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Jakarta Post

Energy expectations for new government

  • Martuado ST

    The Jakarta Post

  /   Thu, November 20, 2014   /  12:05 pm
Energy expectations for new government

The more options, the better: An officer of the Kamojang geothermal power plant checks a production drilling well in Kamojang, Garut, West Java (left photo). The Kamojang geothermal power plant is operated by PT Pertamina Geothermal Energy, a subsidiary of state-owned oil and gas firm PT Pertamina. Antara/Wahyu Putro A

Given Indonesia'€™s abundance of energy resources, the new government should not only focus on the development of fossil fuels, but also on developing renewable energy to achieve energy sovereignty.

A number of energy events have been conducted in several countries over the past two months, with each country addressing its own energy-related issues.

 Despite abundance of energy resources, Indonesia has focused mainly on fossil fuels in terms of energy development, leaving it at risk of energy crises.

Following the inauguration of President Joko '€œJokowi'€ Widodo and Vice President Jusuf Kalla, energy business people, analysts, government officials and the general public rushed to voice their thoughts and expectations of the new leaders.

 They may be divided in their thoughts, but they are united in their expectations: The new government must seriously and thoroughly deal with the looming energy crisis in Indonesia.

 Analysts have stated that due to stagnant explorations and the deteriorating condition of oil and gas fields, Indonesia has seen a declining trend of oil and gas lifting. With a peak production of 1.6 million barrels per day (bpd) in the 1980s, Indonesia'€™s production last year dropped to around 850,000 bpd. This year it is expected to decrease even further.

Arifin Panigoro, the owner of the energy company, Medco Group, has warned of a national oil crisis in the next 11 years.

'€œAs there has been no discovery of new reserves and consumption is continually rising, Indonesia will face an oil crisis in the next 11 years,'€ he said recently at the University of Paramadina in Jakarta.

 Surya Darma, deputy chairman of the Indonesian Renewable Energy Association (METI), said that Indonesia now faced an electricity crisis. '€œBlackouts and shortages of power have affected local economies in several regions. We'€™re already in the crisis,'€ he warned.

He added that the crisis was due to the rising gap between power demand and supply. While power demand has been growing at an average of more than 7 percent per year, the power supply has only been able to grow at 4 percent per year. Currently, Indonesia has a total of 5,765 power plants and a total generation capacity of 46,103 Megawatts (MW), of which 34,205 MW are provided by state-owned electricity company PT PLN and the rest by independent power producers.

Considering its abundance of energy resources, Indonesia should not actually confront the energy crisis. The government has many options to choose from in terms of energy sources to develop. The choices range from oil, gas, coal, hydro power, geothermal power, biofuel, solar power, wind power, and other new and renewable sources.

 Indonesia has the world'€™s fifth-largest potential in hydro power and the world'€™s third-largest potential in geothermal power. It has a total potential of 76,670 MW for the development of hydropower plants (PLTA) and 770 MW for micro-hydro power plants (PLTMH). And yet only 6 percent, or 3,529 MW, has been utilized.

Geothermal potential is set at around 30 MW scattered among 285 locations across the archipelago. However, only around 4.1 percent, or 1,341 MW of the total potential, has been utilized. Sitting atop 40 percent of the world'€™s geothermal reserves, Indonesia has the third-largest geothermal potential in the world after the US and the Philippines.

Rich in various kinds of biomass, the country also has one of the world'€™s top potential in biofuel. It has a total production of 26 million tons of crude palm oil (CPO), most of which are exported, but a certain amount can be easily diverted to be used as feedstock to produce biofuel. If the extraction rate of palm oil is around 25 percent, then there are about 78 million tons of waste, in the form of empty fruit bunches and palm shells, which can be used as feedstock to produce biomass or biogas. This estimate excludes plants such as sugarcane, castor oil plants and other wastes, such as rice husks, corn, and others.

 '€œOur energy resources are not only oil and gas. We'€™re also rich in renewable energy resources that can be developed to realize energy sovereignty. The government only needs to design business-friendly regulations to attract new investments for the development of the energy sector,'€ Upstream Regulatory Task Force (SKKMigas) acting chairman J. Widjonarko told editors in a meeting recently.

Based on data from the government, almost 90 percent of Indonesia'€™s energy mix is derived from oil, gas and coal. Just 10 percent is derived from renewable energy sources, mainly from hydro power and geothermal.

Surya Darma noted that the slow development of the renewable energy was due to unfavorable regulations and financing problems. '€œWe'€™ve aimed for renewable energy to contribute around 25 percent to our energy mix. But so far only a fraction of it has been realized,'€ he said.

 Arifin Panigoro pointed out that the new government should break through the current stalemate by designing business-friendly regulations to encourage new investments in the energy sector. The breakthrough should address all problems in the upstream and downstream sectors, and open the opportunity for other energy sources, such as biofuel, to develop in order to help solve the energy crisis.

 He noted that if Indonesia failed to solve the energy crisis, it would not see its economy grow at the expected level to raise state income, create new jobs and enhance the public welfare.

 Indonesian Geothermal Association (INAGA API) chairman Abadi Poernomo said that regulatory problems and a lack of incentives for energy diversification and innovations had led to the slow development of country'€™s energy diversification. It is the right time to ask the new government under President Joko '€œJokowi'€ Widodo to focus not only on the development of fossil fuels, but also on the development of renewable energy. Indonesia should diversify its energy mix, move away from unsustainable fossil fuels and toward more renewable energy sources, which are sustainable and friendly to the environment.

'€œThe new government under President Joko Widodo should make sure that all energy regulations are designed to guarantee legal certainty, consistency and create a level playing field for all to compete. Only then can energy sovereignty be realized,'€ said Surya Darma.

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