The market of renewable energy in Indonesia continues to grow. This is due to the increasing demand for energy - which is expected to rise by 80% - and the large potential of renewables. Indonesia ranks second globally in geothermal energy capacity. Hydropower is currently the largest clean energy source with 8% share in the country’s total energy mix. Meanwhile, solar power capacity has increased by 800% over the past decade [2].

Renewable energy developers are helping us to gradually stop relying on coal power. In addition, they can take double advantage of their production facilities by selling carbon credits. A renewable energy project that has been registered in CarbonIDX is the Gunung Wugul Microhydro Power Plant by PT PLN Indonesia Power. They obtained verified emission reduction certificates to offset 12.932 tons of CO2 [3]. Here’s how carbon credits can be generated from renewable energy plants [1]:

1. Determine energy production

Measure the annual energy production in kilowatt-hour (kWh) of the renewable energy plant. This information can be obtained from the system’s inverter data, monitoring tool, or using estimation based on the system’s size and geographical specific data, such as local solar insolation data for solar plants.

2. Determine carbon emission factor

Carbon emission factor refers to how much CO2 (kg) is emitted for every unit of activity; in this case, the emission intensity for 1 kWh of electricity produced by the mainstream electric grid. The emission factor varies greatly depending on the mix of energy sources used. Regions that mostly utilize coal will have higher emission factors than regions with larger renewables portions. Thus, the emission factor used should be specific to the location in which the renewable energy plant is located.

3. Calculate carbon offset

The amount of carbon avoided by a renewable energy plant is roughly equal to the carbon emitted by the location’s average energy plant with the same production capacity. So, to calculate the carbon offset, the renewable plant’s capacity is multiplied by the emission factor. The value can be multiplied by the facility’s expected lifetime to get the total lifetime carbon offset.

4. Adjust calculation

Some factors should be taken into consideration to get a realistic value of carbon offset. Although renewable plants will result in a net reduction of carbon emissions, manufacture and installation still produce carbon. Besides, they may not replace coal power 100% of the time, thus they don’t constantly offset emissions. Local grid emission factors may also change over time, especially with energy transition going on.

If you want to know more about calculating emission avoidance, you can look up the Methodology for GHG Emission Avoidance Calculation document from EU Grants.

Let’s create impactful climate solutions together. Visit our page to learn more!

---

References:

[1] Kuga Energy (2023). How do you calculate your green credits? [online] Kuga Energy. Available at: https://www.13kuga.com.au/how-do-you-calculate-your-green-credits/ [Accessed 7 Feb. 2025].

[2] Tachev, V. (2024). Renewable Energy in Indonesia – Current State, Opportunities and Challenges. [online] Energy Tracker Asia. Available at: https://energytracker.asia/renewable-energy-in-indonesia/ [Accessed 7 Feb. 2025].

[3] Utomo, Y.W. (2025). Perdagangan Karbon Internasional di IDX: Baru 1 dari Energi Terbarukan. [online] Kompas. Available at: https://lestari.kompas.com/read/2025/01/14/173324086/perdagangan-karbon-internasional-di-idx-baru-1-dari-energi-terbarukan?page=all.