Beware of Potential Stranded Assets in Coal Industry Due to Energy Transition

Jakarta, August 26, 2021 – The coal industry in Indonesia has a high enough risk to become one of the stranded assets in the future, both in the upstream and downstream sectors. This was stated by Fabby Tumiwa, Executive Director of IESR in the seminar on Exploring Potential Risks of Coal Exit Towards Economics and Finance in Indonesia. This seminar was organized by IESR in collaboration with Climate Transparency – an international partnership of think tanks in several G20 countries, and with the support of the German Ministry of Foreign Affairs held a two-day online seminar themed “Aligning International Energy Finance toward the Net-Zero Economy” on 25 -26 August 2021.

“Demand for coal energy in Indonesia will increase from 130-140 million tons to 160-170 million tons, but after that there will be a decline in line with the retirement of power plants,” said Fabby.

As one of the largest coal exporting countries in the world, Indonesia received an increase in coal demand to countries such as India and China, which initially ranged from 550 million tons to 625 million tons. But on the other hand these countries are ready to announce their energy transition.

The Indonesian Employers’ Association (APINDO) is aware of the energy transition phenomenon and the shift in financing from fossil energy to renewable energy.

“We recognize that there are several things that have factually happened, for example regarding financing, where many world and national banking institutions have reduced their support or portfolio to the coal-based industry,” said Hendra Sinadia, Energy and Mineral Resources Committee, Indonesian Entrepreneurs Association ( APINDO).

“More than 100 financial institutions have now committed to no longer finance coal, but there is still financial support for the coal sector from the APBN in the form of subsidies for fossil fuels.” said Tiza Mafira, Associate Director, Climate Policy Initiative. Tiza also added that the National Economic Recovery (PEN) is still dominated by the dirty sectors, even though PEN has been promoted as a green economic recovery.

Senior Economic Observer, INDEF, Faisal Basri said that decision makers must make comprehensive efforts to carry out economic and energy transformation in order to accelerate economic growth and people’s welfare.

The government needs to immediately mitigate the risk of stranded assets in the coal industry so as to prevent greater economic losses.

“The biggest challenge is our awareness in transforming the economy from low value added to high value added, from value extraction (activities that explore existing resources) to value creation. I believe that there is a legal market mechanism whereby investors will abandon products and stocks that are not pro in reducing GHG emissions,” said Faisal.

The Institute for Essential Services Reform (IESR) through a study of Coal as Stranded Assets: Potential Climate-related Transition Risk and Its Financial Impacts to Indonesia Banking Sector reminded Indonesia to immediately consider and calculate the potential value of stranded assets from the coal industry to prevent greater economic losses. . IESR also recommends, especially for investors and financial institutions to pay attention to these risks so that they are careful in making investment decisions.

The shift in investment towards renewable energy by developed countries will affect the economic and financial sectors in developing countries, such as Indonesia.

“This was also conveyed by the Task Force on Climate-related Financial Disclosures (TCFD). that there are financial risks arising from the adjustment process to a low-carbon economy in terms of policy/law, technology, market, and reputation. One of the financial impacts of the energy transition is stranded assets, where coal sector assets are devalued and even become unusable,” said study author Hadi Prasojo. Coal as Stranded Assets: Potential Climate-related Transition Risk and Its Financial Impacts to Indonesia Banking Sector, Hadi Prasojo.

Indonesia’s Net Zero Emissions: A Roadmap for Clean, Affordable and Secure Energy

Stakeholders in Indonesia have realized that climate change is an important aspect of development planning in Indonesia. In addition to economic growth through the development of key sectors according to the principles of sustainable development, the aspect of emission reduction also requires special attention in order to quickly achieve net zero emissions. On this basis, the Institute for Essential Services Reform (IESR) in collaboration with the Indonesian Foreign Policy Community (FPCI) held a presentation and discussion regarding the roadmap to Indonesia’s net zero emissions by 2050.

On this occasion, IESR’s Research Coordinator, Pamela Simamora, stated that in formulating a strategy to achieve emission reductions, it is by remembering the 2015 Paris Agreement on climate change. Regarding the agreement and the global target, Pamela said that the government needs to refer back to Indonesia’s commitment (through Undang-Undang No. 16/2016, concerning the Ratification of the Paris Agreement) to reduce emissions by 29% with its own efforts or 41% with international assistance by 2030.

