The launch of a Chinese-backed coal-fired electricity plant has raised questions about Indonesia’s commitment to renewable energy sources and if it can meet a goal of renewables powering about a quarter of its energy plants, analysts and environmental activists said.
Unit 1 of PLTU Java 7, built in Banten province by the state-owned China Shenhua Energy Company Limited (CSECL) at a cost of U.S. $1.8 billion, began operations on Dec. 16, four months ahead of schedule. The second unit is expected to be completed next year.
Once finished the two units will make up the largest power plant in the sprawling archipelago, Southeast Asia’s most populous nation, officials said. It will have a capacity of 2,000 megawatts (MW) and require 7 million tons of coal each year to churn out all that electricity, they said.
But according to green energy advocates, the plant’s construction is not consistent with the government’s target of using renewable sources to power 23 percent of Indonesia’s energy plants by 2025, as stipulated in the National Energy Plan (RUEN).
President Joko “Jokowi” Widodo launched a program to generate 35,000 MW of electricity after he first took office in 2014. He started his second five-year term last October.
“Almost 80 percent of the targeted 35,000 MW are coal-fired plants. Indonesia is still far from meeting the commitment of the Paris Agreement,” Mamit Setiawan, executive director of Energy Watch, an NGO, told BenarNews.
He was referring to a pact where world leaders meeting the French capital in December 2015 committed their countries to combating climate change and global warming by reducing emissions from fossil-based fuels such as coal.
“Renewable energy still takes a back seat and is not a priority,” he said.
The Java 7 project is being built by a joint venture between China Shenhua Energy and PT Pembangkit Jawa Bali (PJB), a subsidiary of the state-run power company PT PLN. The two companies formed a consortium under the name PT Shenhua Guohua Java Bali Generation (PT SGPJB).
China Shenhua Energy controls a 70 percent stake in the project, which is being funded by a loan from the China Development Bank. CSECL did not respond to a request from BenarNews for comment.
Throughout 2019, Indonesia added 385 MW of renewables, according to the Indonesian Clean Energy Outlook report released by the Institute for Essential Services Reform (IESR) in December.
As of the end of last year, the total installed capacity of renewables was 10,170 MW, with hydropower still dominating, followed by geothermal, bioenergy, wind, solar and waste power, the report said.
Meanwhile, PLN, the state-run power company, predicts that the additional capacity of coal-fired power plants in 2020 could reach 5,500 MW.
In its report, the institute urged the government to improve the climate for investment in renewable energy through a stronger regulatory framework and better planning.
“Although investors started losing their faith in the Indonesian market, the majority of them will still be in the wait-and-see mode,” IESR said. “The return of these investors next year will very much depend on policy and regulation quality.”
“The government must see that 2020 is a year to restore investor confidence and a year to strengthen the foundations of sustainable energy transformation in Indonesia,” the report added.
PLN spokesman Dwi Suryo Abdullah acknowledged that investors in the energy sector were more interested in coal-fired power plants.
In addition to much lower costs, the return on capital is also more guaranteed, he said.
“We’re just talking about the target of fulfilling electricity. In Java, the number of electricity users is huge and we want to avoid another power deficit,” Dwi Suryo told BenarNews.
Java 7 is not the only China-backed project in Indonesia that has come under criticism.
PT North Sumatra Hydro Energy (NSHE), an independent power producer in which China’s ZheFu Holding Group owns a majority stake, is building a 510-megawatt hydropower dam in the Batang Toru rainforest on Sumatra Island.
The plant will divide the habitat of about 800 Tapanuli orangutan and increase the risk of their extinction, environmental groups and scientists have warned.
The Batang Toru Ecosystem is the only known home to the Tapanuli orangutan, a species discovered in 1939. It has been identified as a distinct species. The International Union for Conservation of Nature recently listed the species as critically endangered.
PT North Sumatra Hydro Energy denied that the project would threaten protected animals.
A spokesman for the Ministry of Energy and Mineral Resources (ESDM), Agung Pribadi, said the PLTU Jawa 7 Unit 1 would contribute significantly to the electricity supply on Java and Bali islands, strengthening the regions’ interconnectedness.
“We know that the economy grows rapidly in Java and Bali. With the additional electricity supply from Java 7, industrial supply will be more secure,” Agung told BenarNews.
PLN’s Dwi Suryo argues that the Java 7 plan is far more coal efficient than conventional coal-fired power plants because it uses the so-called ultra-super critical boilers.
The technology, he said, could cut the use of coal to almost half.
But, he said, the company remains committed to promoting renewable energy sources.
“Most importantly, to get investment we still have to look at opportunities. The cost of producing renewable energy is high, not to mention that production is not as efficient as coal,” he said.
However, a member of the House of Representatives’ energy committee, I Nyoman Parta, accused the ministry of energy of not being serious in developing renewable sources despite interest among investors, especially in geothermal.
“It’s just a matter of habit. If you always wake up at 10, being told to wake up at 5 can make your morning upside down,” Bisnis, an Indonesian daily newspaper, quoted Nyoman as saying.