ACWA Power has teamed up with Indonesia’s state-owned utility PT PLN (Persero) and PT Pupuk Indonesia (Persero) to develop and scale green hydrogen production in Indonesia.
The collaboration was formalised through the signing of the Head of Terms (HoT) for a Green Hydrogen Purchase Agreement at the Indonesia International Sustainability Forum (IISF) 2024.
The agreement positions ACWA Power, a Saudi-based global leader in renewable energy, at the forefront of Indonesia’s energy transition strategy, with green hydrogen playing expected to play a crucial role.
Green hydrogen, produced using renewable energy sources like solar and wind power, is seen as a key solution for decarbonising industries and reducing reliance on fossil fuels, especially in sectors like heavy industry, transportation, and fertilizer production.
Darmawan Prasodjo, President Director of PLN, pointed out the importance of the agreement in helping Indonesia meet its ambitious renewable energy targets, including achieving Net Zero Emissions (NZE) by 2060 or sooner.
He noted that green hydrogen is set to become a cornerstone of Indonesia’s renewable energy strategy as the country strives to diversify its energy sources and reduce greenhouse gas emissions.
“This partnership represents a tangible commitment to developing green hydrogen, which will serve as a vital raw material for producing green ammonia, a key element in securing national energy security,” said Prasodjo.
“We are proud to be working with industry leaders like ACWA Power and Pupuk Indonesia to take significant strides toward our sustainability goals.”
The partnership is aligned with the 10-year roadmap of Indonesia’s Ministry of State-Owned Enterprises (BUMN), which aims to position the country as a pioneer in the green economy.
The BUMN roadmap seeks to foster collaboration between Indonesian state-owned enterprises and international partners to accelerate the adoption of renewable energy solutions and strengthen Indonesia’s role in combating climate change on the global stage.
Hydrogen is increasingly viewed as a critical component in Indonesia’s energy transition, given its potential to decarbonise various sectors. Green hydrogen, produced through electrolysis using renewable energy, can be used to generate electricity, power fuel cells, and serve as a feedstock for industries like ammonia production.
Indonesia, with its abundant renewable energy resources, particularly geothermal, hydro, and solar, is well-positioned to become a major player in the green hydrogen market.
The country’s vast natural resources and strategic location make it a prime candidate for developing a hydrogen-based economy, which could not only meet domestic energy needs but also position Indonesia as an exporter of green hydrogen to other regions, particularly in Asia.
Under the agreement, Pupuk Indonesia will act as the primary off-taker of green hydrogen produced by the joint project between ACWA Power and PLN.
The green hydrogen will be used to produce green ammonia, which is essential for manufacturing fertilizers like urea and NPK (nitrogen, phosphorus, potassium), crucial for Indonesia’s agricultural sector.
Rahmad Pribadi, President Director of Pupuk Indonesia, stressed the importance of the agreement in ensuring a sustainable and stable supply of green hydrogen. “Natural gas, which has traditionally been used to produce ammonia, is a depleting resource,” Pribadi noted.
“By shifting to water-based hydrogen, we can ensure the continued production of fertilizers, which are vital for national food security, while also reducing our carbon footprint.”
Green ammonia is considered a sustainable alternative to traditional ammonia production, which is highly energy-intensive and reliant on natural gas. The shift to green ammonia production is expected to significantly reduce greenhouse gas emissions associated with fertilizer production, contributing to both energy and food security in Indonesia.
Rakhmad Dewanto, Gas & Fuel Director at PLN Energi Primer Indonesia (PLN EPI), highlighted that PLN currently produces around 203 tons of green hydrogen annually from 22 installations that leverage geothermal energy and Renewable Energy Certificates (REC).
The new green hydrogen and ammonia plant, set to be constructed in East Java, is expected to begin operations between 2026 and 2027, producing approximately 15 kilotonnes of green hydrogen per year.
“The green hydrogen and ammonia we will produce will play a crucial role in decarbonising industries across Indonesia,” Dewanto said, adding that the project will support a wide range of industrial applications while contributing to a cleaner, more sustainable industrial sector.