However, along the way, according to a report issued by the Climate Action Tracker in 2020, Indonesia’s Nationally Determined Contribution (NDC) document that year was not in line with the targets agreed in the Paris Agreement. In addition, Indonesia’s Long-Term Strategy on Low Carbon and Climate Resilience (LTS-LCCR) document also does not show zero emissions as a target that must be achieved by 2050. Pamela said the government’s planning through the low-carbon development planning documents earlier was not in line with the downward trend in electricity prices with renewable energy sources (which are expected to contribute substantially to emission reductions).

The IESR study entitled “Deep Decarbonization on Indonesia’s Energy System: A Pathway to Zero Emission by 2050” shows that the energy sector (power generation, transportation and industry) can achieve zero emissions by 2050 because it has achieved the technical and economical feasibility. The roadmap has 4 main pillars; renewable energy, electrification, reduction of fossil fuels, and clean fuels. The study states that a drastic increase in the use of renewable energy, electric vehicles, and electric heating is necessary to be implemented within this decade.

This study also states the need for the implementation of a coal moratorium to reach the peak of carbon from coal by 2025. This study also projects that the electricity sector will become the first sector to be carbon-free by 2045 by utilizing renewable energy sources and battery technology. On this basis, Pamela said that the Government of Indonesia could further increase its emission reduction target.

Responding to the explanation, Satya Widya Yudha from the National Energy Council (DEN) said that beside the Paris Agreement, Indonesia also has a target and vision of Indonesia Emas in 2045 which targets 6% economic growth. With this target, Indonesia has a strategy to develop and grow the manufacturing and service industries, which of course will follow the rules of green growth. Based on this, Satya said that energy consumption will also increase, so that the peak of national emissions is still difficult to achieve even in 2040-2050.

In addition to the aspect of industrial growth, Satya also responded to IESR’s input regarding the moratorium on coal that needs to be terminated as soon as possible. Satya explained that there is a legal risk and financial impact that harms Indonesia if the use of coal is immediately stopped, this is feared to be a premature policy and it is felt that there is still much need to be studied about its implementation strategy.

The same thing was conveyed by Chrisnawan Anditya, Director of the Directorate of Various New Energy, DGNREEC, Ministry of Energy and Mineral Resources. Chrisnawan stated that there is a need for a study related to the calculation of Indonesia’s peak emission that covers all related industries. This is considered to be very important as the basis for planning the development of net zero emissions in Indonesia. Chrisnawan also said that the use of new technologies such as batteries and pumped storage needs to be targeted by the Ministry of Energy and Mineral Resources to be applied in 2030.

In addition, important aspects due to the COVID-19 pandemic were also discussed at this event. Rachmat Mardiana, Director of the Directorate of Energy, Telecommunications and Communication at Bappenas, stated that it is projected that until 2022, changes in global geopolitical dynamics and uneven global economic recovery will more or less be a challenge for Indonesia, especially in terms of energy transition. To compensate for this, Rachmat said Indonesia needed to quickly change its economic structure, implementing a greener economy. He also said that the energy sub-sector has a very complex structure that affects the structure of other sectors such as the economy and population; this concludes that energy planning needs to be carried out through careful studies.

Noor Syaifudin, Policy Analyst from Fiscal Policy Agency (BKF), Ministry of Finance said that towards the 41% emission reduction target, Indonesia needs global assistance, which so far has only been found to be in the form of loans that have the consequence of returning public funds. In addition to this, Noor also said it was necessary to prepare a strategy for the utilization and optimization of existing natural resources, as well as an affordable energy transition strategy for Indonesia. Closing the panel session, Noor said that local and provincial governments also have an important role in achieving the net zero emission target.

In closing the event, the panelists and speakers agreed that the involvement of young people and students in the energy transition process and the success of the net zero emission target is very important. For example, students can conduct research related to technological efficiency so that the cost of new and renewable energy is getting cheaper. This is expected to facilitate the making of supporting policies, which are still influenced by the assumption that renewable energy is an expensive technology.

Comprehensive Planning Required for Utility-Scale Solar Energy Development

Given the potential for solar energy that reaches 20.000 GW, the utilization of solar energy on a utility scale is still very small in Indonesia. It is recorded that until 2020, the total installed capacity of solar energy is 186 MW. Especially for utility-scale solar power plants, the number of auctions that have taken place so far are still sporadic and unstructured. In order to accelerate solar energy more massively, a more structured and comprehensive plan is needed to ensure project availability. This policy reform certainly requires commitment and strong political leadership from the current government.

