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    Rethinking Energy in Indonesia

    Indonesia’s pathway to net zero emissions

    The Indonesian government has set an ambitious plan to run on 100% renewable energy by 2060, while also aiming to provide universal electricity access by 2024. This is no easy feat, but it can be done.   

    Actions taken now will determine the long-term path to net zero, and the key question for leaders is whether they will take the opportunity to proactively shape the new market dynamics of the energy transition or be shaped by it.  

    Our report outlines the steps Indonesia needs to take to match its vision with execution, enabling the country to leapfrog to a future-proof power system.  

    For more regional insights, visit Rethinking Energy in Southeast Asia.  

    Download the report (Bahasa)
    Download the report (English)

    The industry's latest buzz

    In our video series "Rethinking Energy in Southeast Asia," we delve into pivotal topics shaping the region's energy landscape. In this segment, we explore Indonesia's ambitions and strategies for executing its energy transition, with insights from Febron Siregar, Sales Director at Wärtsilä, and Fabby Tumiwa, Executive Director from Institute for Essential Services Reform (IESR).

     
    Indonesia's JETP

    Indonesia has recently received several new support mechanisms for its energy transition, notably the Just Energy Transition Partnership (JETP) which was announced in 2022.  “The JETP plan, which is co-led by the US and Japan on behalf of the International Partners Group, will mobilise $20 billion over the next 3-5 years to accelerate the energy transition in Indonesia”, explains IESR’s Executive Director Fabby Tumiwa. 

    Indonesia’s JETP plan outlines three primary targets:

    • Peaking power sector emissions by 2030.
    • Accelerating the deployment of renewable energy so that it comprises at least 34% of all power generation by 2030.
    • Freezing the existing pipeline of planned on-grid coal plants and closing coal plants before their intended lifespans.

    While the JETP represents a significant milestone, it serves as an initial step, with its potential lying in efforts to enhance investment frameworks, attract increased financial support from international organizations, and mobilise private capital into Indonesia's energy transition.

    Febron Siregar and Fabby Tumiwa delve deeper into these topics in the accompanying video.

     
    Net zero for Indonesia

    Ahead of COP26, Indonesia unveiled ambitious plans to independently reduce emissions by 29% by 2030 (or by 41% with international assistance) and ultimately achieve net zero emissions by 2060. Tumiwa outlines the steps necessary to achieve Indonesia's net zero goal:

    • “Increasing the renewable energy target and adding significant renewable energy capacity to the system is a good start.
    • Then, adding sufficient balancing and flexible capacity is crucial. Flexible generation is key to integrating new renewable energy into the system, necessitating energy storage and grid-balancing engines to manage the variability of renewables while still meeting demand.
    • Stopping new developments in coal projects and phasing out inflexible coal plants.
    • As we approach net zero, power generation assets should transition to sustainable fuels, such as green hydrogen, when they become economically and widely available.”

    Siregar emphasises the need for Indonesia to establish a robust regulatory framework and an attractive investment environment. He notes, "This involves implementing energy market reforms to address non-financial barriers to renewable deployment and incentivise flexible generation sources in the power system."

    In the video discussion, Siregar and Tumiwa explore strategies to further accelerate the energy transition.

     
    The importance of flexibility in renewable power systems

    The Importance of flexibility in renewable power systems Wärtsilä's "Rethinking Energy in Southeast Asia" report and the International Energy Agency's "An Energy Sector Roadmap to Net Zero Emissions in Indonesia" report underscore the critical role of flexibility in Indonesia's future power system, characterised by a high share of renewables.

    Tumiwa elaborates on the growing importance of flexibility technologies, stating, "Decarbonisation is on everyone's mind, and as the share of variable renewable energy increases, the volatility of the system will increase as well. That's why balancing and flexible solutions are needed." 

    He further explains the role of technologies like internal combustion engines, batteries, and pumped hydro in achieving this balance, with batteries handling second-level balancing and internal combustion engines managing minute-level, daily, and weekly balancing.

    In the videos, Fabby Tumiwa and Febron Siregar provide a deeper insight into the flexibility characteristics necessary to ensure future-proof assets.

     

    Matching Indonesia’s net zero vision with clear steps to execution

    Profitable

    With the cost of energy production optimised, share of power generation from renewables can be 3-4 times greater than current goals.

    Indonesia's net zero target by 2060 can be achieved with already existing technology by adding renewables and balancing solutions, while phasing out inflexible power plants.

    In the net zero scenario, Indonesia can achieve up to a 23% reduction in the LCOE and save $1.3 billion USD annually.

    By pivoting to a flexible renewable system by 2060, Indonesia can do more than cut emissions. It can transform the energy sector, creating a deregulated, competitive market which is better able to serve thousands of islands, ensuring that everyone has access to clean, reliable electricity.

    Febron Siregar

    Press release

    Meet our team

    Febron Siregar
    Sales Director, Indonesia, Wärtsilä Energy


    Taimi Vesterinen
    Power System Analyst, Wärtsilä Energy

     

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