Today BRR Media speaks with Daniel Solomon from DibbsBarker’s Renewable Energy team, and we’re talking about a recent report by Austrade which identified a number of opportunities for Australian businesses in the low emissions technology and services sector in Indonesia.  Welcome Daniel.

Thanks David.

Daniel what’s the current energy mix look like in Indonesia and what sort of targets does it have for renewable or low emissions energy?

The current energy mix in Indonesia is largely based around fossil fuels, I think you’re looking at around 39% for coal, about 28% for gas and 23% for oil, hydro and geothermal are the other main players in that game so hydro’s around 7% and geothermal around 3%.  Indonesia I guess is experiencing pressures that aren’t unique to Indonesia or any developing country, it’s got estimated economic growth of around 7% per annum and a population growth of around 1.5% per annum and that’s going to start putting pressure on electricity demands.  And so they’ve got electricity demand growth you know 20 year average predicted to be 9.5%.  So obviously the Government’s looking at addressing that issue and it’s looking at addressing it in a sustainable way not just based on you know continued reliance on fossil fuels.  So it used to have a target of increasing utilisation of renewable energy by 17% by 2025, they’ve revised that now and they’re looking at 25% by 2025, so they’ve called this strategy Vision 2525 and they’re looking as well on the energy efficiency side on reducing energy demand by about 33% on business as usual forecasts by 2025.

So there’s certainly a bit of a shift in the mindset for the Indonesian Government towards renewables, so what are the opportunities for Australian technology and service providers in this area?

The Indonesian market - it’s a different system to what many Australian companies would be used to in operating in Australia.  So the Government’s actually solely responsible for providing electricity to the Indonesian people and it does this through a state owned electricity company called PT PLN, that’s placing huge pressures on the Government budget, obviously with the economic growth factors that we talked about before the population growth and the electricity demand, it’s only going to continue to place more pressure on the budget.  And there’s also another challenge that’s unique to Indonesia in that its 17,000 plus islands and they’ve got a lot of remote communities that require power and they had a policy I think it was called One Panel One House, which was basically one solar panel per house for these remote communities but it’s been largely unsuccessful for a number of reasons.  So coming to the opportunities I think the opportunities in the renewable space are going to be mainly in small to medium scale off grid communal power projects, and some on grid systems to substitute the use of diesel in remote communities.  Now the remote communities heavily relying on diesel, and just to give you an idea of the cost of that, they say that it’s around 17 cents per kilowatt hour to supply diesel to remote communities, so that’s quite expensive.  And so they’re looking at renewables to plug that gap, mini/micro hydro and solar PV, bioenergy as well being the main focuses.  So there’s some incentives already in place, there’s a feed in tariff for geothermal, small scale power generation and biomass, largely for those facilities that have to be under 10 megawatts, and the Government’s also discussing the possibility of bidding tariffs for solar and wind.  And Indonesia’s looking to Australia as well because we have experience in rolling out remote renewable energy programs and they’re also looking for Australia to step in on the energy efficiency side, so to act as consultants or technology providers, particularly in the power sector, industrial sector and in agriculture.  And there’s a number of donor programs underway that are looking for possibly Australian participants.  So there’s quite a range of opportunities there for Australian companies.

Well given that range of opportunities is there much of an Australian presence already in Indonesia to service the low emissions technology sector?

Look not to my knowledge.  The feedback I’m getting from my clients are that they’re particularly in constant consultation with representatives in Indonesia in the past it hasn’t really generated any hard leads, but the contacts I speak to certainly feel that this is slowly changing.  Another factor is Indonesia’s reached a tipping point; it’s now a net importer of oil, so that’s starting to speed up these Government programs and necessitating certain actions from the Government in dealing with that problem.  So I guess that’s providing more momentum and seeing more changes in the Australian dealings with the Indonesian market.

And with that momentum kicking off I guess what would be some of the first steps for an Australian business looking to service that low emissions sector in Indonesia?

You’ve got to know your market.  You can’t play in any market without knowing the peculiar factors of that market, and the reality is that culturally, politically and economically Indonesia is a very different place than doing business in Australia.  That’s something we’re quite in tune with and we have experience in you know advising companies in that regard and entering into different markets.  But there’s a number of government agencies Austrade we’ve mentioned obviously, which can provide good channels into that market and good information about the challenges of entering into that market.

Well look some great insights there and thanks again for your time today Dan.

Thank you.

That was Dan Solomon from DibbsBarker’s Renewable Energy team and he’s based in Sydney.  Listeners if you have any questions for Dan about this interview please send a message using the panel that’s on your screen or you can otherwise email through to law@brrmedia.com and we’ll forward your query.