Advancing Strategies for Increased JETP Funding

press release

Jakarta, August 29, 2023 – The comprehensive investment and policy plan (CIPP), which was initially scheduled for August 2023 to be the end of same year, is considered necessary by the Institute for Essential Services Reform (IESR) to refine the CIPP document to meet the agreed targets and formulate a robust cooperative effort for a just energy transition (Just Energy Transition Partnership/JETP), as well as opening more comprehensive public consultations.

The Executive Director of IESR, Fabby Tumiwa, stated that to reach the goals outlined in the JETP, which include reducing peak greenhouse gas emissions by up to 290 million metric tons of CO2 by 2030 and achieving a renewable energy mix of 34% by the same year, as well as attaining Net Zero Emissions (NZE) by 2050, a minimum of 150 billion is required.

One strategy involves decreasing the capacity of coal-fired power plants (CFPP) before 2030 through either natural or early retirements. IESR  has estimated that a gradual reduction of up to 8.6 GW in CFPP capacity is necessary until 2030. It is important to note that this figure does not account for any reductions in off-grid CFPP capacity outside the PLN’s jurisdiction.

“Until now, IPG and GFANZ’s interest in providing CFPP early retirement funding is shallow, even though a reduction in CFPP is needed to increase penetration of renewable energy,” said Fabby.

IESR estimated the early retirement costs at USD 4 billion, which is lower than the amount assessed by PLN previously. Fabby suggests that IPG should provide funding for the early retirement of CFPP due to its involvement in maintaining the credibility of JETP.

In addition, IESR believes that improving the CIPP document will clarify the funds needed for priority projects, such as constructing renewable energy pipelines. Based on the IESR study, Indonesia must invest USD 1.3 trillion to meet the Paris Agreement objective for the energy transition until 2050, which averages USD 30 billion to USD 40 billion per year. Until 2030, a minimum of USD 130 billion is necessary.

IESR believes that the allocation of the grant portion in the JETP scheme needs to be increased to support broad aspects of a just transition and the transformation of crucial actors so they can implement the ambitious CIPP soon. At least the portion of the grant required is around 10%-15% or USD 2 billion to USD 3 billion in the JETP scheme to execute the energy transition in Indonesia. IESR knows that increasing the grant allocation on the proposed scale requires intense cooperation and commitment from the Indonesian government and international partners in JETP. Through close collaboration, all parties involved can work together to meet this financial need and ensure the success of a sustainable energy transition in Indonesia.

“JETP needs to support the energy transition process in Indonesia, not just determine priority projects to achieve targets. Because JETP requires systemic changes, it requires increasing the capacity of key actors such as PLN and related ministries/agencies, grant funding to compile regulatory/policy changes, as well as supporting affected actors if JETP is implemented later, for example, workers in coal mines or the general public near the CFPP project,” explained Deon Arinaldo, Program Manager Energy Transformation, IESR.

IESR also emphasizes the importance of involving more comprehensive public consultations in the decision-making process related to JETP. Opening up opportunities for a wide range of stakeholders to provide input will ensure that the project accurately reflects community needs and aspirations. Increasing transparency and community involvement will enhance the legitimacy of JETP and lead to more enduring outcomes.

“The public, the primary beneficiary, should have the right to contribute to the CIPP document. Their participation will ensure that the aspects of a just transition, which is one of the spirits of JETP, are reflected accurately as they better understand the real conditions on the ground. The JETP secretariat only held one FGD session with the civil society community at the beginning of compiling this document. In the second leg of the document preparation process, it is hoped that the number of FGD sessions will be increased to more than once. Also, it is crucial to distribute this draft document in advance so that it can be studied before the FGD session,” said Raditya Wiranegara, Senior Analyst of IESR.

Electrification Ratio Doesn’t Address the Reliability of Electricity Quality in Indonesia

press release

Jakarta, August 22, 2023 – The electrification ratio in Indonesia is recorded to have reached 99.63 percent, and the ratio of electrified villages reached 99.79 percent at the end of 2022, based on the 2022 Performance Achievement report and the 2023 Work Plan of the Renewable Energy and Energy Conservation Subsector. However, the Institute for Essential Services Reform (IESR) encourages the government to evaluate and update the definition of the electrification ratio in Indonesia to include meeting the needs of the Indonesian people for quality electricity. Currently, the definition of the electrification ratio is still limited to the ratio of the number of electrified households to total households.

Deon Arinaldo, Energy Transformation Program Manager at IESR, stated in the webinar “Energy Transition in National Electrification Equity” that access to quality electricity will impact the improvement of people’s quality of life.

“Access to electricity should not only provide the availability of electricity but also the opportunity for recipients to enhance their quality of life and the economy,” he said.

