A New Opportunity for Renewable Energy
The New and Renewable Energy Bill must accelerate the endeavor to abandon fossil-based energy sources such as coal. As a precondition, the mechanism for purchasing electricity must be revised.
AFTER disappointing the public by passing a number of problematic laws, such as the revised Corruption Eradication Commission Law and the omnibus Job Creation Law, now the House of Representatives (DPR) has a chance to improve its image. In its deliberations of the New and Renewable Energy Bill, the DPR could push for a faster switch of energy sources in order to mitigate the climate crisis.
The use of renewable energy in Indonesia has frequently been held up by regulations that often change, usually at the ministerial level. As a result, it will be difficult to achieve the target of 23 percent of energy to be produced by renewable sources by 2025. As of 2020, the figure is only 12.3 percent. This new law covering environmentally friendly energy sources should be able to remove these obstacles.
The limited use of renewable energy in this country is regrettable given that Indonesia has so much potential for generating energy from the sun, wind, water and geothermal sources. As a tropical country, every household in Indonesia should be able to meet its daily electricity needs from solar power, especially since the price of rooftop solar panels is now fairly competitive. However, the reality on the ground is not that easy.
As a result of the business scheme in Indonesia that positions state electricity company PLN as the single buyer, households that have solar panels can only supply energy to PLN. As well as not being able to use the energy directly themselves, these energy supplies can only reduce monthly electricity bills by 65 percent. As a result, there is no incentive for PLN customers to install solar panels on their roofs.
This type of scheme clearly squanders the potential for renewable energy before our very eyes. A survey carried out by the University of Indonesia and Greenpeace showed that 84 percent of people living in and around Jakarta were interested in using solar panels on their roofs. Therefore, it is no surprise that the installed capacity for solar power generation in Indonesia is only around 150 megawatts. This is only 0.07 percent of the estimated potential of 207.8 gigawatts.
As well as restricting the development of renewable energy by independent power producers, the position of PLN as the sole buyer makes it almost impossible to switch from fossil fuel energy sources such as coal. Firstly, the price of renewable energy is clearly not competitive when compared with that from the coal-based independent power producers, who previously supplied PLN. It is this difference in price that has led to 59 geothermal power station projects with a capacity of 2,145 megawatts, being on hold since 2019. Secondly, PLN’s obligation to agree the price in advance means that the coal-based independent power producer business is almost risk-free. That is why there are many political interests involved with this sector.
If the DPR and the government want to seriously consider the endeavor to reduce global warming, the deliberations of the Renewable Energy Bill must be accompanied by changes to Law No. 30/2009 on electrical power. It is time that the clause positioning PLN as the sole buyer is changed. There must be no more collusion between PLN and privately-owned coal-fired power generating companies.
The electricity business scheme in this nation must be revised to provide opportunities for the development of environmentally friendly power stations. Without changes to this unhealthy scheme, the long road to green energy will always be steep.