October 21, 2011

Indonesia: Govt considers new renewable energy policy

The government is mulling over a policy that, if taken forward, will require large energy consumers, including mining, oil and gas companies, to partly use renewable energy sources to boost efficiency in energy consumption.

The planned policy is not aimed at limiting the energy consumption of such companies, but rather at better managing the sustainability of future energy demands, according to the Energy and Mineral Resources Ministry’s director general of renewable energy and energy conservation, Kardaya Warnika.

“The government wants to make the program mandatory for all large energy users. We need to enforce it, otherwise no policy can be implemented effectively,” said Kardaya on the sidelines of the World Renewable Energy Congress in Nusa Dua, Bali, on Monday.

Under the planned policy, Kardaya says, all large energy users will be mandated to utilize energy sources such as solar energy to fuel their electricity needs. He declined to comment over when the policy would be issued.

Kardaya also emphasized the government’s commitment to revising the paradigm in relation to the use of renewable energy, from viewing this type of energy as a mere alternative to existing fossil-based energy, to seeing it as a key component of the country’s energy mix.

“Currently, most of the government’s subsidies go to fossil fuels, which are bad for the environment and are non-renewable. These subsidies must be shifted to support the development of renewable energy sources,” he said.

In July, the House of Representatives agreed to raise the energy subsidy in the 2011 state budget from Rp 187.16 trillion to Rp 195.28 trillion (US$22.09 billion), to help the government cope with sharp increases in oil prices. However, subsidies for renewable energy remained at less than 2 percent.

Aside from forcing industries to use renewable energy, the government would also entice energy stakeholders by creating appealing pricing policies, according to Kardaya.

State power company PT PLN will be obliged to buy electricity produced from renewable sources at a price already set.

“We already have a feed-in tariff for hydro, biomass, biogas and city waste. For other renewable sources, like solar, the regulation will be launched soon,” said Kardaya.

Hilmi Panigoro, the chairman of the Indonesian Renewable Energy Society (METI), supported the government’s effort to create investment-friendly pricing policies, saying that investors had already lined up to enter the sector, but were held back from doing so by pricing policies.

“From time to time, we [METI] have closely monitored the investment climate in the renewable energy sector. Now, the condition is still far from ideal, but we will continuously support the government by delivering our suggestions and recommendations,” he said.

The World Renewable Energy Congress will run from Oct. 17 to 19, with 550 participants, comprising 380 Indonesians and 170 foreigners from 49 countries. As many as 130 scientific papers on renewable energy will be presented at the congress.

“Participants from Indonesia can learn from overseas businessmen and experts attending the congress, about technological developments in the renewable energy sector,” Hilmi said.


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