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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
Conclusion Several studies by international energy organizations have shown that Indonesia is facing critical energy security problems. Using the “A4&S” analytical framework that examines energy security in terms of availability, accessibility, affordability, acceptability, and sustainability, this essay has reached a similar conclusion. Availability is the most severe challenge to the country’s energy security, due mostly to declining domestic oil production. Likewise, access to energy is still poor for Indonesians living in rural areas and on small islands, including those close to national borders. The government of Indonesia is aware of the country’s energy insecurity and is taking more serious actions to overcome the problem. Renewable energy can play a significant role in improving energy security and is among the top priorities of the current middle-term development planning led by President Jokowi. Potential sources of renewable energy range from geothermal, hydro, solar, and tidal energy to several types of bioenergy. Indonesia has not yet effectively harnessed the potential of most of these energy resources. Its redoubled efforts to develop renewable energy would not only strengthen the country’s energy security but create attractive business opportunities for both domestic and foreign parties. REDEFINING INDONESIA’S ENERGY SECURITY u NUGROHO 59
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the national bureau of asian resear
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NBR Board of Directors Charles W. B
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the national bureau of asian resear
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Indonesia’s strong economic growt
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electricity to cover several millio
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