Alvin P. Sisdwinugraha, an Electricity System and Renewable Energy Analyst at IESR, mentioned in his presentation that the high electrification ratio in Indonesia hasn’t been able to ensure the accessibility, reliability, capacity, and quality of electricity received by the community. According to him, new indicators are required to provide an overview of the quality of electricity access in Indonesia, such as the Multi-Tier Framework (MTF), which can assess the spectrum of service quality from the perspective of electricity users.

“IESR attempted to measure the quality of electricity access using MTF in NTB and NTT in 2019. As a result, electricity was not available 24 hours a day and was limited to electronic devices and low-power lighting,” he explained.

He encouraged the government to adopt evaluation methods that incorporate the quality of electricity services as a key indicator of achievement related to energy access. Alvin stated that a comprehensive evaluation of the electrification ratio, considering the necessity for quality electricity, requires coordination among relevant ministries and institutions such as the Ministry of Energy and Mineral Resources, PLN, Ministry of Villages, and local/provincial governments.

Moreover, IESR also urges the government to provide dedicated and consistent support for ensuring quality electricity access. This involves addressing diverse challenges, including hard-to-reach geographical locations, limited financing, and local capacity in maintaining electricity facilities through the utilization of renewable energy. Furthermore, the indicators employed to determine electrification ratios and electrified villages need expansion to encompass the quality of electricity received by the households or villages in question.

Marlistya Citraningrum, IESR’s Sustainability Energy Access Program Manager, elaborated on the current policy landscape. She highlighted the Presidential Regulation Number 11 of 2023, which grants increased authority to regional governments, particularly in the development of renewable energy.

“This added authority should be complemented by local government initiatives aimed at devising programs aligned with the goal of providing energy access, particularly through local renewable energy solutions. The principle of energy decentralization enables the pursuit of self-reliant energy solutions with the involvement of various stakeholders, contributing to enhanced community welfare through sustainable energy access,” she added.

Marlistya emphasized that energy decentralization utilizing renewable energy sources will create opportunities for broader and participatory exploration of utilization. This approach is expected to facilitate enhanced electricity access and bolster the reliability and quality of electricity.

The discussion regarding the acceleration of renewable energy utilization through energy transition will be further explored during the Indonesia Energy Transition Dialogue (IETD) 2023, taking place from September 18 to 20, 2023. The event will be conducted in a hybrid format in Jakarta. IETD 2023 is organized by IESR and the Indonesia Clean Energy Forum (ICEF), and it will engage numerous experts to delve deeper into strategies for transforming electricity system operations, thereby enhancing the renewable energy mix. Registration for IETD 2023 is available at www.ietd.info. 

Indonesia Needs to Increase its Efforts to Transition Towards Green Economy to Achieve NZE

press release

Jakarta, 18 August 2023 – The President of the Republic of Indonesia (RI) Joko Widodo (Jokowi), in his state address for the 78th Indonesian Independence Day, which also served as an introduction to the 2024 state budget bill and 2024 financial note stated that the 2024 state budget is directed toward accelerating economic transformation that is inclusive and sustainable. In his speech, the president mentioned the potential crisis due to climate change. For this reason, the transformation of the economic sector that is sustainable and environmentally friendly is crucial. The president emphasized that the transition to the use of green energy needs to be carried out progressively but remains fair and affordable.

The Institute for Essential Services Reform (IESR) appreciates the direction of the 2024 state budget. It encourages the government to accelerate the development of a green economy and the utilization of renewable energy so that Indonesia can gradually reduce the portion of fossil energy while simultaneously reducing greenhouse gas emissions, which are the cause of global boiling. boiling) and climate change.

Fabby Tumiwa, Executive Director of IESR, stated that to achieve the 23% renewable energy target in 2025, the president must direct his staff to increase the renewable energy mix by 2024. This would require the construction of 11 GW of renewable energy generators in the next 2.5 years. The progressive penetration of renewable energy would necessitate the cessation of coal-fired power plant operations, which are old and inefficient, even under conditions where the PLN electricity system is still overcapacity.

The 2024 state budget should support renewable energy use outside Java-Bali, reform policies hindering its acceleration, prepare for the coal-fired power plant’s early retirement, and offer large-scale renewable energy projects to investors.

Indonesia needs to take more aggressive steps to avoid the climate crisis by showing a more substantial political commitment to reducing the use of coal and confirming the termination of coal-fired power plant operations in 2050. According to Fabby, amid Indonesia’s independence celebrations, the National Capital, Jakarta, was covered in severe air pollution. IESR notes that one of the sources of pollution comes from burning coal in power plants and industries around Jabodetabek.

