Jokowi’s Decade in Review: Indonesia’s Energy Transition in Regress [Op-Ed]

Vietnam’s economic growth in the last decade has been 6-7%, making it the highest among ASEAN countries. At the same time, its renewable energy production has increased to 118.82 TWh, or 43% of its total energy production in 2023. Vietnam’s renewable energy (RE) sector is experiencing growth due to several supportive policies encouraging investment in renewable energy. The Vietnamese government recently implemented regulations permitting direct power purchase agreements for renewable energy between private project developers and consumers. On the other hand, during President Joko Widodo’s leadership (2014 – 2024), Indonesia has not yet passed any specific statutory regulations governing the energy transition.

According to Yayasan Indonesia CERAH’s policy review titled “Probing President Jokowi’s Energy Policies: Progress or Regress?” President Jokowi’s energy sector policies are hindering the growth and development of Indonesia’s renewable energy sector. Instead, they facilitated more CFPPs (coal-fired power plants) and fossil fuel expansion. The “Job Creation” Law and its pernickety list of amendments is often regarded as the main culprit. Nevertheless, the study found that this issue may be symptomatic of a wider problem.

Committing to The Paris Agreement

During President Jokowi’s first term, Indonesia signed the Paris Agreement in 2015 and ratified it through Law No. 16/2016 on the Ratification of the Paris Agreement. As stated by its NDC (Nationally Determined Contribution), Indonesia committed to reducing its emissions. This commitment outlined a total reduction of 834 million tons of CO2e by 2030, with the energy sector responsible for reducing 314 million tons of CO2e—approximately 37.6% of the total reduction target.

Nevertheless, attempts to reduce Indonesia’s emissions from its energy sectors were hindered by legacy issues. Law No. 30/2007 on Energy and Government Regulation No. 79/2014 on the National Energy Policy cemented notions of NRE (New and Renewable Energy), which distracted Indonesia’s energy transition efforts. NRE equates fossil fuel derivatives such as liquefied coal, gaseous coal, and coalbed methane with more sustainable and lower-emission renewable energy options. Unfortunately, the term NRE has also made its way into the new government-elect, Prabowo-Gibran mission statement.

Supporting the Fossil Fuel Industry

The Job Creation Law amended Law No. 3/2020 on Mineral and Coal Mining. This regulation stipulates that companies involved in downstream activities or increasing the value of commodities – mainly in the coal industry and nickel smelters – can forgo royalties. As a result, CERAH estimates that the country could potentially lose around US$237.5 million or IDR 3.9 trillion annually in Non-Tax State Revenue.

This estimate is based on the Ministry of Energy and Mineral Resources (ESDM) calculations, using data from seven mining companies projected to require 19.17 million tons of coal annually to produce Dimethyl Ether (DME) or Methanol. If the government were serious about the energy transition, maintaining the royalty fees and using the funds to develop renewables would help the country fulfil more of its NDC commitments.

In 2022, President Jokowi also ratified Presidential Regulation No. 112/2022, which allowed the construction of captive CFPPs in areas connected to industrial areas and special economic zones. The Institute for Energy Economics and Financial Analysis (IEEFA) notes that Indonesia’s captive CFPP capacity is currently around 13 GW or 32% of the 40.7 GW total generating capacity in 2023. This number will increase as plans to build captive CFPPs up to 21 GW throughout Indonesia – or half of the total national generating capacity in 2023.

CERAH has calculated that, between 2015 and 2023, Indonesia produced excess electricity of around 292 GWh out of 825,000 GWh purchased by PLN from Independent Power Producers. More than half of the excess electricity purchased is dominated by coal – which costs the state budget up to IDR 297.37 trillion. By continuing to pay for this unused excess capacity, the government is subsidising the fossil industry while hampering the growth of its renewable energy sector.

Retarding Renewable Energy

According to the International Renewable Energy Agency (IRENA, 2022), Indonesia has 3,506.6 GW of wind and solar energy potential, while Vietnam is almost twice as small at 1,197.2 GW. However, Indonesia’s renewable energy development for both types of energy is only 0.178 GW, or 109 times smaller than Vietnam’s 19.5 GW—the highest in ASEAN (Global Energy Monitor, 2024).

The solar power capacity utilised by Indonesia is only 574 MW (0.016%) of its total potential. Ironically, in January 2024, the Indonesian government removed incentives for potential rooftop PLTS users in the form of surplus electricity bills that are exported to PLN. Although users can only use this incentive to reduce electricity bills the following month, removing it entirely shows just how intent they are in hampering renewable energy generation in Indonesia. Subsequently, the quota for installing rooftop PLTS is limited to only being done twice a year in January and July. This change was ratified through Ministerial Regulation (Permen) of Energy and Mineral Resources No. 2/2024 on Rooftop Solar (PLTS) Connected to the Electric Power Network Holders of Business Permits for Providing Electricity for Public Use (IUPTLU), which replaced the Minister of Energy and Mineral Resources Regulation No. 26/2021.

These changes have been reported to reduce people’s enthusiasm for installing rooftop solar PV. This is clearly cause for concern, considering rooftop PV is the quickest and easiest way to achieve renewable energy growth targets. Solar rooftops do not require large investments, do not cause land use changes, and can be retrofitted relatively quickly and easily on the roof of a house or office building.

For reference, The Ministry of Energy and Mineral Resources noted that PLN customers who installed rooftop PLTS reached 8,491 users with a total capacity of 141 MW as of December 2023. This capacity is almost equivalent to the 145 MW Cirata floating Solar Farm – the largest in Southeast Asia. Rather than finding more ways to hamper its growth, the government would do well to show more support for rooftop solar to achieve its NDC targets. Although the last decade is already set in stone, it is not too late for President-elect Prabowo to show his seriousness regarding Indonesia’s sovereignty – especially regarding energy generation.

Renewable energy development produces more jobs than fossil fuel options for the same amount of investment or installed capacity—a key statistic if we want to ensure that Indonesia’s demographic dividend does not turn into a demographic time bomb. The president-elect could easily reap these benefits by removing mentions of “new energy” and focusing more on renewable energy. The future of Indonesia lies in his willingness to undo the sins of his vice-president’s father.

Sartika Nur Shalati is a researcher at CERAH. She has seven years of experience working in non-government organisations as a researcher on climate, energy, and gender issues. She joined CERAH in February 2022.

About CERAH

Yayasan Indonesia Cerah, also known as CERAH, is an Indonesian non-profit organisation working to advance Indonesia’s energy transition policy agenda. CERAH combines deep energy sector knowledge, cutting-edge communications capacity, and a campaigner’s desire for change.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Energy Tracker As