renewable energy

Renewable Energy in Indonesia – All You Need to Know

Renewable energy in Indonesia is moving sort of snail in producing renewable source of energy but can underestimate the strength and potential of the country can provide. In line with the forecast consumption of electricity is quite double in coming 2025, because the raise in demand of energy within the geographical area.

A lot of Indonesians currently do not have any access to electricity, the depend upon the costly oil resources for power from generators. Which results in raise in fuel consumption. As the country aims to diversify their energy resources, Indonesia has to finally end up lots of things as only a little percent of the country has natural energy.

Government depending upon coal in its primary stage, and it turns the view for renewable energy to push up to the national power output. Government has raised the worth on fuel and power to decrease the value of importing oil and bolster energy security, and therefore, the financial incentives for increase in development of a different energy sources.

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For a secure renewable energy investment and technology partnerships for the higher environment in Indonesia they need to simplify the tender rules, takes risks for early investors, small loans from multi-national assets like clean technology fund and development banks and commenced making project in remote areas which improves infrastructure.

On January 14, The House of Representatives adopted the National Energy Policy and expecting supply of minimum 23% of renewable energy source needed by Indonesia in 2025 and up to 35% in 2050 which is around 6%. In these thousands of islands within the country with 240 million people on them.

The IPPs (independent power producers) have the potential to grab a powerful section in the power generation, as private capital seemed not dependable to produce energy that country needed urgently. To attract investments into the renewable energy projects in recent years there have been numbered theft measures and legal changes.

As ups and downs are controlled and controlled by companies owned by state, it was needed for PLN (Perusahaan Listrik Negara) to buy electricity from the renewable energy producers at imaginable prices (differing the value counting on the areas). For creating plans easier for investors aiming in multiple projects, it’s possible to barter on agreements to buy power.

“The financial risks for developers and IPP’s are further reduced”, claims and guarantee by the government because the IIGF (Indonesia Infrastructure Guarantee Fund) provides guaranty to construct and operate power plants in PPPs (public private partnerships). To draw in long run bank funding the electricity is being sold to PLN to assist producers as per BVGL (The Business Viability Guarantees Letter). To justify and manage the heavy visible cost of the energy the GFF (Geothermal Fund Facility) gives a hand in exploration activities, and for data acquisitions.

Tax holidays and tax reductions are available for renewable projects, and that they are being criticized for not conforming to the implemented policy across the country. Some exemptions are available for VAT and duties imposed on the capital good’s import for renewable energy projects.

Bio fuel blending require mixing a little portion of biodiesel and ethanol form local source into diesel and petrol. Per Ministry of Energy and natural resources Regulation No. 32 of 2008 it mandates that a gradual increase within the bio ratio of fuel for transportation purpose, employed in industries, and in generating power. A minimum of 15% of ethanol for petrol and 20% for biodiesel in diesel is required. Sources of Potential The renewable energy potential of Indonesia is especially spread in heat energy, solar energy, hydro power and bio fuels.


 The geothermal power is a one amongst the foremost interesting opportunity within the country. As in most of the electricity generating field Geothermal energy is also dominated by IPPs. As we all have heard about the famous volcanic activities, it is believable that Indonesia can harbour something around 40% of the planet’s geothermal potential which is around 28,000 MW (megawatts) with uncalculated resources and reserves, Sumatra hold most of these followed by Java.

By 2025 the current Government is planning to amplify its installed capacity to 6500 MW which is around some 1340 MW in early 2014, were on stream and another 1500 MW project is in development. Several new projects were to be tendered in 2014 but if the country is to walk towards its planned destination, then they have to speed up exploration and development. There are some problems like permits and local opposition which are blamed for holding up the projects in some areas.

Hydroelectric Power have greater capacity than that of geothermal energy, with such great potential it is estimated around 75,000 MW. At present it is the mostly used energy with total stored capacity around 6,000 MW. Hydropower sites are spread around and across the country, with visible potential for large scale projects like such in the eastern regions of the country for example Maluku and Papua. Hydropower developers mostly get a challenge in their sites geographically, most of their large-scale projects lie in isolated areas which are usually forest regions with little or no infrastructure.

Hydropower projects with small scale gathers less than 10 MW and on the other hand, face their own technical issues like bringing equipment from across the country or from abroad and challenges with less storage capacity, which is really an over burden for some units of megawatts. Here micro hydropower and mini hydropower projects enjoy support from the government, development agencies and from microfinance credit in some cases. Hydropower gives chances for suppliers and consultants for working with stakeholders.

Photovoltaic solar energy

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PV (Photovoltaic solar energy) is one of the renewable energies which are mostly neglected in Indonesia, while it has the power to clear the problem of low electricity in Indonesia. Indonesia is blessed with strong solar radiation as it is based on the equator, solar power is compatible for providing electricity to rural regions specially including East Java and southern regions. The off-grid rural projects are absurd on purely commercial basis, and appropriate government program take over where PV installations are lacking.

Grid connected projects are still largely untested in Indonesia and because of the growing interest they are to sell PV electricity to PLN. A tender for 80 sites of total 140 MW was launched in November 2013 where the foreign companies can participate in jointly with local operations. The government is using nearly 40% equipment that are built by the neighbours and trying to boost the local production of PV systems and is fulfilling with higher feed-in tariffs.

Biofuel and Biomass

Biofuels are gaining the grip as Indonesia is trying to secure the country’s future transportation requirements while reducing oil imports and improving its ecological recommendations.

Biomass is a further unused area of Indonesia’s renewable energy portfolio with the capacity to generate 49,500 MW of power with a current installed capacity of only 1,600 MW.

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