Massive Utilization of Rooftop Solar Will be Beneficial to the Government and PLN

Jakarta, 28 July 2021- Revision of Ministerial Regulation Number 49 of 2018 concerning the Use of Rooftop Solar Power Generation Systems by Consumers of PT Perusahaan Listrik Negara (PLN), which aligns with the expectations of rooftop solar users will help the government achieve the target of 23% renewable energy mix by 2025 and have major economic, social and environmental impacts. This regulatory improvement can help Indonesia recover from the post-Covid-19 economy and fulfill its commitments to reduce greenhouse gas (GHG) emissions as stated in the Nationally Determined Contribution (NDC).

Until the end of 2020, Indonesia has only reached around 11.5% of the renewable energy mix. To catch up in the next 4 years, the Institute for Essential Services Reform (IESR) calculates that at least Indonesia must build 14-18 GW of renewable energy power plants.

“Observing the draft of the 2021-2030 Electric Power Supply Business Plan (RUPTL), we see that by 2025 the additional development of renewable energy is less than 14 GW. The government should involve the community and actors outside PLN to build renewable energy plants to achieve the 23 percent target,” said Fabby Tumiwa, Executive Director of IESR.

He stated that the communal works to realize the most potential use of renewable energy is by encouraging the adoption of rooftop solar panels on a large scale. Moreover, according to the results of the IESR market survey, there is a market potential of 9%-11% of households or about 7-8 million who are interested in installing solar rooftops. Furthermore, the price of solar PV technology is getting lower and more affordable by the public.

In the process of revising Permen No.49/2018, the government stated that it would improve several provisions, including changing the net-metering electricity export-import tariff to 1:1, extending the reset period from three months to six months, obligating a mechanism application-based services, expanding the licensing of solar rooftop installations to customers in non-PLN business areas, shortening the licensing process and building a Solar Roofing System Complaint Center.

IESR views that there is an effort to improve the economy of solar PV, which is better with the provision of a net-metering rate of 1:1 from the previous 1:0.65. From the market study conducted by IESR, the public’s interest in using rooftop solar PV is high, and they expect policies that will simplify the licensing and installation process as well as adequate economics. With a net-metering rate of 1:1, the payback period for PV mini-grid investments can be decreased from 10 years to less than 8 years.

This provision will affect the revenue of PLN but not significantly compared to the economic, environmental, and social impacts of the development of solar rooftops. The IESR simulation shows that if there is a total installation of 1 GWp of rooftop solar power, PLN’s income will only decrease by 0.58% with a net-metering rate of 1:1 and 0.52% at a rate of 1:0.65. On the other hand, PLN will take the benefit. With the addition of rooftop solar power plants, PLN does not need to invest more in new renewable energy plants to achieve the RUEN target and reduce the operating burden of gas-fired power plants for supply during the day – thereby reducing fuel costs.

The use of electricity from rooftop solar panels for industrial customers will also reduce the weight of government subsidies.

“Currently, PLN spends the basic cost of generating Rp 1,028/kWh. Meanwhile, the subsidized industrial tariff is Rp. 972/kWh. The use of rooftop solar power plants in the industry will substitute for electricity demand from PLN so that the load of subsidizing industrial customers will also be reduced, ” Fabby explained.

Although it has not been officially released, Fabby Tumiwa, who is also the Chairman of the Indonesian Solar Energy Association (AESI), appreciates the improvement and sees it as a breath of fresh air to encourage market development and the development of the PV mini-grid industry in the country.

“So far, the domestic solar PV industry has not developed because the market is still small, around 20-30 MW/year, so it still depends on imports. If Indonesia can reach 1-5 GW/year, it will be able to attract investment in the solar PV component supply chain, meaning that there is a new industry that absorbs workers,” said Fabby.

The cumulative installation of 1 GWp of solar rooftop can absorb direct labor of 20,000 – 30,000 people per year (conservative figure) and reduce GHG emissions to 1.05 million tons per year. The development of this rooftop solar power plant will be useful for the Indonesian government in recovering the economy after Covid-19. Also in 2021, the warranty period for the Energy Saving Solar Lamp (LTSHE) package for the 2018 program year will expire. This pre-electrification program is part of the calculation of the national electrification ratio, so the government needs to immediately continue efforts to provide access to energy, for example by using rooftop solar power plants with a minimum capacity of 0.5 kWp to 1 kWp – which can be used for productive community activities.

“The USAID study for the Ministry of Energy and Mineral Resources also found a large economic impact reaching USD 18 million in each installation of 2,000 rooftop solar panels for an average capacity of 4.5-5 kWp. Nationally, this will move the sluggish economic conditions back. The benefits are far greater for the community than the potential loss of PLN income,” he said.

The Ministry of Energy and Mineral Resources has reportedly also proposed rooftop solar become a National Strategic Project (PSN) with a target of 3.6 GW in 2025. Thus, the revision of Ministerial Regulation No. 49/2018 is crucial to support the achievement of this target.

Electricity Sector Can Achieve Zero Emissions in 2045

Jakarta, 15 July 2021- In the last two decades, renewable energy has developed very rapidly in terms of technology and economies of scale, therefore, many countries in the world are increasing the use of renewable energy. Between 2000 and 2020, the worldwide renewable power generation capacity increased 3.7 times, from 754 gigawatts (GW) to 2,799 GW. The rapid development in the last decade at the global level was mainly driven by the construction of solar power plants and wind power plants. In the same period, the cost of electricity from utility-scale photovoltaic (PV) fell by 85% (IRENA, 2020)..

