Indonesia To Increase Share Of Renewable Energy

It is reported that Indonesia has recently enacted a new regulation to encourage the strong use of renewable energy, with the goal of increasing the share of renewable energy in its energy mix to 23% by 2025. At the same time, the regulation also plans to phase out some coal-fired power plants ahead of schedule.

Currently, Indonesia's share of renewable energy is around 12%. The Indonesian government has developed a new pricing system for renewable energy sources, including geothermal, hydropower and solar, to encourage investment. Prior to this, developers had to engage in lengthy negotiations with the national utility to reach pricing agreements.

To promote investment in renewable energy, the Indonesian government will also provide fiscal incentives, including financing instruments and relaxed permits for renewable energy development.

Indonesia is the world's largest exporter of coal, and coal-fired power generation meets 60% of the country's electricity needs. Indonesia set a target last year to achieve net zero carbon emissions by 2060 and has pledged to join dozens of other countries in phasing down coal use.

Under the new regulations, Indonesian authorities have been instructed to develop plans for the early decommissioning of some coal-fired power plants and the government can help absorb any resulting losses.

In addition, Indonesia has stated in the new legislation that no new coal-fired power plants can be built, but those already under construction and those integrated with natural resource processing industries will be allowed to be built as planned. The regulation also states that new coal-fired power plants must reduce their carbon emissions by 35 per cent over 10 years compared to the 2021 average for coal-fired power plants, and can only operate until 2050.

The International Energy Agency (IEA) said earlier this month that Indonesia needs to ensure policy reforms, including the introduction of transparent and competitive tariffs, a predictable project pipeline, pave the way for renewable energy development and reduce reliance on coal.