Thermal power to command Indonesia’s energy mix in next decade

Major global economies are moving away from coal to curb their carbon emission. This has landed Indonesia in a tight spot as thermal power capacity is expected to maintain its dominance in the country during 2021-2030.

In 2020, thermal power capacity in Indonesia was 59.38GW, making its share 85.6% of total power capacity. Indonesia produced 83.2% of its power generation from thermal sources. Thermal power capacity is expected to reach 92.53GW by 2030, maintaining its dominance in the country. During 2021-2030, thermal power generation will be dominated by coal-based electricity generation.

In the last two years, the Indonesian Government has signalled that they plan to transition away from coal power. The energy ministry even announced that they are considering shutting down ageing coal power plants to replace with renewable power plants. However, with no nuclear power capacity and minimal hydropower capacity, a rapid transitioning from dominant thermal power to renewable power would threaten the energy security of the country.

The growth of renewable power in Indonesia is still in its early phase. In 2000, renewable power capacity in Indonesia stood at 1.3GW, which increased to 4.3GW in 2020. Renewable power capacity is expected to grow at a CAGR of 12.5% to reach 14.9GW by 2030.

By 2030, the country is expected to produce 62.2TWh of its electricity from renewable sources, which will only be around 13% of total power generation in the country.

Indonesia has a significant potential for renewable power development. But, compared to other APAC countries, Indonesia lags in renewable energy development. One of the prominent factors causing this slow growth is the absence of a decisive renewable energy policy and over-regulation with respect to foreign investment.

Moreover, coal is one of the major drivers for the Indonesian economy. Indonesia is one of the major producers of coal in the world, with coal-based power generation offering energy independence for the country. Moving away from coal not only threatens energy security of the country, but it also impacts the economic stability.