Indonesia’s wind energy sector yet to take off-
As Indonesia gears up to meets its target of achieving a renewable energy share of 23 per cent in the overall energy mix by 2025, it is looking at exploiting all available sources. Currently, the archipelago relies mainly on coal-based power, which accounts for a share of nearly 60 per cent in the energy mix, followed by natural gas at 25 per cent. Renewables account for a share of 11.5 per cent with hydro and geothermal having the highest shares of 6.3 per cent and 4.7 per cent respectively, with the rest (0.5 per cent) being contributed by other renewables such as solar and wind power.
The focus on expanding renewables comes in the backdrop of meeting climate change commitments under the COP 21 Paris agreement as well as to reduce the dependence on fossil fuels in order to achieve energy security. Further, renewable energy provides a promising option for electrifying remote islands in the country, all of which are not connected to the central transmission network as extending the grid to these islands is not economically viable. Although the hydro and geothermal segments have received adequate government focus owing to their significant potential, wind power is developing at a slow pace despite it being one of the cheapest, most mature and fastest growing renewable energy technologies globally. The installed wind power capacity in the country was merely 1.12 MW as of 2016 and it is only recently that the country’s first commercial wind farm was commissioned – the 75 MW Sidrap-I project. So what is the future of wind power in Indonesia, what is hampering its development, and what can be done to address the challenges? Southeast Asia Infrastructure takes a look…
Potential
As per IRENA, Indonesia has an onshore wind energy potential of 9.3 GW. The Jawa-Bali region and the Sulawesi and Nusa Tenggara region together account for nearly 84 per cent of this potential while the rest is distributed in the Sumatra, Kalimantan, and Maluku and Papua regions. The National Institute of Aeronautics has evaluated nearly 171 sites so far (2017) at a measurement height of 50 metres.
Key projects
The Sidrap-I wind farm project – the largest wind project in Indonesia – was commissioned in March 2018. The project, located in South Sulawesi, has been developed by UPC Renewables Indonesia – an alliance of global clean energy firm UPC Renewables and local partner PT Binatek Energi Terbarukan. In an official news release, Rida Mulyana, director general of New Energy, Renewable Energy and Conservation (EBTKE), stated that, “This (Sidrap-I project) is our pride as well and also a proof that the government is serious about developing renewable energy.”
The project is expected to provide electricity to nearly 72,000 consumers, meeting about 6 per cent of the electricity needs of South Sulawesi, West Sulawesi and Palu. The wind farm has 30 wind turbines each with a capacity of 2.5 MW, a height of 80 metres, and 57 metre long blades. The turbines were supplied by Siemens Gamesa.
In addition, there are a few other wind power projects in the pipeline. These include Sidrap-II (50 MW), Jeneponto (72 MW), Tanah Laut (70 MW) and Selayar (5 MW). The Indonesian energy ministry has also identified a number of areas to establish wind farms – East Nusa Tenggara (10.2 MW), East Java (7.9 MW), West Java (7MW), Central Java (5.2 MW) and South Sulawesi (4.2 MW). Overall, the Indonesian government has plans to promote the development of 22 wind power plants in the country.
Cost economics
The cost of generation of wind power varies considerably depending on their nature (off-grid or grid-connected), project size (small scale or commercial utility scale) and location (high-wind or low-wind sites). As per IRENA, the weighted average levellised cost of electricity is about $100 per MWh for wind power compared to over $200 per MWh for solar power and $150 per MWh for bioenergy.
As per Regulations 12/2017 and 50/2017 notified by the Indonesian government, the electricity tariffs for renewable energy are to be fixed at a maximum of 85 per cent of the local basic production cost. Accordingly, the tariff of the Sidrap-I project works out to around 11 cents per kWh. However, the energy ministry has requested the developers to keep the tariff for the Sidrap-II project low – below 7 cents per kWh – in order to make it more affordable to consumers.
Challenges
A lack of high wind speed and uneven distribution of wind resources, particularly in inland sites, is a key challenge in the development of wind power in Indonesia. There are a limited number of potential sites for development of wind farms in the country. The mean wind speed at a height of 80 metres above ground is in the range of 3-4 metres per second in inland sites and 5-6 metres per second in coastal areas. As per industry experts, a wind farm is suitable in areas that have a wind speed of over 4 metres per second. In addition, most sites with good wind resources are in the densely populated areas of Java while the sites in remote areas where land is available at a low cost have poor wind resources. However, the lack of sites or low wind speed does not imply that wind power projects cannot be developed although the potential for large-scale projects is limited.
The lack of accurate wind resource availability data and assessment studies is another issue hampering the development of wind power. Although wind data assessment studies have been conducted by various institutes such as the National Meteorological Agency, National Institute of Aeronautics and Space, Winrock International (US), Win Guard (Germany) and NipSA (Spain), it is not complete. There are still certain inaccessible and remote locations where wind resource potential has not been ascertained.
Another challenge is the relatively high capital cost of wind farms vis-à-vis coal-based power plants. There is need for green incentives or subsidies to accelerate the development of wind power plants. In addition, developers need to be provided with adequate returns through remunerative tariffs. The provision of capping tariff to 85 per cent of local average electricity generation cost does not augur well for the industry. In some regions, the local average generation cost is substantially lower than the typical generation cost of most types of renewable energy plants in Indonesia. The regulations were adopted to align renewable energy tariffs with the cost of coal-based electricity but have negatively affected the development of renewable energy projects. A number of wind energy projects have been stalled owing to this provision. As per developers, the new pricing mechanism does not take into account the environmental benefits of renewable energy.
To address this issue, the Indonesian regulators need to consider the interests of both developers as well as consumers while fixing tariffs. They can take cues from India, which has achieved a remarkable reduction in wind power tariffs through reverse auctions and competitive bidding. In an auction conducted in February 2017, the wind power prices crashed to Rs 2.64 per kWh (4.1 cents per kWh) as against the prevailing feed-in tariff of over Rs 4 per kWh (6.2 cents per kWh).
Other challenges hampering wind power development include an uncertain policy framework, regulatory delays, and subsidies to the coal industry.
The way forward
Although the challenges are aplenty, viable wind power projects can be developed with stringent cost control and the cooperation of stakeholders. Further, with a decline in the cost of renewable energy technologies as well as development of advanced wind turbines that can operate at low wind speeds, Indonesia can successfully harness the potential of this natural resource. The Indonesian government is also working in collaboration with European countries, including Denmark, to promote and develop its wind energy sector. The mapping of wind power resources and energy studies has also been undertaken by the two countries jointly.
To sum up, some initiatives are being taken by the Indonesian government to drive the uptake of wind energy in the country but there is still a long way to.
