Latest news with #RUPTL
The Star
6 days ago
- Business
- The Star
Jakarta's energy plan may sideline renewables
JAKARTA: The long-awaited 2025-2034 electricity business plan (RUPTL) could sideline renewable energy despite containing a huge amount of planned green power, as experts suggested the new power procurement plan was leaning toward repeating past mistakes and undermining energy transition commitments. Dody Setiawan, senior analyst for climate and energy at think tank Ember, told The Jakarta Post on May 28 that the new RUPTL backloaded 72% of the planned 42.6 gigawatt (GW) of new and renewable energy projects to the second half of the 10-year procurement period. Instead, the government and state-utility company PT Perusahaan Listrik Negara (PLN) designed it to frontload 12.7GW of coal and gas plants in the first half of the 10-year period, which is 76% of the planned fossil fuel powered generation in the RUPTL. 'We observed a strong energy security focus in the (new) RUPTL, with large capacity additions to support economic growth and rising demand from downstream industries. 'On the other hand, decarbonisation efforts remain (a) secondary (priority),' Dody said. He added that increased reliance on gas-powered plants would also come with supply risks, given the consistent decline in domestic natural gas production, which could translate into more costly power generation. BMI Research, a unit of Fitch, dubbed the newly launched electricity business procurement plan a 'step back' from Indonesia's energy transition and climate commitment. It pointed out that the 6.3GW of new coal-fired capacity indicates a 'persistent reliance on coal' as a baseload power source despite a 2040 coal phase-target announced by President Prabowo Subianto during the Group of 20 Summit in Rio De Janeiro late last year. Mutya Yustika, an energy economist at the Institute for Energy Economics and Financial Analysis (IEEFA), expected that placing most renewable energy projects in the second half of the RUPTL's 10-year period would raise investors' concerns over risks of shifting policy priorities, regulatory inconsistencies and PLN's capacity to support renewable projects. Despite spanning a decade, the government has a history of revising the long-term business plan midway, which occurred four times from 2015 to 2019 and two times in the past five years. Mutya also pointed out that the previous RUPTL launched in 2021 included 21GW of renewable capacity, half of which was slated for 2025, but it saw far slower-than-expected progress in renewable energy procurement, which may cloud investors' confidence in projects offered by the government and PLN in the future. Instead of the required 2.1GW per year, PLN has only added around 0.6GW annually, highlighting a significant gap between targets and execution. 'Without clearer policies, streamlined procurement and tools like joint transmission networks, investor confidence in Indonesia's renewables will remain low,' she told the Post. This lagging progress has also prompted the government to slash its projections on renewable energy contributions to the national energy mix from initially 23% by the end of 2025 to between 17% and 19% in the same period. The new RUPTL was designed with the assumption that the economy could grow by 8% by the end of 2029, which officials hoped would translate to a surge in power demand roughly at the same pace. However, experts warned this could lead to overestimations, repeating the mistakes of the past administration that resulted in PLN generating more power than the country could consume. In 2015, former President Joko 'Jokowi' Widodo launched a plan to add 35GW of electricity to the grid in the next decade, as the administration expected the country's economic growth to reach about 7% over the coming years. Instead, the country's gross domestic product has been growing at an average of 5%, leaving behind an electricity oversupply, mostly from coal-powered plants, with consequences extending to delays and postponement of renewable energy projects. Experts have suggested it is unlikely the country could see the 8% economic growth envisioned by Prabowo as this year's growth is projected to expand below the usual 5% rate. Ember's Dody said if the ambitious projected demand growth fails to materialise, PLN would face another oversupply that would limit access for renewable projects to supply the grid already saturated with power from thermal plants. IEEFA's Mutya warned PLN could face similar pressure as in the past when it was locked into costly coal contracts for excess power that ended up straining its finances. Most power purchasing agreements contained take-or-pay stipulations that obligated PLN to either take delivery of electricity generated by independent power producers or pay a penalty if it chooses not to do so, which guaranteed minimum revenue for investors. — The Jakarta Post/ANN
The Star
29-05-2025
- Business
- The Star
Indonesia's 10-year power procurement plan: Green boon or climate doom?
