Spotlight Activity: NEP 14 and the State Electricity Company’s RUPTL Plan
Government Regulation no. 49 is Indonesia’s multi-sectoral energy policy and was implemented in 2014. It is known as NEP14. It updated the 2006 national energy plan. It continues to be in effect and will expire in 2025 once it has reached its targets for Indonesia’s energy mix.
NEP14 was enacted to increase Indonesia’s energy independence by developing new energy sources and increasing domestic use of locally produced fuel rather than exporting it abroad. This requires Indonesia to decrease imported oil consumption by supplanting it with increases in coal and renewable energy production and improving efficiency in energy production and consumption.
NEP14’s targets for the 2025 energy mix are:
25% natural gas
By 2050, NEP14 targets renewables at 31% of the energy mix. NEP14 intends to gradually end imported gas and coal by an undetermined date. This new energy mix will require a doubling of gas production, a tripling of gas, and an increase in renewables 11 times over.
The policy also lays out steps to increase the electrification ratios, especially in rural areas. To improve electrification ratios, Perusahaan Listrik Negara (PLN, translating to State Electricity Company) released its own plan called RUPTL (Rencana Umum Penyediaan Tenaga Listrik). This plan lays out how it will increase electricity access and meet the 2025 energy mix targets. The 2018 plan projects electricity demand increases of 6.87% per year, lower than the 2017 projection of 8.3%. By 2027, PLN intends to add 56,000 megawatts (MW) of power plants. This is lower than the 2017 projection of 78,000 MW. Independent power producers are vital to PLN developing new plants. To reach the targets for 2025, PLN must enter into purchase power agreements with private enterprises seeking to develop untapped energy sources.
Coal-fired plants under these policies represent the bulk of the electricity supply (54.4% by 2025, 23% for renewables, 22.2% for gas). Under the scaled back 2018 plan, 5,000 MW of coal, 10,000 MW of gas, 1,000 MW of hydro, and 1,000 MW of geothermal were cut from power plant development. The 2018 plan sees increases of 2,000 MW in installed capacity of renewables from 2017’s RUPTL.
Status: Standing Still
With 78 gigawatts (GW) of potential hydropower and 28 GW of potential geothermal power, it is unfortunate that the targeted energy mix is still so dominated by coal. Many of the potential hydropower development sites are far from Java, where energy demand is highest in Indonesia, and often in areas with poor grid access and underdeveloped infrastructure. To foster hydropower development, PLN must improve infrastructure in remote areas. Investing in rural energy infrastructure would simultaneously improve rural electricity access, green Indonesia’s energy mix, and develop the economies of areas outside the capital region. Geothermal energy remains largely untapped, only 1.5 GW of the 28 GW potential were used in 2016.
Please send the following message to the policymaker(s) below.
Dear PT PLN,
I write to urge you to enter into more power purchase agreements for renewable projects, particularly those supported by existing government policies such as renewable feed-in tariffs and the rural electrification allocation fund (Dana alokasi khusus DAK).
Indonesia must move away from coal and towards renewable sources of power. With substantial untapped sources of geothermal in rural areas, Indonesia could green its energy mix while reaching its rural electrification ratio targets. Relying on coal neither improves Indonesia’s long-term energy independence nor is a sustainable solution; this energy source is exhaustible and environmentally deleterious. PLN should invest in PPA for renewable projects, especially in those energies supported by feed-in tariffs and in rural areas that would receive funds from DAK. PLN should push for a greener energy mix. Doing so would more effectively reach the aims of PLN and the Indonesian government; to improve rural electrification ratios, increase Indonesia’s energy independence, and achieve Indonesia’s NDC pledge under the Paris Agreement.
RUPTL 2018-2027: http://news.energy-indonesia.com/?eid=122
RUPTL 2017: https://f.datasrvr.com/fr1/417/56268/RUPTL_PLN_2017-202_(resize_1).pdf?cbcachex=679170