“Last year, the government and IPG agreed on the Just Energy Transition Partnership (JETP). This agreement is Indonesia’s opportunity to accelerate the transition to increasing green energy before 2030, which is fair and affordable. For this reason, the 2024 State Budget must also be allocated to support the implementation of the Comprehensive Investment and Policy Plan (CIPP),” said Fabby.

During preparing the JETP Comprehensive Investment and Policy Plan (CIPP) until October, Deon Arinaldo, Manager of the Energy Transformation Program, IESR, emphasized the importance of identifying policy changes to accelerate the energy transition. He suggested that policy change should focus on integrating implementation between various ministries and agencies.

“There must be a priority in policy directions, for example ending fossil energy subsidies, especially the coal DMO price policy, building massive solar PV, and developing the solar manufacturing industry. Determining the main strategy is important so that execution can be carried out smoothly in the next 3-5 years or even faster with implementation support from various ministries and agencies. Implementation of this integrated strategy can support achieving the vision of Indonesia Gold 2045,” explained Deon.

IESR hopes that the preparation of state budget (APBN) spending will also include efforts to reduce fossil energy subsidies and anticipate the impact of the energy transition on society. The budget from reducing fossil energy can be used to develop renewable energy, early termination of coal-fired power plant operations, and structured programs to anticipate the impact of the energy transition on communities, workers, and coal-producing areas.

CASE IESR: Indonesia Needs to Encourage Stronger Commitment from ASEAN Countries to Reducing GHG Emissions in the Region

press release

Jakarta, 15 August 2023 Holding the Chair of ASEAN in 2023 and possessing significant economic influence within the ASEAN region, Indonesia can foster a joint agreement among other ASEAN member countries to promote the reduction of greenhouse gas (GHG) emissions in alignment with the Paris Agreement. Additionally, Indonesia can mobilize support from other countries as several ASEAN nations aim to phase out coal-fired power plant operations incrementally before 2050. Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), conveyed this message during a media briefing titled “Measuring ASEAN’s Climate Ambition at the Helm of Indonesia’s ASEAN 2023 Chairmanship.”

According to Fabby, while Indonesia prohibits the construction of new coal-fired power plants (PLTU) for general use, allowing their construction for industrial purposes can impede the achievement of a higher renewable energy mix. He emphasized that the Indonesian government should advocate for a stronger commitment to ending the operation of coal-fired power plants throughout ASEAN countries. Furthermore, Indonesia should bolster its renewable energy expansion within ASEAN, particularly in solar energy development. Fabby encouraged discussions on an integrated supply chain to be established during the ASEAN Ministers on Energy Meeting (AMEM) scheduled for August 2023.

“We hope that during AMEM, Indonesia can propose to become a manufacturing hub for solar PV, encompassing technology from polysilicon to solar modules. Although some ASEAN countries have advanced manufacturing capabilities, they are still limited to cells and modules. Moreover, this manufacturing progress lacks integration. Indonesia, endowed with raw materials like silica sand, has the potential, as Chair of ASEAN 2023, to champion an integrated supply chain through a collective agreement,” he stated.

He added that climate threats are escalating for ASEAN nations, significantly impacting the region’s food security, energy security, and developmental progress. Without earnest endeavors to curb global emissions, climate change will compound challenges, making sustained economic growth of over 6% in the Southeast Asian region even more challenging.

Berlianto Pandapotan Hasudungan, Director of ASEAN Economic Cooperation at the Ministry of Foreign Affairs of Indonesia, explained that transitioning to renewable energy and reducing reliance on petroleum is pivotal for Indonesia’s leadership within ASEAN amidst geopolitical, Myanmar, and climate crises.

“Alongside the advancement of electric vehicles, ASEAN is fostering energy interconnections among member countries and embarking on studies for energy interconnections within the region,” he elaborated.

Shahnaz Nur Firdausi, a Researcher on Climate and Energy at IESR, highlighted that Indonesia’s climate policies and commitments do not align with the Paris Agreement’s objective of capping temperature rise at 1.5°C. The Climate Action Tracker (CAT) report underscores the insufficiency of Indonesia’s climate targets and policies. If other countries follow a similar path, global warming could exceed 2°C to 3°C.

“For this reason, Indonesia’s climate policies and actions in 2030 require substantial improvements in line with a temperature limit of 1.5°C. Indonesia should elevate the NDC target to 75% under the NDC business-as-usual (BAU) scenario, excluding land use and land use change and forestry (conditional), and 62% (unconditional). Furthermore, Indonesia’s land use and forestry emissions have accounted for nearly 50% of total emissions over the past two decades,” said Shahnaz.

