Indonesia’s greener electricity supply business plan—2021 RUPTL
After a delay of more than a year, the Ministry of Energy and Mineral Resources released the 2021 electricity supply business plan (2021 RUPTL) in October 2021. The previous RUPTL was issued back in 2019, before the COVID-19 pandemic hit the world. The 2021 RUPTL signals Indonesia's first-ever shift from relying mostly on fossil fuel generation toward renewables.
The lower power demand growth projection is more aligned with the historical pre-pandemic performance. Perusahaan Listrik Negara (PLN) has lowered its power demand forecast owing to a decline in GDP growth by 1.25%, accounting for the COVID-19 impact and recovery time. Over the coming decade, the 2021 electricity supply business plan (RUPTL) projects an average annual power demand growth rate of 4.9% compared with 6.4% in the 2019 RUPTL.
The plan is to shift reliance away from fossil fuels, with larger renewable capacity additions planned. The 2021 RUPTL targets an addition of 21 GW of renewables, a 25% increase from the 2019 RUPTL. In contrast, fossil fuel generation capacity additions decline 50% to just under 20 GW. As a result, the share of capacity additions from renewables in the latest plan has increased from 30% to 52%, clearly indicating the intention to gradually shift away from the reliance on fossil fuels.
The renewables target is unlikely to be met owing to the country's reliance on traditional renewable sources and its unrealistic development timeline. The latest RUPTL plans for a 40-fold increase in solar capacity from the current level but has reduced the planned wind capacity additions by 40%. In contrast, hydropower and geothermal, which have been facing development challenges and delays, have their planned capacity additions relatively unchanged at about 14 GW. A total of 11 GW of renewable capacity is planned to come online by 2025 to meet the renewable generation target. However, IHS Markit has tracked only about 2 GW of capacity under construction, mostly from hydropower and geothermal.
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