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Going clean in Indonesia

Interview - August 5, 2014
Rida Mulyana,Director General for New and Renewable Energy & Energy Conservation, speaks to United World about the current energy situation of Indonesia and efforts to adopt more renewables into the energy mix, particularly geothermal, in which the country has much potential
Tell us about your background and your motivations for serving as the Director General of New and Renewable Energy & Energy Conservation.

In 1990, I started as a researcher at The Research and Development Center for Oil and Gas Technology (Lemigas) within the Department of Mining and Energy. I graduated from The Bandung Institute of Technology (ITB), specializing in Petroleum Engineering on 1988, and later on obtained my master’s degree at London University, United Kingdom, majoring in Petroleum Engineering on 1992. I was appointed as Secretary of Directorate General of Oil and Gas, Ministry of Energy and Mineral Resources on March, 2009 On the same year, I returned to Lemigas as a Director on August, 2009. From 2010, I was promoted to the Head of the Planning and Cooperation Bureau and in January 2013, I was appointed the Director General of New, Renewable Energy and Energy Conservation. My motivation has been to serve my people and my country as best as I can. I feel that I can do this as the Director.

How would you characterize the current energy situation in Indonesia, and what are the renewable energy solutions that Indonesia should be adopting?

The energy situation in Indonesia is one of dependence on fossil fuel energy. Currently, 94% of our energy comes from fossil fuels, meaning only 6% comes from renewable energy. This is a legacy from a time when we had abundant oil and gas resources. Now however, we are a net importer of oil, we apply a dangerously high fuel subsidy, and we also need more energy to support economic growth of 8%.

The challenge is how to find the energy to support that economic growth. There is massive potential in renewable energy, from below the surface to the sky we have all the forms we need: geothermal, hydropower, solar power and wind energy. We have everything we need to change the energy mix in favor of renewable energy sources. That is why the National Energy Council (DEN) decided that nuclear energy should be the final option.

We have created a road map for developing Indonesia’s renewable energy resources. For generating electricity, there are 2 strategies: the first is harnessing geothermal and hydropower. The second is for remote areas where smaller hydropower and solar power generators will be used. Additionally, to reduce our dependence on imported fuel we will mandate the use of biofuel. We have mandated the increase of renewable energy in the energy mix not only for economic reasons, but also to reduce greenhouse gas emissions.

Indonesia is the world’s number 3 geothermal energy producer. What are your expectations for increasing the use of geothermal in the country?

In terms of geothermal potential, it is currently estimated that we have up to 29 gigawatts of electricity, and are now only utilizing 1.4 gigawatts. So, to develop these resources we have designated 65 geothermal working areas. These are the areas that the government offers to developers for geothermal power generation. In these working areas some developers are producing electricity, some are exploring and others are still negotiating the price. We always try to get them to a stage where they can produce electricity as fast as we can.

In terms of regulation we are working to improve the law regarding geothermal, and we will have a new law on geothermal by the end of July. We developed this law in consultation with investors and bankers, so return on investment is emphasized in the new regulations.

We are attracting investment from Japan the Philippines by doing this. Improvements in pricing, removing the distortion of subsidies in favor of a fixed buying and selling price have made it much more attractive for investment. I believe that geothermal has the potential to become the backbone of the electricity supply in Indonesia.

Part of your role as Director General is the promotion of energy conservation. What progress has been made towards this?

In 2007, we implemented law No. 30 concerning energy conservation and diversification. In terms of conservation we have undertaken many activities, starting with campaigns, issuing various regulations such as Government regulation, presidential regulation, and Ministry regulations; formulating energy efficient standards, implementing energy efficient label, and providing free energy audit . However, the result was not what we expected. This is primarily because electricity remains cheap due to subsidies. When something is cheap, people tend to use more of it.

As a result, trying to encourage energy conservation is very difficult. Hopefully, in the near future we will be able to reduce the subsidies on consumer, industry and government electricity. Ultimately, pricing is the main instrument for encouraging energy conservation because economics are more effective than public campaigns.

How would you describe the human resources environment linked to geothermal projects?

Many people working in geothermal are originally from oil and gas backgrounds. Geothermal has become more appealing; I believe the salary is now better than oil and gas. Unfortunately, there are very few Universities that have a special faculty or discipline in renewable energy. In Indonesia, geothermal studies is only offered at ITB and Gadjah Mada University in Yogyakarta. We still lack human resources across the board in renewable energy, however we are maintaining good communication with the universities in an effort to support and foster interest in renewable energy.

The US is leading the way in terms of investments in geothermal technology. What sort of relationship do you have with US companies?

We are in close communication with any company investing in renewable energy. Our relationship with US companies is very good. Last week I went out to dinner with the President Director of Chevron Geothermal and I think our positive relationship will become a model for others. I think investors have seen the success of US companies and they predict a boom in geothermal energy in Indonesia.

There are no major obstacles in developing a geothermal business here. The regulations are becoming easier to deal with; working areas will come under the responsibility of the central government, unlike the case now whereby the regional government has this responsibility. The simpler the process becomes the more investment from the US, and the rest of the world, we expect to see.

What advice would you give the next President of Indonesia when it comes to energy?

We need to become as sustainable as possible. Firstly, we need to continue exploration for oil and gas, reducing our import dependency. Secondly, we need to reduce dependency through diversification, from oil to gas to biofuel. Thirdly, we need to massively develop and utilize renewable energy and put more focus on energy conservation. These strategies to support Indonesia’s growth should be continued by the next president.

Are renewables the only sustainable way forward?

Renewable energy is the only choice we have and in the future we will be reliant on renewable energy. We need greater technological and financial cooperation, as well as better developed human resources to ensure we become more sustainable. We need to change the energy mix in favor of renewable energy. We have the ambition and we believe it is possible to achieve changes.