In concluding remarks, Agus Tampubolon, the Project Manager of Clean, Affordable, and Secure Energy (CASE) for Southeast Asia, emphasized the significance of collaboration among ASEAN member countries to expedite the energy transition.

“Indonesia can serve as a model for the ASEAN region by spearheading the energy transition. ASEAN countries possess tremendous potential for joint efforts in advancing solar PV technologies and crafting policies that facilitate the shift from fossil fuels to renewable energy, thereby amplifying climate targets,” Agus affirmed.

Low Carbon Development Acceleration Requires Target and Strategy Synergy

press release

Jakarta, August 10, 2023 – Sustainable development with minimal emissions is believed to be the key to lifting Indonesia out of the middle-income trap it has been in for 30 years (1993-2022) and transitioning towards a developed country. The Institute for Essential Services Reform (IESR) urges the Indonesian government to set ambitious, measurable emissions reduction targets and include them in the Nationally Determined Contribution (NDC).

Fabby Tumiwa, Executive Director of IESR, in his remarks at the seminar “Bridging the Cross-Sectoral Gap in Pursuing More Ambitious Climate Targets in Indonesia” organized by IESR, mentioned that based on global action Climate Action Tracker (CAT) data, as measured by the current policy base, would lead to a global temperature increase of 2.7°C. However, Indonesia’s latest emission reduction target is categorized as critically insufficient, which means it is far from enough to reduce global boiling. There is a gap between current policies and emission levels compatible with the Paris Agreement. Based on Indonesia’s climate policy and action, emissions will reach 111.4-132.0 GtCO2e/year by 2030 (excluding LULUCF), 351-415% over 1990 levels. To be compatible with the Paris Agreement, emissions must fall to 0.56-0.86 GtCO2e/year in 2030 (excluding LULUCF).

“In addition, we need to look at Indonesia’s NDC shows a gap in action towards meeting the net zero target. The transportation and industrial sectors need to take action, while the energy sector already has a clear strategy to reduce greenhouse gas emissions. A transparent and measurable strategy and plan is needed to achieve the target of the Paris Agreement,” he said.

Furthermore, he alluded to the delivery of different signals from policymakers who adjust the priorities of each sector regarding climate crisis mitigation. This has slowed progress toward achieving emission reduction targets per the Paris Agreement.

“The lack of a clear strategy leads to inconsistent climate action and policymaking across sectors and inadequate budget allocations for adaptation and mitigation. It is crucial to integrate climate action into the National Long‐Term Development Plan (RPJPN) and National Medium Term Development Plan (RPJMN) planning processes,” he said. 

He also emphasized that Indonesia’s chairmanship in ASEAN should be seen as an opportunity to encourage other ASEAN countries to adopt more ambitious climate policies and actions. Indonesia’s climate policies are considered among the most ambitious in ASEAN.

Medrilzam, Director of the Environment for the Ministry of National Development Planning/Bappenas, on the same occasion, explained that his party had completed the 2025-2045 National Long-Term Development Plan (RPJPN) document, which prioritized the principles of sustainable development. One of the main targets is reducing greenhouse gas (GHG) emissions by up to 95% in 2045. He says lowering emissions is closely related to developing a greener economy. In particular, in Indonesia in 2025-2045, RPJPN targets Indonesia’s per capita income to be equivalent to developed countries of around US$30,300 and enter the 5 (five) most significant economies globally.

“Reducing emissions should not be seen as just reducing emissions, and must consider economic development. Green economic interventions with low-carbon development will increase the environment’s carrying capacity and reduce GHG emissions while encouraging Indonesia’s average GDP growth in 2022-2045 to reach 6-7%,” said Medrilzam.

However, Medrilzam highlighted the amount of investment required on average of IDR 2.377 trillion per year from 2025-2045 to implement green economic policies.

“To meet this need, policies are needed to strengthen green innovative financing, such as blended finance, impact investment, carbon taxes, and others. The green investment will also provide job creation benefits of up to 1.66 million jobs/year in 2045,” he said.

Ferike Indah Arika, Young Expert Policy Analysis Center for Climate Change and Multilateral Financing Policy, Fiscal Policy Agency, Ministry of Finance, explained it is crucial to have innovative financing to support climate mitigation and adaptation beyond the State Budget. He compared the accumulated funding for climate change mitigation needed in the 2018-2030 range to reach IDR 4.002 trillion, which is still far less than the investment required for green economy policies.

“The state revenue and expenditure budget (APBN), whose allocation is monitored for mitigation and adaptation activities, is still far between what we have and what is needed. This huge disparity in funding needs, of course, cannot only be met by the limited state budget,” said Ferike.

