Renewable Energy Prospects: Indonesia, a Remap Analysis, International Renewable Energy Agency (IRENA), Abu Dhabi, WwwIrenaOrgRemap
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A Renewable Energy Roadmap RENEWABLE ENERGY PROSPECTS: RENEWABLE ENERGY PROSPECTS: DOMINICAN PROSPECTS: ENERGY RENEWABLE REPUBLIC INDONESIA March 2017 A © IRENA 2017 Unless otherwise stated, this publication and material featured herein are the property of the International Renewable Energy Agency (IRENA) and are subject to copyright by IRENA. Material in this publication may be freely used, shared, copied, reproduced, printed and/or stored, provided that all such material is clearly attributed to IRENA. Material contained in this publication attributed to third parties may be subject to third-party copyright and separate terms of use and restrictions. ISBN 978-92-95111-18-9 (Print) ISBN 978-92-95111-19-6 (PDF) AboutIRENA The International Renewable Energy Agency (IRENA) is an intergovernmental organisation that supports countries in their transition to a sustainable energy future and serves as the principal platform for international co-operation, a centre of excellence, and a repository of policy, technology, resource and fi nancial knowledge on renewable energy. IRENA promotes the widespread adoption and sustainable use of all forms of renewable energy, including bioenergy, geothermal, hydropower, ocean, solar and wind energy, in the pursuit of sustainable development, energy access, energy security and low-carbon economic growth and prosperity. Acknowledgements This report has benefi ted from the valuable comments and guidance of the Indonesian Ministry of Energy and Mineral Resources (MEMR), with special thanks to Maritje Hutapea and Ezrom Tapparan. Additional contributions during the analysis and review were provided by Gareth Davies (Aquatera), Abdul Kholik (Azetsurya), Togar Sitanggang (Indonesian Palm Oil Association - GAPKI), Tjut Devi (German Agency for International Cooperation - GIZ), Bawa Santosa (Indonesian Renewable Energy Society - METI), Budi Mulyono (Perusahaan Listrik Negara - PLN) and Carina van der Laan (University of Utrecht). The report benefi ted signifi cantly from input provided by external expert review by Pradeep Tharakan (Asian Development Bank), Markus Steigenberger and Daniel Argyropoulos (Agora Energiewende), Jacob Høgh and Nadeem Niwaz (Danish Energy Agency), Bill Meade and Ami Indriyanto (USAID-ICED), and Tim Williamson (US Department of Energy State). The report also benefi ted greatly from input and comments provided during two expert review workshops held in Jakarta, in April and July 2016. IRENA would like to thank all those that attended for their valuable input. IRENA colleagues Rabia Ferroukhi, Diala Hawila, Yasuko Inoue, Divyam Nagpal and Nicholas Wagner also provided valuable comments. Finally, a special thanks is due to Andre Susanto, who worked on the report as a consultant and provided invaluable input and support throughout the project. IRENA is grateful for the generous support of the Federal Ministry for Economic Aff airs and Energy of Germany, which made the publication of this report a reality. Authors Dolf Gielen, Deger Saygin and Jasper Rigter (IRENA) For further information or to provide feedback, please contact the REmap team: REmap@irenaorg Citation IRENA (2017), Renewable Energy Prospects: Indonesia, a REmap analysis, International Renewable Energy Agency (IRENA), Abu Dhabi, wwwirenaorgremap Disclaimer This publication and the material featured herein are provided “as is”. All reasonable precautions have been taken by IRENA to verify the reliability of the material featured in this publication. Neither IRENA nor any of its offi cials, agents, data or other third-party content providers or licensors provides any warranty, including as to the accuracy, completeness or fi tness for a particular purpose or use of such material, or regarding the non-infringement of third-party rights, and they accept no responsibility or liability with regard to the use of this publication and the material featured therein. The information contained herein does not necessarily represent the views of the Members of IRENA, nor is it an endorsement of any project, product or service provider. The designations employed and the presentation of material herein do not imply the expression of any opinion on the part of IRENA concerning the legal status of any region, country, territory, city or area or of its authorities, or concerning the delimitation of frontiers or boundaries. FOREWORD Indonesia is the largest country in the Association of Southeast Asian Nations (ASEAN) in terms of energy consumption. Across the country’s more than 17,000 islands, energy demand is growing rapidly. Although reliance on domestic coal, as well as imported petroleum products, has increased in recent years, Indonesia has started adding more renewable capacity to its energy mix. The country aims to achieve 23% renewable energy use by 2025, and 31% by 2050, as part of its plans to reduce greenhouse gas emissions in line with the objectives of the Paris climate agreement. Along with some of the world’s greatest geothermal and hydropower potential, Indonesia also possesses abundant resources for solar, wind, ocean and bioenergy development. In addition to power generation, these sources could support heating, cooling and transport applications. To help countries like Indonesia harness this potential, REmap – the global roadmap from the International Renewable Energy Agency (IRENA) – presents a range of technology and resource options, as well as key insights on the opportunities and challenges ahead. As this REmap country study shows, Indonesia’s renewable energy target for 2050 could be achieved as soon as 2030, given the right policies and investments starting today. Beyond power generation, energy end-uses require closer attention for the full potential of renewables to be achieved. At the same time, a sustainable supply chain needs to be in place to support the expanding use of modern bioenergy. The benefits of such accelerated uptake for Indonesia would greatly outweigh the costs. In economic terms, the net reduction of energy system costs, combined with the avoidance of air pollution and carbon-dioxide emissions, would save up to USD 53 billion per year, or an estimated 1.7% of Indonesia’s 2030 GDP. But harnessing this potential requires over USD 16 billion of investments per year for the years between 2015 and 2030, from modest levels at present. Recent market developments suggest that Indonesia is on the right path, with renewable energy investments already on the rise. If Indonesia continues to follow this course, it can play a leading role, not only regionally but also internationally, in the advancement of the global energy transition. IRENA stands ready to work closely with Indonesia as the country strives for a sustainable energy future. Adnan Z. Amin Director-General International Renewable Energy Agency REmap analysis i CONTENTS FOREWORD ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������I LIST OF FIGURES ...........................................................................................................................................................................IV LIST OF TABLES..............................................................................................................................................................................VI LIST OF BOXES �������������������������������������������������������������������������������������������������������������������������������������������������������������������������������VI LIST OF ABBREVIATIONS ���������������������������������������������������������������������������������������������������������������������������������������������������������VII EXECUTIVE SUMMARY ...................................................................................................................................................................1 1 THE REMAP PROGRAMME AND REMAP INDONESIA ............................................................................................. 9 1.1 IRENA’s REmap programme....................................................................................................................................... 9 1.2 The REmap approach ���������������������������������������������������������������������������������������������������������������������������������������������������10 1.3 Main sources of information and assumptions ...................................................................................................13 2. CURRENT SITUATION AND RECENT TRENDS ............................................................................................................14 2.1 Indonesia’s energy system and recent developments in renewable energy .........................................14 2.2 Drivers for renewable energy ����������������������������������������������������������������������������������������������������������������������������������� 27 3 CURRENT POLICY FRAMEWORK �����������������������������������������������������������������������������������������������������������������������������������30 3.1 Background ���������������������������������������������������������������������������������������������������������������������������������������������������������������������30 3.2 Renewable energy targets and policies ...............................................................................................................30 3.3 Energy subsidies ............................................................................................................................................................35