Here's why Indonesia's renewables scene slowed down in 2018

It missed chances for reforms, investment, and collaboration for business, said experts at Power-Gen Asia 2018.

If 2017 was considered a stellar year for Indonesia's melting pot of renewables, 2018 significantly paled in comparison, said Luke Devine, foreign legal consultant for Hadiputranto, Hadinoto & Partners.

He shared at the Power-Gen Asia 2018 conference session "Indonesia's Renewable Scene" in Jakarta, Indonesia that the sector slowed down no thanks to procurement rule changes, local content, the 10% intermittency on grid policy, and the pressures on tariffs, power plant agreement (PPA), and the rupiah.

"Procurement process reforms have brought renewable independent power retailers (IPP) to a stop," Devine said. He noted that whilst in October 2017, IPPs from solar PV, hybrid, wind, biomass, biogas, municipal waste, and tidal wave sectors were part of the selection process, by the time of April 2018, only IPPs in hydropower and geothermal were accepted.

There was only some activity in non-PLN offtake renewables, however, they are only small-scale and slow-going, Devine said.

Renewables international business
This was echoed by Indonesia Renewable Energy Society (METI) chairman Dr. Surya Darma. Despite the high but slowing growth of electricity demand, development growth of renewable energy is still low and completeness of reserves remains unknown, he said.

"Coal use has increased very much, but on the other hand, renewable energy is very, very slow. Since 2006, the use of renewable energy is about 5% but right now it's about 7% in our national energy mix," he said.

Darma added, "If we see the growth of renewable energy development in Indonesia, it's not so fantastic compared to the others." The country has a new and renewable energy potential of 441.7GW, but a mere 2% or 9.07GW is only installed.

To address this, he added that the renewables sector should be viewed as an international business. "Sometimes, when we discuss with the government sector, they mention, why don't we use the local people and the local content? Here, renewable energy is an international business." The chairman also made recommendations such as the creation of a market, the reduction of subsidies, and the development of cooperation with other countries and international institutions.

No local solar industry
Meanwhile, Fendi Gunawan Liem, managing director of PT Selaras Daya Utama, noted that Indonesia currently does not have its own local solar industry. "Many rural projects are still in the pipeline," he said.

Moreover, Engineering, Procurement and Construction (EPC) costs in Indonesia are some of the highest in the world. "That's because the scope is wider than anywhere else in the world," Liem said.

Amidst all this, there are rural projects aim to bring the costs of electricity down. He cited the 75kWp project for the village community in Bumi Ratu, Lampung, where costs have fallen from $2 per day to $2 per month. "People have a sense of ownership with this plant," he added.

"We need supporting policies that help accelerate the progress of solar power in Indonesia," Liem argued.

Energy in waste?
Inez Rakhmani, senior consultant at ERM, saw hope in Indonesia's waste-to-energy (WTE) technologies for assisting the growth of renewable energy. For her, the traditional approach of Reduce, Reuse, and Recycle no longer works for large-scale waste management. "More or less 70% of the 64 million tons of solid waste generated in Indonesia each year is sent to substantially unsanitary landfills," she said.

The country has enforced the acceleration of WTE power plant installations in cities like Jakarta, Tangerang City, Tangerang Selatan, and Surabaya and stipulated their PPA basis. However, the push for WTE technology is not without potential negative impacts such as air emissions from pyrolysis technology, noise level, and land use issues.

"WTE technology in mass production is still rare and requires high-cost investments for implementation," Rakhmani concluded. "The government might require foreign investors for WTE development in Indonesia."