2019, transition year for bioenergy

4 January 2020

Out of five renewable energy sources being developed in Indonesia, bioenergy saw the most progress this year as Indonesia escalated a policy mandating the use of biofuel-blended diesel. Otherwise, renewable energy development and investments are poised to fall behind annual targets.

August marked Indonesia’s 11th month of mandating the use of 20 percent blended biodiesel (B20). However, less than a year under in, President Joko “Jokowi” Widodo announced the government would begin mandating use of B30 starting in January next year.

“We need to respond to any pressure on crude palm oil [substance used in producing biofuel] by driving up domestic demand and so that we can have a good bargaining position, whether with the European Union or other parties that try to weaken our position,” Jokowi said.

In preparing businesses for the implementation of the B30 policy, the Energy and Mineral Resources Ministry kicked off in June a five-month experiment to test the biodiesel’s compatibility with market-available vehicles. In September, the ministry increased this year’s allocation for subsidized fatty acid methyl esters (FAME), a key biofuel ingredient, by 208,238 kiloliters.

Fuel consumption using biodiesel depends on the vehicle, but B30 is around 0.87 percent higher than B20, said the ministry’s research and development head, Dadan Kusdiana, in September, when the experiment neared completion.

“This does not mean it’s more wasteful because the power is also higher and the performance is better,” Dadan added. “In terms of emissions, everything improved, except for nitrogen dioxide, depending on the vehicle type.”

In renewable power generation, Institute for Essential Services Reform (IESR) researcher Marlistya Citraningrum summarized this year as a period when solar energy saw the most progress even though the renewable energy sector declined overall.

“Several big solar power plants began operations this year, such that solar energy growth was higher than last year, even though renewable energy cumulatively declined,” she told The Jakarta Post.

The IESR’s latest renewable energy report shows that, even though Indonesia’s solar energy production capacity tripled yearto-date (ytd) to 152 megawatts (MW) in November, the overall share of renewables declined by 0.19 percentage points ytd to 12.2 percent in the same month.

The report also noted that Indonesia’s total capacity hit 10,169 MW as of November. At that figure, the country is poised to miss the year-end target of 13,900 MW, as stipulated in the General Plan for National Energy (RUEN).

Limited renewable energy growth aligned with an investment shortfall that, as of October, reached only 65 percent of this year’s targeted US$1.8 billion, one-third of which went to geothermal projects. This year’s investment target is $21 million lower than last year’s.

“In general, investment in [renewable energy and energy conservation] has been stagnant in the past five years, showing low investment attractiveness in Indonesia. Over the years, the government has also seemed pessimistic about the investment in the sector as it lowered the target,” writes the IESR.

Nevertheless, some modest progress was achieved as, out of 70 ministry-sponsored renewable projects announced in 2017, only 32 remained without financial closing as of early November.

The 32 projects include four that were cancelled, nine awaiting financial disbursement and 19 in the process of receiving funds. According to energy ministry renewable energy director Harris, “most of the canceled projects are in Sumatra”.

Among the largest projects that commenced operations this year are Supreme Energy’s 85 MW Muara Laboh geothermal plant in West Sumatra and Indonesia Power’s 45 MW Rajamandala hydropower plant in West Java.

Singapore-based renewables company Vena Energy also began operating its 15 MW Likupang plant in North Sulawesi in September. The plant is currently the largest of its kind in Indonesia.

Entrepreneur Gusmantara Himawan, founder of Jakartabased solar panel start-up Xurya, said industrial-scale solar energy growth was facilitated this year by the issuance of two ministerial regulations that amended disincentivizing clauses within regulation No. 49/2018.

The ministry introduced in September regulations No. 12/2019 and No. 16/2019. The former cuts back bureaucratic red tape while the latter slashes operational costs for on-grid solar power installations.

However, the regulations mainly benefit industrial scale solar power projects. In comparison, household solar energy hit 16.66 MW as of November, far from the year-end target of 1,000 MW as stipulated in the joint public-private One Million Rooftop Solar Panels Initiative.

“Indonesia’s solar energy utilization is very low. Only 78.5MW out of a total potential of 207,898 MW [0.37 percent]. The world average is 2.6 percent. Germany has the biggest at 14 percent,” said Eka.

The Indonesian Renewable Energy Society (METI) estimates that renewable energy will contribute around 9 percent to the energy mix this year. Most industry stakeholders are skeptical about Indonesia having an energy mix comprising 23 percent renewable energy by 2025, as stipulated by the RUEN.

“Right now, our renewable energy mix is still far from expectations. It’s 2019 now and adding between 17 and 18 percent to the mix over the next five to six years is a large task. Even adding 1 to 2 percent each year is not guaranteed,” said METI chairman Surya Dharma.

Source: The Jakarta Post, 4 January 2020