Having diverse and abundant renewable energy sources, especially its solar technical potential of up to 20 thousand GWp, based on a recent report entitled “Deep decarbonization of Indonesia’s energy system: A pathway to zero emissions by 2050” by the Institute for Essential Services Reform (IESR) that Indonesia as a whole technically and economically able to achieve zero-emission in the electricity sector in 2045, much faster than the transportation and industrial sectors which will achieve the same condition in 2050.

“Compared to the transportation and industrial sectors, the electricity sector is the low hanging fruit in the effort to decarbonize Indonesia’s energy system. That’s why this one decade is very decisive. Four things need to happen in the next decade: (1) renewable energy acceleration, (2) stop the construction of new coal-fired power plants before 2025, (3) plan to accelerate the termination of steam power plants, especially subcritical types, and (4) modernize the grid,” said Fabby Tumiwa, Executive Director of IESR.

The electrification of the transportation sector (acceleration of the use of electric vehicles/EVs) and industry (electrification of industrial processes) also started along with a deep decarbonization process in the electricity sector. As a result, reducing GHG emissions in the power sector will contribute to significant emission reductions in the transportation and industrial sectors. Using the Best Policy Scenario (BPS), IESR shows that electricity demand from the transportation and industrial sectors will continue to increase towards 2050. Around 50% of electricity will be produced by renewable energy in 2030 from 140 GW of renewable energy power generation, before finally reaching 100% renewable energy in 2045. In this scenario, the Levelized cost of electricity (LCOE) can decrease from 79.52 USD/MWh in 2020 to 40.59 USD/MWh in 2050 so that the cost of electricity generation of renewable energy in Indonesia is becoming increasingly competitive.

By relying on solar energy (photovoltaic), IESR modeling shows that electricity supply is guaranteed even though the variability of solar power generation is quite high. To balance the load requirements and solar power generation, it can be done by charging batteries & utilizing pumped hydro energy storage, utilizing electricity to produce clean fuel, utilizing electricity for transportation (EV charging), utilizing electricity to produce thermal energy, and exporting and importing electricity between regions. Hydroelectric power plants can also be operated flexibly during this period to help balance the system, while geothermal operate as baseload.

Integrating the transportation sector and the industrial sector through electrification, indeed, requires a massive expansion of the electricity network covering all regions in Indonesia. The BPS scenario shows that nearly 760 TWh of electricity is distributed throughout the country by 2050, with Java Island as the main energy consumer in Indonesia consuming 80% of the country’s total energy. To meet its energy needs, Java Island will import 4.6% of electricity in 2030, 45.5% in 2040, and 82.1% in 2050 from the islands of Sumatra and Nusa Tenggara.

IESR recommends to the government to increase the capacity of Indonesia’s electricity grid to support the inter-island power grid interconnection system and optimize renewable energy resources spread across various islands. The Java-Sumatra interconnection is important to supply electricity to Java by up to 50 percent by 2050. In addition, the interconnection between East Java and Bali needs to be expanded to Nusa Tenggara to meet the electricity needs of other small islands. The results of the IESR model even show that by 2050, a transmission capacity of 158 GW needs to be built to connect Indonesia from west to east.

“The government needs to make a decision today because it will affect the speed at which we transition and the costs we will incur. If we continue to develop coal-fired power plants even though there have been many studies that have revealed it will become a stranded asset, it will become an economic burden for Indonesia. Deep decarbonization of the energy system to achieve zero emissions is beneficial for Indonesia,” said Pamela, lead author of the report “Deep decarbonization of Indonesia’s energy system: A pathway to zero emissions by 2050”.

Planning for the construction of inter-island transmission and interconnection networks that can support Indonesia to achieve the zero-emission target in 2050 is very crucial to be carried out as soon as possible. It is because the construction of transmission network projects usually takes a long time. Undoubtedly, it takes a firm commitment from the government, policymakers, regulators, and the State Electricity Company (PLN) as the main operator of transmission and distribution lines.

However, at the Hearing Meeting in the House of Representatives, May 2021, PLN stated that it is currently preparing a strategic plan with the Ministry of Energy and Mineral Resources to achieve carbon neutrality by 2060. However, this is incompatible with the target of the Paris Agreement for net zero emissions by 2050.

“PLN’s plan is still not ambitious enough to achieve the target of the Paris Agreement. The IESR study shows that the electricity sector can achieve zero emissions by 2045 by utilizing renewable energy. The plan will risk causing an increase in the cost of providing electricity, stranded assets & lost opportunities for the use of cheaper renewable energy technologies,” said Fabby Tumiwa.

The report “Deep decarbonization of Indonesia energy system: A pathway to zero-emission by 2050” is a study by IESR in collaboration with Agora Energiewende, and Lappeenranta University of Technology (LUT). The report can be downloaded at the following link:

Deep decarbonization of Indonesia’s energy system: A Pathway to zero emissions by 2050

 

IESR launches a pathway to zero emissions by 2050

 

A pathway to zero emissions by 2050: Technologically and Economically Feasible, Indonesia Just Needs a Strong Political Will and Bold Plan to Reach Zero Emissions by 2050

The narrow time is running out to overcome the increasingly threatening climate crisis. In contrast, Indonesia’s NDC is lacking ambition in complying with the Paris Agreement to keep the earth’s temperature below 2 degrees, let alone the 1.5 degrees Celsius. It was evident in the 2050 Long-term Strategy on Low Carbon and Climate Resilience (LTS-LCCR) document in mitigating climate change which only targets carbon neutrality in 2070.

Institute for Essential Services Reform (IESR) new report “Deep decarbonization of Indonesia’s energy system: A pathway to zero emissions by 2050” shows that Indonesia’s energy sector is technologically and economically feasible to achieve zero carbon emissions by 2050.

