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ThestateofIndonesia'srenewable 17Feb2016: ISPORSPOJoint
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Jul22,2015

TsunamiinAceh 01Feb2016: Indonesiaplayinga

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climatechangedeal

21Jan2016: Indonesialaunches
nationalblueprinttoprotectits
biodiversity

Indonesia's government recently revised its renewable energy target to 23 percent by 2025.
IsthistargetlargeenoughtodriveIndonesiainitstransitiontoagreeneconomy?Whatare
the most pressing issues facing Indonesia in achieving its renewable energy target? We
spoketoVeraniaAndria,ProgrammeManageronRenewableEnergyinitiatives,tohelpshed
lightonthisissue.

TheIndonesiangovernmenthasrecentlyannouncedanewtargettoincreasetheshare
ofrenewableenergyinthetotalenergymixto23percentby2025.Doyouthinkthisis
arealistictarget?Why?

Asalongtermguideline,theGovernmentofIndonesiasNationalEnergyPolicytargetsa23
percent renewable contribution in primary energy in 2025 from the baseline of 4 percent in
2014.

The current government translates the National Energy Policy by targeting 10 to 16 percent
of the renewable energy contribution in primary energy mix by 2019. So the governments
newtargetistoincreasetheshareofrenewableenergyto6to12percentby2019(baseline
4 percent) and to have an additional 35,000 Megawatt (MW) installed capacity for power
generation.

The target to increase the renewable energy share to 6 to 12% in the primary energy mix
meanshaving2,100to4,200MWofrenewablebasedpowerplants.Ahydroandwindpower
plant usually has a capacity of 100 MW. So to achieve the target the government needs to
have42x100MWofrenewableenergypowerplantsinfiveyears.Itisarealistictargetbut
definitely need enabling conditions to attract private investment in the sector because
thegovernmenthaslimitedfiscalcapacitytobuildonitsown.

IsenoughbeingdonetodeveloptherenewableenergysectorinIndonesia?

Not yet. More efforts need to be made in terms of removing barriers in regulation and
financing, and to improve the institutional and technical capacity to promote sustainable
renewableenergyinvestments.

WhataresomeoftheobstaclestherenewableenergysectorinIndonesiaisfacing?

I think the main obstacles in the renewable energy sector in Indonesia are the high initial
costs due to imported technology and operations/maintenance costs and financing
institutions consider renewable energy investment to be high risk so loan interest rates are
high. Additionally, there is a lengthy investment permit process, land availability issues due
totheconflictingstatusoflanduse,andlackofareliabledatasystemonrenewableenergy
potentialresourcesandfeasibleprojectssoverycommonitleadstocostoverrun.

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2/22/2016 ThestateofIndonesia'srenewableenergy|UNDPinIndonesia
Whatkindofpoliciesneededtospurthedevelopmentoftherenewableenergysector
inIndonesia?

Amongothers,theconditionsthatthegovernmentneedstoputinplaceare:

a)Ensuringcleanandclearlandforrenewableenergydevelopment.

b) Issue attractive tariff regulations for purchasing of renewable energybased power

generationbytheStateownedElectricityCompany(PLN)andfornoncommercialmicroand
miniscaleofREtoattractprivateinvestment.

c) Establish innovative renewable energy financing mechanisms that involve concessional,

mixedgrantloanmechanismstoreducefinancingrisks.

d)Streamlinethepermitprocessforrenewableenergyinvestment.

e) Speed up the procurement process for renewable energy developers by applying direct
contracting.

f) Provide incentives for local renewable energy technology manufacturers and R&D
institutionstolowertechnologycostsinthefuture.

g) Build capacity and certification of renewable energy development, operations and

maintenanceserviceproviderstoensurethequalityofprojectfeasibilityandsustainability.

h)Buildreliabledataandinformationsystemsonthepotentialofrenewableenergyresources
andfeasibleprojects.

OurWork SustainableDevelopmentGoals AboutIndonesia

PovertyReduction AnnualReport 1 Eradicateextremepovertyandhunger

2012/2013 Population Poverty
DemocraticGovernance 2 Achieveuniversalprimaryeducation
242 Rate
CrisisPrevention&Recovery 3 Promotegenderequalityandempowerwomen
million 11.40%
Environment&Energy 4 Reducechildmortality
5 Improvematernalhealth
6 CombatHIV/AIDS,malariaandotherdiseases Percapita Human
income Dev.Index
7 Ensureenvironmentalsustainability
$5200 0.684
8 Developaglobalpartnershipfordevelopment

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