Nurcahyanto, Associate Policy Analyst, Directorate of Energy Conservation, Ministry of Energy and Mineral Resources of the Republic of Indonesia, explained that from the energy sector, to encourage the acceleration of GHG emission reduction, the termination of coal-fired power plants operation is one of the main contributions in reducing emissions in the power generation sector. Nurcahyanto emphasized that the draft roadmap for the early termination of coal-fired power plant operations with a target of retiring a total capacity of 4.8 GW of coal-fired power plants in 2030 has been completed and submitted to the Coordinating Ministry for Maritime Affairs and Fisheries, the Ministry of Finance, the Ministry of State Owned Enterprises (BUMN), and PT PLN (Persero) for comments.

 

Declare Bali Net Zero Emission 2045: Bali Government Targets 100 Percent Renewable Energy in Nusa Penida before 2030

press release

Bali, August 4, 2023 – A significant increase in the renewable energy mix is ​​needed to achieve the 2045 Bali Net Zero Emissions (NZE) ambition, 15 years ahead of Indonesia’s carbon-neutral target. In addition, using renewable energy and sustainable principles will create a positive image for economic activity and tourism.

Ida Bagus Setiawan, the Head of  Bali Labour, Energy, and Mineral Resources Agency in Bali Province, explained in a meeting titled ‘Towards Bali Net Zero Emission 2045’ held in Jayashaba, Denpasar, Bali, that the energy sector is responsible for 57% of total emissions in Bali. He added that the local government aims to reduce these emissions by achieving 100% renewable energy in Nusa Penida by 2030.

“Nusa Penida was pushed earlier to achieve net zero emissions compared to mainland Bali, one of which is because it is isolated from an electricity perspective,” said Ida Bagus.

The Institute for Essential Services Reform (IESR), which has been actively working with the Provincial Government of Bali since 2019, has recorded that the technical potential for renewable energy in Bali is relatively large, reaching 143 GW, including the technical potential for PLTS installed on land of 26 GWp and pumped hydroelectric power (PHES) of 5.8 GWh. Fabby Tumiwa, Executive Director of IESR, on the same occasion, mentioned that his party projects that in the next few years, the population of Nusa Penida, which will number around 62 thousand in 2022, will increase, as well as the growing tourism sector will increase demand for energy, including electricity. This can be met with renewable energy.

“The existence of large renewable energy potential and available renewable energy generation technology, manageable electricity demand, and relatively equal patterns of electricity load between day and night, as well as the support of PLN, make me highly confident that the electricity system is 100% renewable energy based. In Nusa Penida can be realized before 2030,” said Fabby.

Alluding to the condition of Nusa Penida, where currently one of the electricity needs is supplied from 7 units of Diesel Power Plants (PLTD) with a total capacity of 10 MW, Fabby said that replacing PLTD with renewable energy was a challenge in itself.

“The challenge is to replace the 10 MW PLTD, which is currently operating, within 2-3 years and improve the performance of solar PV Suana to be more optimal in the coming year. IESR has also conducted technical studies, and the study results show that technically and economically, a 100% renewable energy electricity system can be carried out in Nusa Penida,” he said.

Prof. Ida Ayu Dwi Giriantari, Head of the Center of Excellent Community-Based Renewable Energy (CORE), said the results of her study measured the potential for rooftop solar PV in Nusa Penida government buildings to reach 10.9 MW. In addition, she mentioned that large-scale solar PV has the potential to be utilized in Nusa Penida. According to her, the problem of land for installing large-scale PLTS is resolved with sufficient land in Nusa Penida.

“Solar PV in Suana, with a capacity of 3.5 MW, uses a land area of ​​4.5 hectares. Meanwhile, in Nusa Penida, there is potential for 10 thousand hectares of land for large-scale solar PV,” she explained.

The Provincial Government of Bali declared the Bali Action Plan Towards Bali Net Zero Emissions 2045, supported by the main partners of the Institute for Essential Services Reform (IESR), World Resources Institute (WRI) Indonesia, and New Energy Nexus Indonesia. The event was also attended by supporting partners from global and national philanthropic institutions, namely Bloomberg Philanthropies, IKEA Foundation, Sequoia Climate Foundation, ClimateWorks Foundation, Tara Climate Foundation, and Viriya ENB.

About Bali Net Zero Emission 2045

The Bali Net Zero Emissions 2045 Initiative consists of various efforts aimed at low carbon development in Bali through the transition to renewable energy, electric mobility, and climate entrepreneurship, all geared towards achieving Bali Net Zero Emissions by 2045. This initiative encourages collaborative action and work cooperation between the Provincial Government of Bali, various partners, communities, and stakeholders in Bali to accelerate the adoption of clean energy and encourage the active participation of the Balinese people in the low carbon development agenda. The parties involved include international institutions, non-profit organizations, independent research institutions, the private sector, entrepreneurship and start-up businesses, academic institutions, associations, and local communities. The main partners of this initiative are the Institute for Essential Services Reform (IESR), World Resources Institute (WRI) Indonesia, and New Energy Nexus Indonesia.