This report is the first comprehensive study in Indonesia to present a path to achieving a zero emission energy sector by 2050. It is an important milestone as the current mitigation action in the energy sector is not ambitious enough. The emissions from the energy sector are predicted to increase to 58% by 2030, as indicated under the BAU scenario in Indonesia’s Nationally Determined Contribution (NDC), mainly driven by the increase in the final energy consumption.

“As one of the largest economies in the world and with its strategic position in Southeast Asia, Indonesia should take a lead in transforming its energy system now. Decarbonization of Indonesia’s energy system could bring significant impacts on the region and inspire other countries to accelerate energy transition. Making this happen will require strong political commitment and leadership by President Jokowi,” said Fabby Tumiwa, Executive Director of IESR.

He added that the first and crucial step of this journey is to reach an emission peak by 2030 at the latest. With strong policy support, renewable energy shall be deployed at large scale, accompanied by declining thermal power capacities.

Using the Energy System Transition Model developed by the Lappeenranta University of Technology (LUT), this report shows that it is achievable to use 100 percent of renewable energy in the power, heat, and transport sectors in Indonesia.

“The model used for the detailed scenario analyses for Indonesia is designed for hourly temporal resolution and interconnected regions, as this is of highest relevance for the energy transition of Indonesia for ensuring a stable energy supply for all hours and all regions,” said Christian Breyer, LUT Solar Economy Professor.

This decade will become a crucial time for decarbonization efforts in Indonesia. To bend the emission curve, Indonesia needs to install around 140 GW of renewable energy by 2030, of which about 80% is solar PV. Sales of electric cars and motorcycles should increase to 2.9 million and 94.5 million by 2030 respectively, a dramatic increase from nearly zero sales today. Meanwhile, electric heating should become the main heat producer in the industrial sector, accompanied by biomass energy. Most importantly, PLN needs to stop building new coal-fired power plants by 2025.

By 2045, renewable energy supplies 100 percent of the electricity in Indonesia. For the first time, the Indonesian power sector becomes carbon free. Solar PV is the largest contributor in power generation with 88% share, followed by hydropower at 6%, geothermal at 5%, and other renewable energy at 1%. To address the intermittency issue, energy storage technology is used, mainly batteries. Meanwhile, synthetic fuels, hydrogen, and electric heating will play a greater role in decarbonizing the transport and industry sectors. The importance of grid integration of Java, Sumatra, Kalimantan, and other islands will increase from 2030 onwards as renewable energy becomes the backbone of Indonesia’s energy system. The IESR model shows that by 2050, an overall transmission capacity of 158 GW is required to connect the archipelago from west to east.

By continuing the decarbonization efforts in the much-harder-to-abate transport and industry sectors to 2050, Indonesia will reach a point where the whole energy sector becomes carbon free through the use of 100% renewable energy. The decarbonized energy system would potentially reduce the annual system cost by 20% compared to a fossil-based energy system.

To reach such an ambitious target, Indonesia will need investment of USD 20-25 billion per year from now until 2030 and will increase to USD 60 billion per year between 2030 and 2040. Considering the big investment needs, the government should attract investment from the private sector and individuals. Improvement of the investment climate is therefore crucial in this endeavor.

“The size of the challenge should not obscure the fact that deep decarbonization will bring enormous benefits and opportunities to Indonesia’s economy,” said Pamela Simamora, Research Coordinator of IESR and author of this report.

Through deep decarbonization, Indonesia will see at least 3.2 millions of new, sustainable and quality jobs, the improvement of public health (which will also imply a substantial reduction in health costs), and the establishment of a modern economy, which enable the country to compete in the growing world market for carbon-neutral products. To get there, a strong political will is required. The Indonesian government also needs to put in place the right policies and regulations today and remove regulations and policies perceived as barriers to clean technology investments.

The report “Deep decarbonization of Indonesia’s energy system: A pathway to zero emissions by 2050” is a study by IESR in collaboration with Agora Energiewende, and Lappeenranta University of Technology (LUT). The launch of the report is held on May 28th, 2021. The report can be downloaded at the following link:

https://iesr.or.id/en/pustaka/deep-decarbonization-of-indonesias-energy-system-a-pathway-to-zero-emissions-by-2050

IESR launches a pathway to zero emissions by 2050

Technologically and Economically Feasible, Indonesia Just Needs a Strong Political Will and Bold Plan to Reach Zero Emissions by 2050

The narrow time is running out to overcome the increasingly threatening climate crisis. In contrast, Indonesia’s NDC is lacking ambition in complying with the Paris Agreement to keep the earth’s temperature below 2 degrees, let alone the 1.5 degrees Celsius. It was evident in the 2050 Long-term Strategy on Low Carbon and Climate Resilience (LTS-LCCR) document in mitigating climate change which only targets carbon neutrality in 2070. 

Institute for Essential Services Reform (IESR) new report “Deep decarbonization of Indonesia’s energy system: A pathway to zero emissions by 2050” shows that Indonesia’s energy sector is technologically and economically feasible to achieve zero carbon emissions by 2050. 

This report is the first comprehensive study in Indonesia to present a path to achieving a zero emission energy sector by 2050. It is an important milestone as the current mitigation action in the energy sector is not ambitious enough. The emissions from the energy sector are predicted to increase to 58% by 2030, as indicated under the BAU scenario in Indonesia’s Nationally Determined Contribution (NDC), mainly driven by the increase in the final energy consumption. 

“As one of the largest economies in the world and with its strategic position in Southeast Asia, Indonesia should take a lead in transforming its energy system now. Decarbonization of Indonesia’s energy system could bring significant impacts on the region and inspire other countries to accelerate energy transition. Making this happen will require strong political commitment and leadership by President Jokowi,” said Fabby Tumiwa, Executive Director of IESR.

