Kadin Says Renewables the Key to Heading Off Energy Crisis

Jakarta Globe, Faisal Maliki Baskoro, July 15, 2011

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The Indonesian Chamber of Commerce and Industry has called on the government to show its commitment to developing renewable energy resources through regulations and pricing as the nation tries to reduce its reliance on fossil fuels.

The government had yet to issue any regulations to set the price of renewable energy, which has hampered business plans for developing the resource, said Harry Salman F. Sohar, the deputy for new and renewable energy at the chamber, also known as Kadin.

“Renewable energy is still seen as an alternative, not a solution,” he said. “Developing renewables is necessary, and the government needs to be more serious about this.”

The importance of moving away from fossil fuels and natural gas for electricity generation has been acknowledged in legislation that prioritizes shifting energy use to new and renewable resources, including coalbed methane, nuclear, gasified coal, geothermal, solar and wind.

“There’s still a lack of regulation that is pro-renewables, especially on the pricing mechanism,” Harry said. “Kadin will form a working committee that will provide input to the government.”

Kadin, he said, will propose a feed-in tariff payment plan, which would pay those who operate renewable electricity systems for every kilowatt hour generated based on the cost of production by technology. That means homeowners who have solar panels installed on their roofs would be paid for the surplus electricity that is generated and transmitted to the power grid.

The FIT scheme is already widely used in Europe, Asia and Africa.

According to government data, Indonesia has up to 40 percent of the world’s geothermal reserves, with the potential to produce the equivalent of 28,000 megawatts.

Harry said countries had already committed to helping develop Indonesia’s renewable energy potential, including $364 million coming from the United States. Finland has also set aside $40 million to develop renewables in South Kalimantan and Riau, he added.

According to Shinta Widjaja Kamdani, Kadin’s deputy for the environment and climate change, the government needs to act on developing renewables because fossil fuel reserves could run out as soon as in the next 15 years, leaving the country with an energy crisis. “A major breakthrough needs to happen soon,” she said.

Indonesia’s oil reserves are estimated at 4.7 billion barrels, the equivalent of 15 years’ worth with average domestic consumption of 1,126 million barrels per day, she said, citing data from the BP Statistical Review of World Energy.

At the same time, the use of renewable energy by way of solar, wind and biodiesel has increased significantly over the past four years, she said, citing the International Energy Agency.