Adaro Energy president director Garibaldi Thohir, popularly called “Boy”, said in Jakarta on Tuesday that renewable energy could become the company’s future as the coal business would be more challenging in the next 15 to 20 years.

The company has made a number of preparations to support investment in renewable energy such as the establishment of a new business unit, the development of a pilot project for solar power generation and the plan to take part in state-owned electricity company PLN’s auctions for the construction of solar power plants.

To date, the company, which operates large coal mines in Tabalong regency, South Kalimantan, has two coal-fired power plants (PLTUs) in the pipeline, namely 200-megawatt (MW) PLTU Tanjung Power Indonesia in Tabalong and 2,000-MW PLTU Batang in Central Java, which are expected to commence operation in July and December 2020 respectively.

Two years ago, Adaro formed a special division to look into profitability in renewables and invested around US$5 million for the research and infrastructure.

“We have a special division on renewable energy and the goal is looking into what kind of renewable energy fits in certain regions. We cooperated with industry experts,” Christian Rachmat, the vice president of Adaro Energy, said.

Christian further said the business group would sign a cooperation agreement with a foreign company in the next two months to develop solar power plants (PLTS) on a remote island. “The project is part commercial and part social responsibility,” he said, but did not disclose the name of the company.

In addition, through its power business subsidiary PT Adaro Power, the company will take part in a tender to be held by PLN for the development of a 122-MW PLTS in Sumatra. The construction of the plant will cost between $120 million and $150 million.

At present, Adaro operates a small-scale PLTS to provide electricity for its port facilities in Kelanis, Central Kalimantan.

Adaro Power vice president Dharma Djojonegoro said the company had a big interest in renewable energy projects and proposed another project to PLN in Bali. “We have submitted proposals for projects in Sumatra and Bali,” he added.

Energy watchdog Institute for Essential Services Reform (IESR) believes Adaro’s move in renewable energy is part of the trend of global energy companies to shift from the nonrenewables business.

“It is also a measure to reduce their operational costs and maximize their business value. But, I think it’s still a long way for Adaro to really shift to renewable energy,” IESR executive director Fabby Tumiwa told The Jakarta Post on Tuesday.

He further said the government had contributed to the low interest of local energy companies to tap into renewables because of unsupportive regulations on renewable energy.

Besides tapping into renewable energy development, the firm plans to diversify coal production to coking coal, an integral material in producing steel.

The company sees big potential in the coking coal market as it supplies the domestic market 1 million tons per year while the market size is 6 to 7 million tons annually, according to Kontan.co.id.

Christian of Adaro said the firm had invested more than $1 billion on the coal diversification program.

“To build infrastructure, we need steel, which requires iron ore and coking coal. It’s only [us] and Australia that produces coking coal, so we will continue to import it if we don’t develop it.” he said.

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