A renewable energy bill that has been included in the House of Representatives’ National Legislation Program (Prolegnas), is expected to solve issues related to regulations obstructing the growth of green energy in the country, according to an environmental law expert.
Grita “Ninda” Anindarini, a researcher at NGO Indonesian Center for Environmental Law (ICEL), said the absence of legislation specifically regulating the renewable energy sector had led to legal uncertainty in the development of green energy in the country.
“Legal uncertainty poses a challenge to investors wanting to develop a renewable energy project in the country. This is probably what the government is trying to address through the bill,” she told a media briefing in Jakarta on Friday.
Ninda, who oversees pollution control research at ICEL, said the bill sought to improve the regulatory climate by filling the legal vacuum.
Laws related to renewable energy are currently scattered across different pieces of legislation, such as Law No. 30/2007 on energy, Law No. 30/2009 on electricity or several energy and mineral resources ministerial regulations.
The country’s slow growth of renewable energy can be seen in the proportion of renewables in the energy mix, which was at 12.36 percent last year and lower than the government’s target of 17.5 percent set in the General National Energy Planning (RUEN) road map. The government is seeking to increase the proportion of renewables to at least 23 percent in 2025 and 31 percent in 2050.
“We should try to provide a firm legal basis for the renewable energy sector to give certainty, so it can grow significantly,” said Sugeng Suparwoto, head of the House Commission VII overseeing energy, which initiated the planned bill.
The commission was planning to establish on Thursday a working group to draft the bill and to invite the government for a meeting, he said after a meeting between the commission and state-owned electricity firm (PLN) on Tuesday.
Energy and Mineral Resources Ministry spokesman Agung Pribadi told The Jakarta Post on Saturday that he “just heard about the [planned] bill”. The ministry’s director of diversified new and renewable energy, Harris, also said he was not aware of the bill.
According to Indonesian Renewable Energy Society (METI) chairman Surya Darma, the planned bill should cover issues related to pricing scheme, renewable energy certification and obligation for companies to develop a green power plant, funding, incentives and permits.
“This is to give legal certainty to businesses because up to this point, the ministerial regulations kept changing, which made the sector less attractive to investors,” he told the Post on Saturday.
Energy and Mineral Resources Ministerial Regulation No. 50/2017, for example, was seen as bureaucratic red tape hampering the development of renewables, according to energy think tank Institute for Essential Services Reform (IESR). The regulation sets the cap for renewable energy prices, among other things, at 85 percent of local electricity supply cost (BPP).
“The BPP scheme has failed to attract investors,” Surya said. “We have proposed the government to stop its implementation.”
Sugeng told the press that the planned bill would not cover a pricing scheme and the matter would be regulated by the government.
According to Energy and Mineral Resources Ministerial Regulation No. 55/2019, in Jakarta, for example, the ceiling price is 8.6 US cents per kilowatt hour (kWh) or 85 percent of the regional BPP at 10.18 US cents per kWh.
Alin Himatussaidah, an economist and expert on natural resources at the Social and Economic Research Institution of the University of Indonesia’s Economic and Business School, said the BPP scheme was flawed because the price ceiling was based on average regional supply costs.
“It should use a feed-in tariff scheme instead,” she added.
Under a feed-in tariff scheme, the price of renewables is based on the production cost, which takes into account the technological needs.
“Failure to achieve the target of renewables proportion in the national energy mix indicates stalled growth,” she told the Post in a phone interview on Saturday. “The government should identify why the market did not grow and what it can do to give support.” (dfr)