Indonesia needs legal breakthrough to boost renewable energy

Indonesia needs to remove a host of legal barriers if it wants to boost development in alternative energy sources such as geothermal, solar, and hydropower plants, a senior government official said.
Rida Mulyana, the director general of new and renewable energy at the Energy and Mineral Resources Ministry said on September 30, that the forestry law should be revised in order to accelerate the development of geothermal power plants.
“Without a legal breakthrough, much of the geothermal reserves cannot be developed because they contravene the forestry law,” he told reporters at the Asia-Pacific Economic Cooperation (APEC) conference on clean and renewable energy.
The existing forestry law prohibits open-pit mining in protected forests, but Rida said that geothermal exploration activities should be exempted from the law because unlike mining activities, geothermal drilling would not damage the environment.
Indonesia has been encouraged to use renewable energy sources. To support its fast-growing economy, Indonesia remains highly dependent on fossil fuels such as oil and coal, which can cause serious environmental damage.
According to the Energy and Mineral Resources Ministry’s data, approximately 70% of total electricity in the country is generated from oil and coal-fired power plants, as compared to 5% generated from renewable energy sources.
Indonesia is blessed with immense amounts of energy from the sun, with a large fraction of the archipelago located on the equator. It also possesses 40% of the world’s geothermal reserves, with total energy potential in various spots in the country estimated to be able to provide around 29,000 megawatts (MW).
Indonesian Renewable Energy Society (IRES) Chairman Rachmat Gobel said the country needed an integrated strategy to promote the use of renewable energy.
He said the government planned to revise the law to remove the legal uncertainty.
Apart from that, Rachmat pointed out that certain fiscal incentives, including government subsidies, would be effective aids in helping to expand the utilization of alternative energy sources on a wider scale and spur investment in ecofriendly projects.
The government already offers tax holidays for investment projects that generate power from renewable energy sources such as geothermal power plants, but business players agree that they are still insufficient to encourage widespread private investment in the sector.
Observers have said that the development of renewable energy was also imperative for Indonesia’s economic stability, as the country’s addiction to coal and oil had led to a significant increase in oil imports, enlarging its current account deficit.
The operation of all the coal and oil power plants throughout the country uses at least 6 million kiloliters (kl) of subsidized fuel annually, according to Nasri Sebayang, state-run electricity firm PT PLN’s director of construction and renewable energy.
(October 1, 2013)