Indonesia’s energy sector is making a tremendous transformation to complete energy independence, despite unique challenges of having the world’s fourth largest population spread over thousands of islands. Indonesia, formerly an oil-exporting nation and OPEC member, has long been reliant on oil in its energy mix but since the decline in its oil reserves it has been importing vast quantities of oil to make up the shortfall – instead of utilising its vast local energy resources. Indonesia has enormous reserves of coal and natural gas and is the world’s largest coal exporter. In order to secure its energy supply, Indonesia is aiming to significantly reduce its oil consumption and replace it with local energy resources including coal, gas and renewables. It has set ambitious targets for this transformation and although renewables are not the only focus in these energy targets, the renewable energy sector is likely to experience a period of growth as a result of it.
Indonesia has made commitments to reduce it greenhouse gas emissions and is focusing on the largest source of emissions currently – the land use and forestry sector. However, the share from the energy sector is expected increase and by 2030 it will be the biggest source of national emissions. There is clearly an opportunity to increase the use of renewables to mitigate these emissions.Growth in renewables in Indonesia will be primarily focused on geothermal energy and hydro. The wind and solar industries are still in their infancy. Indonesia has the resources to attract developers from within the country and internationally, particularly in the geothermal, hydro and bioenergy fields. Total investment in renewable energy in 2016’s first quarter came to $327 million and this will likely increase as the industry further develops.
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