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Indonesia’s PLN to issue RECs, promote clean energy

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Wind turbines generate power in Sidrap regency of South Sulawesi. THE JAKARTA POST

Indonesia’s PLN to issue RECs, promote clean energy

Indonesian state-owned electricity firm PLN will issue renewable energy certificates (RECs) to support the government’s programme to promote the use of clean energy in the country in cooperation with Clean Energy Investment Accelerator (CEIA) Indonesia.

PLN deputy president director Darmawan Prasodjo said the certificate issuance was part of the company’s efforts to push the country’s clean energy agenda by making more use of renewable sources, such as wind, sun, geothermal power and hydropower.

He said PLN currently had renewable energy plants with a combined capacity of 7,681MW and planned to increase that to more than 15,000MW by 2028.

“We need to balance [economic] growth with environmental sustainability; the prosperity of this generation must be passed on to future generations,” Darmawan told reporters late last month, following the signing of a cooperation agreement with CEIA Indonesia on the certificates.

CEIA Indonesia would provide technical assistance to help PLN prepare a generation attribute tracking system – a trading platform designed to meet the needs of buyers and sellers in the REC market.

Darmawan said that, with the REC certificate programme, local companies could buy RECs from the local market, so they no longer needed to purchase them from abroad. “Local companies can get their RECs from anywhere globally, and, unfortunately, Indonesian companies still import their certificates,” he said.

RECs, also known as green tags or renewable energy credits, are issued to green energy-based power producers as part of the global programme to promote the use of clean energy. Power producers will receive an REC certificate for every megawatt-hour of clean energy they produce and can sell the certificate for profit on the open market.

Companies can buy RECs to offset their carbon footprint and support clean energy programmes. By buying the so-called renewable energy credits, companies can claim that the energy they use comes from renewable sources.

Unilever Indonesia head of corporate affairs and sustainability Nurdiana Darus said she was happy that PLN would offer RECs domestically, as her company had so far bought RECs overseas. “I hope [PLN’s REC] price will be competitive as well,” she said.

Meanwhile, World Resources Institute director Nirarta Samadhi said private sector firms were the key players for renewable energy development in Indonesia, as the government could only fund 17 to 20 per cent of its development in the next five years from the state budget, citing figures the 2020-2024 national medium-term development programme.

Darmawan also stressed the private sector’s role in renewable energy development, as some companies had been driving renewable energy demand with self-imposed green energy use.

Sustainability has become a trend among micro to multinational enterprises operating in Indonesia as some companies seek to improve their environmental credentials while raising awareness among consumers and industry players.

The government, meanwhile, has announced plans to increase the share of renewables to 23 per cent of the country’s energy use by 2025. At the same time, however, the government has allowed the continued expansion of coal-fired power plants and subsidises dirty fuel. The country ended 2019 with a share of just 12.36 per cent of renewables in its energy mix, far from the 17.5 per cent target stipulated in the General National Energy Planning road map.

Darmawan claimed there was no need for a government-imposed clean energy policy given the rapid development of renewable energy, as it had been getting more affordable and almost beat fossil fuels.

“The solar power price has started to come down from 12 US cents [per kilowatt-hour] to nine cents and has now reached 5.8 cents, almost nearing the [price of power generated from coal],” he said. “PLN coal-fired power plant contracts eight years ago were priced at 7.5 cents, while PLN solar power contracts now are priced at 5.8 cents. That means we have hope.”

Indonesia Renewable Energy Society chairman Surya Darma, meanwhile, said the government should fast-track the deliberation of the renewable energy bill, which includes rules to implement the REC, but suggested that the RECs should be issued by independent bodies. “I’m sure [there will be a market for RECs] because we are also going to implement a renewable portfolio standard [through the bill].”

THE JAKARTA POST/ASIA NEWS NETWORK

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