Jakarta, February 24, 2022 – The development of solar energy in Indonesia since 2018 has been increasing, although not significantly. The Ministry of Energy and Mineral Resources noted that there was an increase in installed capacity for rooftop solar to 48.79 MW at the end of 2021 from only 1.6 MW in 2018. Progressive developments have also occurred in utility-scale PLTS, with the lowest PLTS electricity price being below 4 cents USD/kWh. One of the reasons for the increasing adoption of rooftop solar, apart from developing technology, is also due to the policy of the Minister of Energy and Mineral Resources Regulation number 49 of 2018 as the first official rule regarding rooftop PV.

The Institute for Essential Services Reform (IESR) projects an increase in the capacity of rooftop PV in the next 10 years, which will come from the government setting a target for solar PV of 4.7 GW in the RUPTL 2021-2030. The enactment of the Minister of Energy and Mineral Resources Regulation number 26 of 2021 provides new hope for PLN customers who will install rooftop PV because this new rule is considered beneficial to all parties.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), and Chairperson of the Indonesian Solar Energy Association (ISA) in a webinar entitled “Indonesia Solar Chapter: Unlocking the Unlimited Potential to Embrace a Greener Future” (24/2/2022) stated that solar energy continues to grow in Indonesia both for household and utility-scale.

“In the coming years, solar energy has promising potential in Indonesia because the government has quite a lot of targets for using solar PV, such as the target of 3.6 GW in 2025 and replacing diesel with solar plus battery,” he said.

However, Fabby underlined a number of challenges in the development of solar PV in the country such as the policy framework that is not strong enough, as well as the role of PLN as the sole off-taker for the electricity produced so that the development of solar PV is highly dependent on the condition of the PLN grid. The Local Content Requirement (LCR) for solar panels also makes investors less confident to invest in Indonesia.

“The domestic solar panel industry is not yet mature enough to produce tier-1 solar modules. IN which for bankable PV projects, they are required to use a tier-1 module,” he explained.

Fendi Liem, Founder/Managing Director of PT Selaras Daya Utama (SEDAYU), agrees that the clarity of government regulations is the trigger for the exponential growth of rooftop solar. The issuance of the Minister of Energy and Mineral Resources Regulation 49/2018 has undeniably provided a sense of security for both investors and potential customers of rooftop solar power plants since 2018. Fendi reminded all government stakeholders to accelerate coordination and synchronization when there are new regulations.

“We often encounter rules that are out of sync between institutions in the government. This of course creates a bad impression from the entrepreneur. The desire to invest can be reduced because the rules between government institutions are not in harmony,” explained Fendi.

Fendi sees 2022 as a momentum for the rise of rooftop PV after the MEMR Ministerial Regulation 26/2021 applies which provides more benefits for rooftop PV customers, don’t let this momentum pass by. One of the government’s homework is to capture this momentum by strengthening the policy framework so that both developers and consumers will no longer hesitate to invest in rooftop PV.

Erik Peper, Country Director of Indonesia Infunde Development, sees the development of solar energy to accelerate the energy transition in Indonesia as the right thing to do. However, there are a number of obstacles such as scalability, land acquisition, and project clustering. Erik also sees that there is still uncertainty from the Indonesian government to use clean energy technology.

“The energy transition must be prepared carefully and look at the possible developments of the situation in the future. Technology that is currently cheap/economical may become expensive in the future. If there is a financial cost (of the transition) let be it, as in the long run it will be beneficial, it should be treated as an investment.”