He added that the first and crucial step of this journey is to reach an emission peak by 2030 at the latest. With strong policy support, renewable energy shall be deployed at large scale, accompanied by declining thermal power capacities. 

Using the Energy System Transition Model developed by the Lappeenranta University of Technology (LUT), this report shows that it is achievable to use 100 percent of renewable energy in the power, heat, and transport sectors in Indonesia.

“The model used for the detailed scenario analyses for Indonesia is designed for hourly temporal resolution and interconnected regions, as this is of highest relevance for the energy transition of Indonesia for ensuring a stable energy supply for all hours and all regions,” said Christian Breyer, LUT Solar Economy Professor.

This decade will become a crucial time for decarbonization efforts in Indonesia. To bend the emission curve, Indonesia needs to install around 140 GW of renewable energy by 2030, of which about 80% is solar PV. Sales of electric cars and motorcycles should increase to 2.9 million and 94.5 million by 2030 respectively, a dramatic increase from nearly zero sales today. Meanwhile, electric heating should become the main heat producer in the industrial sector, accompanied by biomass energy. Most importantly, PLN needs to stop building new coal-fired power plants by 2025.

By 2045, renewable energy supplies 100 percent of the electricity in Indonesia. For the first time, the Indonesian power sector becomes carbon free. Solar PV is the largest contributor in power generation with 88% share, followed by hydropower at 6%, geothermal at 5%, and other renewable energy at 1%. To address the intermittency issue, energy storage technology is used, mainly batteries. Meanwhile, synthetic fuels, hydrogen, and electric heating will play a greater role in decarbonizing the transport and industry sectors. The importance of grid integration of Java, Sumatra, Kalimantan, and other islands will increase from 2030 onwards as renewable energy becomes the backbone of Indonesia’s energy system. The IESR model shows that by 2050, an overall transmission capacity of 158 GW is required to connect the archipelago from west to east. 

By continuing the decarbonization efforts in the much-harder-to-abate transport and industry sectors to 2050, Indonesia will reach a point where the whole energy sector becomes carbon free through the use of 100% renewable energy. The decarbonized energy system would potentially reduce the annual system cost by 20% compared to a fossil-based energy system. 

To reach such an ambitious target, Indonesia will need investment of USD 20-25 billion per year from now until 2030 and will increase to USD 60 billion per year between 2030 and 2040. Considering the big investment needs, the government should attract investment from the private sector and individuals. Improvement of the investment climate is therefore crucial in this endeavor. 

 “The size of the challenge should not obscure the fact that deep decarbonization will bring enormous benefits and opportunities to Indonesia’s economy,” said Pamela Simamora, Research Coordinator of IESR and author of this report.  

Through deep decarbonization, Indonesia will see at least 3.2 millions of new, sustainable and quality jobs, the improvement of public health (which will also imply a substantial reduction in health costs), and the establishment of a modern economy, which enable the country to compete in the growing world market for carbon-neutral products. To get there, a strong political will is required. The Indonesian government also needs to put in place the right policies and regulations today and remove regulations and policies perceived as barriers to clean technology investments.

The report “Deep decarbonization of Indonesia’s energy system: A pathway to zero emissions by 2050” is a study by IESR in collaboration with Agora Energiewende, and Lappeenranta University of Technology (LUT). The launch of the report is held on May 28th, 2021. The report can be downloaded at the following link:

Deep decarbonization of Indonesia’s energy system: A Pathway to zero emissions by 2050

IESR: Indonesia Can Achieve Carbon Neutrality Before 2060

Press Release
For Immediate Release
Jakarta, 25 March 2021 – In an effort to fulfil the mandate of the Paris Agreement, the Government Indonesia through the Ministry of Environment and Forestry (KLHK) as the national focal point for the UNFCCC, announcing a Long-Term Strategy for Reducing Carbon Emissions and Climate Resilience 2050 (Long-term Strategy on Low Carbon and Climate Resilience (LTS-LCCR) 2050. This meeting was also attended by the relevant ministries. Despite positive progress, the Institute for Essential Services Reform (IESR) looking at Indonesia’s road map towards low carbon by 2050, as showcased in the presentation of the LTS-LCCR 2050 document, was less ambitious and did not meet the target
Paris Agreement.
Several things listed in the LTS-LCCR 2050 document:
  1. The achievement of Indonesia’s first NDC is targeted in 2030, then Indonesia will achieve net-zero emission by 2070;
  2. In mitigation efforts, the LCCP scenario (low carbon scenario compatible with Paris Agreement target) indicates an ambitious target to be implemented in the AFOLU sector (agriculture, forestry and land use), energy, industrial processes and uses products (IPPU), as well as waste;
  3. On a low carbon and climate-resilient policy direction, it is estimated Indonesia will reach the highest peak (peaking) in GHG emissions by 2030 in AFOLU and energy sectors before finally reaching net zero emissions by 2070. In the calculation of emissions, the peak in 2030 will reach 1163 million tons and these emissions will decrease to around 766 million tonnes of CO2e by 2050;
  4. For the energy sector, a transition scenario and LCCP will be an option to be applied. In the more ambitious LCCP target, the primary energy mix will be 34% coal, gas 25%, oil 8%, renewables 33% in 2050. The use of coal will decrease to 205 million tonnes (293 million tonnes of coal);
  5. Additional renewables for generators of around 38 GW in 2035 and will be prioritized for Solar Power Generation due to the increasing investment costs low. In addition, emission reduction will be encouraged through the following actions:
    1. Provision of electricity through EBT generators,
    2. Application of energy efficiencies such as in buildings and public street lighting (PJU),
    3. Use of Biofuels;
    4. Implementation of biomass co-firing to reduce coal consumption in 52 PLTUs,
    5. Utilization of electric vehicles with a target of 2 million cars and 13 million motorbikes in 2030,
    6. Transitions towards low-carbon fuels and clean generation technologies such as the use of CCUS / CCS ( carbon capture, utilization and storage/carbon capture and storage ) and hydrogen
Responding to the explanation regarding Indonesia LTS-LCCR 2050, IESR responded as follows:
  1. IESR responded positively to the peak emission target in 2030. This will provide clear medium-term targets for climate change mitigation action plans in Indonesia. However, it needs clarity regarding the support of policies and regulations that allows each sector to transition quickly and reach the peak emission by 2030;
  2. The achievement of net-zero emissions in 2070 is too long and does not match the Paris Agreement. To be consistent with the Paris Agreement and support restrictions on global temperature (below 1.5°C), then Indonesia’s GHG emissions must have decreased reach 622 million tonnes of CO2e in 2030 (excluding the AFOLU sector) and will reach net-zero in 2050 1 ;
  3. A stronger effort is required, especially to be able to shift from the use of coal. Indonesia needs to gradually stop using coal by 2037 and increase its renewable energy target to at least 50% by 2030 2 ;
  4. Each sector needs to establish mitigation measures that is credible, transparent, and measurable in order to be on track with the Paris Agreement. Based on several global modelling, such as Integrated Assessment Models (IAMs), Deep Decarbonization Pathway Project, Energy Watch Group/LUT University, there are several parameters that could be a reference for Indonesia in measuring the suitability of the achievement of GHG emission reduction with Paris Agreement targets.

