Bappenas said that despite Indonesia’s high electrification ratio, which reached around 96 percent, its electricity consumption per capita was at a similar level to that of Vietnam’s, and far below Malaysia’s consumption. According to data from the World Bank, Indonesia’s electricity consumption per capita is 812 kilowatt hours (kWh), below Vietnam at 1,411 kWh and Malaysia at 4,596 kWh, as of 2014.

This indicates that, in some isolated locations in Indonesia, electricity is unstable and not available 24 hours a day.

Thus, the use of renewable energy could become a solution to expand electricity access to isolated and remote areas that are unreachable by state-owned electricity company PLN.

Currently, the contribution of renewable energy power plants to total electricity production amounts to 7 to 8 percent. The low figure has become a pressing issue, since Indonesia, under the Paris Agreement, has pledged to have 23 percent of its energy mix come from renewable energy by 2025.

“[Increasing renewable energy in the mix by] two percent [per year] might seem small in terms of size, but this is the proportion. And when we are talking about the renewable mix, in terms of proportion, it means renewable energy has to compete with fossil fuels, which could be coal or natural gas,” National Development Planning Minister Bambang Brodjonegoro said during a discussion in Jakarta on Tuesday.

Renewable energy must compete with fossil fuels such as coal, which makes up a significant portion of Indonesia’s energy mix. The massive use of coal has become a challenge since some countries have declared it would phase out the use of coal as an energy source in the future.

In order to accelerate the use of renewable energy, Indonesia needed to focus on the few energy sources that had been developed, such as geothermal energy and hydropower, Bambang said. However, Bappenas acknowledged that PLN as the only off-taker was not always keen on buying renewable energy.

In response to this, Budi Mulyono, PLN’s senior manager for the new and renewable energy division, said the company’s main challenge was the government’s demand that it be profitable. Thus, it often has to opt for cheaper energy choices instead of using renewable energy.

In order to finance renewable energy projects, Bambang suggested that companies find low-cost financing programs that could use the green climate fund or green bond facility, among other options.

“At Bappenas, we are now trying to develop our Indonesia Climate Change Trust Fund for financing renewable energy,” he said. “Our idea is to get as much low-cost funding as possible or grants from different parts of the world [...] we need to mix low-cost funds with commercial funds.”

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