Australia and Indonesia has worked closely on a range of common strategic interests, and one of them is in the energy sector. The sector is indeed important for both countries. Moreover, both have abundant energy resources that could be used up for electricity. In Indonesia, the dominant electricity producer is from the coal-powered steam power plant with a share of 56.06% of the total electricity generated in 2015 (Figure 1). Meanwhile on the renewable energy side, the hydropower plant is the top electricity producer with a share of only 5.93% of the total electricity generation, followed by geothermal (4.34%) and other NRE (0.20%).
Figure 1. Indonesia’s Electricity Generation Sources (PricewaterhouseCoopers Indonesia, 2017)
Similar to Indonesia, Australia’s source of electricity in 2015 is dominated by coal with a share of more than 60% of Australia’s total electricity generation, while sources from Renewables contribute only 14% (Figure 2). In a report from Australian Energy Update 2016, the largest contributor to electricity generation comes from hydropower with a share of 39%, followed by wind (33%) and solar (23%) in 2015 (Figure 3).
Figure 2. Australia’s Source of Electricity Generation (Australian Government Department of Industry, Innovation and Science, 2016)
Figure 3. Australian Electricity Generation from Renewable Resources (Australian Government Department of Industry, Innovation and Science, 2016)
The above figures show that coal is still dominant in the energy production for electricity generation in both countries. However, environmental impacts from coal’s excessive usage are becoming even more obvious in recent years. Moreover, both countries have set their target on renewable shares in the energy mix, with Indonesia aiming to have 23% of Renewable Energy in their total energy mix by 2025 and Australia targets to have 20% of their electricity supply came from renewable energy sources by 2020. This led Indonesia and Australia to shift their policies to the development of renewable energy sector in the country and it is supported with both countries having abundant renewable energy resources in wind, solar, hydro, ocean and geothermal.
On the northwest desert region of Australia, the country has some of the world’s best wind and solar resources. In fact, Australia has more than 80 commercial wind power plants operating through the country with the first one has operated since 1987 in Esperance, Western Australia(Australian Consulate-General in Makassar, 2018). While in the solar power sector, Australia is a leader in Solar Rooftop installation with over 1.8 million solar rooftops installed in the country(Kenning, 2018). The small-scale of solar rooftop is a solution to provide electricity access to the remote villages without access to the grid. Meanwhile in Indonesia, the country has just started its steps into the wind energy and solar power sector. Indonesia has the first commercial wind energy power plant, “The Sidrap Wind Farm” in mid-2018 in South Sulawesi. The Sidrap Wind Farm produces 75 MW of electricity and can power up to 70,000 households. In the solar sector, Indonesia’s government has already begun its program in providing Energy Efficient Solar Powered Lamp (LTSHE) which targets more than 2,500 villages. The solar PV from LTSHE program is able to power four lamps and a USB port for phone charging. This criterion is in line with Tier-1 electrification criteria by the United Nation (United Nation, 2014).
In the hydro power sector, Australia is in the fourth largest of hydropower-installed capacity globally according to Hydro World’s 2017 Hydropower Status Report (International Hydropower Report, 2017). The report suggests Australia’s total hydropower capacity accounts for 8,790 MW, exceeding its neighboring countries: Malaysia (6,094 MW), New Zealand (5,346 MW), and Indonesia (5,305 MW). The hydro-generated electricity energy is, however, similar among Australia, Malaysia, and Indonesia at around 17,000 GWh. However, the water availability is the main challenge of the Australia’s hydropower development due to Australia’s dry condition. This condition is predicted to limit its development to a smaller scale of hydropower project. In Indonesia, hydropower is now the largest contributor to Indonesia’s renewable energy mix (see again Figure 1). It is expected that the potential of hydro resource for off-grid electrification has pushed its growth in Indonesia to address its scattered inhabitant in the remote area.
In the geothermal sector, Australia is dominated by hot dry rock, compared to major hydrothermal system in Indonesia. The resource characteristic results in slow pace in its development despites of its abundant hot dry rock resources. Australia needs to battle with the economic viability of the technology to exploits its hot rock resource. The first Australia geothermal power plant started in 2003 while the Indonesia’s first geothermal power plant commercially operated far earlier in 1982. Australia’s geothermal power plant capacity was considerably low at 55 MW, compared to Indonesia’s vast capacity of 1,800 MW in 2017. According to the Department of the Environment and Energy of the Australian Government, geothermal only contributed to 0.5 GWh of electricity power generation in 2017. This number is significantly smaller than Indonesia’s geothermal sourced electricity production of 12,626 GWh. Despites its slow development, Australia now focuses in its development considering its promising hot dry rock potential, especially to supply Australia’s base load.
The development of this super-grid will open numerous opportunities for Indonesia and Australia. The grid will enable both countries to trade renewable energy supply in the form of electricity to each other. Moreover, the grid connection to the other South-East Asian countries will open the renewable energy market to other countries as well.
Figure 4. The Planned Asian Renewable Energy Hub (The Asian Renewable Energy Hub, 2017)
The second planned project is the development of renewable energy sector for the east part of Indonesia. The Australian Consulate-General in Makassar, which its office was established in 2016, has just started to look at this sector as an area where they could promote greater bilateral engagement with commercial benefits for Australian businesses, and development benefits for eastern Indonesian communities. This is because a majority of the Indonesia areas that need to be electrified by Indonesia’s government is located in the Eastern Indonesia area, where most of its area is isolated and located far away from the electricity grid. Most of these isolated villages, without access to the national grid in Indonesia, generally rely on expensive diesel generator.
Besides the above examples of planned projects, there are still many possible cooperations between both countries that can be explored. Indonesia and Australia are also expected to become major players in the SouthEast Asia renewable energy market given to their abundant renewable energy sources. The growth of Indonesia and Australia to become a major energy trader will also be supported by the growing demand for renewable energy in the developing countries to fulfill the Sustainable Development Goals (SDGs). Thus, enhancing cooperation between the two countries in the renewable energy sector is needed in hope to meet each national’s target of renewable energy in each resprective energy mix.
Bibliography
Australian Consulate-General in Makassar. (2018, April). Renewable Energy in Eastern Indonesia: Opportunities for Australian-Indonesian Cooperation. Retrieved April 25, 2018, from Australian Consulate-General Makassar, Indonesia: http://makassar.consulate.gov.au/mksr/Blog
Australian Government Department of Industry, Innovation and Science (2016). Australian energy update 2016. Canberra: Australian Government Department of Industry, Innovation and Science
Kenning, T. (2018, February 20). Australia surpasses 1.8 million solar rooftops. Retrieved April 25, 2018, from PVTech Web Site: https://www.pv-tech.org/news/australia-surpasses-1.8-million-solar-rooftops
PricewaterhouseCoopers Indonesia. (2017). Power in Indonesia: Investment and Taxation Guide. Jakarta: PricewaterhouseCoopers Indonesia.
The Asian Renewable Energy Hub. (2017). About the Asian Renewable Energy Hub. Retrieved April 13, 2018, from The Asian Renewable Energy Hub website.
United Nation. (2014). Universal Electrification Access. Retrieved April 23, 2018, from United Nation Web site: https://unite.un.org/sites/unite.un.org/files/app-desa-electrification/index.html
*This opinion piece is the author(s) own and does not necessarily represent opinions of the Purnomo Yusgiantoro Center (PYC)
