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IESR: Indonesia Must Lead ASEAN Member Countries to Collaborate Towards the Development of Solar Energy in Southeast Asia

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Jakarta, August 24, 2023 – During the upcoming 41st ASEAN Ministers on Energy Meeting (AMEM) in August 2023 and the 43rd ASEAN Summit in September 2023, The Institute for Essential Services Reform (IESR) hopes Indonesia, as the chair of ASEAN 2023, to use this opportunity to encourage ASEAN member countries to work together and commit to transitioning their energy source in line with the Paris Agreement targets. Additionally, the IESR is encouraging the development of industrial hubs and the use of solar energy in the region.

IESR believes that Indonesia can build collaborations to make ASEAN a manufacturing center for PLTS components that will create industrial development and green economic opportunities and contribute to reducing global greenhouse gas emissions. Fabby Tumiwa, Executive Director of IESR, explained that solar energy currently stands as the primary source for achieving each ASEAN member country’s net-zero emission (NZE) goal. This is due to the abundant resources and affordable technology prices. Among the ASEAN countries, Vietnam has the highest installed capacity of PLTS, over 20 GW. Thailand follows with around 3 GW, Malaysia with about 2.2 GW, and the Philippines with roughly 1.7 GW. As for Indonesia, its PLTS installed capacity has only reached 0.2 GW until the middle of 2023.

“The industrial potential and supply chain for solar PV components in ASEAN have also started to develop. In terms of  material availability, Indonesia and Malaysia have the potential to meet the polysilicon needed for producing wafers, ingots, and solar cells,” said Fabby Tumiwa.

The energy transition under the Paris Agreement target requires the ASEAN region to build renewable energy capacity of up to 39% – 41% of the primary energy mix in 2030. The solar PV capacity must reach 142 GW to 241 GW. The most significant need for solar PV is in Indonesia, the country’s largest economy, with a target of reaching 34% of the renewable energy mix in the electricity sector by 2030. Indonesia needs solar PV technology with good quality, stable supply, and affordable prices.

Besides market potential, Indonesia possesses significant silica resources that can be processed into polysilicon, the critical component of solar cells. Indonesia can reap economic benefits by establishing a solar industry hub in ASEAN. Furthermore, ASEAN nations can benefit from a more reliable supply of essential raw materials to manufacture solar cells and modules.

Moreover, IESR assesses that the Indonesian government should lead by example in establishing and implementing policies that support industrial and supply chain development in Indonesia. It will encourage the adoption of large-scale solar PV and bring Indonesia on par with other ASEAN member countries that prioritize solar energy. Based on IESR’s observations, even though throughout 2022 and until the middle of 2023 there are several obstacles to the installation of solar PV, such as limiting the installation capacity and revision of Minister of Energy and Mineral Resources number 26 of 2021, there are at least 186.5 MW of contracted solar PV capacity from the 655 MWp project pipeline solar PV roof alone to April 2023.

“Indonesia needs to build up to 100 GW of utility-scale solar PV by 2030 to achieve zero-emission 2050 based on the IESR Deep Decarbonization study. This requires alignment of policies and implementation in the field and clarity of procedures that can encourage active community participation, a good investment climate, and support in the form of incentives or other innovative financing. At the ASEAN level, strategic collaboration and the parallel development of the regional solar industry is expected to make the growth of solar PV more massive in the coming years,” said Marlistya Citraningrum, Program Manager for Sustainable Energy Access, IESR.

IESR urges the Indonesian government at the 41st AMEM and 43rd ASEAN Summit to offer initiatives and realize monumental agreements in terms of collaboration between countries in ASEAN to make this region a manufacturing center for solar PV components and other supporting components by focusing on the comparative advantages of each country. As a manufacturing center for solar PV components, ASEAN can encourage economic, industrial, and trade cooperation and is in line with Indonesia’s goal of becoming the chair of ASEAN 2023. In addition, this vision aligns with Indonesia’s downstream policy and can be a driving force for the growth of Indonesia’s renewable energy technology manufacturing industry.

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