indonesia

of policy and technical regulations published in recent years by the Ministry of Energy and
Mineral Resources. 32
Feed-in tariffs. The number of feed-in tariffs published by the government has increased
remarkably. This includes detailed figures for each type of renewable energy classified by region in
Indonesia. A similarly impressive trend is the rising number of updates to the Indonesian National
Standard published for the renewable energy sector. 33
Economic measures. The energy sector, and renewable energy in particular, was included in
several economic packages issued by the government in 2015 to accelerate economic growth.
Reforms include simplifying licensing and other procedures and emphasizing the construction of
energy infrastructure in remote areas.
Sumba Iconic Island program. The Sumba Iconic Island program, which aims to supply energy
for the whole island of Sumba entirely from renewable energy, is making impressive progress.
A highlight of this initiative is that increasingly programs such as those underway in 2015 have
involved greater participation of government ministries and the private sector, including aid from
foreign parties. Given the existing low electrification rate on the island, however, achieving the
program’s goal will be quite challenging.
Energy Business Opportunities
As the Indonesian economy is still growing at a high rate, there are business opportunities
associated with development of the energy sector. For the current planning period, the electricity
sector will require the largest investment, particularly the program to add 35,000 MW of power
capacity. 34 Much of this funding is expected to come from foreign sources. Development of
downstream infrastructure for domestic natural gas and oil refineries will be the other activities
requiring large investments.
The Indonesian government’s determination to develop renewable energy will surely open
wider business opportunities. Development of geothermal power is an example of a renewable
energy business in which foreign investors have considerable experience in Indonesia. Another
example is hydropower infrastructure, which has been constructed across the archipelago.
Business opportunities can also be found in the development of solar, wind, and tidal energy,
though their application in Indonesia is still limited. The development of bioenergy, such as the
generation of electricity from biomass, the production of wood pellets, or biogas, will increase as
well. Many of the coming renewable energy projects will take place in remote areas or on small
islands of the archipelago.
The development of renewable energy in Indonesia will require not only the construction of
infrastructure but also large-scale capacity-building to improve the country’s human resources
and institutions dealing with the renewable energy business. As a result, the government
might seek greater assistance from foreign parties—through either bilateral or multilateral
cooperation—to increase its capacity to foster the renewable energy business, particularly at
local levels.
32 IEA, “Southeast Asia Energy Outlook,” 32.
33 Ibid.
58
NBR
34 Ibid.
SPECIAL REPORT u DECEMBER 2015