Electric Energy Transition In Supporting Energy Self-Sufficiency, Especially In Rural Areas

JAKARTA - Utilization of renewable energy as a source of electricity supply can be one of the strategies to achieve self-sufficiency in Indonesia's energy. Through President Prabowo's direction at the Inauguration Speech on October 20, 2024, Indonesia will focus on managing renewable energy to achieve energy self-sufficiency in accordance with Asta Cita. This directive is the main reference for the preparation of the 2025-2029 National Medium-Term Development Plan (RPJMN), especially in the electricity sector.

According to the Ministry of Energy and Mineral Resources, the potential for renewable energy in Indonesia is up to 3,686 GW. Even the IESR (2022) study indicates that there is a greater potential for renewable energy, reaching more than 7,800 GW, with more than 75 percent being a source of solar energy. However, the large amount of renewable energy that exists has not been utilized optimally, especially in rural areas.

Although the electrification ratio is close to 100 percent, currently there are still several challenges, including uneven quality of electricity services between regions, high dependence on fossil energy, low utilization of local renewable energy sources, and the distance between renewable energy resources and the center of load/electric energy demand (spatial mismatch).

Data from KESDM until November 2024 shows that there are still around 86 villages that do not yet have access to electricity. Therefore, it is necessary to encourage the construction of renewable power plants according to local energy potential and dedieselization, the construction of distribution and isolation networks and the development of rural electricity.

The use of renewable electricity can also support the decline in energy imports and support the achievement of infrastructure stock targets in economic growth. The increasing fulfillment of electricity needs per capita can show the advancement of the economy of a country. To increase access to renewable electricity, Indonesia needs to encourage the development of electricity infrastructure and digital technology that can support increased connectivity and renewable electricity integration.

The need for national electricity infrastructure financing, including the development of electricity infrastructure in rural areas, is very large, so the Government continues to encourage investment involvement from the private sector.

Deputy for Facilities and Infrastructure, Ministry of National Development Planning/Bappenas, Ervan Maksum said that to achieve the energy transition target, you cannot only rely on financing from the State Revenue and Expenditure Budget (APBN) or the Regional Revenue and Expenditure Budget (APBD).

Energy transitions in Indonesia require alternative financing from non-governmental sources, and the involvement of private capital to achieve targets in the electricity sector. For this reason, the government has prepared a regulatory framework and policies to mobilize funding and private investment.

Collaboration with various private companies and capital-owning institutions is very necessary. One of the initiatives that can be offered to the company is the use of environmental funds, sustainability and governance (ESG) which is directed to support renewable energy projects in villages, as the company's obligation to reduce carbon emissions from its business activities," said Ervan, in his statement, Sunday, November 24.

The Director of Electricity, Telecommunications and Information Technology, Ministry of National Development Planning/Bappenas, Taufiq Hidayat Putra stated that the electricity sector planning in Indonesia includes quality electricity access, not only to industry, but also to all levels of society, especially in villages.

The Indonesian government and all stakeholders must work hand in hand to achieve the energy transition in the electricity sector. We must support our brothers and sisters who are in the village, especially to enjoy clean, safe and affordable electricity with renewable energy potential in their respective regions. With quality electricity, rural communities can receive various benefits in various fields, one of which is modernization in agricultural activities or what is often called electrifying agriculture. Meanwhile, in fishing villages, quality electricity access allows the provision of cold storage to store fresh fish catch results for longer," he explained.

"To produce reliable electricity in the village, the challenges related to the spatial mismatch between the location of the renewable energy source of electricity and the location of industrial centers and economic activities, as well as the community, need to be answered through holistic, integrative, and comprehensive planning with the construction of a transmission network and electricity distribution that is integrated with the plan to build a renewable power plant," said Taufiq.

Executive Director of the Institute for Essential Services Reform (IESR), Fabby Tumiwa, emphasized that the Indonesian government needs to prepare a roadmap for energy transition with the cheapest choice of costs, ensuring optimal and fair supply reliability. According to Fabby, through the latest energy transition, Indonesia can increase its ambition to reduce GHG emissions in line with the 1.5 degree Celsius target targeted by the Paris Agreement.

"Emission reduction is very important for Indonesia, because as an archipelagic country, people in the 3T (Front, Outermost and Disadvantaged) areas are very vulnerable to -impacts caused by increasing geothermal temperatures. Providing electricity and reliable, affordable and clean in rural areas and 3T is very possible by utilizing the potential of local renewable energy to replace the 3 GW PLT Diesel which is spread. With this in addition to accessing electricity, reducing emissions and the cost of providing electricity can occur," said Fabby.

On the other hand, to increase the appeal for investors, Deni Gumilang, Project Lead Clean, Affordable and Secure Energy for Southeast Asia (CASE for SEA) in Indonesia, GIZ Energy Program for Indonesia/ASEAN underlines the importance of developing polycy derisking instruments aimed at mitigating transaction risks, considering that challenges in policies and regulations are still considered as the main obstacle in developing renewable energy in Indonesia. In addition, financial risk mitigation instruments also need to be developed in parallel to create momentum that allows optimizing the distribution of funding from investors, in order to encourage the growth of the renewable energy market.

"Indonesia has great potential in developing renewable energy that attracts the interest of many investors. However, the high risk in renewable energy projects is an obstacle to the entry of investment. The application of polycy and finance derising instruments is expected to open up opportunities for real financing implementation for Indonesia," explained Deni.