The severe power crisis in Indonesia is a boon for many, not least for the environment. Of course, it is a curse for nearly one-third of the country’s population but the good news is that if the torrent of new investments in green power is an indication, brighter days are just ahead.
Spurred by a booming economy, easier regulations, and government enthusiasm; the green power sector is opening up like never before as foreign and domestic investors queue up to take a slice of the pie. Government projections are pegged at nearly triple by 2020 to meet a severe power shortage.
Mochamad Sofyan, head of the new and renewable energy division at state utility PLN, is at the forefront.
“If I had enough time, I would be meeting investors every day”, he said in an interview at his office in south Jakarta, where a white board displayed his many appointments for the day. Two years ago he met with not more than two investors a month. Now, investors from the United States, Japan, Europe, South Korea and China hanker for appointments. Just to give you an idea of the scale, French firms would invest about $2 billion in geothermal projects. Major firms from other countries are not far behind.
Indonesia is replete with green energy sources. The Indonesian archipelago, along the Pacific Ring of Fire, is brimming with volcanoes and super-heated water that can be pumped from deep wells to drive steam turbines. Presently 12 percent is contributed by geothermal; that’s set to touch 18 percent by 2019. Sofyan estimates an additional 6,000 MW from new geothermal projects by 2019 and another 6,100 MW from large and small hydro plants. Right now, about 1,200 MW comes from geothermal plants and 4,000 MW from large hydro.
Inspite of the rush, the Asian bugbear of bureaucracy and red tape was hampering the acceleration of green power projects. Sofyan said that dates of some projects may need to be revised. Despite the problems, foreign investors were bullish on the prospects of doing green business in Indonesia.