For the electricity and transportation sector, parameters among others3 :
a. Electricity

    1. The intensity of emissions from the electricity sector; should be in the 50-255 range gCO2 / kWh in 2030 and  in 2050
    2. The renewable energy mix of electricity generation; up to 50-85% in 2030 and 98-100% in 2050
    3. Electricity generation mix from coal PLTU; down to 5-10% by 2030
      b.Transportation

      1. Emission intensity from the land passenger transportation sector; be in the range of 25-30 g CO2/pkm by 2030
      2. Low-carbon fuel mix; reaching 20-25% of the total energy demand in the transportation sector by 2030

5. The IESR study on Indonesia’s energy transition scenario shows that Indonesia can achieve a primary mix of renewable energy of 69% by 2050 with increase the capacity of renewable energy generation to a minimum of 24 GW in the year 2025, build 408-450 GW of renewable energy generation by 2050, and stop the construction of a new coal power plant since 2025 and retire Coal Power Plant early.

6. There is a need for increased investment and research encouragement towards innovation and development of renewable energy technologies such as hydrogen in order to be immediately implemented and optimized for achieving net zero-emission.
7. IESR supports the use of sustainable biofuels and electric vehicles. The Climate Transparency Report 2020 makes clear that biofuels are sustainable that does not leave a carbon footprint, the use of electric vehicles, and stricter fuel efficiency standards would reduce GHG emissions in particular from the transport sector significantly. In addition, the percentage of fuel that is low in carbon in the transport fuel mix should increase to about 60% in year 2050.
References:
1 CAT (nd). Indonesia country summary
2 Climate Transparency (2020) .The Climate Transparency Report 2020
3 CAT (2020). Paris Agreement Compatible Sectoral Benchmark
4 IESR (2020). National Energy General Plan (RUEN): Existing Plan, Current Policies Implication and Energy Transition
Scenarios

12 IESR Recommendations for Accelerating of Electric Vehicle Ecosystem Development in Indonesia

Tuesday, 23 February 2021-Indonesia needs to work harder to prevent the increase in the earth’s temperature below 2℃ by reducing the addition of greenhouse gas (GHG) emissions in the world, including by boosting the penetration of renewable energy and environmentally-friendly transportation.

The transportation sector contributes about a quarter of total global GHG emissions. The amount of this emission will increase along with the development of a country’s economy. In 2019, the transportation sector was the second-largest contributor to Indonesia’s greenhouse gas (GHG) emissions (157 million tonnes CO2 or 27%) after the industrial sector (215 million tonnes CO2 or 37%). Many countries in the world, including China, the United States, and countries in Europe are increasingly adopting electric vehicles which are proven to have lower emissions and better efficiency in the use of electric energy than conventional vehicles.

By online, the Institute for Essential Services Reform (IESR) launched a study on Developing an Electric Vehicle Ecosystem in Indonesia: Lessons learned from the United States, Norway, and China, which contains prominent strategic and policy recommendations for the government for the advancement of the electric vehicle ecosystem in Indonesia. 

“Nowadays, there are 17 countries that have not allowed the sale of fossil fuel-based vehicles from 2025-2040, one of which is Norway, which will ban internal combustion engine vehicles by 2025,” said Fabby Tumiwa, Executive Director of IESR.

Electric vehicles are seen as one of the solutions to reduce GHG emissions from the transportation sector. The development of electric vehicles in a decade has also grown rapidly. Fabby added that globally, electric cars have experienced a rapid increase in the last decade, from 0.1 market share in 2011 to 4.4% in 2020.

“Although in general, vehicle sales have decreased by 15 percent due to the Covid-19 pandemic, the demand for electric vehicles has increased in several countries. Compared to 2019, China increased 5 percent, Europe increased 10 percent, the United States increased 4 percent, “he explained.

Quoting data from the IEA, Fabby emphasized that for the earth’s temperature to be maintained according to the Paris agreement, the adoption of electric vehicles must be 13.4% of the total vehicles from 2030.