As one of the co-signatories of the Paris Agreement, Indonesia has a target to achieve the renewable energy mix target of 23% by 2025. Unfortunately, until now the achievement of the energy mix has only reached around 12%. In the short term, Indonesia must increase its renewable energy capacity. Dadan Kusdiana, Director General of New and Renewable Energy, and Energy Conservation, Ministry of Energy and Mineral Resources said in a webinar launching the report “Hitting Record-Low Solar Electricity Prices in Indonesia” that it takes at least 4 times the effort to achieve the energy mix target of 23%.

“Currently we are trying to reach the target of 23%. From the electricity sector, we are preparing a new RUPTL that accommodates a larger portion of EBT, the figure is up to 51%,” explained Dadan.

Cita Dewi, Executive Vice President of PT PLN’s New and Renewable Energy Division, continued that the presence and contribution of PV solar is one of the main options for increasing renewable energy in the future in addition to hydro.

“We are very happy to see the current development of PV technology, especially for the declined intermittency side. As a result, they are increasingly competitive and the rates tend to fall. Both the state and PLN can gain benefits from PV,” she said.

The direction of the government’s steady commitment to accelerating renewable energy is a good sign. However, considering the current condition of Indonesia, who must meet the target of installed capacity of renewable energy in a short time, a strategic move is needed to create a mature solar ecosystem. 

Daniel Kurniawan, a photovoltaic specialist researcher as well as the author of this report, explained that the reason why utility scale PV has not developed rapidly in Indonesia is partly because of the less ambitious planning of the electricity system to include solar PV in it.

“So far, we have seen that solar auctions are still sporadic, or buy-out, and do not have a large scale to maximize its economic benefits. In this case, the determination of the target for the auction in the next 5 years, for example, is important. The government can help by making a feasibility study or land acquisition,” he said.

The Local Content Requirement (TKDN) is still an obstacle to the acceleration of the solar industry in Indonesia because the price of domestic panels are more expensive, but the efficiency is lower. Entrepreneurs also find it difficult to get international capital assistance because the quality of these domestically made panels has not been tested for quality. To deal with this issue, the government needs to consider separating TKDN and non-TKDN auctions according to the readiness of local industries.

Melina Gabriella, IESR Energy Transformation Program Officer, who also co-authored this report, added that to achieve affordable solar prices, Indonesia can learn from countries with low solar auction prices, such as Brazil, India, and the United Arab Emirates.

“Some of the lessons that we can take from those countries include the commitment and strong leadership from the government which is revealed in policy products such as qualification standards and PPA, as well as the transparency of auction and clarity of rules. The establishment of a special agency to manage the tender process should also be considered. In addition, the Indonesian government also needs to review supporting regulations such as TKDN and tariff setting policies,” explained Melina.

The integration of solar in the national electricity supply program is the key to the development of solar energy. Therefore, a structured, measurable and comprehensive auction planning needs to be carried out by the government. National targets for solar energy need to be set and a strategic roadmap for achieving them made.

Gigih Udi Atmo, Coordinator of Electricity Business Preparation, Director General of Electricity, MEMR, appreciated this latest report from IESR, and stated that the government is currently focusing on pursuing the 23% renewable energy mix target by 2025.

“We need to see why we need to accelerate solar energy. There are at least two big targets, namely 2025, a 23% NRE mix and net-zero emissions in the long run. So the context is how solar can contribute to achieving the existing targets,” Gigih said.

Salman Baray, Country Director of Indonesia ACWA Power, shared his experience of participating in solar auctions in various places, both Indonesia and abroad.

“Many investors have looked at Indonesia as a place to invest, but in terms of regulations and government support, certain improvements need to be made. For example, assisting in the land auction process, tax incentives, regulations related to local content requirement, as well as making it easy to get local funding,” Salman closed his explanation.

Solar PV and Cooperatives Combined to Achieve Energy Democracy

Jakarta, 24 June 2021, IESR survey shows that more people are interested in adopting rooftop solar power plants, especially if an attractive financing scheme is available. It will be a huge opportunity to expand the rooftop solar PV market answering the challenges of the climate crisis on a practical level done individually by transitioning to renewable energy.

