Indonesia is a large country comprised of more than 17,000 islands covering 1.9 million square feet. The population of close to 240 million people inhabits 6,000 of those islands, with 70 percent of the population living on Java and Bali and the remainder disbursed throughout Sumatra, Kalimantan, Papua, Nusa Tenggara and a variety of other islands. As an archipelagic nation, geographic and demographic circumstances make energy service provision particularly challenging. A vast energy infrastructure is required to ensure that fuel supply and distribution meets demand.
In Indonesia, the demand for energy rises in parallel with population and economic growth. Currently, Indonesia relies heavily on fossil fuels to meet its energy demands despite the fact that fossil fuel reserves are limited. Electric power plants are powered by diesel-fueled generators that compound the cost of electricity. There is, however, a huge potential for renewable energy to dominate Indonesia’s energy portfolio. For many of Indonesia’s isolated islands and regions, provision of basic energy needs through off-grid renewable energy resources is an economically viable and environmentally sound option. Few countries in the world offer the renewable energy potential of Indonesia. The country is home to 40 percent of the world’s known geothermal resource and offers opportunities in wind, solar, biomass, and hydropower. Renewable energy (RE) sources have an important role to play, alongside conventional energy sources, such as fossil fuels. This kind of diversified energy portfolio supports the achievement of the UN Millennium Development Goals. In many rural or remote areas far from the national grid, tapping into and investing in RE can have a greater comparative advantage than traditional energy sources such as coal and large hydro.
In remote areas and small islands, the energy infrastructure is insufficient and fuel distribution systems do not reach the poorest communities, making fuel supply and distribution prohibitively expensive for the country’s poorest people, who represent 27 % of the population, in the eastern regions even up to 44%.
To overcome developmental gaps in Indonesia, the government has carried out rural energy projects. In Remote areas with no access to oil, natural gas, or electricity through national networks or grids, the use of RE technologies and the exploitation of locally available RE resources are the only economically and environmentally viable options for the provision of energy services.
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