29 Jul 2020

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Indonesia Must Optimize Renewable Energy as Main Energy

National energy security is a very strategic issue. The fall in the price of fossil energy does indeed cause the economics of new and renewable energy (EBT) to be increasingly left behind. In the short term, people will tend to choose cheaper energy.

Technology that utilizes alternative energy as an energy source, requires expensive costs with a low level of efficiency. With restrictions like this, of course business people will think deeper to invest in the alternative energy sector. 

In fact, fossil energy reserves continue to run low. The proven reserve of petroleum is only 3.6 billion barrels, it will run out within the next 10-13 years assuming production of 288 million barrels per year. The current proven natural gas reserves which reach 100.3 TSCF, will also only last around 30 more years with the assumption of production of 2.97 TSCF per year.

Therefore, EBT must be immediately optimized to replace fossil energy. If it continues to depend on fossil energy, Indonesia will experience an energy crisis in the next two decades.

"Indonesia must immediately change the paradigm towards EBT, by no longer viewing EBT as an alternative energy," said Deputy Chairman of the Indonesian Chamber of Commerce in Energy and Oil and Gas, Bobby Gafur Umar.

According to Bobby, it is time for Indonesia to see and treat EBT as its primary and vital energy. Moreover, Indonesia is actually very rich in energy sources which are often referred to as complementary or complementary fossil energy.

Indonesia does have the potential and enormous renewable energy content in the form of biofuels, geothermal energy, solar energy sources, water energy sources, ocean waves, and biomass energy sources. Based on Indonesian Chamber of Commerce and Industry data, Indonesia's renewable energy potential for electricity reaches 431 GW.

"However, the use of renewable energy is still very limited," said Bobby.

Policy Orientation

Bobby Gafur Umar revealed, there are at least two policy orientations that need to be synergized. On one hand, the government has an electrification target by equalizing electricity to all regions of Indonesia. On the other hand, the government also wants to accelerate the transformation from fossil energy to EBT. 

 "For that, there needs to be special regulations that can accommodate both targets," he said.

Kadin Indonesia has recently presented several recommendations related to the development of EBT. First, regulations are needed that prioritize the use of renewable energy over non-renewable energy. Second, there must be a regulation on the price of renewable energy based on the type of renewable energy source, location, and installed capacity built.

"If the purchase price of electricity is greater than the cost of PLN's production, the government must provide compensation to PLN," said Bobby.

Third, according to Bobby Gafur Umar, there needs to be fiscal and non-fiscal incentives to encourage the acceleration of renewable energy investments to reach economic prices.

Fourth, the need to establish a Renewable Energy Management Agency (BPET) which will play a central role in achieving the renewable energy target in the National Energy Policy (KEN) of 23% in 2025 and reducing greenhouse gas emissions by 29% in 2030 from the energy sector.

The fifth recommendation is the establishment of a Renewable Energy Fund to raise funds to encourage the acceleration of renewable energy investments, including the provision of incentives, research and development, capacity building, PLN compensation, and other matters related to accelerating renewable energy investment.

Not a Choice

Bobby Gafur Umar stressed, the development of EBT is not an option, but a necessity. Moreover, it was emphasized Government Regulation (PP) No. 79 of 2014 concerning the National Energy Policy.

"Principle number one is to advance EBT," he stressed. 

Bobby reasoned, the EBT was a priority step in building a national energy source because Indonesia along with 193 other countries had signed the Paris Agreement on the United Nations Framework Convention on Climate Change (UNFCCC) on 22 April 2016.

That is why the government and investors must address Covid-19 not as a signal to slow down, but to accelerate EBT.

"I, as an energy industry practitioner, really believe that there are many breakthrough steps that Indonesia can take to become the leading country in economic growth," he said.

Bobby Gafur gave an example, the use of urban waste which annually reaches 65 million tons and has been a source of environmental problems has been a brilliant breakthrough.

"The construction of an integrated garbage power plant (PLTSa) with an urban waste management program is a step forward," said Bobby.