The urge to develop renewable energy to protect the earth from rising temperatures above 1.5 degrees C, especially by utilizing solar PV has been started in 2017, through the National Movement of One Million of Solar Rooftops (Solar Archipelago).  IESR together with 13 other institutions initiated this movement. The target of this movement is to achieve 1 GW of rooftop solar PV in Indonesia by 2020, assuming one house installs 1 KWp of rooftop PV. Compared to the potential of solar power in Indonesia, whose official number is 207 GW, but the actual technical potential is way bigger up to 20.000 GW according to IESR, the 1 GW target is a small target.

“This target was made as a benchmark, considering that at that time there was no ministerial regulation, nor a market that looked potential. When we reach 1 GW, it means that there is a combination of supportive regulations, reliable EPC companies, and a mature market. So this target is not only to install 1 GW of solar PV rooftop but also to fight for the supporting ecosystem,” explained Marlistya Citraningrum, IESR’s Sustainable Energy Access Program Manager, in an online workshop entitled “Cooperatives as Agents of Change in Financing Climate Change Mitigation and Adaptation”.

The initiation of Solar Archipelago projects missed their target in achieving 1 GW of rooftop solar in Indonesia’s residential area, however, there has been a rapid increase in terms of the number of rooftop solar PV users.

“When this initiative was launched, there were around 200s new rooftop solar PV customers. Currently, there are around 3000s households of PV mini-grid. It has not reached the target of one million roofs, but there is a significant increase,” said Marlistya

The increase in PV mini-grid customers indicates that the interest and information received by the public about this technology is increasingly widespread. Since 2018 IESR has conducted market studies in the following cities, Greater Jakarta, Surabaya, seven cities in Central Java, and three cities in Bali. The survey shows that there are various potential PV mini-grid markets in each of these cities.

In Jabodetabek 13% of respondents fall into the category of early followers and early adopters. This group is respondents who have knowledge of rooftop PV and are financially able to afford it. This group only needs comprehensive information covering PV mini-grid technology, installation procedures, as well as service providers for rooftop PV installations. This group of early followers and early adopters is quite large in various cities, 19% in Surabaya, 9.6% in Central Java, and 23.3% in Bali.

Another interesting thing about IESR’s market survey is that the issue of price is still the second most frequently asked question by potential consumers. Questions about savings are the most frequently asked questions by potential customers. This phenomenon shows that price is still the main consideration for prospective solar PV customers.

The attractive rooftop solar PV mini-grid scheme is an opportunity for financial institutions, including cooperatives.

“At least, there are 3 opportunities that can be taken by cooperatives to participate in this rooftop solar PV scheme. First, by collaborating with EPC companies and providing financing schemes. Of course, you need to choose a trusted EPC company. The second is by selling solar panels as well as providing a financing scheme. Third, providing a financing scheme as well as after-sales service,” explained Marlistya.

Attractive and affordable financing schemes for PV mini-grid are still difficult to find at this time because currently EPC companies just work with banks. Of course, this should be seen as an opportunity for cooperatives to develop their programs.

Closing the first session of the morning workshop, Fitrian Ardiansyah, chairperson of the Sustainable Trade Initiative Foundation, stated that the financing of rooftop solar power plants would be one of the business niches for cooperatives.

“The green economy is aggregated at the local community level, cooperatives are the right financial institutions to pick up the ball at this opportunity,” he said. 

Renewable Energy Development First, Nuclear should be the last option or not at all

Nuclear energy has created a dialogue and debate about the benefits and risks it brings. On the one hand, nuclear energy can meet energy needs, and can be used in various fields such as medical and military. But nuclear power also carries the risk of radiation leakage. There are noteworthy nuclear accidents, starting from Three Mile Island (1979), Chernobyl (1986), and Fukushima (2011). From this the question arises, is nuclear still worthy to be developed on a large scale? If so, what aspects must be considered in its development? Presenting three speakers with different backgrounds, FISCO UGM held a webinar on Nuclear Potential and Controversy to try to solve this question.

On the occasion, Fabby Tumiwa, Executive Director of IESR, said that there are several things that must be considered regarding the development of nuclear energy, including three factors of nuclear reactor safety, namely regulations or regulatory bodies, operational security, and security systems.

