Jakarta – To accelerate the transition to clean energy, Indonesia needs a supportive ecosystem and consistent policies, from developing renewable energy to creating a conducive market for green energy technologies. This was stated by the Institute for Essential Services Reform (IESR) at the Indonesia Energy Transition Dialogue (IETD) 2024, which focused on the opportunities and challenges for creating a sustainable clean energy ecosystem in the country.
Farid Wijaya, IESR Senior Analyst, emphasised that Indonesia has great potential in renewable energy resources but needs to be supported by adequate ecosystem readiness.
“Indonesia must have an integrated supply chain and industry to support adopting renewable energy such as solar power, wind power, and green hydrogen. Our renewable energy potential is huge, but without ecosystem support, it is difficult to ensure security of supply and affordable costs,” Farid said in the session “Establishing Domestic Advantage in Renewable Energy Supply Chain” at IETD 2024, Wednesday, November 6.
According to Farid, one of the first steps is to utilise Indonesia’s critical mineral resources, especially through downstream programs. This is important to reduce dependence on imported raw materials, which has been an obstacle in developing clean energy.
“Using critical minerals to produce batteries and renewable energy components can be a big step for energy independence. If the domestic market can be met from domestic production, we will strengthen independence and have the potential to increase economic growth significantly,” he explained.
Green hydrogen roadmap as a key driver
Through the Ministry of Energy and Mineral Resources (MEMR), the government realises the need for a clear roadmap in developing a clean energy ecosystem. Coordinator of Services and Supervision of Various Renewable Energy Businesses of the Ministry of Energy and Mineral Resources, Muhamad Alhaqurahman Isa, said that the green hydrogen roadmap is expected to be completed by early 2025, with projected domestic demand for hydrogen reaching 9.2 million tons by 2060.
“This roadmap is based on a demand-driven approach, prioritising domestic needs and export fulfilment for green hydrogen. We expect the initiation phase in 2025-2034 to include the development of feasibility studies, incentive designs, and the establishment of supply chains,” said Alhaqurahman.
With a projected hydrogen production of up to 17 million tons, this roadmap is expected to be an important reference in accelerating the adoption of green hydrogen in Indonesia while encouraging investment in the clean energy sector.
IESR emphasizes that supporting policies is essential to creating a safe investment climate for clean energy industry players in Indonesia. IESR proposes that the government accelerate the downstream process and create clear incentives for the renewable energy industry.
“This policy should be easily accessible and investor-friendly. A consistent roadmap and tax incentives will strengthen the supply chain and increase national energy independence,” Farid added.
In the solar power sector, Indonesia projects capacity to reach 115 GW by 2060, with an estimated investment of around USD 110.6 billion. In this context, the government is working to ensure that the investment comes from the domestic industry. This is important not only to ensure affordability but also to maintain economic value in Indonesia.
“With good industrial readiness, 90% of this investment value has the potential to strengthen the domestic economy, especially in solar module manufacturing and other supporting components,” he added.
Various international parties supported accelerating the development of a clean energy ecosystem in Indonesia in the IETD 2024 forum, which the British Embassy supported. Julio Retana, Team Leader of UK Mentari, highlighted the economic impact of the renewable energy manufacturing industry, especially in the battery sector. He mentioned that constructing a 140 GWh capacity battery factory in Indonesia is projected to add up to USD 10 billion in GDP and create more than 530 thousand new jobs. This is a huge opportunity that needs to be seized immediately.
According to Julio, Indonesia has excellent capital to become a leader in the renewable energy manufacturing sector. However, strong synergy between the government and the private sector is needed to maximize this potential. In this case, support from other countries such as the UK, is expected to encourage collaboration and technology transfer. (Hartatik)
