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Jakarta Post

Govt to issue green energy regulation this year as goals remain elusive

  • Yunindita Prasidya and Norman Harsono

    The Jakarta Post

Jakarta   /   Mon, October 26, 2020   /   04:43 pm
Govt to issue green energy regulation this year as goals remain elusive A mini hydropower plant is nestled under foliage in Buwun Sejati village, West Lombok, West Nusa Tenggara, on June 24. The 550kW facility draws power from the Sesaot river, bringing electricity to 520 customers. (Handout/PLN)

The government has reaffirmed its plans to issue a presidential regulation (Perpres) on renewable energy this year as it seeks to boost the development of clean energy and reach its energy mix target.

The anticipated regulation is set to govern the pricing and procurement of new and renewable energy (EBT) and set green energy incentives, among other provisions.

“Before the end of the year, we will have a presidential regulation on the EBT tariff,” Energy and Mineral Resources Ministry (ESDM) electricity director general Rida Mulyana said during Tempo Energy Day, a two-day webinar series, on Oct. 21.

Rida added that the regulation sought to attract investors for the development of renewable energy in Indonesia and help the country to achieve its energy mix target. 

“This will improve the economics for developers so that investors will be increasingly interested in developing EBT in Indonesia and we can achieve the [EBT mix] target by 2025.”

Rida said the regulation was supposed to be issued in June but that the COVID-19 pandemic had altered the timetable.

In the National General Energy Planning (RUEN) road map, the government stipulates that EBT should make up at least 23 percent of the total energy mix by 2025 and at least 31 percent by 2050. 

However, Indonesia is struggling to meet its targets. Regulations stipulate that 17.5 percent of Indonesia’s energy usage should have been from renewable sources by 2019, but the country only achieved a 12.36 percent mix that year, according to ESDM data.

In July, the International Energy Agency (IEA) urged the government to reform regulations to accommodate investment to boost Indonesia’s renewable energy mix and increase its electrification capacity.

Investment in renewables had been held back by an uncertain regulatory environment, the IEA report noted, amid government renewable energy targets dominated by hydropower and geothermal energy.

Read also: Regulatory reform key to post-pandemic green energy investment, IEA says

ESDM director of renewable energy Harris Yahya confirmed Rida’s statement during a webinar on Oct. 22.

“The government is finalizing its presidential regulation draft on renewable energy pricing,” Harris said.

He said one of the regulation’s pricing mechanisms would be a feed-in tariff for power plants for up to 5 MW of capacity. The fixed electricity rates for small renewable power plants were expected to ensure predictable financial returns for investors.

“The prices will be set, so there will be no negotiations,” Harris said.

Additionally, the regulation will assign 11 state agencies to support the pursuit of renewable energy in the country. Harris said he hoped the state agencies would create their own regulations to pursue the agenda within their respective jurisdictions.

State-Owned Enterprises (SOEs) Minister Erick Thohir said during the same webinar that the SOEs Ministry had instructed firms in the energy and mining sector, including state electricity giant PLN and mining holding company MIND ID, to continue investing in renewable energy.

“We will continue transforming the field of energy security [...] and implement a clear, integrated transition from fossil fuels to renewable energy in accordance with the potential reserves that we have and our energy needs going forward,” Erick said.

Surya Darma, chairman of the Indonesian Renewable Energy Society (METI), observed that the development of renewable energy in the country had been hindered by changing regulations, whose variability created legal uncertainty for investors. 

“We appreciate this presidential regulation. We hope that it will not change as easily as several past ministerial regulations,” Surya said during the webinar on Oct. 22. 

He encouraged the quick deliberation of the long-awaited New and Renewable Energy (EBT) bill, which has been under discussion by the House of Representatives since 2017.

“Hopefully then there will be a more comprehensive legal umbrella,” Surya noted. 

Ari Sumarno, former president director of Pertamina, said the persistent problem of energy consumption in the country was driven by cheap brown energy subsidized by the government.

He said the subsidy for fuel had been enjoyed by everyone, regardless of their income, which prompted inefficiency in energy usage. 

“This subsidy is making the development of new and renewable energy very complicated and difficult,” Ari said.

“People have the right to clean and affordable energy,” he added.

Read also: RI to break long-term green energy promises at current pace: IESR