The government hopes to double the amount of electricity generated from renewable resources within five years, a move that will require some US$36 billion in investment.
The Energy and Mineral Resources Ministry’s director general for renewable energy, Rida Mulyana, said that his office planned to increase the 10.7 gigawatt (GW) currently generated by renewable resources to 21.5 GW by 2019.
“It is estimated that we will need $36 billion in investment to add 10.8 GW during the period of the new government,” Rida said.
The addition of 10.8 GW is the renewable energy office’s contribution to the new government’s plan to add 35 GW to the power grid over the next five years.
Under the renewable energy expansion plan, hydro power plants are expected to be the biggest contributors. Under the plan, by 2019, hydro power plant capacity is expected to jump by more than 76 percent to 13,393 megawatts (MW) from the current output of 7,572.3 MW.
The single largest boost in hydro power is set to come from the development of the 6,000 MW Kayan hydro power plant in North Kalimantan.
A groundbreaking ceremony for the Kayan plant, which was developed by PT Kayan Hydro Energy, was carried out earlier this year and is expected to be completed in 2018. The project will cost about $1.7 billion, according to Jarman, the director general for electricity at the Energy and Mineral Resources Ministry.
“The project is supported by a number of investors, including from China,” he said previously.
After hydro power, geothermal is slated to make the biggest contribution in the renewable energy expansion plan. Under the plan, geothermal power plants’ installed capacity is projected to increase nearly three-fold, to 4,926.5 MW from the current output of 1,403.5 MW, according to figures from the renewable energy directorate general.
Due to its geographic position atop the “Ring of Fire”, the country sits astride abundant geothermal resources. However, the government has struggled to grow the sector as projects have stalled due to conservation area issues.
Funding is also a challenge, as geothermal plants require high injections of capital and are high-risk, discouraging financial institutions from approving loans. Rida has called on geothermal developers to redouble efforts and to dedicate time and resources to compiling data and statistics to bolster confidence.
“For instance, Supreme Energy initially did explorations on its own. [The company] got the data and power-selling agreement and then they got a funding deal with the ADB [Asian Development Bank],” Rida said.
Supreme Energy recently obtained $50 million from the ADB to fund exploration activities. In geothermal development, exploration is seen as high-risk, as it requires huge amounts of investment with no guarantee that the drilling site will provide enough steam for the development of a plant.