JAKARTA: Indonesia has backtracked on pledges it had made to stop building new coal-fired power stations – other than those it had already previously committed to – with the announcement of a new 10-year plan that includes more coal plants coming into operation as late as 2033. But in a shift from the past, renewable energy comprises the majority of the 69.5 gigawatts (GW) additional power capacity outlined in the government's 2025-2034 electricity procurement business plan (RUPTL). The ambitious plan, released on Monday (May 26), has been met with scepticism, with analysts and observers questioning whether the country can truly achieve its power supply and environmental targets. Indonesia issues updated power business plans every few years to reflect estimated electricity demand growth, investment needs and technology costs. The last one, covering the years from 2021 to 2030, was released in September 2021. Based on the new 10-year plan, Indonesia would have to build renewable power plants five times faster than today in the first five years and 11 times faster in the second five years of the period, Tata Mustasya, the executive director of the Indonesian Sustainable Welfare Foundation (Sustain), told The Straits Times. 'This is hard to achieve without major policy reforms,' Tata said, pointing out that between 2018 and 2023, Indonesia added a total of 3.2GW of renewable power capacity, or equivalent to 0.53 GW annually, and a 2025 target to achieve 23 per cent renewable energy was later revised to between 17 and 19 per cent. At present, wind and solar comprise less than 1 per cent of Indonesia's annual power-generating capacity. Some of the policy reforms, according to Tata, include offering attractive power purchase rates to solar farms and channelling some of the government royalties collected from coal mines to the construction of smart grids to help distribute power from the renewables. Indonesia has been stepping up efforts to attract green investment, including by promoting floating solar farms on reservoirs, or installing them offshore, to avoid the high costs of land procurement and having to relocate local residents. But coal power still dominates, with just over 60 per cent of the nation's electricity generated by burning the fuel. Indonesia is also a major coal producer and top global exporter. Lobbying efforts by coal interest groups, and government policies, have ensured coal's pre-eminent position. A government coal price cap ensures that power producers can access affordable coal shipments. And an unattractive power purchase rate offered to solar farms has deterred investors, according to Jakarta-based Institute for Essential Services Reform (IESR). All power plants and solar farms must sell their generated electricity through PLN, the state power utility. But things are changing, especially as using solar and wind is now cheaper than fossil fuels, in addition to the lure of investment and jobs in renewable energy product manufacturing. Worries over coal plants' air pollution, health costs and their planet-warming emissions are also pressuring the government. Indonesia, which lies on the Equator, and Singapore are also discussing the terms of a possible agreement for a planned sale of solar power from Batam to Singapore via an undersea cable. Earlier talks have revealed that the possible sale size would be 2GW annually as part of the Republic's biggest effort so far to import low-carbon electricity, ST reported in November 2024. The plan is part of a memorandum of understanding (MoU) on renewable energy cooperation between the two neighbours signed in March 2023 during the Singapore-Indonesia Leaders' Retreat held in Singapore. 'Very soon. It won't be long. Signs started to emerge that we would have an agreement (with Singapore),' Energy and Mineral Resources Minister Bahlil Lahadalia said at the May 26 RUPTL press briefing, referring to the Singapore-Indonesia MoU. Analysts and industrialists have offered mixed views about the new RUPTL, with some of them seeing it as the government striking a balance between the interest to promote green investment and to accommodate coal proponents. 'In terms of energy mix (proportion between renewable and fossil energies), it looks okay because the renewable energy portion increased, but we are seeing new coal-fired power plants being planned. 'This is against an earlier commitment,' the chief executive of a Jakarta-based business group that seeks renewable energy projects told ST in a text message. He did not want to be named when commenting on government policies. Of the additional 69.5GW in power capacity outlined in Indonesia's new 10-year power procurement plan, 42.6 W would come from renewable energy – 17.1 GW from solar, 11.7 GW from hydroelectricity, 7.2 GW from wind power, 5.2 GW from geothermal, 0.9 GW from bioenergy and 0.5 GW from nuclear. On top of that, it also includes: 10.3GW of battery and pumped (hydroelectricity) storage; and 16.6GW of fossil-based electricity production from coal (6.3GW) and gas (10.3GW). Mutya Yustika, who covers economics, finance and politics of the Indonesian electricity market for the Institute for Energy Economics and Financial Analysis (Ieefa), noted that the 16.6GW of additional fossil fuel power capacity would require multibillion-dollar investments. 'Obtaining the necessary financing will be challenging, considering the strict ESG (environmental, social and governance) guidelines by banks or other financial institutions,' Mutya told ST. Many foreign banks, for example, will no longer fund new coal- or gas-powered plants. 'This condition might tip the balance towards the acceleration of renewable energy power plants,' she added. Ieefa is a US-based think-tank. Still, the plan now expects coal power to be part of the energy mix until 2063 – well beyond 2057 in the previous plan and challenging the government's net-zero 2060 pledge. New coal plants typically have an average life of 30 years. But overall, the RUPTL represents an important step in the right direction, said Dody Setiawan, senior analyst of climate and energy at London-based energy think-tank Ember. 