Indonesia Mulls New Renewable Energy Utility as PLN Resists Costs

Indonesia is considering creating another utility company dedicated to purchasing renewable energy as the state-owned power firm resists buying from renewable sources because of higher costs.

President Joko Widodo wants to triple geothermal output this decade to help cut greenhouse gas emissions, but is struggling to attract investment in renewables as domestic demand for clean power remains uncertain because of a heavy dependence on coal-fired power.

The government supports creating a new state-owned company, PLN Renewable Energy, if existing state-owned utility Perusahaan Listrik Negara (PLN) PLNEG.UL continues to oppose the purchase of renewable energy because of high costs, Rida Mulyana, the energy ministry’s director general of renewable energy, told reporters late Thursday.

“PLN is resisting the purchase of electricity from renewable energy sources. They think it’s too expensive and financially burdensome,” said Mulyana.

Agung Murdifi, PLN’s spokesman, declined to comment on the new SOE proposal.

Shortly after taking office in October 2014, the president unveiled land and regulatory reforms aimed at making Indonesia the world’s largest geothermal energy producer. But investment in renewables has been slow in Southeast Asia’s largest economy.

Southeast Asia’s largest economy has pledged to cut greenhouse gas emissions growth by 29 per cent by 2030. But it also plans to develop more than 35 gigawatts of new power stations by 2019, almost 80 per cent of them coal-fired.

Indonesia, the top thermal coal exporter and palm oil producer, is the world’s fifth biggest greenhouse gas emitter, primarily due to deforestation, peat land degradation and forest fires.

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