Despite an uphill battle to increase the usage of clean energy nationwide, the government has decided not to propose a renewable energy subsidy in the revised 2017 state budget.

It plans to supply 23 percent of the domestic energy mix from renewable sources by 2025 to decrease carbon emissions and wean the country off fossil fuels.

To achieve this goal, the National Energy Board (DEN) recently recommended the government include a Rp 1.2 trillion (US$89.2 million) renewable energy subsidy in next year’s revised state budget, a proposal previously rejected by the House of Representatives.

However, Energy and Mineral Resources Minister Ignasius Jonan has rejected the notion in favor of a full-scale review of the current feed-in tariffs for every renewable energy source, including geothermal.

“We do not need a subsidy. We will just have to have more competitive prices, which have not been so due to a lack of efficiency,” he told reporters on the sidelines of a seminar on renewable energy Wednesday.

Jonan pointed out that price competitiveness was the key to renewable energy sources challenging fossil fuel, and that the government therefore fully supported efforts to make them more affordable.

Although Indonesia has an estimated 300 gigawatt (GW) in potential clean energy resources, attempts to develop them have been snail-paced.

Ministry data shows that by October, only 8.8 GW of electricity, equal to 2.1 million tons of oil equivalent, were procured from new and renewable energy sources.

Slow progress is mainly caused by the high cost of green energy and experts have claimed that state-owned electricity company PLN is part of the problem because as the country’s sole off-taker it is reluctant to generate power from renewable energy sources.

The subsidy previously proposed to the House was meant to appease PLN. However, the House rejected the proposal, saying that the state should only subsidize citizens, not corporations.

Even so, the government remains optimistic that development of renewable energy will progress next year in spite of the lack of a subsidy.

New and renewable energy director general Rida Mulyana said that despite the turn of events, the investment target should still be achievable as it was mostly sourced from small renewable energy power plant projects.

Data from the ministry’s new and renewable energy directorate shows that it aims to obtain an additional 539.76 megawatts of electricity from renewable sources and boost biodiesel consumption to 4.6 kiloliters by 2017.

Furthermore, it hopes to attract $1.56 billion in investment in the renewable energy sector next year. As of November, investment reached about $1.2 billion, out of this year’s $1.37 billion target, according to the ministry.

PLN new and renewable energy director Syah Darwin Siregar acknowledged that the current feed-in tariff offered by the government was sometimes higher than the company’s production costs, resulting in a business-to-business negotiation to set renewable energy prices.

“So far in 2016, all our PPAs [power purchase agreements] have used a business-to-business system. This is sufficient, in our opinion, even though it takes a while to complete negotiations,” he said, adding that the private sector often had difficulty in obtaining loans for renewable energy projects.

However, PLN remains positive that it can help the government fulfill its desired renewable energy capacity by 2025.

According to Darwin, PPAs for 29 renewable energy power plant projects with 734 MW capacity have been completed, while a renewable energy power plant with a capacity of 214 MW started operation this year.

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