“The debate about nuclear power plants from the start was not solely about technology. But more about the security risks. The most feared disaster from nuclear power is the leakage of radiation into the outside environment, so the controversy is not solely about technology but rather the environment in which the nuclear power plant is located, “explained Fabby.

To ensure this security aspect, in addition to strict regulatory bodies and security procedures, the economic or cost issues required also need to be re-examined.

“The trend of nuclear power plant investment from year to year is getting more expensive. If the goal of building a nuclear power plant is to meet the growing demand for electricity, then there are other renewable energy alternatives that are more affordable and less dangerous,” continued Fabby.

Environmental factors, including public acceptance, are important and make this nuclear issue dynamic. Derajad S. Widhyharto, Lecturer of Sociology at the Faculty of Social and Political Sciences, UGM, also revealed that the public’s concern about nuclear power, both as nuclear power plants and new energy, lies in management issues.

The management aspect that is a concern for the community is further exacerbated by the dynamics of nuclear regulation which are not interrelated with the findings of surveys or research conducted by various institutions.

Alexander Agung, a lecturer in Nuclear Engineering UGM, complements this discussion with a more technical perspective on nuclear energy. Nuclear power plants were developed to meet the increasing demand for electricity, as well as to support industrialization. Countries such as the United States, Japan, and European countries do meet their electricity needs from nuclear plants.

“The existence of a regulatory body that specifically regulates and oversees the development and construction of the nuclear power plant ensures the safety of this nuclear power plant from the start, during the site selection survey to construction, even up to decommissioning” Alexander concluded.

However, in its development, it is also necessary to ensure that this regulatory body continues to work optimally so that the development of nuclear energy does not endanger the community and the surrounding environment.

Beyond 207 Gigawatts : Accelerating solar development in Indonesia

Seeing the need for an update for solar power technical potential in Indonesia, the Institute for Essential Services Reform (IESR) with technical support from the Global Environmental Institute (GEI) conducted a nationwide geographic information system-based (GIS-based) solar photovoltaic (PV) technical potential assessment in the country.

Technical potential estimates represent the achievable electricity generation potential (terawatt-hours), including its capacity potential (gigawatt-peak) and suitable land area (square kilometers), given the topographical (geographical) and land-use constraints as well as PV system performance. The technical potential is different from economic or market potential, as it does not consider projected costs and policy and regulatory limits (other than those related to land-use), and thus, do not represent the level of the generation that might actually be deployed, but rather an upper-boundary estimate of development potential. Using publicly available GIS data, this report covers both national- and provincial-level results of Indonesia’s spatial analysis and focuses on large-scale (utility-scale) ground-mounted solar PV applications.

The analysis of this report is the first step of a series of activities to assess potential solar PV projects in Indonesia and provides an overview of national solar power potential before zooming in to the potential regions. The estimation of the technical potential starts with first assessing the suitable areas and terrain for solar PV development. Then, by considering the solar resource potential in the areas and taking some technology-specific assumptions, the technical potential can be calculated. Several constraints to determine the suitable areas include certain terrain features (e.g., ground slope), protected areas, land-use restrictions, water bodies, and others.

Our findings show that Indonesia’s solar PV technical potential ranges between 16 to 95x larger compared to the current national estimates by the Ministry of Energy and Mineral Resources (MEMR), which is 207 GW (see Table 4).

As the assessment goes into provincial and cities/regencies level, the findings can be used to inform policymakers, PLN, business players, and other relevant stakeholders to accelerate solar development in Indonesia, starting by updating Indonesia’s solar potential figure and identifying potential solar projects across the country.

Here are some of the key recommendations that policymakers and PLN could do:

  1. The government could update their nationwide solar technical potential figure, to reflect the more detailed potential for solar energy development in Indonesia. The current assessment shows Indonesia’s solar potential is higher (16 to 96x) than the current official figure (207 GW) and it has the potential to supply Indonesia’s future energy demand.
  2. The municipal government and its respective PLN’s regional office could work together on identifying prospective locations in their jurisdictions. Case studies such as for Bali and Sumba could be entry points to more detailed planning. Assessment should include current and projection of electricity supply and demand in the area, grid study, financing needs, as well as related policies and incentives.
  3. Further technical assessments can be conducted, particularly to zoom in on specific locations at the cities/regencies level and even smaller, not only for utility/large-scale solar but also for floating solar and rooftop solar.

