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

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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.

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