IESR: Indonesia Needs a New Strategy to Achieve 23% Renewable Energy Mix by 2025

press release

Jakarta, July 27, 2023 – In facing the challenges of climate change and striving for sustainable national growth, the Institute for Essential Services Reform (IESR) assesses that accelerating renewable energy development has become necessary. Through the National Energy Policy (KEN), the Indonesian government has set a target of increasing the share of primary renewable energy to 23% by 2025 as one of the benchmarks.

Based on data from the Ministry of Energy and Mineral Resources (MEMR), the utilization of national renewable energy in 2022 only reached 12.3% of the target of 23% by 2025. IESR sees the electricity sector as having the most significant potential to support the achievement of renewable energy targets. According to the National General Energy Plan (RUEN), it is necessary to have 45.2 GW of electricity sourced from renewable energy by the year 2025. However, renewable energy development needs to be faster, with a growth rate of around 400-500 MW per year over the past five years. This growth is also far from the government’s target of increasing renewable energy by 2-3 GW per year in the last five years.

Deon Arinaldo, the Manager of the Energy Transformation Program at IESR, revealed that the Indonesian government needs to prepare a new strategy to promptly achieve the 23% renewable energy mix target by 2025 and consistently increase the renewable energy achievement targets. 

“The National Energy Policy (KEN) aspiration is to achieve national energy independence and resilience that supports sustainable development. Therefore, Indonesia must remain optimistic and ambitious in increasing its renewable energy mix. Even while updating the KEN document, the target for the renewable energy mix needs to be maintained or even raised. What is needed is a new strategy that considers technological advancements, current economic growth, and can be implemented quickly, such as how to accelerate rooftop solar PV installations optimally in the next two years,” Deon emphasized during the Road to Indonesia Energy Transition Dialogue (IETD) 2023, Expert Discussion Webinar on Thursday (July 27, 2023).

His Muhammad Bintang, a Researcher in Energy Storage Technology and Battery Materials at IESR, stated that based on IESR’s study in 2023, power plants contribute more than 40% of Indonesia’s total energy sector emissions. To support the achievement of a 23% renewable energy mix and to consider the realization of lower energy demand growth than the RUEN projections, it is required to have at least 24 GW of installed renewable energy generation capacity that needs to be in place by 2025 or an additional 13 GW should increase it within the next two years. This means that the growth of renewable energy generation needs to reach 5-7 GW per year.

“To achieve the net zero emission target (NZE) by 2060 or earlier, several concrete strategies are needed. According to IESR’s study, some of the identified strategies in the electricity sector include increasing the success of Commercial Operation Date (COD) for geothermal power plants by 1.4 GW and hydropower plants by 4.2 GW, increasing the capacity of the de-dieselization program for scattered diesel power plants from 588 MW to 1.2 GWp of solar power plants and batteries, constructing 4.7 GW of solar PV power plants and 0.6 GW of wind power plants. Additionally, the implementation of biomass co-firing in PLN’s coal-fired power plants with an average share of 10% for Java-Bali and 20% for non-Java-Bali power plants, and the early retirement plan for certain coal-fired power plants. Among the various technology options, expanding solar PV power plant capacity can become a viable solution to achieve the 23% renewable energy mix target quickly. Compared to other power generation technologies, solar PV plant development is relatively faster,” Bintang explained.

Bintang explained that accelerating the development of renewable energy requires the readiness and flexibility of the electricity system to increase the penetration of various renewable energies (variable renewable energy, VRE). To meet the NZE target, the role of VRE power plants needs to be enhanced, from the current 0.4% to around 4% by 2025 and increasing to 77% by 2060. Moreover, investments are required for constructing power plants and developing infrastructure to accommodate the penetration of variable renewable energy (VRE).

IESR encourages Indonesia to smoothen and accelerate the energy transition. Through the organization of the Indonesia Energy Transition Dialogue (IETD) 2023, IESR will involve numerous experts to delve deeper into efforts to transform the operation of the electricity system as a strategy for increasing the share of renewable energy. IETD 2023 marks the sixth edition since its first inception in 2018. This year, IETD adopts the theme “Enabling Rapid Power Sector Transformation” and will take place over three days from September 18-20, 2023, held in hybrid form in Jakarta and online. Follow IETD 2023 by visiting the website www.ietd.info and take advantage of attractive ticket discounts by registering from July 22 to 28, 2023.

