The New Energy Map Riddles
The National Energy Council plans to revise the National Energy General Plan. Relevant parties are hoping the amendment would not change the new and renewable energy development targets.
AFTER their inaugurations on Friday morning, January 8, members of the National Energy Council (DEN) from the stakeholders element immediately held their first meeting. With a number of issues discussed, the meeting eventually came to a point of the plan to evaluate the energy mix target set in the National Energy General Plan (RUEN). “In the afternoon, we immediately held a discussion with the executive director (Energy and Mineral Resources Minister Arifin Tasrif),” said Satya Widya Yudha, DEN member representing the industry, on Thursday, January 28.
The council has members from the government and stakeholders, and is led by the President. Satya and seven other newly appointed members represent the industries, the environment, academics, consumers and technology sectors. The eight new members agreed to make adjustments to the RUEN—the government’s policy on the national level of energy management plan that is cross-sectoral—so that it would be suitable to the current conditions of the energy sector.
The government, according to Satya, has been mulling over to revise the RUEN for quite some time. The RUEN is set forth in the Presidential Regulation No. 22/2017. A number of problems have fallen upon the energy sector in recent years, including hardships caused by the Covid-19 pandemic. As a result, the assumptions and calculations that were established four years ago are seen as no longer relevant with the latest developments.
As an example, Satya mentioned how the energy demand in each sub-sector is calculated based on macroeconomic growth assumptions. As a result, several RUEN targets are too ambitious. On the other hand, a number of regulations have changed, such as the recently passed Job Creation Law and the revised Mineral and Coal Mining Law.
During a meeting with the House of Representatives’ (DPR) Energy Commission on January 19, Energy and Mineral Resources Minister Arifin Tasrif mentioned that evaluating RUEN is one of the ministry’s strategic programs for 2021. Echoing Satya’s opinion, Arifin said that an evaluation is necessary because things have changed a lot, in part due to the pandemic. “We will evaluate everything, because these assumptions (that were made) with optimism must now be adjusted to existing conditions,” said the minister.
As a road map for energy management, the RUEN regulates a number of strategies to achieve various targets by 2050. All targets, including electricity supply, are calculated using various assumptions, from economic growth to population.
The problem is, in the last four years the various assumptions used by the government have proven too ambitious. The economic growth assumption, for example, was pegged at 7 to 8 percent annually for the next three decades. The fact is, in the last four years, economic growth has fallen far below that assumption.
A number of people also doubt that the various targets of the RUEN could be met. The provision of new and renewable energy, for example, was targeted to reach at least 23 percent of the primary energy mix by 2025. To achieve this target, the RUEN projects the green energy power plants to have 45 gigawatts capacity in four years.
However, the annual report of state electricity company PLN shows that there is a huge gap to fill in order to meet that goal. As per 2019, the PLN recorded that the total capacity of renewable energy plants—those owned by corporate and independent power producers—only reached 7,790 megawatt, or 12.32 percent of the nation’s total generating capacity. Coal-fired steam power plants are still the prima donna in the primary energy mix for electricity.
Halim Kalla, Deputy Chair of Renewable Energy and Environment Division at the Indonesian Chamber of Commerce and Industry (KADIN), are among those who are pessimistic about the 23-percent renewable energy mix target in 2025. He agreed that the RUEN needs evaluating. However, he hopes that the evaluation will stick to the same target, not change it. This is because, he reminded, the targets in the RUEN, including in matters of renewable energy development, are part of Indonesia’s efforts to meet the Paris Agreement—the global agreement to mitigate climate change. “I know it’s difficult,” he said.
Instead of changing the target, Halim suggested the government to use the RUEN amendment—as well as the formulation of the new and renewable energy bill—as a momentum to encourage the development of renewable energy. “Strengthening it in terms of investment, risk assurance, and affordability, in order to compete with the fossil energy,” he said.
The Institute for Essential Services Reform (IESR), a research and advocacy institute in the field of energy and environmental policy, shares this sentiment. IESR Executive Director Fabby Tumiwa said that evaluating the RUEN is an appropriate step, as far as it does not decrease the renewable energy mix target. In fact, Fabby hopes that the RUEN revision will lead to the targets' increase. “The economic (value) of renewable energy has improved,” he said.
Fabby said that the 2017 RUEN still places coal as the dominant fuel for generating electricity until 2050. Whereas the long-term use of fossil energy, including coal, should be reviewed. In the World Energy Outlook 2020 analysis, the International Energy Agency (IEA) predicts that the Paris Agreement will reduce the global use of coal, which is predicted to fall by 66 percent between 2019 and 2030. On the other hand, the demand for new and renewable energy continues to increase.
Fabby reminded that electricity demand is currently on a downward trend. On the other hand, there are potentials of oversupply. Because of that, the IESR suggested that the latest RUEN could encourage energy transition—something he considered lacking in policies so far. “The IESR recommends the government to stop the construction of coal-fired power plants starting in 2025,” said Fabby. “The government also needs to shut down coal power plants older than 30 years, and replace them with those running on renewable energy, such as solar power and storage technology.”
The IESR recommendation also aims at responding to the Energy Minister Arifin Tasrif’s agenda to relocate 20 to 30 years old plants. Arifin mentioned the discourse during a meeting with the DPR on January 19. At that time, the minister said that old power plants could be relocated to other areas, such as those with potentials for the smelter industry.
Satya Widya Yudha agreed with suggestions that the RUEN revision must left the energy mix targets untouched, particularly the new-renewable energy plans and goals. “We are still adamant on the 23 percent (of renewable energy mix target in 2025). We will see what obstacles are making (the goal) unattainable,” said Satya, a former member of the DPR Energy Commission from the Golkar Party Faction.