IRENA Study Calls Renewable Pathway More Cost Effective than Fossil Fuels in Indonesia

A new study by the the International Renewable Energy Agency (IRENA) states that Indonesia’s untapped potential for renewable energy can  help meet the growing demand and prove to be more cost effective when compared to its dependence on domestic and imported fossil fuels.

The report entitled Indonesia Energy Transition Outlook, which has been jointly put forth by by IRENA and the Indonesian Ministry of Energy and Mineral Resources, offers an outlook on the long-term energy pathway for facilitating the transition to a more sustainable system focused on renewable energy.

“Energy transition is very important for Indonesia, and we are committed to reduce greenhouse gas emissions and has also pledged to reach Net Zero Emissions (NZE) target to be achieved in 2060 or sooner,” said Arifin Tasrif, Minister of Energy and Mineral Resources of Indonesia.

Indonesia’s Energy Mix

The report reflects that Indonesia’s share of renewable energy could reach two-thirds of its total energy mix in 2050. Currently, renewable energy claims a meagre 14 per cent of its energy mix. Hydro dominates that mix, and is expected to continue to do so, besides Geothermal. Wind energy potential is much lower than one would expect, as offshore wind potential is limited due to the high depths in the Indian Ocean. However, the country has added onshore wind capacity of close to 300 MW, and hopes to add more in the coming years.

Over the span of the next three decades, Indonesia’s population is expected to touch 335 million. This population boom in the coming three decades will cause the electricity demand to grow by at least five times to over 1,700 terawatt hours (TWh) from the present levels by mid-century. In order to meet this expansion in demand, the report proposes bolstering primary sources of renewable power like solar, bioenergy, geothermal and green hydrogen.

“Indonesia’s rising energy demand gives the country the opportunity to untap its huge renewables potential and advance in its pursuit of a just, sustainable, low-carbon economic growth,” shared IRENA’s Director-General, Francesco La Camera. “Our Outlook shows that Indonesia can set itself on a pathway to net-zero emissions at lower cost than the alternative, provided the government implements steps as recommended in the Outlook, and gets the international support it needs.”

He  further said, “Endowed with an abundance of renewable energy resources Indonesia is uniquely positioned to develop a sustainable energy system based on renewable energy that can support its socio-economic development, address climate change, and achieve energy security and resilience.”

Electricity Share

The report provides an insight into Indonesia’s end-use sector electrification and points out that the power sector of Indonesia is set for a radical transformation. By 2050, the country will have more than 1,000 GW of renewable capacity, claiming a renewable generation share of 85 per cent or higher.

Investment Towards Energy Transition Technologies 

As per the report, Indonesia will have an investment opportunity of USD 332 billion for energy transition technologies by year 2030 while for grid infrastructure development, it will stand at USD 80 billion. For longer term, however, the report recommends augmenting investment in energy with up to USD 2 420 billion in cumulative investment to 2050. This investment, it says, should be made across the energy system, whether for generation, or to accelerate efficiency or facilitating infrastructure.

Even though the investments are significant, the cost of the scenario presented in the report is lower than the alternative, resulting in energy cost-saving between USD 400 – 600 billion in total to 2050, with an additional as much as USD 600 billion in external cost savings from lower air pollution.

Other Observations 

The report further makes another set of key observations and comparisons between energy emissions in the years 2018, 2030 and 2050.

In a significant indication, it reflects that the emissions from oil production and generation in 2018 were over 500 MTCO2. However, heading into 2030, this may rise to over 350 MTCO2 by 2030. In 2050, there will be a marked decline to 174 MTCO2. Similarly, from coal and coke, the emissions will drop rather significantly from 2030 to 2050 (from 273 MTCO2 to 42 MTCO2).

The study shares that by accelerating renewables, Indonesia will be able to meet its energy needs, reduce dependence on fossil fuels. At the same time, the transition away from coal is important to develop new industrial opportunities.