Renewable Energy in Indonesia

The geothermal industry has huge potential in Indonesia, with Indonesia ranking as one of the world’s largest potential geothermal resources. The World Bank has recently approved over $55 million in grants to support Indonesian geothermal energy projects, split between infrastructure development and actual technical assistance, both of which are currently lacking in Indonesia. One huge milestone for Indonesian geothermal energy was the financial closing for a large geothermal plant by Engie, one of the world’s largest energy utility companies in the Solok Selatan region in West Sumatra province. Historically challenged by lack of funding in renewable energy sectors, the Engie plant is an excellent example of Indonesians seeing the increasing importance of renewable energy as a resource. Combined with the approved investment funds via the World Bank, the Indonesian geothermal industry has great potential to utilize its currently untapped power.

The solar industry in Indonesia currently faces certain framework and developmental challenges. However, with government involvement in clean technology growing alongside privately funded projects, the solar realm seems to be gaining ground on the road to industry maturity. The government has taken huge strides in addressing concerns with the Indonesian solar market, with the Ministry of Energy and Mineral Resources (EMR) taking on both large and small projects, providing funding for rooftop solar systems at airports and government buildings, as well as funding over 500 solar PV mini/microgrid projects. Additionally, the Indonesian government has created new regulations to support solar systems for utilities, furthering the future of Indonesian clean tech.

Indonesia is among the top ten countries with the biggest hydropower potential in the world. As Indonesia’s dependency on fossil fuels rises, clean technology is becoming increasingly focused on by consumers, the government, and private sector alike. Micro-hydro power, producing about 5KW to 100KW of electricity, has seen a growth rate of over 700% since 2000, with over 450 MW of electricity currently coming from micro-hydro power in Indonesia. The government has set goals to quintuple this number by 2025, developing partnerships and funding through the domestic economy utilizing feed-in tariffs. These are payments to ordinary energy users for the renewable electricity they generate, which incentivize Indonesians to pursue hydroelectric power, among other clean tech initiatives.

Wind power in Indonesia is another form of renewable energy that Indonesians must capitalize on. With help from the US-based Overseas Private Investment Corporation (OPIC), UPC Sidrap Bayu Energi has secured funding to build a $120 million wind farm,providing 70 MW of wind-generated electricity to Indonesians in South Sulawesi. UPC Sidrap Bayu Energi, a joint venture between UPC Renewables and Binatek Energi Terbarukan, is further looking at adding over 1,000 MW of wind energy to Indonesia in the next 5 years. With this project being the first utility-scale windpower, Indonesia’s goal of increasing its amount of renewable energy from 6% in2016 to 23% by 2025 is becoming increasingly more realistic.