COMMENTARY: Committed to clean energy
Wednesday, February 10 2016 - 02:20 AM WIB
There?s concern that the oil price drops will make many countries less interested to develop clean energy. The encouraging fact is that Indonesia, under President Joko Widodo, remain committed to developing clean energy, better known in Indonesia as ?new and renewable energy?.
The commitment is evidenced among others by the following facts: First, the President recently issued a presidential regulation to establish a special agency tasked with purchasing and selling power generated from clean energy; secondly, Indonesian is sponsoring an international conference on clean energy scheduled to be held on Feb. 11-12 in Nusa Dua, Bali. Dozens of energy ministers and experts from various countries are expected to attend the Bali Clean Energy Forum.
The move to set up a special agency for purchasing and selling power generated from clean energy is indeed a step in the right direction to push for the development of clean energy in Indonesia.
Details regarding the new agency remain sketchy. As of this writing, we are still unable to obtain a copy of the presidential regulation on the establishment of the new agency. While announcing the issuance of the regulation last week, Minister of Energy and Mineral Resources Sudirman Said only said the agency will be attached to public utility PT Perusahaan Listrik Negara (PLN); it is aimed to spur the growth of clean energy and will create a sense of security among investors.
Publicly, PLN always claims it is strongly committed to supporting the development of clean energy. In reality, however, it often complains about the high purchasing price of power generated from clean energy. Power from clean energy, such as geothermal, which Indonesia has in abundance, costs 50-100 percent higher than power generated by conventional power plants using coal. PLN has to buy the geothermal power at prices higher than its selling prices to the public. That?s the reason why PLN and PT Pertamina Geothermal Energy (PGE), the country?s largest geothermal developer, have been often locked in dispute over geothermal prices. That?s also the reason why the country?s geothermal industry has thus far progressed at a snail?s pace. Of the country?s 28,000 MW geothermal resources, only around 1,400 MW or 5 percent of the total resources has so far been developed, according to the government?s data.
As it happens in many countries, clean energy needs the government?s financial supports to develop. Theoretically, the government may channel the financial supports in the form of subsidy to PLN to help it purchase power from clean energy but it runs counter to the efforts of making the firm an efficient firm and risks further degrading the firm?s profile among financial institutions. PLN has been in financial troubles for many years and the government has tried to improve the situation by among others allowing it to sell its power at market price.
The government?s decision to channel clean energy subsidy to a separate entity will certainly help improve PLN?s financial performance. The new entity should however be attached to PLN because it needs PLN?s human resources to fulfill the task of purchasing and selling clean energy.
The Bali Clean Energy Forum is another evidence to the government?s strong commitment to developing clean energy. The conference was planned by the Ministry of Energy and Mineral Resources some time ago, following the acceptance of Indonesia as member by the Paris-based International Energy Agency (IEA last November. IEA is known as the leading organization of renewable producing countries under the Organization for Economic Cooperation and Development (OECD)
The conference will be keynoted by President Joko Widodo and chaired by Minister of Energy and Mineral Resources Sudirman Said and IEA Executive Director Fatih Birol. Participants include energy ministers from Malaysia, Germany, Sweden, India, Australia, Thailand, United Arab Emirates, Denmark, the Philippines, South Korea and United Kingdom.
In a press statement last December, the ministry said that during the high-profile conference, the government will launch a US$7 billion project to build 5,000 MW solar farms across the country. The project aims to achieve the target of raising the percentage of clean energy in the national energy mix to 23 percent from around 7 percent at present.