Such a move is likely to lead to a number of private developers postponing their planned projects, while at the same time, triggering concerns over Indonesia’s ability to meet its ambitious target of boosting the contribution of green and clean energy to its energy mix in the long term.

In its 2018-2027 business plan, PLN intends to build new renewable power facilities with a capacity of 14,912 megawatt (MW), consisting of hydroelectric power facilities (55.5 percent) and geothermal power plants (30.7 percent), out of an overall 56,000 MW facilities it seeks to construct. That follows a weaker-than expected growth in its power sales of around 4 percent in 2017.

The target is down from the 21,560 MW renewable power facilities, out of a total 77,900 MW power plants it aims to develop, as outlined in its 2017-2026 business plan, based on an assumed 8.3 percent surge on average in annual sales.

“We have corrected our electricity sales growth projection to only around 5 percent. As a result, we plan to only procure 56,000 MW over the next decade,” PLN renewable energy division head Tohari Hadiat recently said.

The revised renewable quota will comprise projects that had previously been contracted or were deemed the most-ready to be developed, he added.

Consequently, facilities excluded from the quota will be placed on the potential list, which Tohari described as resembling “a waiting list”. “Some renewable developers must wait because we can only generate electricity if the demand is there,” he explained.

Indonesia had 32,493.5 MW worth of renewable power plant projects in the pipeline as of last year, according to PLN data.

However, of that figure, only 8.7 percent had started construction, while more than 70 percent were still under initial feasibility study and had just reached the proposal-submission stage.

If realized, PLN’s cutback will mark another setback for Indonesia’s ambitious goal of raising the share of renewable energy in the country’s energy mix from only 7.7 percent in 2016 to 23 percent by 2025.

To meet the target, the government previously planned to develop renewable power plants with a combined capacity of 45,200 MW as well as intensifying the use of biofuel, biomass, biogas and coal bed methane (CBM) to a total of 23 million tons of oil equivalent (mtoe) per year by 2025. As of last year, the country ran renewable power plants with a combined capacity of 7,350 MW, representing only 12.15 percent of the national power capacity.

Energy and Mineral Resources Minister Ignasius Jonan separately concurred it would be hard for the country to meet the 23 percent target on time.

“I cannot say it is possible or not possible, but I say it is not easy,” Jonan said. “If we try to deliver the 23 percent energy mix by 2025 at any costs, I don’t think the people could afford [the electricity].”

Fabby Tumiwa, the executive director of the Jakarta-based energy think tank Institute for Essential Services Reform (IESR), said it would still be better for PLN to spur the development of renewable power plants instead of fossil-fueled plants because the former facilities were unaffected by the volatility of primary energy sources, such as oil and coal. He attributed PLN’s worsening financial performance to the soaring price of both commodities.

In its 2017 work plan and budget (RKAP), PLN projected that the coal price would hover at around US$63 per ton, while in reality it had exceeded $90 per ton by the end of the year. As a result, it posted around Rp 14 trillion ($980 million) in losses.

Popular

RI, Australia strengthen partnership on taxing crypto assets

Analysis: Indonesia denies normalization with Israel to enter OECD

Citroen to produce electric cars in Indonesia