Fostering Courage to Resolve Dilemmas in Indonesia’s Solar Energy Industry Development

Jakarta, July 26, 2023 – Indonesia’s swift progress in the energy transition hinges upon the nation’s ability to cultivate a robust domestic solar energy industry. This imperative message was conveyed by Fabby Tumiwa, the Executive Director of the Institute for Essential Services Reform (IESR), during a compelling discussion at the Indonesia Solar Summit 2023 (26/07). Tumiwa emphasized that prompt government action is pivotal to address several critical aspects such as obtaining market data for solar PV, ensuring the bankability of the industry to facilitate obtaining business loans, adhering to the 40% local content requirement for domestic solar PV products, and surmounting the constraints within the solar industry’s supply chain. Moreover, the willingness to invest in the solar energy sector will play a pivotal role in shaping the trajectory of Indonesia’s solar industry growth.

Tumiwa accentuated, “Regulators must consolidate dispersed data regarding the emerging solar PV market, thereby providing potential investors in Indonesian solar PV manufacturing an insightful data. Additionally, Indonesia currently lacks tier-1 manufacturers, those compliant with bankability prerequisites. This shortfall impedes the production of highly efficient solar modules. The establishment of tier-1 solar manufacturing facilities within Indonesia would be a monumental stride.”

He further evaluated that once the bankability predicament is alleviated, it will not only invigorate larger-scale solar projects to set foot in Indonesia but also stimulate burgeoning market demand.

Similarly, Rachmat Kaimuddin, the Deputy Minister for Infrastructure and Transport, Coordinating Ministry of Maritime and Investment Affairs, Republic of Indonesia, reiterated the importance of proactively preparing the groundwork for solar energy demand to foster the development of a solar energy industry in Indonesia during the same event. He underscored that governmental intervention in shaping a solar energy market can be effectively achieved through the Just Energy Transition Partnership (JETP).

“The solar industry in Indonesia is still in its pioneering stages, relatively underdeveloped. Meanwhile, our power generation heavily relies on coal. Our objective is to establish a thriving solar industry, necessitating the cultivation of demand. Through JETP, we are intervening by reducing our reliance on fossil fuels and infusing renewable energy sources like solar PV. This demand extends beyond Indonesia’s borders, for instance in Singapore, where there’s interest in sourcing green electricity generated using modules and batteries manufactured in Indonesia,” elaborated Rachmat.

Pramudya, the Deputy Director of Power Plant Planning at the Directorate General of Electricity, Ministry of Energy and Mineral Resources, Republic of Indonesia, anticipates that the renewable energy mix will only constitute 11.3% of the targeted 23% by 2025. He posits that the gap in achieving this target can be addressed by the inclusion of solar power plants..

“Solar PV possesses a promising opportunity due to its potential for rapid development. While aiming to achieve the 23% renewable energy mix target, a substantial 15 GW of solar PV is required. However, the realization of this goal within a 2-year timeframe is subject to challenges, encompassing local content requirement considerations and the essential adaptation of network flexibility,” remarked Pramudya.

Wilson W. Wenas, a Solar Practitioner from ISG Solar, outlined three key strategies to expedite the growth of the solar industry in Indonesia. Firstly, it is imperative to select the appropriate solar energy technology, such as TOPcon, Heterojunction, Advanced Heterojunction and TOPcon, and Perovskite Solar Cell Tandem. Secondly, robust research and development initiatives should be primed to support the chosen technology. Thirdly, the collaboration should extend to machine makers, not solely module makers.

“Making an erroneous technology or machine maker selection could lead to catastrophic consequences,” he emphasized.

Additionally, Daniel Kurniawan, a Solar Energy Specialist at IESR, elucidated that investing in polysilicon technology stands as a strategic imperative for both the cell and panel sectors. He underscored that propelling the growth of Indonesia’s solar energy industry demands the presence of bold stakeholders willing to undertake investment risks.

Continuous Effort in Paving the Way for Solar Energy in Indonesia

press release

Jakarta, July 26, 2023 – The Indonesia Solar Summit 2023, hosted by the Ministry of Energy and Mineral Resources and co-hosted by think tank Institute for Essential Services Reform (IESR), affirms the commitment to accelerate solar deployment in the country.  Solar energy has made it significantly into Indonesia’s NZE pathway, projected at 61% of total electricity sources by 2060. A previous separate study by IESR placed solar energy as the backbone for a zero-emission energy system by 2050.

Minister of Energy and Mineral Resources, Arifin Tasrif, mentioned solar energy is a crucial strategy to achieve 23% of the renewable energy mix within the next two years before 2025. However, he also emphasized the significance of having access to technology and funding to successfully utilize solar energy and meet the renewable energy mix target. According to him, investment in solar energy will easily flow into Indonesia if there is a significant demand in the country. 

