Renewable Energy Development Strategy in Indonesia: CDM Funding Alternative

Abstract

Renewable energy has advantage than non-renewable energy, i.e. environmentally friendly that has low pollutant emission and support sustainable development. Nevertheless, renewable energy development in Indonesia was not growing fast. Besides renewable energy development has a high investment cost, renewable energy reserve is also not so big comparing with non-renewable energy reserve. Recently, renewable energy utilization in Indonesia (hydropower and geothermal power plant) is only about 3 % of the total reserve. It is means that there is still a big opportunity to develop renewable energy. With the coming of economic crisis since 1997, the growth of electricity demand is not enough to drive renewable energy development. Therefore, there should be assessed and developed new strategy for renewable energy, such as to develop integrated industrial estate for big hydropower and utilization of non-electricity purpose for geothermal. The other strategy is to sell Greenhouse Gas (GHG) emissions reduction via Clean Development Mechanism (CDM) to reduced investment cost. Under CDM regime developed countries can undertake collaborative project to reduce GHG gases in developing countries. Indonesia has potency to reduce GHG emission about 17.1 million tC along the period 1995-2025 with cost about 0.8 ñ 7.8 US$/tC using hydropower power plant. While using geothermal power plant is expected about 100.9 million tC will be reduced with cost of 43.9 US$/tC.