Green Paradox: Indonesia's Electricity Future Defined by Coal, Renewables

By Basten Gokkon

Indonesia, the world’s fifth-biggest carbon emitter, has significantly scaled back its electricity output plans to boost the share of renewables, but will remain heavily reliant on coal.

The administration of President Joko “Jokowi” Widodo has introduced a new 10-year electricity procurement business plan (RUPTL) that will see it add 56 gigawatts (GW) of electricity capacity across the archipelago between 2018 and 2027, down 30 percent from its previous target of 78 GW.

Indonesia also planned to set a coal production cap starting in 2019, but backpedaled because of the difficulty of accounting for all the unsanctioned coal-mining activities in the country.

The scale-back is driven largely by the fact that demand for electricity in Southeast Asia’s largest economy have failed to live up to expectations, Ignasius Jonan, the energy minister, said at a media event.

The previous plan was based on Jokowi’s ambitious projections of economic growth of 7 percent a year from 2014 to 2019. Under such a scenario, electricity demand was expected to have grown by 8 percent a year.

But since Jokowi took office in 2014, Indonesia’s GDP has grown by just 5 percent annually, while demand for electricity has stagnated at around 4.4 percent.

As a result, the government has warned the state-owned power utility, PLN, of financial burdens on the company, and by extension on the state, from an oversupply of electricity in parts of the country, particularly the Java-Bali grid.

The new 2018-2027 working plan assumes average annual GDP growth of 6.3 percent and electricity demand growth of 6.9 percent. “The new plan is more realistic,” Jonan said.

The minister added that revisions in PLN’s latest working plan would help the government achieve a target to generate 23 percent of electricity from renewable resources and 54.4 percent from coal by 2025.

The government has adjusted the mix for renewables and coal in the 2018-2027 plan to hit the 2025 target. It plans to have 106 GW of new electricity capacity installed in the next seven years, of which 57.7 GW would come from burning coal and 24.4 GW from renewables.

In the longer term, though, stretching to 2027, the government actually envisions shrinking the share of renewables to 20.4 percent and boosting coal to 58.5 percent.

Despite the government scaling back its overall target output, energy observers in Indonesia say the figures are too optimistic to resolve PLN’s financial woes.

The new plan calls for 5.2 GW less coal-fired electricity than in the 2017-2026 plan. This falls short of the 13 GW reduction that activists say is necessary to offset the financial and health problems caused by the glut of electricity in the Java-Bali grid.

“These revisions on coal are still not enough to prevent an air pollution disaster or to protect consumers from energy price hikes,” Hindun Mulaika, a climate and energy campaigner at Greenpeace, an NGO, said in a statement.

The Indonesian government’s push to generate an additional 35 GW of electricity by 2019 relies heavily on building new coal-fired power plants. The program, however, has been criticized for focusing too much on the already saturated Java-Bali grid, while ignoring millions of households in more remote areas.

The preference for generating power from coal has also been deemed a public health issue, potentially threatening the health of up to 30 million people living in areas slated for new power plants.

The government is reluctant to adopt more renewable energy, arguing that the costs for such resources are too high and the supply is not reliable enough to provide stable power at a massive scale compared to coal.

“[The government] still doesn’t have a comprehensive policy and strategy to make the costs for renewables competitive [in the market],” said Faby Tumiwa, director at the Institute for Essential Services Reform (IESR).

The government’s approach to coal, though, is markedly different. It recently announced a plan to keep down the operating costs of coal-fired power plants by forcing local miners to sell the fuel at below-market prices.

Indonesia’s coal-fired power plants require about 80 million to 90 million metric tons per year, or roughly 80 percent of the locally mined coal allocated for the domestic market under the so-called domestic market obligation scheme.

Indonesia, one of the largest coal producers in the world, last year also planned to set a coal production cap starting in 2019, but backpedaled because of the difficulty of accounting for all the unsanctioned coal-mining activities in the country. This year, Indonesia is expected to produce 485 million metric tons of coal, up 5 percent year-on-year, according to the energy ministry.

Meanwhile, Indonesia has pledged to cut carbon emissions resulting from deforestation, forest fires and burning coal by 29 percent in 2030.

Read next: Corruption 101: An Insider's Guide to Graft in Indonesia

The News Lens has been authorized to publish this article from Mongabay, an environmental science and conservation news and information site. The original article can be found here.

Basten Gokkon is a Jakarta-based writer with interest in wildlife conservation, renewable energy efforts, and indigenous peoples empowerment.

TNL Editor: Morley J Weston