Perusahaan Listrik Negara, the state electricity company, forecasts Indonesia will need at least $77.3 billion in funding to sufficiently develop renewable energy as a source of electricity until 2021, a company official said in Jakarta on Friday.
Mochamad Sofjan, head of the renewable and new energy division at the Jakarta-based company, said that amount would be enough to add another 13,000 megawatts to the country’s power grid over the next eight years.
“During that period, we will build power plants with hydro, geothermal, biomass and solar as energy sources,” Sofyan said.
PLN, which has to provide power to the country’s population of nearly 250 million, has projected that renewable energy will contribute at least 20 percent of the country’s electricity needs by 2021.
“Currently, 86.3 percent of our power plants are powered by conventional energy, while renewable accounts for only 13.7 percent,” he added.
PLN had a total installed capacity of 32,901 megawatts last year.
Overall, renewable energy contributed only 12 percent of the country’s energy consumption, with coal, oil and natural gas accounting for 44 percent, 23 percent and 21 percent, respectively, according to Sofjan.
To achieve the target, PLN would require the assistance from the private sector as it would find it difficult making such a large investment on its own, Sofyan said.
“We are hoping the private sector can make up 47 percent of the investment,” he added.
Sofjan acknowledged some challenges in developing renewable energy, including slow progress in project completion.
He said a renewable power plant would take at least seven years to be completed, with three years alone to be used for exploration and conducting feasibility study.
There are also issues of permits to exploit concessions under the jurisdiction of the Forestry Ministry and the differences in standards set by the central government and the regional government, he added.
To encourage investment in renewable energy, the government has introduced a price mechanism to ensure investors will receive a sufficient and steady return.
It has set a minimum purchasing price of power generated from geothermal at 11 cents to 18 cents per kilowatt hour, depending on location. Solar sources may fetch 25 cents to 30 cents, depending on local component content.