With abundant, unexplored potential in the renewable energy sector, Indonesia has emerged as one of the most appealing markets for German companies wishing to expand their businesses, a business representative says.
The demand for energy was rapidly growing in Indonesia so that it was necessary for the country to build more energy infrastructure, so that German companies could take part by providing technologies to generate energy from renewable sources, said Jan Ronnfeld, managing director of the German-Indonesian Chamber of Industry and Commerce (EKONID).
"The potential of renewable energy in Indonesia is huge. You have a lot of big plantations [whose waste can be utilized to produce electricity], while we have technologies to offer," he told reporters on the sidelines of the Germany-Indonesia Renewable Energy Conference on Monday.
Around two decades ago, Germany was in the same situation as Indonesia is today and was only beginning to develop the use of renewable energy, he continued. Indonesia could learn from Germany in terms of how to create a good system and an investment-friendly regulatory framework, he added.
Ronnfeld revealed that there were eight German companies that had come to the conference in order to explore business opportunities in Indonesia and expand their business networks by meeting members of Indonesian companies.
The eight companies are Energie Baden-Wurttemberg AG (EnBW AG), Ribelga Deutschland GmbH, Schnell Motoren AG, Consulectra GmbH, Suma GmbH, Maxxtec AG, Putmeister Solid Pumps GmbH and Pro2 Anlagentechnik GmbH.
"On regulations in the renewable energy sector, I've seen a lot of progress in the past several years, including the feed-in tariff," said Ronnfeld.
Indonesia has issued several new regulations to help renewable energy businesses grow, such as obliging state electricity company PT PLN to buy power produced from geothermal sources at 9.7 US cents, raising purchasing tariffs for electricity from biomass, biogas and city waste and increasing subsidies for bioethanol and biodiesel.
Ronnfeld suggested that the government expand the feed-in tariff policy to other renewable energy sources, such as solar power.
He added that it would be better if the government allowed independent power producers using renewable energy to directly sell electricity to customers and not to PLN, if they were located in remote areas where PLN had yet to have a power grid.
The bioenergy director at the Energy and Mineral Resources Ministry's directorate general for new, renewable energy and energy conservation, Maritje Hutapea, said that the government welcomed the German companies' interest to invest.
"However, we hope that this cooperation can bring benefits to both parties. We don't want German companies to only sell their technologies but also to transfer them so that we can develop the same technologies by ourselves in the future," she emphasized.
According to the ministry's data, Indonesia has a total of 75,670 megawatts (MW) potential of hydro energy, with only 5,705 MW being utilized. For geothermal energy, the total potential is 29,038 MW, with only 1,189 MW being utilized.
The utilization of mini and micro hydropower (with a capacity of below 10 MW), has reached 462 MW, or 46 percent, from a potential 1,013 MW. The utilization of biomass energy stands at only 3.25 percent, or 1,618 MW out of a potential 49,810 MW.
Indonesia has targeted 25 percent of the country's energy consumption as coming from renewable sources by 2025. In the country's current energy mix, the share of renewable energy stands at only 5 percent. The government also expects a higher usage of biofuel in 2012 after increasing subsidies for biofuel.