[Discussion Report] Renewable Innovation Forum – Plenary Session

A Plenary Session Moderated by Dr. Ir. Herman Darnel Ibrahim, M.Sc (The Chairman of Indonesian National Committee of CIGRE, the Chairman of Indonesian Counterpart for Energy and Environmental Solutions (ICEES), and the Chair of Expert Board of Indonesian Renewable Energy Society)

A Plenary Session was held in Renewable Innovation Forum after the MoU signing. The discussion in plenary session primarily talked about energy equitability, which translated into reasonable, appropriate, fair, and on par in general term. The poorest Indonesian lives in the underprivileged houses must be able to afford the price of electricity, and for any private sectors who wish to take part in the energy sector, and this is something worth note-taking.

A Plenary Speech by Rida Mulyana, MSc. (The Director General of New and Renewable Energy and Energy Conservation of Ministry of Energy and Mineral Resources of Republic of Indonesia)

Mr. Rida Mulyana outlined the national priority to establish an equitable energy, in which everyone throughout the country should be able to enjoy a reliable and adequate energy supply. In Indonesia, New and Renewable Energy (NRE) plays an important role in driving a green economy advancement. It is seen as a key player in increasing energy supply, accelerating the provision of modern energy access to the underdeveloped region, and contributing to the national commitment of greenhouse gas reduction target of 29% by 2030. Therefore, the national energy policy laid out in the Governmental Regulation No 79 the Year 2014 mandated that NRE share is to be increased to at least 23% by 2025. The target is then translated into more details for the electricity sector, specifically targeting a total capacity of the geothermal power plant at 7.2 GW, hydropower plant at 17.9 GW, small hydropower plant at 3 GW, bioenergy power plant at 5.5 GW, the solar power plant at 6.5 GW, wind power plant at 1.8 GW, and other sources at 3.1 GW. In relation to this, the Directorate General of Electricity has mastered a plan to have at least 10 GW additional capacity of NRE-based power plants in total, which is dominated by geothermal and hydro-based power generation.

In terms of off-grid renewable energy development, there are two available mechanisms to drive the infrastructure capacity advancement as follows:

1. Commercial mechanism

Commercial mechanism invites the private sectors to take part in developing on-grid and off-grid communal systems such as solar PV, mini or micro-hydro, wind, marine, or biomass power plant. Private sectors are allowed to act like the National Electricity Company (Perusahaan Listrik Negara – PLN) to generate, distribute, and sell electricity to the end consumers. Among others, legal bases to guide and protect the interest of both parties are the Ministry of Energy and Mineral Resources (MEMR) Regulation No. 50 the Year 2017 on the utilization of renewable energy sources for the provision of electric power and MEMR Regulation No. 38 the Year 2016 on the acceleration of electrification in priority areas through the implementation of the small-scale power supply. There are around 210 GW of NRE potential in total spreads in 13 priority areas that have remained economically attractive. The different price has been set between areas according to the local cost of production compared to the national average cost. If the local production price is higher than the average national level, the electricity price is based on 100% local production cost. Meanwhile, if it is equal or lower, 85% of local production cost is implemented in the associated area.

2. Non-commercial mechanism

The non-commercial mechanism is intended for government-led projects that develop energy infrastructure in priority areas through the implementation of off-grid systems in communal sites. Since 2011, there are around 697 units or 34 MW of NRE off-grid system installed using either the national budget or a special allocation fund (Dana Alokasi Khusus – DAK) to electrify around 100,000 households in Indonesia. But as the state budget must be limited, the role of private sector to carry out more development program is very much needed as there are at least 11,000 people still living in the darkness.

A Plenary Session by Agoes Triboesono, M.Eng (The Secretary-General of Directorate General of Electricity of the Ministry of Energy and Mineral Resources of Republic of Indonesia)

The availability of energy is not only an important factor to drive the national economic growth, but it also enables people to combat poverty and to reach welfare. Therefore, it is the responsibility of the government to control the provision of energy, where energy produced must be sustainable, reliable, and environmentally-friendly. Under the Electricity Law, the implementation of energy provision is carried out by both the central and local government in accordance with their respective authorities. Energy management must be first taken care of by the state-owned enterprise or regional-owned enterprise for the public interest. However, other enterprises such as regional owned enterprise (BUMD), the private sector, or community-led entity can also participate in electricity supply business if the first parties mentioned cannot fulfill its duty in certain areas. Electricity selling price, leased power grid, and electricity tariff should be subject to approval or stipulated by the government.

