Wind energy remains a niche

Due to weak winds and a difficult regulatory environment, wind energy in Indonesia will remain only a marginal area within the renewable energies industry.

A look at the digital global wind atlas of the World Bank Group shows that Indonesia is not a particularly good location for the generation of wind energy as the archipelago lies in the low wind zone around the equator. However, this does not mean that there are still areas with permanently strong winds that are suitable for the operation of larger wind turbines. 
 
Still, there is currently no industrial-scale generation of wind energy in sight. After all, there are only two larger wind farms. Both are in South Sulawesi. In 2018, the U.S. UPS Renewables Group commissioned 30 wind turbines with a total generating capacity of 75 megawatts in Sidenreng Rappang ("Sidrap"). Siemens Gamesa supplied the turbines. The project has an investment volume of US$150 million. Capacity is to be expanded in the coming years.

The second location is Jeneponto. There, Vena Energy used funds from the Asian Development Bank (ADB) to build a wind farm with a capacity of 72 megawatts. Siemens Gamesa also supplied the turbines. Vena Energy is planning a second wind farm in the same location. 
 
There are only vague reports of other major wind projects. Most of the time, they amount to nothing more than feasibility studies. Current information about the respective planning stage can hardly be found. It is therefore unclear which projects actually have a chance of being realized.

Only selective wind force studies 
Studies done on behalf of the United Nations have identified several regions in Indonesia with wind speeds of more than 6.5 meters per second. These include Kupang and Oelbubuk (both in East Nusa Tenggara) and Sukabumi and Cikelet (both in West Java). These are selective studies. It has not yet been thoroughly researched whether there are other windy areas in the huge archipelago with an east-west extension of 5,000 kilometers. 
 
At the same time, wind strength alone is not a sufficient factor for economically profitable electricity generation. Because, if necessary, the areas in question would first have to be developed infrastructurally. At the same time, there must also be customers there, otherwise an expensive construction of transmission lines would be necessary. 
 
In addition, private electricity producers complain about the lack of incentives to engage in renewable energies. The state-owned electricity monolith PLN only pays for wind and solar electricity at 85 percent of the regional producer price that it has set itself (if this is above the national average of US 7.86 cents per kilowatt hour). In developed Java and Bali, the producer price is around 7 cents per kilowatt hour. In the underdeveloped east, such as East Nusa Tenggara (NTT), the Moluccas or in Papua, it can be 20 cents per kilowatt hour. However, there are indications that a change in the law in 2020 could overturn the 85 percent rule in favor of renewable energies.

Small wind turbines for off-grid regions 
Even if electricity generation from wind energy in Indonesia is not in sight in the foreseeable future, there are still smaller fields of application. In remote regions that are not connected to the power grid, villages and settlements can be supplied with small wind turbines. Installation and financing are often done there through international development aid. However, no information is available on how many small wind turbines are currently in use. 
 
Another possible application of wind turbines in off-grid regions is hybrid solutions, in the context of which they are used in combination with diesel engines or smaller gas-fired power plants as well as battery storage systems. According to the local requirements, however, one mostly rely on photovoltaics. 
 
According to official figures from the state-owned electricity company PLN, just under one percent of the population was still without a connection to the power grid in 2019, which is around 27 million people (industry experts estimate the number to be somewhat higher). The greatest gaps are found in the east of the archipelago, namely the provinces of Papua, Moluccas and East Nusa-Tenggara.

Moderate extension planned 

The Ministry of Energy and Raw Materials (ESDM)鈥檚 ten-year electricity generation plan ("RUPTL") envisages a six-fold increase in existing wind generation capacities to 855 megawatts by 2028. Taken together however, this corresponds to the performance of a medium-sized coal-fired power plant. 

This means that wind power remains only a small peripheral area of electricity generation. The generation capacity for wind power in 2019 was just 1.5 percent of that of renewable energies - which in turn contributed only 12.4 percent to the total electricity mix. This is why wind energy is often only subsumed under other in the electricity statistics. The focus of renewables in Indonesia is clearly on hydropower and geothermal energy.

Indonesia has committed to 23 percent of renewable energies in electricity generation by 2025 under the Paris Agreement. Hardly more than half of it has been achieved to date. Industry observers therefore assume that this goal will not be achieved. 

 

GTAI is the foreign trade and inward investment agency of the Federal Republic of Germany. The organization advises foreign companies looking to expand their business activities in the German market. It provides information on foreign trade to German companies that seek to enter into foreign markets.