Endowed with a wealth of renewable energy resources, Indonesia has done less to tap into this potential than most countries its size. The country announced Tuesday that it had secured a $20 billion climate financing deal from wealthy countries — possibly the largest loan of this type in history — but activists and experts say this will only make a small dent in the approximately $600 billion that Indonesia needs to phase out coal-generated electricity and reach net-zero emissions.
The country has to play catch-up, critics say, because government leaders have moved too slowly in the past decade to disinvest from fossil fuels and to abandon archaic policies that subsidize dirty sources of energy. Indonesia’s experience, analysts say, illustrates some of the toughest challenges that industrializing economies face in transitioning to green energy.
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In 2015, after Indonesian President Joko Widodo was elected, he commissioned a series of projects that would generate 35 gigawatts worth of new energy — the bulk from coal-fired plants. At the time, 16 percent of the population still lacked access to electricity, and officials were confident that the country’s economic growth would soon send demand for energy surging.
By the time it became clear that Indonesia’s growth was not keeping pace with projections, it was too late. Dozens of new power plants had come online, with more under construction. The country’s grid became oversupplied with coal energy, which accounted for more than half of electricity generation — double what it was a decade ago, according to the Institute for Essential Services Reform, an Indonesian think tank. Renewable energy had no space to grow.
“This is like an excess baggage that the Indonesian government is carrying,” said Elrika Hamdi, an energy finance analyst based in Jakarta. It is “a mistake of the past” that the country is still paying for, she added.
At the same time, regulations governing clean energy have been inconsistent, onerous and often poorly implemented, advocates say, leaving Indonesia trailing behind other industrializing countries such as Vietnam and the Philippines. After a decade-long “solar boom,” Vietnam’s installed solar capacity is nearly 80 times that of Indonesia despite having a third of the potential, according to the International Renewable Energy Agency (IRENA), an intergovernmental organization that helps countries transition to clean energy.
Although Bali receives enough sunlight to support its power needs multiple times over, its energy demands are met almost entirely by fossil fuel plants on the island and on the neighboring island of Java. Renewable energy accounts for less than 2 percent of electricity generation, provincial officials say.
In northern Bali, fishermen have been campaigning for years against the proposed expansion of a coal plant, alleging that it threatens their livelihoods. “We will accept any power plant that doesn’t damage the air, the sea, the water,” said Supriyadi, a fisherman in the village of Celukan Bawang who goes by one name. “We just don’t want coal.”
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Indonesia’s leaders have often characterized their reliance on fossil fuels as an issue of inadequate financing for alternatives. Coal, which is abundant in Indonesia, was for decades the cheapest way to electrify the country. Even now, addressing the climate crisis cannot supersede developmental needs, said Luhut Binsar Pandjaitan, the minister for investment.
“Everything we do, we don’t want to stop our economic growth,” Luhut said in an interview last month from his office in Jakarta. “Even as we do this new program, we should see revenue for the government, for the people of Indonesia.”
But analysts say this view is outdated, and that in Indonesia, money is only part of the problem.
“It’s frustrating because technologically, the solutions are there. Economically and financially, there are no longer barriers,” said Nicholas Wagner, a researcher at IRENA.
The average amount of solar power that Indonesia receives per square meter is almost double that of some countries in Europe, research shows, and Indonesia has the largest geothermal reserves in the world. Those conditions position the country to make one of the world’s most dramatic energy transitions, though it’s not currently on the path to do so.
Last year, the government banned new coal plants from being developed but said the rule would not affect the 13.8 gigawatts of additional coal energy — enough to power 10 Balis — that was already in the pipeline. Two months ago, the government announced another set of exceptions to its ban, allowing new coal plants that support “national strategic projects” such as smelters for battery minerals.
In addition, the government has required since 2009 that all coal-mining companies sell a designated amount of their output to the state-owned utility company below market value. This regulation, which the World Bank has urged Indonesia to scrap, effectively subsidizes the price of coal, distorting the energy market against renewable sources, analysts say.
Even when the government tries to spur the deployment of clean energy, it sometimes misses the mark on implementation, said Hamdi, the energy finance analyst. In 2018, for example, a ministerial decree that was meant to encourage rooftop solar panels ended up making people pay more to use them. “On paper,” Hamdi said, “it’s not the same as reality on the ground.”
Bali has long sought to be energy independent, and locals increasingly believe this goal can dovetail with their ambitions to reach net-zero emissions by 2045, 15 years earlier than the rest of Indonesia. A 2017 study from the Asian Development Bank found that Bali needs to harness just 5 percent of its renewable energy resources to support all of its electricity needs.
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But without adequate support from the national government, progress has been glacial, residents say. From 2012 to 2015, the government opened eight small solar farms in Bali, placing them in the custody of local authorities. Only four are still operating, a provincial representative said. The rest have fallen into disrepair. Meanwhile, plans are underway to build a new terminal for liquefied natural gas, a type of fossil fuel, in southern Bali.
“We have a high ambition,” said Ida Ayu Dwi Giriantari, a professor at Bali’s Udayana University who wants to see more renewable energy. “But we can’t achieve this by ourselves.”
Fabby Tumiwa, executive director of the Institute for Essential Services Reform, said that while he agrees that Indonesia has moved slowly so far, the push for renewables is picking up.
In September, Widodo issued a regulation paving the way for the country to retire coal plants early. And on Monday, Indonesia’s state-owned utility company, Perusahaan Listrik Negara, announced the first coal facility that it would be closing down ahead of schedule. Under the terms of the new climate financing deal, PLN plans to reach net-zero emissions by 2050.
“I am ready to be surprised,” said Tumiwa, a vocal PLN critic in the past.
Not all advocates are as optimistic, especially those in Bali. Most of the 600-plus electric vehicles being used for the G-20 were brought in from Java and will be sent back after world leaders depart. It’s not clear who will maintain the solar panels set up for the summit — or whether there are plans to help the local government replicate them across the island.
“The real challenge,” said Ida Bagus Setiawan, head of Bali province’s energy division, “comes after the summit.”
Winda Charmila in Bali contributed to this report.