Indonesia's renewables target likely to be revised lower amid slow additions: Ember

Indonesia is likely to lower its renewables capacity target for 2025 given the slow growth over the past five years, which has see additional power demand largely met by fossil fuels, London-based energy think tank Ember said in a report Aug. 14.

"Indonesia has not yet seen a boom in renewables, resulting in fossil fuels meeting its electricity demand growth," said the report.

The country's National Energy Policy (NEP) 2014 set a target of 23% of renewables in the energy mix by 2025, but this target is likely to be reduced to between 17%-19% in the revised NEP currently being developed, the report said.

"Between 2018 and 2023, Indonesia only added 3.3 GW of renewables, bringing the total to 13 GW by 2023," the report said, with the largest capacity additions seen in bioenergy (1.3 GW), followed by hydropower (1 GW), solar (0.5 GW), geothermal (0.5 GW) and wind (0.01 GW).

"In contrast, the country installed an additional 26 GW of fossil fuel capacity in the last five years. Fossil fuels now account for 80 GW, or 86% of the total power generation capacity of 93 GW in 2023," the report said.

In 2023, renewables accounted for 19%, or about 65 TWh, of Indonesia's electricity mix, including both on-grid and off-grid sources, with solar and wind generation only contributing 0.7 TWh and 0.5 TWh, respectively. Among renewables sources, hydro was the largest contributor at 7%, or 25 TWh, followed by bioenergy at 6.4%, or 22 TWh, and geothermal at 4.8%, or 17 TWh, the report said.

The remaining 81%, or 285 TWh, of electricity demand was met by fossil fuels, and coal alone contributed 62%, or 217 TWh, of the generation, the report said, adding that gas also recorded a 6.9% rise from 58 TWh in 2013 to 62 TWh in 2023.

"The sharp rise in power sector emissions in the past decade has been attributed to the record installations and utilizations of carbon-intensive electricity generation capacity, particularly coal (+30 GW), gas (+6 GW) and biomass (+1.5 GW)," the report said. "This surge has been driven by investment in coal power plants, spurred by the government's 35,000 MW electricity construction program introduced in 2015 that considerably sped up the pace of new power plant construction under the auspices of 5%-7% economic growth."

Meanwhile, loans for capital spending on coal power plants reached $1 billion in 2021-2022, leading to overcapacity in coal-fired generation, it said.

Indonesia's Ministry of Energy and Mineral Resources has forecast electricity demand growth rate to be between 4.8% and 5.2% annually, resulting in power demand increasing from 363-377 TWh in 2023 to 1,846-2,152 TWh in 2060.

Currently, coal power plants are running at around 49% capacity and raising the efficiency to 64% could mean that anywhere between $1.9 billion and $2.4 billion can be saved, which in turn could be utilized to grow clean power and avoid unnecessary coal investment even with rising demand, the report said.