Juan Cole Informed Comment
President Prabowo Subianto of Indonesia has just announced a plan to halt all imports of petroleum and liquefied natural gas within three years.
He said, “We must no longer import even a single barrel of oil, God willing, in the shortest possible time.”
That statement is, of course, hyperbole. But much reducing petroleum imports for electricity generation is doable on a short timetable.
It is safe to say that Indonesia does not bulk large in the American imagination. It should be on our radar, of course, as the world’s fourth most populous country (288 million) after India, China, and the United States. It is the most populous Muslim-majority country. It is the 17th largest economy in nominal terms (in the same ballpark as South Korea and Turkiye, and with about 3/4s the GDP of Spain and Mexico). Its military is ranked 13th out of 145 countries in the world. By any metric, Indonesia matters in global affairs.
That is why President Subianto’s launching of 14 solar farms with a total capacity of 5.3 gigawatts of power generation is a huge big deal. The 14 solar farms will cost $7.6 billion USD. And it is only the beginning. Solar farms can be constructed in 18 months. Subianto wants to erect so many that by 2029, Indonesia will have 100 gigawatts of new solar generating capacity. He wants to combine these massive solar installations with mega-batteries, which will store the energy of the sun’s rays during the day and release it at night.
A new 100 gigawatts of solar would reduce emissions by 140 million tons of CO2 per year. It would reduce electricity costs in the country by $4.5 billion a year.
In my view, the reason for this initiative is even more momentous than the project itself. Subianto wants to replace diesel-fueled power plants with the solar farms.
Indonesia is a vast country of 17,000 islands. Most electricity in the world is generated by coal, fossil gas, wind and solar. But islands sometimes use diesel instead. It is easy and inexpensive to ship to an island, compared to heavy coal and more expensive fossil gas.
Indonesia is a major coal producer and that fuel generates 60% of its electricity. But a substantial chunk of the remaining fuel is imported diesel.
The problem is that the Israeli-US war on Iran has caused a shortage of refined diesel, which is hurting Indonesia.
Indonesia has to import 2.7 billion liters of High-Speed Diesel annually, which costs billions of dollars every year. Higher diesel prices because of the Iran War are pushing that cost up. Worse, the Indonesia government subsidizes diesel for consumers, at a cost of another $1.5 billion a year.
Photo by Utku Özen | @utku.zn on Unsplash
While China manufactures most of the photovoltaic solar panels now in use, Germany also has a position in the industry and Indonesia is also attempting to bring in German panels and scientific know-how.
The US is absent from these deals because Trump kneecapped our solar panel manufacturing base.
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