Indonesia Has Not Developed a Planned Electric Vehicle Ecosystem

Idoan Marciano, Author of the Study on Developing Electric Vehicle Ecosystems in Indonesia: Lessons from the Experience of the United States, Norway, and China, explains the reasons IESR chose these three countries as best practices that Indonesia can emulate. The countries that registered the highest electric vehicle adoption (2019) were China (3.4 million units) and the United States (1.5 million units), while the country with the largest electric vehicle market share in the world was Norway (greater than 50 percent).

IESR believes that the electric vehicle ecosystem in Indonesia has not been well developed. The ecosystem referred to in this study includes several aspects, namely: (a) incentives and supporting policies from the government, (b) charging infrastructure; (c) the model and supply of electric vehicles; (d) public awareness and acceptance; (e) the supply chain for batteries and electric vehicle components.

The Indonesian government, through the Ministry of Industry, is targeting the number of electric vehicles to reach 20% of total vehicle production in 2025 (400,000 Low Carbon Emission Vehicles (LCEV) and 1,760,000 electric two-wheeled vehicles). However, until August 2020, there were only 2,279 roadworthy electric vehicles.

“For electric motorbikes, 1,947 units do not reflect the number of adoptions after Indonesia launched an accelerated development program for electric vehicles because this figure still describes low-performance electric vehicles, which already existed from the previous year,” added Idoan.

To meet the target, IESR encourages the Indonesian government to implement fiscal policies, which will make electric vehicle prices more competitive. Reflecting on the experiences of the three countries, incentives can be in the form of VAT exemptions, registration taxes, import duties, and subsidies. Meanwhile, currently, the total incentives provided by the Indonesian government are only able to reduce about 40 percent of the initial price of electric vehicles entering Indonesia.

No less important is the provision of non-fiscal incentives by user needs, such as the ease of obtaining a number plate (registration) which is considered to greatly increase the attractiveness of electric vehicles in China, providing access to high occupancy vehicles in several states in America. States, and granting bus line access in Norway.

“Currently, Indonesia does not have any restrictions on the use of fossil-fueled vehicles, compared to comparison countries that have targeted 100 percent EV in the next 5-20 years,” said Idoan.

Besides, from the supply side, the government also needs to increase the quantity and availability of various models of electric vehicles by providing policies that encourage producers to produce more electric vehicles, such as by setting fuel efficiency standards at an early stage and using the electric vehicle credit mechanism when the market is already on as applied in China and California.

In supporting the creation of the domestic electric vehicle industry, the government can learn from China by providing special incentives for local manufacturers and using public procurement as a tool to boost production volumes for locally made electric vehicles, thereby accelerating economies of scale.

The construction and expansion of the charging infrastructure (SPKLU and SPBKLU) networks, as well as the preparation of home charging infrastructure, are needed to support the adoption of electric vehicles. The ratio of electric vehicles to the SPKLU in 2019 was the most massive in China, namely a ratio of 6.5: 1. The ratio represents countries with a more mature level of electric vehicle development. Meanwhile, if Indonesia follows the road map issued by PLN, it will only reach around 70: 1.

This study recommends several strategies and policies that can be adopted by the government and all stakeholders to develop the electric vehicle ecosystem in Indonesia, as follows:

  1. Align the national electric vehicle adoption targets and make them binding
  2. Develop an integrated roadmap for the transition to electric vehicles
  3. Implement policies to limit the sales of fossil fuel vehicles 
  4. Provide financial incentives (from the central government) to reduce the purchase price of electric vehicles, a minimum of about 50 percent for electric cars, for electric motorbikes only 5-10 percent more expensive than the price of conventional motorbikes.
  5. Provide fiscal and non-fiscal incentives (from local governments) under the conditions of their respective regions 
  6. Impose technology transfer in collaboration with the international electric vehicle and battery manufacturers
  7. Issue supply-side policies, like fuel economy standard, conventional vehicles quota and to encourage production and increase the availability of electric vehicle models 
  8. Provide grants to research and academic institutions, as well as to EV and battery manufacturers to support R&D of electric vehicles and batteries technologies 
  9. Increase investment in domestic industrial and supply chain development of electric vehicles 
  10. Develop a more massive public charging infrastructure network through a mandate from government entities along with the subsidies for private developers 
  11. Electrify public transportation as an entry point for the adoption of the electric vehicle. IESR appreciates the ongoing collaboration.
  12. Promote electric vehicles as environmentally friendly vehicles and educate consumers on the benefits and incentives of purchasing EVs

The study report Developing an Electric Vehicle Ecosystem in Indonesia: Lessons learned from the United States, Norway, and China can be downloaded at:

Mengembangkan Ekosistem Kendaraan Listrik di Indonesia

Boosting Solar Energy Acceleration in 2021, Government of Central Java holds a Central Java Solar Day

The 23% target of the renewable energy mix in 2025 in the National Energy General Plan (RUEN) until the end of 2020 has only reached around 11.5%. For the next 5 (five) years, the government still has prominent homework to achieve this target. Based on the results of the Institute for Essential Services Reform (IESR) study, one of the potentials that the government can optimize for the acceleration of renewable energy is by developing massive solar power plants. 

IESR has calculated the technical potential of residential solar energy in Indonesia. As a result, by using the highest scenario, Indonesia has a potential of 655 GWp (IESR, 2019), with Central Java being one of the top three provinces with the highest technical potential. The market potential study conducted with a survey in 7 cities in Central Java for 3  (three) different sectors also showed significant potential early adopters and early followers: 9.6% for the residential group, 9.8% for business/commercial, and 10.8. % for small and medium entrepreneurship. Central Java also has the potential for floating PV, which is quite large, from 42 dams scattered throughout the province.