Coal as Stranded Assets: Potential Climate-related Transition Risk and Its Financial Impacts to Indonesia Banking Sector

An important issue to be discussed at the G20 Summit

Based on the Task Force on Climate-related Financial Disclosures (TCFD), transition risk is one of the financial risks that can arise from the process of adjusting to a low-carbon economy, both from policy/legal, technology, market, and reputation risks. One of the financial impacts of these risks is stranded assets, in which assets suffered devaluations and even became unusable. As a coal-producing country, this study can serve as a reminder for Indonesia which has the potential to lose if it does not consider the potential value of stranded assets in the future. Therefore, all parties, especially investors and financial institutions, must pay attention to this risk and be cautious in making investment decisions.

Coal contribution in the national energy mix is still high. With the power sector still being the largest domestic coal consumer, the government is reluctant to move away from coal-fired power plants (CFPPs). CFPPs are likely to become stranded assets due to more competitive investment costs from renewable energy power generation technology. With the existence of a merit order, the utilization of the CFPPs in the power system will decrease.

The government also looked at coal downstream industries as an attractive opportunity to increase the added value of coal. This industry is likely to engender stranded asset risks in the future since the economic viability of these projects is still in doubt with the need for various incentives from the government. The coal upstream/mining industry also has the potential to become stranded assets where the proven reserves must remain below the surface of the earth.

Stranded assets from the coal industries will directly have a negative impact on the financial sector which is involved in financing these projects. The global trend of moving away from coal financing projects is expected to increase the demand for domestic financing sources, including from the banking sector. This can further increase risks and impacts on the domestic financial system. Furthermore, if this risk is not properly managed, it could have a wider impact on financial stability through various transmission mechanisms.

In response to the emergence of climate-related risks, the Indonesian government has developed policies and regulations to foster sustainable finance. However, the implementation is still focused on efforts to take advantage of opportunities that arise. Meanwhile, efforts to mitigate risks are still low. Indonesia should begin to explore the lessons learned from the responses that have been made at the global level so as to improve the utilization of sustainable finance towards climate mitigation.

This study encourages recommendations for various actors to avoid the risk of coal project-stranded assets. The government should present clear signals in implementing climate policies so that economic actors can anticipate. The central bank and financial regulator should undertake thorough research such as assessment of climate-related financial risks, and disclose it by following the TCFD recommendations. Meanwhile, financial institutions/investors should manage investments and portfolios that are exposed to climate-related risks, as well as disclose this risk information to the public. This information is important to avoid incorrectly price or value assets, which are leading to a misallocation of capital.

The transition risks are not a single country issue, so it needs also to be mainstreamed through various means including through the international discussion forum. The momentum of the Indonesian presidency at the G20 Summit in 2022 and Indonesia’s Minister of Finance as co-chair of the Coalition of Finance Ministers for Climate Action in 2021-2023 can be used as a medium for discussion and raise the awareness of global countries towards this issue.

Not Renewable energy but Communicate that Coal is Intermittent and Expensive

ACEF side event

Communication is a powerful instrument that can be used to build public awareness of the transition to energy and renewable energy. As for how to use this tool to reach various groups of people, not only for people whose daily life is involved in the energy world is an interesting topic of discussion in the side event of the Asia Clean Energy Forum 2021 entitled Evidence-based Communications to Propel the Energy Transition which was organized by the Clean Affordable and Secure Energy for Southeast Asia (CASE) project team in collaboration with Asian Development Bank.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), explained that communications play a significant role in achieving CASE goals. The goals of CASE include building a constructive dialogue with stakeholders from the non-energy sector and creating broader public discussions supporting the acceleration of the energy transition.

Christiane Rossbach, the Business Director, Multilateral, Sustainability, Agri-Food and Health at Edelman and Co-lead CASE Communication Team, in her presentation, emphasized the essentiality of defining energy transition as a crucial mission to targeted audiences.

“What are the communication roles to propel the energy transition forward by making key stakeholders realize the opportunities, in particular decision-makers, non-energy stakeholder, financial, business entities, influencer consumers; those who are more engaged with society and impact of business. More likely to share their opinion with, and like to attend a public meeting, while they are not decision-makers per se, but more influential in shaping the way of business,” she said.

