This year, national electricity demand is estimated about 140 TWh (1 TWh = 1000 GWh) with the growth about 7 % per year (Muchlis, 2007). It mainly utilized for industrial sector, residential, and commercial. It only can be supplied about 112 TWh by the government which 89 % portions are fossil fuel especially coal. Non fossil fuel utilized only geothermal (7%) and hydroelectricity (4 %).

Indonesia should develop its great potential energy, that is geothermal. Fortunately, Indonesia lied by 20 % ring of fire which contained by a lot of active volcano. Investigation of Direktorat Sumber Daya Mineral found that there are 256 geothermal locations with total reserve about 27.441 MW. That reserve is 40 % world reserve of geothermal which total number about 50.000 MW. So that, Indonesia awarded as the largest geothermal reserve in the world. As comparison, the largest oil field in Asia, Minas and Duri, have total reserve about 4 billion Barrel, so Indonesia geothermal reserve equivalent with three times reserve of oil field in Minas and Duri.

Beside for electricity demand, a huge portion of Indonesia energy consumption is also for fuel both industrial and transportation need. Indonesian energy consumption in 2007 is about 114,6 million ton oil equivalent. Until now, it mostly supplied by fossil fuel which give bad effect to the environment. Biofuel is believed as solution to reduce CO2 emission risk. Indonesia has tremendous natural resources which has a lot of reserve of biofuel. Our country is again awarded as largest natural diversity in the world after Brazil. So that, biofuel is the second promising sustainable energy which should be develop sooner.

One of the mostly biofuel applied is biodiesel. Indonesia has a great potential for this fuel. Biodiesel is commonly made from CPO and our country has the widest palm plantation in the world and listed as the greatest CPO importer in the world. In 2009, area of palm plantation is estimated about 7,12 Million Ha with productivity about 19 million per year. Not only CPO, biodiesel can be made from jatropha curcas which easy planted in Indonesia. There are 49,5 Million area in our country which potentially planted by the tree. Beside that, microalgae are believed as other potential recourses for biodiesel. It even more promising than CPO and jatropha curcas because the productivity is very high, 136.900 Liter per year per Ha area and produce oil in 24 hour. It is greater 50 times than CPO productivity which considers as the promising resources currently.

Beside as renewable energy, biodiesel is better than fossil fuel because of its emission, that is reduce CO emission up to 46 % ,CO2 up to 78 % and low sulfur release (miller, 2007). Other benefits of biodiesel have no need engine modification, increase engine lifetime, biodegradable, nontoxic, and safely storage. By implementing biodiesel in fuel transportation and industrial need will reduce CO2 concentration in the atmosphere significantly. In 2009, CO2 emission is predicted reach 573,84 million ton (Energy Indonesia Outlook, 2006). And the main contributors on this condition are transportation sector, industry and power generation.

Economically, biofuel including biodiesel not competitive enough compare to BBM (fossil fuel) production as long as Indonesia government give BBM subsidy to the society. Although, the BBM subsidy has been reduced, it considered not sufficient. The prospect of biofuel industry still cannot grow rapidly. If can reduce CO2 emission, one of the way is develop biofuel consumption, Indonesia is potentially receive fund from CDM project (clean Development mechanism). Of course it’s a great opportunity for developing country like Indonesia. Biofuel development also will increase economic growth because biofuel business engage a lot of person both in upstream and downstream area.

The government should reinvestigate its policy related with renewable energy especially geothermal and biofuel. For electricity demand, geothermal absolutely consider as the promising one. To accelerate the development of geothermal, government should reform government regulation and the investment climate to attract foreign investor. So with the biofuel development, it also needs government support for improving. Government should determine the appropriate policy by considering social welfare, sustainable development and environmental condition. Beside that, development of process technology and research related with biofuel obviously need to be supported in order to increase biofuel production and development. Finally, because of a lot of advantages, geothermal and biofuel will be the top choice as Indonesia’s promising sustainable energy.

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