Renewable energy utilisation: Obstacles to clean electricity development
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Pemanfaatan EBT: Ganjalan pengembangan listrik bersih
11 December 2024
By Afiffah Nurdifa and M. Ryan Hidayatullah
Increasing the utilisation of new renewable energy (NRE) is more challenging than it appears. The electricity grid, which is not yet fully connected from clean energy sources to the centres of electricity demand, leads to suboptimal absorption.
PT PLN (Persero) Risk Management Director Suroso Isnandar noted that many NRE sources in Indonesia are located far from the centres of clean electricity demand. For instance, the development of the Kayan Cascade hydropower plant (PLTA) in North Kalimantan has not yet aligned with the demand for clean electricity.
This situation has led PLN to take the initiative to establish a green-enabling super grid, which will connect electricity generated from NRE sources to the demand centres.
"Many renewable energy sources, such as the Kayan PLTA in North Kalimantan with a capacity of 10,000 megawatts, or 10 gigawatts, currently have no demand. So, the demand must be created," Suroso said at the Bisnis Indonesia Economic Outlook 2025 on Tuesday (10/12).
In addition to Kalimantan, Suroso noted that many potential PLTAs in Sumatra are also hampered by a lack of absorption, as most of the electricity demand is concentrated in Jakarta. This situation is one of the reasons why the utilisation of NRE in Indonesia remains low, at around 1-3 gigawatts (GW), despite having a potential of 3,600 GW.
"Due to the mismatch between large-scale renewable energy centres and energy demand centres, we must establish a green-enabling super grid," Suroso stated.
He mentioned that the super grid is a solution for facilitating the energy transition in Indonesia, aiming to achieve net zero emissions by 2060.
However, constructing the grid is not an easy task, as it is hindered by environmental and permitting challenges.
Additionally, Suroso revealed that the investment challenge is significant, estimated at around US$235 billion until 2040, to accelerate the utilisation of NRE in the electricity sector.
These funds are needed for various projects, including the construction of additional NRE power plants and the development of a smart grid.
He detailed that the NRE capacity could increase by 33 GW, with 24.9 GW coming from hydropower, 6.5 GW from geothermal, and 0.9 GW from bioenergy. Achieving this would require an investment of US$80 billion over the next 15 years.
Meanwhile, increasing the NRE capacity from gas to 21.7 GW and from coal to 5.6 GW will require an investment of US$33 billion. On the other hand, expanding NRE capacity from wind turbines to 14.2 GW and solar to 27.3 GW will need US$43 billion between 2025 and 2040.
"Including the transmission, we need US$235 billion to implement the energy transition," Suroso stated.
PLN plans to accelerate the energy transition through the Accelerated Renewable Energy Development (ARED) programme. This initiative proposes that 75% of newly constructed power plants use NRE, while the remaining 25% rely on gas, in order to aggressively reduce emissions.
Gas utilisation
Utilising gas as an alternative energy source plays a crucial role in energy transition efforts, as it is considered to have lower emissions compared to coal or oil.
Unfortunately, companies tend to focus on liquefied natural gas (LNG), which is why they are shifting their power plants from being fuel oil-based to gas-based.
"Next year, PLN requires 96 cargoes of LNG. However, since LNG production has already been allocated, there is a possibility that PLN will face an LNG shortage next year," Suroso stated.
During the occasion, Chrisnawan Anditya, Head of the Data Centre and Information at the Energy and Mineral Resources Ministry, stated that the government will prioritise domestic gas requirements.
From January to September 2024, natural gas absorption reached 5,590.12 billion British thermal units per day (BBtud).
Chrisnawan assured that the government will continue to increase gas production and distribution, with one of the solutions being the gas network development programme.
He mentioned that the development of gas pipeline transmission aims to connect existing potential gas locations, such as the Cirebon-Semarang (Cisem) I pipeline, which is intended to link the gas network in eastern Java to that in West Java.
A similar initiative has been undertaken in Aceh-Andaman, where a substantial offshore gas reserve has been discovered.
"If we do not develop the gas transmission networks, the high potential in Andaman cannot be fully realised," Chrisnawan stated.
