Country report: Indonesia

Materials World magazine
1 Jun 2017

With the world’s fourth largest population and an ambitious target to increase the share of renewable energy to 23% by 2025, Natalie Daniels looks at the country’s energy mix. 

Indonesia has an abundance of natural resources. At the same time, it is the world’s sixth-largest emitter of greenhouse gases. According to BP, in 2015, Indonesia’s energy consumption was 41.1% coal, 37.6% oil and 18.3% natural gas. Renewable energy sources supplied only 3% of Indonesia’s electricity in 2015. 

As the world’s largest steam coal exporter, Indonesia supplies half of Asia’s steam coal imports. Due to its influence in the Pacific Basin steam coal market, the country plays an important role in shaping Asia’s energy market with the International Energy Agency (IEA) reporting in 2011 that Indonesia had exported 309 million tonnes of thermal coal, 95% of which went to countries in the Asia-Pacific region. The Government is now scaling up efforts to exploit its renewable energy market, particularly geothermal power, to meet the 23% target by 2025. The ambitious plan is not a first for the Government – in 2015 it announced plans to complete the electrification of the country by 2019. To meet this target, the President of Indonesia, Joko Widodoof, launched a fast-track programme aiming to add 35GW of power capacity by 2019. As of December 2016, 40 million Indonesians still have no access to electricity. Indonesia has also pledged to cut its greenhouse gas emissions by 29% by 2030. 

Indonesia is the world's 14th largest country in terms of total area. It has an estimated population of more than 260 million people and is the world's fourth most populous country, with an average density of 134 people per square kilometre. According to the IEA, Indonesia has been taking action on fossil fuel subsidies in recent years with the introduction of the ‘big bang’ to remove subsidies in early 2015, along with other efforts to target remaining subsidies to poor households, as low oil prices have significantly reduced the need for them. Spending on fossil fuel subsidies in 2016 is expected to amount to less than 1% of GDP compared with 3% in 2014. 

Geothermal in the mix 

In 2016, the National Renewable Energy Laboratory (NREL) published the report, Sustainable Energy for Remote Indonesian Grids: Strategies to Accelerate Nationwide Deployment, which sets out actions the country can implement to accelerate renewable electricity in remote towns. With an estimated conventional geothermal energy resource considered among the largest in the world and with Indonesia reportedly having 40% of the world's potential geothermal resources (28,000MW), Arcandra Tahar, Indonesia’s Deputy Minister for Energy and Mineral Resources, said during a visit to the main Javanese site of Pertamina Geothermal Energy that geothermal energy would provide the country’s main baseload power supply in future. 

The plan is to achieve around 6,000MW of installed geothermal power capacity by 2020, more than a fourfold increase on the Q4 2012 capacity of 1,335MW. According to the NREL, the main challenge is transmitting and distributing power. While the majority of Indonesia’s population is concentrated on the two main islands of Java and Sumatra, the rest are spread across around 1,000 islands. The size and extent of these island populations can make power transmission challenging, resulting in an estimated 900-isolated grids across the country, mostly powered by diesel generators.

In a statement Tahar said, ‘The challenge in the development of geothermal power is competitiveness of price. The production cost is high, making it less competitive in price than power produced from other facilities such as gas, oil and coal fired power plants.’ The country has been working towards making its energy market more reliant on renewables and the Government launched Feed-in Tariffs in 2009 to accelerate the deployment of renewable energy, in particular for small-and medium-scale projects up to 10MW. However, progress has been slow due to institutional, regulatory and tariff constraints, according to the Asian Development Bank and World Bank. 

The area of Java, lying between Sumatra and Bali, is an island surrounded by volcanos at the centre of Indonesia, accounting for 85% of installed geothermal capacity at 1.2GW. Four new plants will begin operation this year in Sarulla Unit II (110MW) Sorik Marapi Modular in North Sumatra, Karaha Bodas (30MW) in West Java, and Ulubelu Unit in Lampung and will have a combined capacity of 215MW to raise Indonesia’s installed geothermal capacity to 1,858MW. While geothermal energy is slowly starting to take shape in the country’s energy mix, its reliance on coal continues to dominate. 

Cleaner and greener coal

In September 2016, the World Coal Association and Indonesian Government announced a clean coal technology that will be incorporated into existing coal power plants aimed at reducing carbon dioxide and greenhouse gases and tackle sulphur dioxide, nitrogen oxide and particulate matter emissions. Despite the new technology being slightly more expensive, it is expected to reduce CO2 emissions by 35%. This is to ensure that the country can fulfil its coal energy demand while continuing to meet its emission reduction targets under the Paris Agreement within the United Nations Framework Convention on Climate Change. The target could be increased to 41% if the country receives international support.

Tidal power is another means Indonesia hopes will provide more energy to the country. Indonesia is an ideal location for tidal power due to its strong tidal stream that moves between the world’s largest archipelagos. DCNS Energies and PT AIR signed a Letter of Intent in March 2017 that delivers a roadmap for the engineering, industrial development and commercial ramp-up of a tidal energy industry in Indonesia. The companies, which have been working together for the past two years to access the most suitable sites for tidal energy projects, will analyse and assess the commercial and economic conditions required to build a tidal energy industry. Construction is already underway for a new tidal power plant, known as the Palmerah Tidal Bridge, which will be built into a floating 800m-long bridge on the Larantuka Strait delivering 18–23MW, enough electricity for 100,000 people in the area. With the push towards renewables still a way to go, Indonesia has some big strides to take if it’s to fully exploit its renewable energy potential and reduce its reliance on fossil fuels.