Moreover, she explained, during the pandemic, the consumption of online content doubled, therefore,  it needs to carefully decide which evidence or argument will work best for which audiences. The approach she suggested in delivering the message of the importance of energy transition to raise awareness, drive engagement, and create a conversation is by storytelling.

“Beyond fact and figures, storytelling is powerful. Human brains are hardwired to process and store information in the form of a story. They stimulate our sense emotionally and intellectually; they can put a face on the issue and help us connect with true empathy,” she added.

Talking about the energy transition narrative, Renato Redentor Constantino, Executive Director of the Institute for Climate and Sustainable Cities (ICSC) from the Philippines, shared his views. In his opinion, the narrative that needs to be conveyed by both non-governmental organizations and the government is that the energy transition is underway.

“The landing zone is that clean energy will be dominant, the question is how soon we get there? Can we arrive sooner to bring the benefit of modern and clean, affordable, and secure energy to the table of the inside of the house of a family? Civil Society Organization doesn’t have to monopolize on good intentions here, we need to recognize that governments also share the dream of clean, affordable, and reliable secure energy as their premier objectives,” he said.

In contrast to the Philippines, which has progressed in communicating the narratives, Gandabhaskara Saputra, Outreach, and Engagement Adviser CASE Indonesia revealed that most of the news coverage in Indonesia is still dominated by coal.

“We are still challenging to bring the energy transition conversations towards public engagement and advocacy through the past 5-10 years in a way. While it doesn’t really speak to their daily basis and as long as they have the access to energy,” he stated.

On the other hand, Markus Steigenberger, Deputy Executive Director of Agora Energiewende, sees the need to align research planning with the political agenda.

“The problem that we have been facing many times, once the research is done, and the political agenda has already moved ahead, it’s too late. So whatever you say is interesting to experts but still irrelevant,” he explained.

He said 2 things need to be done, first, strategic anticipation by predicting the political situation in the next two or several years and linking it to relevant research or evidence.

“We have already started thinking about the communication before we actually started the actual research,” he said.

Next, determine an integrated and inclusive methodology by involving stakeholders as early as possible in research.

“We have relevant stakeholders sitting at the table, we share and make data and assumptions transparent, we invite them to share their views and opinions. It helps in terms of creating a sense of belonging,” he explained.

Rana Adib, Executive Secretary of REN21, said that to move a narrative, it is also necessary to look at it from two sides: from renewable energy and also from fossil energy. Citing the latest report released by REN 21, over the past decade, there has been an increase in final energy consumption in renewable energy from only 9 percent to 11 percent. Ironically, the final consumption of fossil energy did not register a significant change, only moving from 80.3 percent to 80.2 percent. This fact asked the strong push from the government and business people to target the use of renewable energy in all sectors immediately.

“We are very far from being on track. RE has shown especially in the power sector that they are able to deliver, technology matured, least-cost options. Today is not enough to say that let’s support renewables, we need to clearly have a message on banning fossil fuels,” she stressed.

Agreed with it, Renato views, communicating a narrative supported by concrete evidence is necessary for the development of renewable energy and the discontinuance of the use of fossil energy.

“The reality that we need to communicate better is that coal is actually intermittent, most of the unreliable, expensive, and insecure fuels,” he concluded.

Bali can lead as the clean energy province, the island owned enormous potential for technical and market of solar PV

 

Denpasar, 9 June 2021 – With the technical potential of 26.4 GWp (IESR, 2021), Bali can rely on solar energy to realize the vision of “Nangun Sat Kerthi Loka Bali” in its energy system, one of which is by encouraging the community involvement in invest in PV mini-grid. This became an interesting discussion at the seminar “Bali Towards a Clean Energy Province” organized by the Institute for Essential Services Reform (IESR), in collaboration with the Indonesian Solar Energy Association (AESI), and the Amoghasiddhi Union, Bali. 

Ida Bagus Setiawan, Head of Energy and Mineral Resources, Department of Manpower and Energy and Mineral Resources – Bali Province said that in terms of potential and track record of technology, rooftop solar is the best renewable energy to be developed in Bali. The local government of Bali has issued government regulation no 45 of 2019 concerning Bali Clean Energy, one of which regulates the adoption of rooftop solar power plants on buildings with a certain area, both public and private buildings.

“The target of rooftop solar in 2021 is 0.5 MWp and 7.5 MWp in 2025. This target is realistic and may be higher in accomplishment if more support is available from the central, regional, and community,” he added.

