Investment opportunity in Indonesia


During the international conference "Technology cooperation and economic benefit of reduction of GHG emissions in Indonesia" held in Hamburg on 1st and 2nd November 2010, there will be a presentation from the Investment Coordinating Board of Republic of Indonesia (Badan Koordinasi Penanaman Modal - BKPM) concerning the investment opportunity in the sector of renewable energy in Indonesia.


Due to its decreasing oil reserves, Indonesia should shift its primary energy source into non-oil. Hence, through the revised energy policy, the Government of Indonesia adopts the energy mix scenario which further increases the number of coal power plants to reduce the dependence on imported oil. Coal power plants are designed to supply 33 % of energy demand in Indonesia by 2025. Realizing the importance of the development of renewable energy, the Government of Indonesia will also increase the use of renewable energy to supply the 33 % of energy demand in Indonesia by 2025. However, currently, the installed capacity of renewable energy in Indonesia is still far below its potential capacity. For example, the installed capacity of geothermal energy in Indonesia is only app. 3 % of its potential capacity although Indonesia has the biggest geothermal resource in the world, i.e. app. 40 %. 


Energy mix in 2025


The Government of Indonesia also considers to using the renewable energy for rural electrification projects. Of 70,000 villages in Indonesia, more than 91 % of them have already electricity access, either from the electricity grids or stand alone. Despite this advanced condition, only 64 % of households can have electricity access. This problem is mainly due to the geographical difficulties. As the Government of Indonesia sets a new target that 95 % of household should have access to electricity by 2025, Indonesia should provide 1.3 million new electricity connections annually. For this reason, solar, mini / micro hydro, geothermal, and wind energies should be developed to fulfil the electricity demand mainly in the remote areas of Indonesia. Meanwhile, more than 20 % of diesel fuel in 2025 is expected to be made from biodiesel. A similar rapid growth is also expected from bio-ethanol development. Bio-ethanol use is expected to increase by 6.28∙109 litres by 2025, which is equivalent of 15 % of gasoline consumption estimated for that year.