The government aims to complete this year a study into replacing several aging fossil fuel-fired plants with renewable energy plants as it races against time to catch up with its green goals.
The study, which began in January, not only includes mapping potential renewable sources but also future growth in targeted regions, the Energy and Mineral Resources Ministry’s director general for electrification, Rida Mulyana, said on Monday. It is being conducted by state-owned electricity company PLN as the operator of the aging plants.
"We are still gathering data right now," said Rida, who is also a PLN commissioner. “There are a lot of plants and they are quite spread out. We can't study them randomly, but this has to be done one by one. This needs time."
Indonesia has 2,246 diesel-fired power plants (PLTD) that are over 15 years old, 16.2 percent of which are in Aceh, ministry data shows. These plants have a combined installed capacity of 1,778 megawatts (MW).
“At the end of the day, it's a question of how much efficiency can we achieve,” Rida added.
Southeast Asia’s largest economy aims to make renewables contribute 23 percent to its power production by 2025, yet regulatory headwinds are setting the country back from achieving the goal. Existing regulations stipulate that Indonesia should have reached a 17.5 percent renewable power mix by 2019, yet the country achieved only 12.36 percent that year.
Energy Minister Arifin Tasrif first publicly announced the replacement plan in January. He said the government’s purpose was to simultaneously “supply energy at competitive prices” and chase Indonesia’s renewable energy commitments.
“We are still conducting the assessment. We hope to finish as soon as possible,” PLN deputy president director Darmawan Prasodjo told The Jakarta Post on March 6.
Indonesia also has 23 coal-fired power plants (PLTU) that over 20 years old and 46 combined-cycle power plants (PLGU) of similar ages. The former have a combined capacity of 5,655 MW and the latter 5,912 MW. Most of these aging plants are located on Java Island.
In comparison, PLN’s total installed capacity is 42,350 MW as of December last year, according to government data.
Arifin has repeatedly said that Indonesia’s regions should use locally available energy sources, particularly renewables, instead of solely relying on fossil fuels. His statement reflects a principle enshrined in the country’s 2007 Energy Law.
However, Indonesia’s largest electricity company, PLN, is also constantly being pushed by the government to sell electricity as cheaply as possible for the benefit of low-income households and major industries.
The government imposes price limits for PLN electricity through Energy Ministerial Regulation No. 28/2016 on electricity tariffs. Such limits force PLN to invest in fossil fuel-fired power plants, whose fuel is kept at below-market prices through other regulations.
The government’s Domestic Market Obligation (DMO) policy requires coal miners to sell one-fourth of their production domestically at US$70 per ton. The government is also allocating Rp 18.7 trillion ($1.18 billion) for fuel subsidies this year.
“PLN has the target of selling the cheapest electricity in ASEAN,” said PLN’s strategic procurement director 1, Inten Sripeni Cahyani, in December last year when she served as the company’s acting president director.
According to PLN data, the electricity company sells household electricity at an average of Rp 1,467 per kilowatt-hour (KwH). The tariff is the second-lowest in Southeast Asia after Malaysia, which sells at Rp 1,286 per KwH.