With the significant potential of solar energy and Central Java’s commitment to developing renewable energy, the Provincial Government of Central Java, through the ESDM Office, in collaboration with IESR, declared the Central Java Solar Province initiative in 2019. The initiative was based on a memorandum of understanding between the Governor of Central Java and the IESR Executive Director, specifically aimed to accelerate the development of solar energy in Central Java and make Central Java the first “solar province” in Indonesia.

In one year since it was declared, according to the records issued by the IESR in the Indonesia Energy Transition Outlook (IETO) 2021, Central Java increased its solar energy capacity to 5.1 MWp with a total of 147 users, compared to only 155.2 kWp and 40 users in September 2019 The largest increase came from the industrial sector, as much as 73% (3.7 MWp) of the total increase in installed capacity. The largest recent contributor was the Danone-AQUA 2.91 MWp rooftop solar installation at the Klaten plant. The rest are scattered in various sectors, including in the ESDM office building, provincial APBD projects, and the housing sector.

One of the supporting factors for the increase in the capacity and number of solar rooftop users in both the private and public sectors is the issuance of a Central Java Governor’s Circular Letter to use the solar rooftop. 

However, to achieve the renewable energy mix target in the Regional Energy General Plan (RUED) of 21.32% in 2025; One of them is by a more aggressive penetration of solar energy, the Central Java ESDM Office sees that there are still many challenges to overcome; for example, uneven renewable energy literacy, low level of public awareness, limited availability of solar contractors/installers in the area, and long waiting period for bi-directional meter replacement.

To encourage more equitable and comprehensive information disclosure on solar energy, as well as bringing together various relevant stakeholders and accelerating Central Java’s steps to become a “solar province” in Indonesia, the Central Java Government and IESR will hold Central Java Solar Day 2021, on February 16, 2021, 08:30 – 12:00 WIB online via Zoom Conference + Youtube live stream (IESR / ESDM Central Java). This event will be attended by the Governor of Central Java, Ganjar Pranowo, Dadan Kusdiana, Director General of EBTKE, Feby Joko Priharto, General Manager of PLN UID Central Java and DIY, Fabby Tumiwa, Executive Director of IESR, and others.

Local Government Programs are the Key to Successful Renewable Energy Transition

Jakarta, December 8, 2020 – Each region in Indonesia has a lot of renewable energy potential that has not been utilized optimally. That being said, local governments with renewable energy acceleration programs are the key to the renewable energy transition.

Governor of East Nusa Tenggara (NTT), Viktor Bungtilu Laiskodat, said that NTT has 60,000 MW renewable energy potential from sunlight. However, only 100 MW of it has been utilized optimally by the people.

“In this transition, we face challenges from the local government, this is conflicting with the comfort of using fossil fuels, but we have no choice other than undergoing energy transition because the world’s interest is now heading there,” said Viktor, Tuesday (Dec 8, 2020) in a panel discussion on the Indonesia Energy Transition Dialogue (IETD) titled “High-Level Roundtable Dialogue: Local Governments Lead the Way in Energy Transition.”

Viktor said the companies that acquire seaweed from NTT start turning down products that are not produced using renewable energy. Based on this phenomenon, according to Viktor, a transition to renewable energy is inevitable. Therefore, the local government is still trying to increase renewable energy absorption from solar energy on Sumba Island.

However, according to the Head of the Energy and Mineral Resources (ESDM) in Central Java, Sujarwanto Dwiatmoko, local governments must also implore the community to adopt renewable energy potential. “If we only take into account the renewable energy absorption from power plants built by the government, the absorption target will never be achieved,” said Sujarwanto.

The Central Java Provincial Government has developed an Energy-Independent Village (Desa Mandiri Energi) in which the community uses solar power, hydropower, wind power, and livestock waste biogas as power plants. As of today, nearly 80 energy-independent Villages have been established.

Commitment between the local government and community has been implemented in Chungnam, South Korea. Chungnam Governor, Yang Seung Joo, along with 300 community organizations, has committed to eliminating carbon emissions by 90 million tonnes of carbon dioxide ever since his campaign in 2018. “Commitments from all stakeholders can accelerate the energy transition. The key is how local leaders can lead the transitional energy,” said Yang Seung Joo.

###

Tentang ICEF

Indonesia Clean Energy Forum adalah platform dialog konstruktif dan berbasis fakta untuk meningkatkan pemahaman transisi energi dan berbagi praktik terbaik mengenai kebijakan, peraturan, dan kerangka kerja kelembagaan untuk mendukung transisi energi yang adil di sektor energi Indonesia. ICEF secara resmi diluncurkan oleh Menteri Energi dan Sumber Daya Mineral pada 15 November 2018. Anggota inti ICEF terdiri dari 25 individu terkemuka dari berbagai latar belakang. Untuk informasi lebih lanjut silahkan kunjungi laman http://iesr.or.id/program/indonesia-clean-energy-forum/.

Tentang IESR

Institute for Essential Services Reform adalah institusi riset dan advokasi di bidang energi dan kebijakan lingkungan. Institusi kami mengkombinasikan studi mendalam, menganalisa kebijakan, regulasi, dan aspek tekno-ekonomi pada sektor energi dan lingkungan dengan aktivitas advokasi kepentingan umum yang kuat untuk mempengaruhi perubahan kebijakan pada skala Nasional, sub-bangsa dan dunia. Untuk Informasi lebih lanjut silahkan kunjungi laman www.iesr.or.id atau ikuti  Facebook dan Twitter kami.

 

Media contacts:

Jannata Giwangkara

Manajer Program Transformasi Energi, IESR

081284873488 | egi@iesr.or.id 

Gandabhaskara Saputra

Outreach and Engagement Adviser – Clean, Affordable and Secure Energy for Southeast Asia
IESR

081235563224 | ganda@iesr.or.id

The Urgency of Reviewing and Updating the RUEN to Accelerate the Energy Transition in Indonesia

Jakarta, Tuesday, September 28, 2020 – Institute for Essential Services Reform (IESR) launched one of five thematic study series on Indonesia’s energy transition roadmap entitled National Energy Plan (RUEN): Existing Plan, Current Policies Implication and Energy Transition Scenario. This study remodels the 2017 National Energy General Plan (RUEN) through three additional scenarios (realization scenario, strategic program, and energy transition) to evaluate and project the achievements of the initial RUEN targets based on the three developed scenarios. The energy transition to renewable energy systems has become a global phenomenon as a response to addressing the threat of climate change and reducing the risk of stranded assets.

In the current policy condition, RUEN 2017 has not adopted the energy transition vision, even though it has adopted a renewable energy target of 23% of the total energy mix by 2025. This target is correlated with the total installed capacity of renewable energy generators of 45.2 GW in 2025 from a total of 136 GW of capacity. power plants. Referring to one of the findings of this report, it is indicated that the target installed capacity of renewable energy of 45.2 GW in 2025 will not be achieved in the realization scenario with various decreases in the value of parameters and key assumptions that have occurred in the last five years. With economic and energy conditions and parameters that have changed since the 2017 RUEN was drafted five years ago, the IESR calls for a review and renewal of the RUEN, as a reference for mid-term and long-term national energy planning and development, in order to accommodate not only the progress and development of the energy transition. global, but also to anticipate various challenges and opportunities that arise in the transformation that is currently taking place.

The economics of renewable energy technologies and energy storage systems that keep getting cheaper every year can accelerate the energy transition efforts. In fact, the price of electricity generated from solar and wind energy on a large scale is able to compete with the price of electricity generation from coal. The digital revolution in the energy sector, the growing power of consumers to use electricity from clean energy, the rise of hybrid and electric vehicles, and the decentralization of energy generation are other driving factors in efforts to decarbonize this sector.

“For the Indonesian context, the transition to a sustainable clean energy system needs to be well prepared. The use of renewable energy, which has become a priority for the development and utilization of national energy in the National Energy Policy (KEN), has not been reflected in the achievement of RUEN until 2020. Apart from ambitious targets, several indicators and assumptions used to model energy supply and demand in RUEN were built based on data and information in 2015. In fact, in the last five years indicators and assumptions from socio-economic, techno-economic experiencing significant development, “said Fabby Tumiwa, Executive Director of IESR, in his opening remarks at the virtual launching of the study series on Indonesia’s energy transition road map study.

Referring to RUEN, in 2025 renewable energy is projected to increase from 7% to 23%, coal from 26% to 30%, and fuel oil to fall from 46% to 25%, and relative gas to fall to 22% from 23% in the previous year. the national primary energy mix. Based on this target, renewable energy power generation in 2025 will reach 45.2 GW with a composition of 20.9 GW from water, 7.2 GW from geothermal, 6.5 GW from solar, 5.5 GW from bioenergy, and 1.8 GW. from the wind power.

Fabby added, “by seeing the massive decarbonization trend occurring at the global and regional levels, IESR seeks to investigate the contextualization of the RUEN model, as a reference for medium and long term national energy planning and development, in order to accommodate not only progress and transition developments that have occurred,” but also to anticipate the various challenges and opportunities that arise in this transformation. “

The report writer, Agus Praditya Tampubolon, states that the target installed capacity of renewable energy of 45.2 GW in 2025 is indicated not to be achieved in the realization scenario with various decreases in the value of parameters and main assumptions that have occurred in the last five years. This is due to the realization of the low annual energy consumption growth rate and per capita electricity consumption as a result of low economic growth in the 2015-2019 period.

“RUEN which was established in 2017, uses real data from 2000 to 2015 as input and projects data from 2016-2050. Some of these projection data are overestimated, especially on economic and industrial growth and population demographics. This causes the projection of RUEN to be disproportionate, for example on primary energy consumption and electricity, including in generating capacity. So the realization scenario shows that renewable energy is only indicated to reach 22.62 GW in 2025. “

Agus also added that the city gas network, electric vehicles, and biodiesel launched by the government only contributed to the primary energy mix of around 3 percent (to 17.9%) of the new baseline in the realization scenario of 15% in 2025. Until 2050 too, the mixed renewable energy is projected at 40.3%, higher than the 31% target in the current RUEN model, but still has not started to take over the dominance of fossil energy by 59.7%. The mix and installed capacity of renewable energy will only increase significantly in an energy transition scenario, particularly from the time period when no new PLTUs are being built and all PLTUs over 30 years old are closed, with a projection of 408 GW by 2050.

In the report that was launched, there are at least three things that need to be done as recommendations. First, the parameters and assumptions of RUEN 2015-2050 need to be reviewed, especially in the assumption of economic growth, the rate of energy demand, and the economy of renewable energy. Second, a review also needs to be done on the plan to use coal and build a PLTU as a response to the decarbonization trend which has caused a decline in coal import demand from China, India, and South Korea. Third, the need to study the development of alternative scenarios in the national energy supply plan that integrates a larger portion of renewable energy.

Therefore, the IESR calls for a review and renewal of the RUEN, as a reference for medium and long-term national energy planning and development, in order to accommodate not only the progress and development of the global energy transition but also to anticipate the various challenges and opportunities that arise in the transformation. when this is happening.

Press contact:

Agus Praditya Tampubolon

Author/Energy Management Specialist, IESR | agus@iesr.or.id 

Gandabhaskara Saputra

Communications Coordinator, IESR | 081235563224 | ganda@iesr.or.id

Fact Sheet