The energy trilemma framework which was introduced by the World Energy Council is defined into three pillars as follow.

1. Energy security – a question of how to effectively manage primary energy supply from either internal or external sources, how to maintain the reliability of energy infrastructure, how energy provider is able to meet the current and future energy demand;
2. Energy equity – a need to establish accessibility and affordability of energy supply for the whole society;
3. Environmental sustainability – to create a clean and environmentally-friendly energy usage through the promotion of renewable energy and other low carbon sources as well as demand efficiency

In Indonesia’s power sector, the implementation of energy trilemma carries out among others by increasing the capacity of the generation system, increasing availability, and increasing accessibility through equitable distribution. The goal is to establish a full coverage of electrification ratio but also a robust electricity supply system that is affordable, reliable, and environmentally-friendly. In line with the energy trilemma, MEMR’s current policy and foremost priority is now the equitable energy. The objective is to emphasize on social welfare, conducive business climate, and economic growth. The principle of energy trilemma has been adopted into five pillars under the equitable energy policy, namely the electrification ratio, fair distribution, sustainability and affordability, investment and growth, and bureaucracy reform.

As a part of the effort in increasing energy security, the Government of Indonesia has been committed to improve and strengthen the national electricity infrastructure every year. In 2017, the national installed power generation capacity was 60 GW, the transmission network increased to 47.800 km, and the progress of substation has reached 110,000 MVA. These numbers are to be growing, as there is still at least the additional 35 GW of the national program on progress since its kick-off in 2015. The project is aimed to not only accelerate the economic growth to about 7% a year but to also increase the electrification ratio. Moreover, the government is working side by side with the local government, PLN, and private sectors to improve the accessibility of energy for all. The approaches are as follow.

1. Grid extension

Grid extension is encouraged for villages located not too far away from the existing national grid and therefore, the cost of extending the grid is more attractive.

2. Mini off-grid system

A mini off-grid system is promoted for remote and underdeveloped villages in which the villagers are living in a centralized area next to one another. MEMR Regulation No 38 the Year 2016 was then established to promote the acceleration of Indonesian rural electrification for such cases. Private sectors are given privileges to develop a maximum of the 50 MW renewable energy system in either underdeveloped rural areas, remote areas, international border areas, or small-populated islands.

3. Individual stand-alone solar home system

An individual stand-alone solar home system is basically a pre-electrification program for scattered houses in villages that are geographically difficult to reach by PLN’s grid. Under the state budget, the program is known as the efficient solar-powered lamp (Lampu Tenaga Surya Hemat Energy – LTSHE).

To create an affordable electricity tariff, the MEMR has mandated PLN to improve its efficiency in operation and maintenance, transmission and distribution, and primary energy. Through these initiatives, the cost of electricity generated is expected to be competitive, acceptable, and affordable to the public. It is worth note-taking that Indonesia applies a public policy to keep a stable level of electricity price in the interest of pursuing competitive industrial products and power purchase ability of the people.

The implementation of environmental sustainability is carried out by encouraging the development of renewable power generation. As many have mentioned that Indonesia has committed to increasing its NRE share in the primary energy to become at least 23% by 2025. In the power generation mix, it is set even higher at 25% by 2025. As a consequence of such an ambitious target, MEMR has instructed PLN to develop massive renewable electricity generation infrastructure in the next 10 years. By December 2017, there were at least 70 projects that PLN have co-signed with the Independent Power Producer (IPP) with a total installed capacity of 1.2 GW. This number only shows that NRE projects in Indonesia are very much attractive from the investment point of view. 

To create a conducive investment climate, particularly in the electricity sector, all the necessary licenses such as the determination of specific area for micro-grid development has been transferred to and managed by the National Investment Coordinating Board (BKPM) since 2014. Furthermore, MEMR has simplified and revoked at least 15 regulations on electricity sector in early 2018 only as its commitment to bureaucracy reform. As a closing statement, the speaker recited the pledge that development and utilization of energy should be done for the prosperity of the people and economics of the country.

Discussions