Indonesia’s energy production exceeding its consumption over the past decade has led to greater exports due to increased coal production, and it’s well known that the country surpassed Australia as the world’s largest exporter of coal by weight in 2011.
While Indonesia currently exports around 75% of its production, this has plateaued since 2012 and is starting to drop, dropping 18% in the first half of 2015 compared to the same period last year.
The Indonesian Coal Mining Association advised the Indonesian government early this year to cut coal production by 12% and cap exports at 300 million metric tonnes for 2015.
This was due to a number of reasons, including falling coal prices, declining demand from China and a weakening rupiah.
FDI said that while this could spur growth in the renewable energy sector, renewable sources will not meet increasing energy demands any time soon, especially given the poor growth seen in the geothermal energy sector.
To address this, the Indonesian government is shifting the focus of coal production from exports to domestic consumption, given its abundance and its attractiveness as a cheap fuel source – hence Indonesia’s plans to increase energy production by approximately 20,000 megawatts through coal-fired power plants by 2025.
However, FDI warned that while Jakarta actively promotes the expansion of the geothermal energy sector, such ambitious plans are not without issues.
“Meeting Indonesia’s future energy demands will require the continued development of the non-renewable sector in conjunction with the renewable sector,” the firm said.
Widodo said in his keynote speech at the August 19-21 Indonesia International Geothermal Convention and Exhibition that there was still a need to reduce the country’s dependence on fossil fuels, which could be partly done by generating geothermal energy.
He also noted that a major part of Indonesia’s energy mix consisted of fossil fuels, and said this needed to be addressed by developing the renewable energy sector, specifically geothermal energy.
While Indonesia’s geothermal potential is widely estimated at between 28,000 to 30,000MW – about 40% of the world’s geothermal resource – there are claims that this estimate is too large, given that the World Bank and the Indonesian Ministry of Energy and Mineral Resources (MEMR) do not explicitly address how much of the resource can be feasibly and economically utilised.
FDI said that as a result, it’s unclear exactly how much geothermal energy can be utilised in Indonesia, although the figure is likely to be significant.
The Indonesian government aims to achieve 6000MW of installed geothermal power capacity by 2020 – a goal FDI says is “ambitious” given that its current installed capacity is around 1340MW and shows little progress since the 1200MW capacity was installed in 2010.
“A significant change of pace is needed, therefore, if the 6000MW target is to be reached,” FDI said.
“A total installed capacity of around 2000MW by 2020 is a more likely scenario.”