'It aims to ensure that Indonesia's 8 per cent economy target has the energy it needs to support industrial development while also beginning to address decarbonisation,' Dody told ST. President Prabowo Subianto has set an 8 per cent annual growth target for the latter part of his five-year term that started in October 2024. South-east Asia's largest economy has grown about 5 per cent annually in the past decade. Dody said that while the RUPTL gives encouraging signals, there needs to be clear regulatory support. Jakarta-based foundation Sustain's Tata said the government needs to introduce incentives to help bring down the costs of building renewable energy power plants, which typically require heavy capital investment upfront, although they typically have low operating costs. This is especially the case for solar power plants, he added. 'A bold incentive the government could offer investors would be a large-scale competitive bidding auction at one go – combining several projects into one package – to build solar farms,' Tata said, arguing that this would create economies of scale. Under the revised investment plan, 47,758km of new transmission lines will be built, connecting Java island with Sumatra and Kalimantan, moving the nation a step closer to a single power grid. At present, Indonesia's main power grid links only Java, Bali and Madura islands, with other islands operating independently. 'Expanding transmission lines is necessary to connect new power plants, particularly renewables, to demand centres to strengthen the grid reliability and flexibility,' Ember's Dody said. - The Straits Times/ANN
Straits Times
29-05-2025
- Business
- Straits Times
Mixed views on Indonesia's 10-year power procurement plan
At present, wind and solar comprise less than 1 per cent of Indonesia's annual power generating capacity. PHOTO: EPA-EFE JAKARTA – Indonesia has backtracked on pledges it had made to stop building new coal-fired power stations – other than those it had already previously committed to – with the announcement of a new 10-year plan that includes more coal plants coming into operation as late as 2033. But in a shift from the past, renewable energy comprises the majority of the 69.5 gigawatts (GW) additional power capacity outlined in the government's 2025-2034 electricity procurement business plan (RUPTL). The ambitious plan, released on May 26, has been met with scepticism , with analysts and observers questioning whether the country can truly achieve its power supply and environmental targets. Indonesia issues updated power business plans every few years to reflect estimated electricity demand growth, investment needs and technology costs. The last one, covering the years 2021 to 2030, was released in September 2021. Based on the new 10-year plan, Indonesia would have to build renewable power plants five times faster than today in the first five years and eleven times faster in the second five years of the period, Mr Tata Mustasya, the executive director of the Indonesian Sustainable Welfare Foundation (Sustain), told The Straits Times. 'This is hard to achieve without major policy reforms,' Mr Tata said, pointing out that between 2018 and 2023 , Indonesia added a total of 3.2 GW of renewable power capacity, or equivalent to 0.53 GW annually ; and a 2025 target to achieve 23 per cent renewable energy was later revised to hitting between 17 and 19 per cent. At present, wind and solar comprise less than 1 per cen t of Indonesia's annual power generating capacity. Some of the policy reforms, according to Mr Tata, include offering attractive power purchase rates to solar farms and channelling some of the government royalties collected from coal mines to the construction of smart grids to help distribute power from the renewables. Indonesia has been stepping up efforts to attract green investment, including by promoting floating solar farms on reservoirs, or installing them offshore, to avoid the high costs of land procurement and having to relocate local residents. But coal power still dominates, with just over 60 per cent of the nation's electricity generated by burning the fuel. Indonesia is also a major coal producer and top global exporter. Lobbying efforts by coal interest groups, and government policies, have ensured coal's pre-eminent position. A government coal price cap ensures power producers can access affordable coal shipments. And an unattractive power purchase rate offered to solar farms has deterred investors, according to Jakarta-based Institute for Essential Services Reform (IESR). All power plants and solar farms must sell their generated electricity through PLN, the state power utility. But things are changing, especially as solar and wind are now cheaper than fossil fuels, plus the lure of investment and jobs in renewable energy product manufacturing. Worries over coal plants' air pollution, health costs and their planet-warming emissions are also pressuring the government. Indonesia, which lies on the equator, and Singapore are also discussing possible terms of agreement on a planned sale of solar power from Batam to Singapore via an undersea cable. Earlier talks have revealed the possible sale size would be 2 GW annually, as part of the Republic's biggest effort so far to import low-carbon electricity, ST reported in November 2024. The plan is part of a Memorandum of Understanding (MoU) on Renewable Energy Cooperation between the two neighbours signed in March 2023 during the Singapore-Indonesia Leaders' Retreat held in Singapore . 