Exchanging Insights on Local Solar Manufacturer in Indonesia and Viet Nam

Ha Noi, 14 December 2023 – The Ministry of Science and Technology of Viet Nam hosted its annual event: Technology and Energy Forum 2023, in collaboration with the Ministry of Industry and Trade and Project Clean, Affordable and Secure Energy for Southeast Asia in Viet Nam.In recent years, Viet Nam has witnessed remarkable development in the trends of energy transition, particularly in wind and solar power. By the end of 2022, the total capacity from wind and solar power had reached 20,165 MW, constituting 25.4% of the overall power capacity within the system.

However, despite this progress, 90% of equipment for renewable energy projects in Viet Nam is imported from countries like China, Germany, India, and the US. This reliance is due to the country’s limited ability to perform specific tasks during project assessment and development phases and its high dependence on imported technologies. Factors contributing to this situation include inadequate local technology capacity, production levels falling short of requirements, and a lack of support from industrial policies and mechanisms to encourage renewable electricity.

Consequently, Vietnamese enterprises and local supply chains have seen limited participation. Similarly, Indonesia faces comparable challenges in its procurement of renewable energy, particularly in solar power. Despite both countries boasting immense potential in solar power, their domestic markets are not yet equipped for solar manufacturing. This deficiency stems from uncertainties in local demands and the lack of competitiveness in the local supply chain.

Fabby started with an explanation about local content regulation that could minimize dependence on imported products. 

“Indonesia is currently facing domestic market issues; these local products encounter difficulties entering the market. The lack of a credible development pipeline limits financial viability for new solar modules manufacturing facilities. When it comes to Rooftop PV, PLN limits the installation capacity to 15%. This regulation further restricts the market for domestic solar modules,” state Fabby.

Fabby went on to highlight several lessons learned from implementing Local Content Regulations (LCR) in Indonesia, which could potentially accelerate the development of Viet Nam’s solar energy local content. First, despite the projected growth in solar power, there’s insufficient market signal to stimulate the growth of the solar module industry without a reliable pipeline. Second, inconsistencies in policies across government bodies might discourage investment in the solar power market due to increased uncertainty. Third, support for the domestic solar modules industry should encompass downstream raw material industries to reduce import dependency and enhance the competitiveness of end products. Lastly, governments should offer incentives, both fiscal and non-fiscal, to encourage the development of solar module manufacturing facilities. Fabby emphasized that LCR, without a conducive investment climate for the industry, might impede rather than foster the development of solar power.

Preparing for the Energy Transition in South Sumatra for Youth

Palembang, 5 December 2023 – The increasing intensity of hydrometeorological disasters in the last decade indicates that climate change is currently underway. Secretary General of the United Nations (UN), Antonio Guterres, said that the earth is entering an era of global boiling, where July 2023 was recorded as the hottest day in history.

Climate change occurs due to high greenhouse gas emissions. The energy sector is one of the highest emitters, especially with the use of fossil energy such as coal. Indonesia is one of the coal producing countries, with 80% of its coal output for export needs. Indonesian coal production is concentrated in four provinces in Indonesia, namely East Kalimantan, South Kalimantan, North Kalimantan and South Sumatra. South Sumatra is a food and energy barn for the island of Sumatra. The coal produced by South Sumatra will be used to generate electricity which will supply all the electricity needs on the island of Sumatra, according to projections, it will even export electricity as far as Singapore.

Marlistya Citraningrum, Sustainable Energy Access Program Manager of the Institute for Essential Services Reform (IESR), in a public lecture at Sriwijaya University quoted a survey related to the current climate change phenomenon, young people aged 24-39 years had high concerns about the climate crisis and impact.

“The energy transition is a systematic effort to mitigate the impact of the climate crisis that we are increasingly feeling,” said Marlistya Citraningrum, who is familiarly known as Citra.

This change in the energy system also has other impacts, namely the growing need for workers who have skills and insight into sustainability.

However, young people’s enthusiasm for getting involved in green jobs is hampered by several things, one of which is the limited information about green jobs and job vacancies in the green jobs sector.

“In the energy transition process, young people can take roles according to their respective skills, not limited to the engineering field alone. Social departments such as economics and international relations can also contribute to the energy transition process,” said Citra.

Citra added that currently a number of challenges still face the development of green jobs in Indonesia, one of which is related to certification. Currently, certification is still limited to technical sectors related to renewable energy-based electricity generation.

On the other hand, reducing and stopping the use of coal and switching to renewable energy will have an impact on social and economic aspects in coal-producing regions in Indonesia. Hari Wibawa, Head of the Economic and Development Funding Division of South Sumatra Bappeda, on the same occasion, said that coal reserves in South Sumatra province will run out in 12 years, so economic diversification is very important to avoid major economic shocks when the coal sector stops.

“Our (government’s) current priority is to integrate the energy transition plan into the RPJPD so that every action or activity has a strong legal basis,” said Hari.