Jakarta, 5 February 2025: ERIA, in collaboration with the National Energy Council of Indonesia (DEN) hosted a workshop called ‘De-dieselization of Power Plants in Indonesia’ in Jakarta to support Indonesia’s energy security efforts. This event followed an earlier session on ‘Towards Green Hydrogen Production Pathways’ held on the same day.

Yunus Saefulhak (DEN) opened the session, welcoming participants and expressing gratitude to the workshop organisers. Abadi Poernomo of DEN highlighted the significant role of diesel power plants in rural electrification but stressed the need to reduce fossil fuels dependence to meet Indonesia’s nationally determined contribution (NDC) targets. Ir Wanhar (Director of Electricity Business, Directorate General of Electricity) discussed the National Electricity Planning (RUKN), which aligns with Indonesia’s 8% economic growth target. He emphasised electricity supply optimisation to achieve energy independence.

Ms Surhayati of DEN detailed Indonesia's reliance on diesel power plants, which account for 13% of the total generation, primarily in eastern Indonesia. Due to high oil prices and import dependence, the Indonesian government supports transitioning to alternatives like natural gas, which is more readily available domestically. The de-dieselisation programme aims to shift from oil to gas power plants and connect isolated diesel power systems to the grid, hence reducing carbon emissions. The workshop included forecasts for LNG supply and demand, with transport routes optimised through linear programming and dynamic simulation.

Cecilya Malik (ASEAN Energy Expert) analysed 47 diesel power plants targeted for de-dieselisation under Ministry of Energy and Mineral Resources Decree No. 249.K/MG.01/MEM.M/2022, calculating the gas demand needed to substitute oil in Kalimantan, Nusa Tenggara, Sulawesi, Maluku, and Papua.

Dr I Gusti Suarnaya Sidemen (CCS/CCU Fellow at ERIA) examined existing and potential domestic LNG supply sources. He cautioned against supply risks due to gas exploration uncertainties and price caps, recommending transparent pricing mechanisms and investor-friendly policies.

On behalf of Setsuo Miyakoshi, Shigeru Kimura (ERIA) presented LNG transportation optimisation results. Using linear programming, he demonstrated that 47 power plants could be supplied using only 33 LNG receiving sites. The simulation also showed that the milk-run delivery method reduces the number of required LNG tankers compared to the more conventional hub-and-spoke model. Kimura also illustrated the relationship between storage size, number of tankers, CAPEX, and OPEX during the presentation.

Key Takeaways and Recommendations

Mr Kimura emphasised the economic and environmental importance of de-dieselisation. The annual LNG delivery cost is estimated at about US$4.15 per ton, with minimal storage and tanker capacity variations. However, initial construction costs for LNG tankers and storage are estimated to range from US$800 million to US$900 million, underscoring the need for substantial financing. He also stressed the importance of renewable energy investments (solar and wind) to reduce LNG consumption, which in turn lowers the LNG delivery cost. 

Dr I Gusti Suarnaya Sidemen (ERIA) closed the workshop by summarising the presentations, conclusions, and recommendations. He expressed gratitude to the organisers and participants, emphasising the importance of continued collaboration between ERIA and DEN.