Report CoalSwarm 2017), cost of coal power technology become cheap, and Indonesia become potential to be the location of “dumping” coal technologies, including the eastern part.
Providing energy access to the last communities without, from experiences of some countries showed for increasing electrification rate from 85% to 100% have more severe challenges. The 10-15% last community groups without access to electricity are generally constrained by geographical, economic and dispersion of users. Renewable energy is suitable to face these challenges, due to more easy to to be decentralized based local energy resources. Therefore, renewable energy should be main candidate for eastern Indonesia with electrification ratio lower than the national electrification ratio, to help government target to reach electrification 99.7% by 2025 from 88.3% in 2015.
To achieve this target giving electricity access to communities in remote areas, would need support such as viability gap fund for private sector to build renewable energy generation, or subsidies to PLN’s unit that work in these territories. It is not yet reflected in several regulations curently issued by the government.
Jokowi government should provide and review closely on implementation regulation to reach commitments of climate, renewable energy, and electrification ratio target. The current regulation seems not lead towards these targets. Therefore, it is important to conduct an evaluation and review of the latest regulations related to this electricity