Driving Green Hydrogen Development in Indonesia: Overcoming Cost Challenges
Key Ideas
- High prices pose a major challenge for green hydrogen development in Indonesia, with costs currently 4 times higher than gray hydrogen from natural gas.
- Factors like advancing technology, decreasing electricity prices from renewable sources, and growing global investments are key to enhancing green hydrogen's competitiveness.
- Green hydrogen offers economic benefits like job creation, energy security, and potential export revenue, contributing to both economic growth and emission reduction.
- The government is urged to establish targets for green hydrogen development in the next 5 years, including production increase, cost reduction, and market creation, emphasizing policy support and incentives.
Executive Director Fabby Tumiwa of the Institute for Essential Services Reform (IESR) highlighted the high prices hindering the growth of green hydrogen in Indonesia, currently priced at US$3.8-12 per kilogram, significantly more expensive than gray hydrogen. To boost green hydrogen adoption, a significant price reduction is vital in the coming years. Tumiwa emphasized the importance of advancing green hydrogen production technology, citing the role of solar and wind power plants in lowering electricity costs and improving electrolysis technology efficiency. Global investments in green hydrogen projects have been increasing, signaling a positive trend towards green energy development. The economic benefits of green hydrogen, including job creation and energy security, were underscored, along with its potential as an export commodity, aiding in bolstering the country's foreign exchange reserves. Tumiwa stressed that green hydrogen development could foster economic growth and emissions reduction, aligning with Indonesia's vast renewable energy potential and decarbonization goals for 2050. The IESR study identified 333 GW of financially feasible renewable energy projects in Indonesia that could support green hydrogen production. Tumiwa called for government intervention to establish green hydrogen development targets, focusing on production growth, cost reduction below US$2 per kilogram, market expansion, and policy and financial support to drive the transition towards green hydrogen.