“There are two crucial factors that must be considered to accelerate the use of solar energy. The first is the availability of technology, which requires support from the industry. The second is the availability of international and domestic coverage that needs to be mobilized. The target for the renewable energy mix is 23% by 2025, but currently, it only stands at 12.5%, leaving only two years to achieve this goal. Additionally, the aim is to reduce greenhouse gas emissions by approximately 290 million tons in 2030, which has increased to 358 million tons. To achieve this, various efforts are being made, including de-dieselization programs and converting fossil-fueled motorized vehicles to electric motors, to absorb emissions,” said Arifin. 

The progress towards solar energy adoption in Indonesia remains slow. The actual installed capacity of solar PV in 2022 is 271.6 MW or far below the plan of 893.3 MW, based on data from the Directorate General of New, Renewable Energy and Energy Conservation (EBTKE), MEMR. There are several factors that have hindered widespread adoption of solar energy, including complications with land ownership, lack of local experience and unattractive tariffs. Whereas, the latest technical potential is at 3,295 GWp, acceleration of solar deployment will be critical in achieving renewable energy and NZE targets. In the short term, 18 GW of solar energy is needed to attain a 23% renewable energy mix target by 2025, with an investment value of US$14.1 billion, based on BloombergNEF and IESR study. 

With the announcement of Just Energy Transition Partnership (JETP) last year at G20 Summit 2022 in Bali, Indonesia – a comprehensive investment and policy plan is currently drafted in consultation with relevant stakeholders, covering early coal retirements, just transition measures, and acceleration of renewable energy development. The US$20 billion partnership aims to peak Indonesia’s power sector emission by 2030, and solar energy has become a significant part of the planning due to its techno-economic advantage and high potential for greenhouse gases emission reduction. The first version of such a plan will be unveiled in August 2023.

Rachmat Kaimuddin, Deputy Minister for Infrastructure and Transport, Coordinating Ministry of Maritime and Investment Affairs revealed that to build solar energy industrialization, Indonesia needs to prepare the demand first. 

“Reflecting in this, we intervene in the country, for example through JETP, how we minimize dependence on fossil energy, can be in several forms such as reducing the output of coal-based power plants and creating new demand,” he explained. 

He also emphasized that Indonesia’s cooperation with Singapore for green electricity requires that solar modules and batteries must be produced in Indonesia, so that the demand that arises becomes a trigger for the PLTS industry in Indonesia to form. 

“We don’t want to only import in the future. We hope that a domestic industry will be formed while we are in the process of energy transition,” he said.

Antha Williams, who leads Bloomberg Philanthropies’ Environment Program stated that developing a homegrown solar industry is a key component to advancing Indonesia’s transition to clean, affordable, and reliable energy.

“By cultivating international partnerships to mobilize capital and scale domestic solar manufacturing capacity, Indonesia has the potential to realize its net-zero energy pathway goals through rapid deployment of clean energy projects. Bloomberg Philanthropies welcomes the opportunity to support Indonesia’s goal of becoming a leader in solar energy development.”

Fabby Tumiwa, the Executive Director of IESR, stated that over the last two years, a new market has emerged, utilizing solar PV not only for selling electricity but also for producing new value-added products, such as green hydrogen and ammonia. Based on IESR data, there are currently 10 green hydrogen and ammonia projects that have been initiated since last year, intending to use solar energy as their primary electricity source. These projects are currently in the study phase and are expected to be realized within the next 2-3 years. Fabby also pointed out that experiences from various countries, including some developing ones, demonstrate that constructing Gigawatt-scale solar power plants within a year is an achievable feat.

Fabby highlighted three essential supporting factors to encourage the development of solar PV, “Firstly, it requires political will and strong, active leadership from the government, along with the establishment of transparent and sustainable policies and regulations. Secondly, there is a need for the development of an integrated ecosystem, which involves defining quality standards and guarantees for solar modules, ensuring the availability of qualified and trained human resources. Lastly, it is crucial to foster the growth of an integrated and competitive solar PV manufacturing industry.”

Indonesia’s Chairmanship in ASEAN 2023 presents an opportunity to engage the public and raise awareness about the benefits of solar PV adoption. Public outreach campaigns, educational programs, and community-driven initiatives can inform people about the environmental advantages, economic benefits, and energy independence that come with solar PV usage. Building public support and understanding can facilitate smoother and more widespread adoption of solar PV technology. Besides that, Indonesia’s Chairmanship can set a precedent for solar PV adoption in ASEAN through policy alignment, regional cooperation, investment promotion and innovation. It is timely to promote and drive domestic solar industries and supply chains in parallel with fast deployment of solar projects.