This is the second of a three-part series by CNN Indonesia’s Dewi Safitri, exploring Indonesia’s coal phase out and transition to renewable energies.
2022 was an extraordinary year for the growth of the renewable energy (RE) sector worldwide. In Asia, RE capacity has grown far beyond any other part of the world, led by China and India.
China, the mothership of all RE growth in Asia, has made enormous investments since the mid-2000s and is reaping the rewards now.
“In the 2010s, when there was a photo news (story) from China, (it was) always a lament on how industry in China polluted the environment and the air pollution was very acute. The sky was dark because of the thick pollution. It’s much clearer now, right? That’s because they are very aggressive with renewables,” commented Surya Darma, head of the Center for Indonesian Renewable Energy Studies.
Fifteen years ago, China began to build excellence in the solar sector with a project with a capacity of 820 megawatts. This capacity was already the second largest in Asia after Japan in 2007.
So big was the expansion of the solar energy business, that China eventually controlled the world’s solar panel industry.
For Indonesia, it’s archipelagic and vast geography is problematic. Java has 80% of the country energy needs, while most suppliers are in outer islands remotely away from Java. (There is) no denying that there are indeed abundant stocks of (energy from the) sun.
Putra Adhiguna, Energy Analyst, IEEFA
India shares a similar story.
The country with nearly 1.4 billion people grew its clean energy mix to 43% in 2023. This figure exceeds the target of 40% which was previously planned to be achieved in 2025.
According to Surya Darma the key for supporting this growth was India’s central government regulation. In 1992, the Department for Unconventional Energy was formed which has now evolved into the Ministry of New and Renewable Energy.
Indian RE Minister Raj Kumar Singh believes that another target, namely achieving a clean energy mix of 65% by 2030, will also be exceeded more quickly.
“The target of 65% is too small because our current capacity is around 170 gigawatts of RE. There are still 80 gigawatts under construction. The total is 250 gigawatts,” he added at a press conference in Delhi last October.
The World Bank praised India’s move as a game changer in increasing the welfare of its citizens, as well as for the world which is struggling with the issue of climate change.
The World Bank called India’s strategy “worthy of emulation by other developing countries” that are shifting their energy sources.
Indonesia-India comparison
Similar to Indonesia, India consumes massive amounts of coal to fuel its giant power plants. The difference is that India’s dependence on coal is currently being offset by a large expansion of RE, especially those sourced from solar.
Energy studies have indicated the choice of focus on solar development is crucial for India, which is heavily supported by a large population and a high solar insulated area. The Indian region gets sunshine almost 360 days a year.
Even though both countries have tropical climates, according to IEEFA energy analyst Putra Adhiguna, India and Indonesia are not likely similar.
India, for one, is a non-archipelagic country, which makes production of solar power easier.
“For Indonesia, it’s archipelagic and vast geography is problematic. Java has 80% of the country energy needs, while most suppliers are in outer islands remotely away from Java. (There is) no denying that there are indeed abundant stocks of (energy from the) sun,” said Putra.
Surya Darma admits that the vast geography and population are prominent factors in India’s RE performance. With almost twice of Indonesia’s land, India’s population is about five times larger.
However, even putting those into perspectives, Indonesia’s RE numbers remain inconsequentially small.
“Or say divide India’s capacity by five, because our population is only one-fifth of India, we should have at amassed 15-gigawatt solar capacity.”
“But the reality is, up until today, Indonesia’s capacity still laying extremely low at 200 megawatts. In fact, it’s only equivalent to one small-scale coal power plant in Indonesia,” said Darma, chuckling.
The International Energy Institute (IEA) noted that India was the third largest consumer of electricity in the world and the third largest producer of renewable energy in the world in 2022.
For example, Minister Regulation 20/2021 stated that rooftop solar power is allowed to be installed at maximum capacity. As it turns out, only 15% of that promised capacity is acceptable—this makes solar investment unattractive. Why should people invest heavily and then be able to sell a limited capacity of 15% only?
Surya Darma, Head, the Center for Indonesian Renewable Energy Studies.
Indonesian RE, meanwhile, according to IEA, faces a stiff problem in two main areas: electricity system policies and poor plant management. Both Putra and Surya Darma agree that this view is true.
For Surya Darma, it is the policy’s inconsistency that really hinders growth in Indonesia.
“For example, Minister Regulation 20/2021 stated that rooftop solar power is allowed to be installed at maximum capacity. As it turns out, only 15% of that promised capacity is acceptable—this makes solar investment unattractive. Why should people invest heavily and then be able to sell a limited capacity of 15% only?” demanded Surya.
Another regulation is on Surya’s list, namely the Presidential Decree (Perpres) 112/2022 mandating the price of RE electricity. It has been long awaited by investors with the draft initially proposed by the Indonesian Renewable Energy Society (METI), which Surya chaired.
Once the decree was published however, the vital guarantees for doing business in the energy sector were missing.
“It initially regulated how PLN becomes the purchaser of power from an RE generator. Once out, it has changed to non-mandatory. The Perpres omitted the mandatory stipulation and instead, leaves the price mechanism to negotiation between PLN and the RE producer. This dampens the spirit of investment,” concluded Surya.
He believes this policy is out of sync with the realities of the business world and consequently has left Indonesia far behind. Not only from China and India, but also from neighboring countries in the ASEAN region.
Read part one here.
This story was produced with support from Internews’ Earth Journalism Network. It was first published in CNN Indonesia on July 3, 2023. It has been lightly edited for length and clarity.