'Very soon. It won't be long. Signs started to emerge that we would have an agreement (with Singapore),' energy and mineral resources minister Bahlil Lahadalia said at the May 26 RUPTL press briefing, referring to the Singapore-Indonesia MoU. Analysts and industrialists have offered mixed views about the new RUPTL, with some of them seeing it as the government striking a balance between the interest to promote green investment and to accommodate coal proponents. 'In terms of energy mix (proportion between renewable and fossil energy), it looks OK because the renewable energy portion increased, but we are seeing new coal-fired power plants being planned. 'This is against an earlier commitment,' the chief executive of a Jakarta-based business group that seeks renewable energy projects told ST in a text message. He did not want to be named when commenting on government policies. Of the additional 69.5 GW in power capacity outlined in Indonesia's new 10-year power procurement plan , 42.6 GW would come from renewable energy: 17.1 GW from solar, 11.7 GW from hydroelectricity, 7.2 GW from wind power, 5.2 GW from geothermal, 0.9 GW from bioenergy and 0.5 GW from nuclear. On top of that, it also includes: 10.3 GW of battery and pumped (hydroelectricity) storage; and 16.6 GW of fossil -based electricity production from coal (6.3 GW) and gas (10.3 GW). Ms Mutya Yustika, who covers economics, finance and politics of the Indonesian electricity market for the Institute for Energy Economics and Financial Analysis (Ieefa), noted the 16.6 GW of additional fossil fuel power capacity would require multi-billion dollar investment costs. 'Obtaining the necessary finan cing will be challenging, considering the strict ESG (environmental, social and governance) guidelines from banks or other financial institutions,' Ms Mutya told ST. Many foreign banks, for example, will no longer fund new coal or gas power plants. 'This condition might tip the balance towards the acceleration of renewable energy power plants,' she added. Ieefa is a US-based think-tank. Still, the plan now expects coal power to be part of the energy mix until 2063 – well beyond 2057 in the previous plan and challenging the government's net-zero 2060 pledge. New coal plants typically have an average life of 30 years. But overall, the RUPTL represents an important step in the right direction, said Mr Dody Setiawan, senior analyst for climate and energy at London-based energy think-tank Ember. 'It aims to ensure that Indonesia's 8 per cent economy target has the energy it needs to support industrial development while also beginning to address decarbonisation,' Mr Dody told ST. President Prabowo Subianto has set an 8 per cent annual growth target for the latter part of his five-year term that started in October 2024. South-east Asia's largest economy has grown about 5 per cent annually in the past decade. Mr Dody said that while the RUPTL gives encouraging signals, there needs to be clear regulatory support. Jakarta-based foundation Sustain's Mr Tata said the government needs to introduce incentives to help bring down the costs of building renewable energy power plants, which typically require heavy capital investment upfront, although they typically have low operating costs. This is especially the case for solar power plants, he added . 'A bold incentive the government could offer investors would be a large-scale competitive bidding auction at one go – combining several projects into one package – to build solar farms,' Mr Tata said, arguing this would create economies of scale. Under the revised investment plan, 47,758 km of new transmission lines will be built, connecting Java island with Sumatra and Kalimantan, moving the nation a step closer towards a single power grid. At present, Indonesia's main power grid only links Java, Bali and Madura islands, with other islands operating independently. 'Expanding transmission lines is necessary to connect new power plants, particularly renewables, to demand centres to strengthen the grid reliability and flexibility,' Ember's Mr Dody said. Wahyudi Soeriaatmadja has been Indonesia correspondent at The Straits Times since 2008, and is based in Jakarta. Join ST's WhatsApp Channel and get the latest news and must-reads.
Reuters
11-02-2025
- Business
- Reuters
Indonesia plans to boost renewable usage in new electricity supply plan
JAKARTA, Feb 11 (Reuters) - Indonesia is aiming to increase the share of renewable energy under its electricity supply plan over the next ten years, fueled by more solar, hydro and geothermal capacity, a deputy minister said on Tuesday. The new plan, known locally as RUPTL, would replace Indonesia's 2021-2030 RUPTL in which a total of 40.6 gigawatts of new capacity was planned, with around 52% of it from renewable energy. The government is finalising the discussion of the electricity plan with state utility Perusahaan Listrik Negara (PLN), in which 70% of the planned additional 71 gigawatts will come from renewable sources, said Kartika Wirjoatmodjo, deputy State Owned Enterprise Minister. "This will increase the mix of renewable energy from around 12% to around 35% in 2034," he told a business forum in Jakarta. Under the upcoming plan, Indonesia aims to build 17 GW solar power capacity, including supporting battery systems, 16 GW of hydro power, and 5 GW of geothermal power, as well as other sources such as wind and bioenergy, he said. Around 5 GW of new coal capacity is still expected to come online till 2034, Kartika said. "We will still continue some of the remaining projects on coal, but this is just closing up on the previous plan," he said. Around 15 GW gas power capacity is planned to be built until 2034, especially to support the base load capacity for Java, he added. Indonesia banned development of new coal power plant in 2022, except for those that have already in the pipeline and those that are integrated with natural resources processing industry as long as the have an emission reduction plan.
