Keywords: Singapore, Indonesia, Renewable Energy, Infrastructure
From the Indonesia and Singapore bilateral relations, what are the prospects of the renewable energy industry?
Source: Business Team
Indonesia and Singapore established diplomatic relations on the 7th of September 1967, a month after the formation of the Association of Southeast Asian Nations. They are two of the five founding members of ASEAN including Malaysia, Thailand, and the Philippines. Their relations have been determined by strong economic cooperation. Bilateral trade between the two countries reached USD 59 billion in 2019. Not only that, but both countries have good cooperation across a wide range of sectors, which include education, culture, defense, and the environment.
One of the biggest investments that Indonesia and Singapore have established is a USD 12.4 billion investment towards the green economy and logistics port. Joko Widodo, Indonesia’s president, said that the money will fund renewable energy projects in Batam, Riau Islands province, Sumba Island, and West Manggarai in East Nusa Tenggara province. He also stated that investments in the renewable energy sector continue to be the priority of the Indonesian government to advance green and sustainable development.
Another specific cooperation they would like to emphasize is the provision of low-carbon energy, through the facilitation of cross-border electricity transport and the financing of low-carbon energy infrastructure. This cooperation was formalized on Tuesday through the signing of the Memorandum of Understanding on Bilateral Partnership on Green and Circular Economy Development, and an MOU on Energy Cooperation. On top of all of that, Indonesia has been scaling up its green energy plans as it sees future renewable drivers of economic growth.
Overview of the Renewable Energy Industry in Indonesia and Singapore
In Singapore, there is a limited option for renewable energy. There are no hydro resources, low wind speeds and mean tidal range, and economically unavailable geothermal energy. With that issue in hand, solar energy remains the most viable renewable energy option for Singapore when it becomes commercially viable. However, the Singaporean government has provided funding for research and development of more renewable energy technology, which serves a positive outlook for the performance of this industry.
Over the course of 5 years, Singapore moved from oil to natural gas for cleaner power generation. In addition to that, solar energy was most commonly found in the city, particularly on rooftops and reservoirs. With climate change as a barrier, there should be a shift in the way Singapore produces and uses energy, to parallel align the rise of energy demand and Singapore’s economic development.
Over the course of 5 years, Singapore had moved from oil to natural gas for cleaner power generation. In addition to that, solar energy was most commonly found in the city, particularly on rooftops and reservoirs. With climate change as a barrier, there should be a shift in the way Singapore produces and uses energy, in order to parallely align the rise of energy demand and Singapore’s economic development.
To provide more reliable energy, Singapore could harness the 4 Switches according to Singapore’s Energy Market Authority. Among them include:
- 1st Switch: Natural Gas
- 2nd Switch: Solar
- 3rd Switch: Regional Power Grids
- 4th Switch: Emerging Low-Carbon Alternatives
Indonesia is projected to increase the use of renewable energy by up to 23% as the national energy source. There is no uncertainty that energy demands will increase equally with economic development and population growth. Given that Indonesia is a rapidly developing nation and ASEAN’s largest country, Indonesia is responsible for 40% of the region’s energy consumption. It is also predicted to increase by 80%, and the need for electricity could rise 3 folds between 2015 and 2030.
Currently, Indonesia’s renewable energy contribution is holding at twelve percent. Fossil fuels remain the dominant source of national power capacity. To reach its target, shifting to energy investments could make Indonesia reach its target.
In Indonesia, renewable energy is an attractive sector for investment. There are currently 97 renewable energy projects, which highlight a USD 12 billion investment potential, 34,000 job creation opportunities, 4-gigawatt capacity, and 19 metric ton CO2 equivalent of emission reduction potential in Indonesia. The current annual investment in clean energy capacity is approximately IDR 131.5 trillion between 2015 and 2030 and is expected to grow by IDR 26.6 trillion as energy demands continue to incline.
With Indonesia’s archipelagic geographical location, Indonesia is naturally provided with a massive potential to generate solar and tidal energy, hydropower, and geothermal energy. In addition to that, the country controls 40% of the globe’s geothermal reserves, which compliments the fact that the geothermal energy sector has won most projects in the pipeline. Now, one way to reduce the country’s reliance on fossil fuels is by looking into clean and renewable energy sources.
Enter The Indonesian Petroleum Market with BRIGHT Indonesia
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