Jakarta – A report by the Institute for Energy Economics and Financial Analysis (IEEFA) said on Wednesday, December 18, that most renewable energy projects auctioned since two years ago are still stuck at the negotiation stage, far from supporting the achievement of national clean energy targets.
Mutya Yustika, IEEFA’s Energy Finance Analyst, highlighted that although PLN’s 2021-2030 Electricity Supply Business Plan (RUPTL) targets 21 gigawatts (GW) of additional renewable energy capacity, the realisation to date is only 0.6 GW per year, far below the annual target of 2.1 GW.
“Despite the ambitious target, the reality is not supportive. Many projects are still dragging on in the auction process and contract negotiations,” Mutya said in his statement.
One important program that has experienced delays is the initiative to replace 5,200 diesel power plants (PLTD) with renewable energy. Although the first phase of the tender was completed in 2022 and the Letter of Intent (LoI) document was signed in December 2023, no contract has been concluded to date.
Similarly, the Hijaunesia project, which is expected to create a large-scale solar power plant with a capacity of 1 GW, is still stuck at the planning and partner selection stage despite being almost two years old.
“In fact, the replacement of diesel power plants and large-scale solar power plants are key elements to accelerate our energy transition. If this process continues to be delayed, the 75 GW of renewable energy target by 2040 will be difficult to achieve,” Mutya emphasised.
Grant Hauber, IEEFA’s Asian Energy Finance Strategic Advisor, emphasised the need for deep reforms in the procurement process for renewable energy projects. He emphasised the importance of collaboration across institutions, including PT Sarana Multi Infrastruktur, PT Indonesia Infrastructure Finance (IIF), and Indonesia Investment Authority (INA), to accelerate project realisation.
“These institutions should work closely with relevant ministries and PLN to ensure the necessary resources are available and the procurement process is transparent and efficient. The primary focus should be on identifying and prioritising projects that have sufficient land and resources available,” Grant said.
“Convoluted procurement only adds risk and extends execution time. Transparency and contract flexibility are needed so that projects can run quickly and deliver real results,” he added. (Hartatik)
