Energy (Power)

Energy - Power profile1

Energy (Power) Sector1

The Indonesian Power sector heavily relies on fossil fuels. The common use of coal, oil and gas for power generation makes this sector as one of the main sources of GHG emission. Data in 2005 shows that the electricity demand contributes 26.6% of the total GHG emission in the energy sector, following industry and transportation (ICCSR, 2006). GHG emissions in the power sector occur by burning fossil fuels for electricity generation on the supply side. The electricity is consumed on the electricity demand side. Related GHG emissions caused by electricity consumption can be calculated by multiplying the electricity consumption (kWh) with the according GHG emission factor.

Figure 1 clearly shows that the energy mix of Indonesia is dominated by oil, gas and coal sums up to almost 95% of total energy generation.  With the current electrification rate of 66%, Indonesia is intended to achieve 90% electrification rate by 2020 (RUPTL, 2011). It becomes a concern since the Ministry of Energy and Mineral Resources predicts that the future energy mix will be dominated by fossil fuels, particularly coal (Pusdatin ESDM, 2007). Thus, under business-as-usual scenario, the energy (power) sector  is contributing a large amount of GHG emission to the atmosphere.

To address this development, various mitigation actions can be undertaken. In the guidelines of the National Action Plan for Greenhouse Gases Emission Reduction (RAN-GRK), there two appropriate mitigation actions which relate to the power sector, namely promoting energy saving as well as alternative and renewable energy development. The appropriate mitigation actions under RAN-GRK guidelines seek to reduce emissions on both demand side through promotion of energy efficiency and supply side through development of alternative as well as renewable energy.

Promoting energy saving (energy efficiency) can later be translated through many specific actions such as technical retrofit of household and industrial appliances.  On the supply side, GHG emissions can be reduced by increasing the share of renewables. Indonesia actually has abundant resources such as hydro power, biogas, wind power and solar power. Unfortunately, those potentials are still barely touched due to the lack of incentives to generate useful energy from renewable resources

The heavy reliance on fossil fuels and the bold electrification target suppose to be perceived as opportunities instead of barriers. The possibility of renewable energy to blossom is widely open in presence of policy support and proper incentive. The power demand in Indonesia is mainly fulfilled using a centralized system through inter-province and inter-island electricity interconnection transmission. [P1] As an archipelagic country, such centralized system is suitable in the big islands like what we observe now. However, the need of energy the remote areas and small islands will not be viable using the centralized system due to financial and geographical barriers. Therefore, the decentralized energy system should be supported to meet the needs of other (remote) areas in Indonesia. Increase of renewable energy share and introduction of community-based energy initiative could support the development of sustainable decentralized energy systems. With abundant resources, it is possible to initiate renewable energy instead of relying on fossil fuels to meet the energy needs. The annex of Presidential Regulation No. 61/2011 states some types of renewable energy to be developed as mitigation actions namely micro and mini hydro, solar, wind, biomass and biogas.  

Feed in tariff is another factor to accelerate the installation of renewable energies. The government of Indonesia is currently imposing feed in tariff policies However, one of the obstacles to promote renewable energy investments is the discrepancy between production cost and feed-in tariff. Recently, the government just revised the rate of feed in tariff. Such revision is based on Minister of EMR’s Regulation No. 4/2012 concerning Power Purchase Price by PT PLN (Persero) from Power Plants using Small and Medium Scale Renewable Energy or Excess Power. It is expected that such raise will encourage the investors to tap renewable energy potentials in Indonesia.

There are various viable opportunities to reduce emissions from both supply side and demand side in energy sector. Subsidy on fossil fuel should gradually be phased out and directed towards cleaner energy options. Ultimately, the policy support including appropriate pricing for renewable and alternative energy along with continuous community education are essential in reducing emissions from the power sector.