Chrisnawan Anditya, Director of Various New & Renewable Energy, DJBTKE, who came online on the same occasion promised positive support from the Ministry of Energy and Mineral Resources so that the adoption of rooftop solar power plants would be even more massive.

“Currently, the Ministry of Energy and Mineral Resources is finalizing the revision of the MEMR regulation no. 49 of 2018. Some improvements are made in important points, such as greater exporting provisions than 65%, excess accumulation, and extending invoices from the original 3 months, application-based service mechanisms, shorter application times, and expansion to customers in non-PLN business areas (now only 34 out of 53 regions), as well as coaching and supervision. One of the things that we encourage is performance standards and safety aspects regarding the provisions for installing Indonesia National Standard (Standard Nasional Indonesia-SNI) rooftop solar in the Minister of Energy and Mineral Resources No. 2 in 2021,” said Chrisnawan.

Furthermore, Chrisnawan said that until March 2021, as many as 3,472 customers had installed rooftop solar power plants with a capacity of 26.51 MWp. He said that Bali is in the top 10 (ten) with 141 customers with a capacity of 1.07 MW, where customers are dominated by households but the portion from the industrial sector has a larger capacity.

Stressing about community involvement in supporting the development of rooftop PV mini-grid, Fabby Tumiwa, Chairman of the Indonesian Solar Energy Association (AESI), and also the Executive Director of IESR, revealed that the availability of information regarding the procedures and licensing of rooftop PV mini-grid, as well as easy access to this information, will help the public make investment decisions solar rooftop.

“AESI encourages the creation of a good ecosystem for PV mini-grid, by ensuring a credible Engineering-Procurement-Construction or EPC, having good standards, skilled workforce, and clear financing schemes,” explained Fabby.

Fabby said that the market potential for rooftop solar PV in Bali is large, essentially because Balinese people have realized the importance of respecting nature therefore, the use of renewable energy such as solar rooftop will make the spirit of environmental protection even higher.

In particular, IESR has surveyed household perceptions, the commercial sector, and MSMEs in Bali (2020) and found that the highest reason for respondents’ interest in the concept of PV mini-grid, apart from caring for the environment, was the electricity savings of 51.9%.

“The market potential in the household sector reaches 23 percent, or equivalent to 256,000 households. Huge potential also exists in the business sector, around 35,000 businesses and SMEs and even reaching 71,000 SMEs. This amount is also an opportunity for the government to see that the community’s contribution will be very significant to encourage the achievement of emission reductions and Bali’s goal of 100 percent renewable energy,” said Marlistya Citraningrum, IESR Energy Access Program Manager.

Ida Ayu Maharatni, Manager of the Amoghasiddhi Union, admits that the electricity cost savings have been drastically reduced since the cooperative installed rooftop solar panels.

“During the pandemic, electricity demand rose while financial conditions were difficult, but this was greatly helped by the initial solar rooftop’s investment. We spend electricity equal to zero in 6 months,” she said excitedly.

Answering the cost of PV mini-grid investment which is often considered by the community before installing rooftop PV mini-grid, her party provides energy credit at the Amoghasiddhi Union called SvarnaSiddhi. This loan is included in the investment credit scheme, so the interest rate is relatively reduced by 2% and can be repaid at any time.

“With the installment scheme, our cooperative reduces the tenor of rooftop solar to a maximum of 3 years of financing,” explained Ida Ayu Maharatni.

Agung Prianta, Green Building Council Indonesia (GBCI), Bali, added that the results of a survey conducted by GBCI showed, as many as 87% of the people wanted to be given credit with monthly installments below Rp 500,000 thousand.

The expansion of the rooftop solar PV market will create more job opportunities in the rooftop solar PV sector. Anthony Utomo, Deputy Chairperson of the Indonesian Solar Energy Association, explained that one of AESI’s missions is to produce 1,000 Solarpreneurs, also known as reliable energy SMEs. The program will guarantee the standard of solar PV quality and installations. 

“The market potential for rooftop solar is around 1.5 million users with a market potential value of more than 67 trillion. The RUEN target of 6.5 GW can absorb 812,500 to 1,500,000 workers. The market is large and easy to replicate. This effort will also create Indonesia as a Solar Power House,” added Anthony.

Watch their discussion on this video-on-demand: