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Green Recovery through Rooftop Solar Adoption

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Bali, August 9, 2022 – After the Covid-19 pandemic, economic growth in Indonesia is slowly recovering. Having contracted to minus 5.32% in the second quarter of 2020, Indonesia’s economic growth began to move positively at 5.02% in the fourth quarter of 2021. This momentum should be an impetus for the government to align the post-pandemic economic recovery with a sustainable green recovery, in line with long-term climate goals and contribute to the reduction of greenhouse gas emissions.

However, in developing a sustainable economy as part of the green recovery, we are still faced with harmonization in policies, including the policy of developing rooftop solar. Jadhie Judodiniar Ardajat (Main Expert Planner) of Bappenas said that the adoption of rooftop solar PV needs to be encouraged.

“Although the challenges, constraints and potential risks faced in the future are still relatively large, the development of solar rooftop is a chosen step, which is projected and believed to be one of the priorities and optimal steps in the framework of developing new renewable energy supply and is part of the national priority, within the framework of national energy transformation,” said Jadhie in his remarks at the “Sustainable Economic Recovery by Promoting Solar PV Development” webinar held in Bali by the Clean, Affordable and Secure Energy for Southeast Asia (CASE) project.

The Governor of Bali, I Wayan Koster stated that his party supports the adoption of rooftop solar by issuing various policy instruments, such as Circular Letter Number 5 of 2022 concerning the Utilization of Rooftop Solar PV.

“The community response has been very good. But when we want to increase it (rooftop PV adoption), there is a policy from PLN that limits the installation of rooftop solar to only 15 per cent,” he said.

While promising to discuss further with policymakers at the national level regarding the obstacles to installing rooftop PV, Koster said that the development of clean energy must be viewed as a whole, not partially.

“The use of clean energy will make the ecosystem better, including healthiness. If PLN feels a loss (on revenue), then it is better to change its business scheme,” he said.

Similarly, Fabby Tumiwa, Executive Director of IESR who is also the Chairperson of the Indonesian Solar Energy Association (AESI) encouraged PLN to review its policies to encourage massive rooftop PV penetration.

“The policy of limiting the capacity of rooftop PV installed in a building has made rooftop PV unattractive. In addition, this has made many EPCs in medium and small business scale who are members of the AESI lay off their employees due to the lack of demand to install rooftop solar,” he explained.

Daniel Kurniawan, Researcher Specialist in Photovoltaic Technology & Materials at the Institute for Essential Services Reform (IESR) and lead author of the CASE Indonesia report entitled Supporting National Economic Recovery through Power Sector Initiatives said that the Indonesian government has so far not prioritized green recovery in the context of national economic recovery post-pandemic. This can be seen from the allocation of the National Economic Recovery (PEN) budget which is still dominantly targeting the fossil energy sector which is the largest contributor to greenhouse gas emissions in Indonesia.

“Meanwhile, the budget allocation for this low-carbon development initiative is still very low, only under 1% or around Rp. 7.63 trillion of the 2021 PEN allocation of Rp. 747.7 trillion,” Daniel explained in his presentation.

Daniel identified several reasons why the government is still slow in aligning the economic recovery with the green recovery, including the assumption that the green recovery initiative is not urgent to be carried out due to its long-term nature, and the limited fiscal budget.

Responding to this, Daniel in the same report stated that the alignment of economic recovery with green recovery can be done by encouraging the adoption of rooftop PV. According to him, rooftop PV can be installed faster than utility-scale PV, plays an important role in decarbonizing the electricity sector, and creates more jobs.

“Installation of 2,000 units (9.1 MWp) of rooftop solar will create at least 270 direct jobs, 270 indirect jobs, and 170 new jobs,” he said.

For the adoption of rooftop PV, Daniel encouraged the government to, first, carry out general procurement for the installation of rooftop PV in government buildings. The cost of procuring rooftop solar can be reduced by using a long-term financing scheme that only pays for the operational costs of rooftop solar. Second, implementing a general procurement program for rooftop solar aimed at subsidized households or what IESR calls the Solar Archipelago (Surya Nusantara) program. The economic benefit is in the form of cutting electricity subsidies.

“The Solar Archipelago program will save electricity subsidies from the APBN amounting to Rp. 1.3 trillion per year or Rp. 32.5 trillion for 25 years of the economic life of rooftop PV. In addition, this program can also reduce greenhouse gas emissions by up to 1.05 million tCO2 per year for the installation of 1 GWp of rooftop solar,” he explained.

Third, encourage adoption or small scale by providing financial incentives in the form of subsidies or installation of free kWh meters or fiscal incentives such as tax exemptions and other steps that can attract people to install rooftop solar power plants.***

The video on demand of the “Sustainable Economic Recovery by Promoting Solar PV Development” webinar can be accessed at the following link:

https://caseforsea.org/post_events/sustainable-economic-recovery-by-promoting-solar-pv-development/ 

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