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Greater energy efficiency ‘crucial’ for Indonesia’s energy transition
Energy conservation already offers investment opportunities, but low energy prices and a lack of regulations hamper the business, experts say.
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Every watt counts: A worker at state-owned electricity company PLN tests a pre-paid kilowatt-hour meter in Jakarta in July 2020. Energy conservation already offers investment opportunities, but low energy prices and a lack of regulations hamper the business, experts say. (JP/Dhoni Setiawan)
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ndonesia has expressed its intention to transition from coal to clean energy for power generation, but greater energy efficiency is crucial for the country to achieve its carbon emission goals, experts say.
Elrika Hamdi, an energy economist with the Institute for Energy Economics and Financial Analysis (IEEFA), told The Jakarta Post on Nov. 12 that energy efficiency should be the first step in the energy transition. She added that other countries, such as China, tended to focus on reducing industry’s energy intensity before shifting from fossil energy to renewables.
In other words, they address the demand side of the energy market –how much and how effectively energy is used – before tackling the supply side.
The sectors of transportation and industry account for the lion’s share of final energy consumption in Indonesia at 45 and 34 percent, respectively, according to 2020 data from the Energy and Mineral Resources Ministry.
Therefore, it is necessary to encourage investment in energy-conservation projects for the industrial sector, Elrika said, noting that that sector was expected to reduce its final energy consumption by 17 percent from a business-as-usual scenario, according to the government’s National General Energy Planning (RUEN) road map.
From 2015 to 2019, investment in the energy-efficiency sector in Indonesia amounted to Rp 396.16 billion (US$27.94 million), according to the same data, which is only a fraction of investment possibilities totaling $154.35 million identified by the ministry.
According to the same 2020 energy ministry data, energy audits and energy conservation for industry are deemed the biggest business opportunities, accounting for $75.65 million and $26 million, respectively, of the total investment potential.
