Jakarta, INTI - The Institute for Development of Economics and Finance (INDEF) and Systemiq have proposed the implementation of renewable energy zones (REZ).
They recommend that these zones be implemented in industrial areas, special economic zones, or sustainable industrial areas. With this model, the pursuit of economic growth targets can be aligned with energy transition targets.
"So we are shifting from project-by-project planning to zone or area-level planning," said Systemiq Director, Batari Saraswati, at a public discussion in Jakarta on Tuesday, April 28.
Furthermore, with this model, renewable energy developers no longer need to go through initial negotiations, find land, manage complex permits, or conduct repeated feasibility studies. Batari said that projects can enter the procurement process in a more ready and lower-risk condition.
Eight Percent Economic Growth Target
Based on Systemiq's analysis, with an economic growth scenario of eight percent per year, national electricity consumption will increase to 600 TWh by 2029. Currently, national electricity consumption is around 411 TWh. This increased demand can be met by various renewable energy power plants.
Executive Director of INDEF, Imaduddin Abdullah, stated that Indonesia's ambitious economic growth target of eight percent per year requires a new economic growth engine.
According to him, Indonesia cannot rely solely on fossil fuels like coal for its economic growth. Moreover, its price is no longer competitive. He said that the coal windfall is not enough to boost Indonesia’s economy or exports.
Meanwhile, global investment is shifting to clean energy and technology, particularly for power generation and transportation. Therefore, the development of REZs for economic or industrial zones is considered an appropriate model to support the energy transition while creating new investment opportunities.
The Government Has to Step In
According to Arief Sudianto, VP of Electricity System Planning at PT PLN (Persero) Tbk, the REZ scheme helps address the demand for clean electricity. This is because if power plants are integrated with industrial areas, there is guaranteed to be a market for this clean electricity.
The problem is that in Indonesia, industrial areas tend to be far from renewable energy development locations. For example, the nickel smelting industry is located in South Sulawesi, while potential hydroelectric power plants are located in West and Central Sulawesi. Same case as industrial centers that are in Java, but renewable energy generation locations are in Sumatra.
"This means transmission is still needed. The challenge is the same: we have to acquire land for transmission," said Arief. Therefore, he hopes the government can intervene to prepare land for renewable energy development and transmission.
Conclusion
INDEF and Systemiq have proposed the concept of renewable energy zones (REZs) for industrial areas to align economic growth with the energy transition. This model is considered to facilitate the development of renewable energy projects and attract investment. Electricity demand is projected to increase significantly, while reliance on fossil fuels is deemed insufficient. However, PT PLN (Persero) highlighted that there are challenges on this, such as far distances between industrial areas and renewable energy sources.
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