Assessing Solar Market in ASEAN Member State

Jakarta, 25 July 2023 – Southeast Asia has emerged as a focal point for both economic development, and energy growth. The increasing energy demand within the ASEAN region is to be expected to be met through the expansion of renewable energy. Notably, certain ASEAN countries have achieved noteworthy progress in renewable energy development, exemplified by Vietnam’s exponential growth in solar energy over recent years. 

Fabby Tumiwa, the Executive Director of Institute for Essentials Services Reform and the Chairman of The Indonesia Solar Energy Association said that ASEAN must establish strong cooperation in developing solar PV manufacturing capability.

“Southeast Asia countries must ensure affordable access to this technology by establishing a solar PV manufacturing and supply chain that includes silicon ingots, wafers, cells, and other components such as low-tempered iron glass, as well as the balance of system components such as inverters and controllers,” he said.

Fabby added that Southeast Asia has the potential to become a solar PV manufacturing hub, supplying both domestic and global demand. Currently, seven Southeast Asia countries already have manufacturing capacity in various stages, with a total annual capacity of 70 GW of solar module production, with Vietnam supplying half of this capacity. 

Monika Merdekawati, research analyst for sustainable renewable energy development, ASEAN Centre for Energy (ACE) during the ASEAN Solar Summit 2023 explained that while solar energy adoption in ASEAN is on the rise, the pace of progress is insufficient to accelerate the energy transition. Vietnam’s remarkable strides in augmenting its solar capacity have been associated by diversification efforts in its renewable energy development plan in its PDP8 (Vietnam’s energy planning).

“It’s similar to Thailand who started to look for biomass development in its priority program plan,” said Monika.

She further highlighted the necessity for Indonesia to devise innovative strategies to attain its goal of achieving a 23% renewable energy mix in 2025.

Within the context of Indonesia, the state-owned utility company PT PLN heavily relies on the 2021-2030 RUPTL (Electricity Supply Business Plan) famously recognized as “green RUPTL” to expedite its renewable energy endeavors. Warsono, the EVP for electricity System Planning, PT PLN on the same occasion said that PLN aims to incorporate5 GW of renewables by 2030.

“The main challenge to deploy renewables, particularly solar, is the fulfillment of local content requirements of the PV component. It means we need to grow the local industry for solar PV components,” he said. Furthermore, PLN is committed to ensuring equilibrium between energy supply and demand of energy.

Mohammad Nazri bin Mizayauddin, Chief Strategy Officer Sustainable Energy Development Authority, Malaysia shared his view on Malaysia strategy to enhance renewable energy penetration.

“People usually look at the large-scale ground mounted solar PV, but now let’s realize the other potential in the solar rooftop. The rooftop itself is an asset,” he said.

According to Nazri, Malaysia has been facing issues related with the energy subsidy therefore the Government must make sure that the market is mature enough to slowly detach the subsidy.

Eka Satria, Director and CEO of Medco Power Indonesia presented the indispensable correlation between growth of the solar PV component industry and expanding market demand. He stressed the importance of compiling and implementing a comprehensive roster of potential projects to instill investor confidence. 

“To accelerate solar energy deployment, we need a strong PV industry in Indonesia. To grow the PV industry a long list of committed projects to guarantee the investors that their money wouldn’t be lost,” Eka explained.

Eko Agus Nugroho Director of Machinery and Agricultural Machinery Industry, Ministry of Industry agreed that the solar cell technology is advancing rapidly, urging Indonesia to accelerate its pace in keeping up with the advancement.

“There are 21 local producers making solar modules currently and the total capacity is still below 500 WP. The ministry wants to map the capability of the (solar) industries to fulfill the need from the PLN and other developers,” he said. 

Eko also revealed plans for the upcoming announcement of a consortium dedicated to local solar industry manufacture in the ensuing months.

Continuous Effort in Paving the Way for Solar Energy in Indonesia

press release

Jakarta, July 26, 2023 – The Indonesia Solar Summit 2023, hosted by the Ministry of Energy and Mineral Resources and co-hosted by think tank Institute for Essential Services Reform (IESR), affirms the commitment to accelerate solar deployment in the country.  Solar energy has made it significantly into Indonesia’s NZE pathway, projected at 61% of total electricity sources by 2060. A previous separate study by IESR placed solar energy as the backbone for a zero-emission energy system by 2050.

Minister of Energy and Mineral Resources, Arifin Tasrif, mentioned solar energy is a crucial strategy to achieve 23% of the renewable energy mix within the next two years before 2025. However, he also emphasized the significance of having access to technology and funding to successfully utilize solar energy and meet the renewable energy mix target. According to him, investment in solar energy will easily flow into Indonesia if there is a significant demand in the country. 

“There are two crucial factors that must be considered to accelerate the use of solar energy. The first is the availability of technology, which requires support from the industry. The second is the availability of international and domestic coverage that needs to be mobilized. The target for the renewable energy mix is 23% by 2025, but currently, it only stands at 12.5%, leaving only two years to achieve this goal. Additionally, the aim is to reduce greenhouse gas emissions by approximately 290 million tons in 2030, which has increased to 358 million tons. To achieve this, various efforts are being made, including de-dieselization programs and converting fossil-fueled motorized vehicles to electric motors, to absorb emissions,” said Arifin. 

The progress towards solar energy adoption in Indonesia remains slow. The actual installed capacity of solar PV in 2022 is 271.6 MW or far below the plan of 893.3 MW, based on data from the Directorate General of New, Renewable Energy and Energy Conservation (EBTKE), MEMR. There are several factors that have hindered widespread adoption of solar energy, including complications with land ownership, lack of local experience and unattractive tariffs. Whereas, the latest technical potential is at 3,295 GWp, acceleration of solar deployment will be critical in achieving renewable energy and NZE targets. In the short term, 18 GW of solar energy is needed to attain a 23% renewable energy mix target by 2025, with an investment value of US$14.1 billion, based on BloombergNEF and IESR study. 

With the announcement of Just Energy Transition Partnership (JETP) last year at G20 Summit 2022 in Bali, Indonesia – a comprehensive investment and policy plan is currently drafted in consultation with relevant stakeholders, covering early coal retirements, just transition measures, and acceleration of renewable energy development. The US$20 billion partnership aims to peak Indonesia’s power sector emission by 2030, and solar energy has become a significant part of the planning due to its techno-economic advantage and high potential for greenhouse gases emission reduction. The first version of such a plan will be unveiled in August 2023.

Rachmat Kaimuddin, Deputy Minister for Infrastructure and Transport, Coordinating Ministry of Maritime and Investment Affairs revealed that to build solar energy industrialization, Indonesia needs to prepare the demand first. 

“Reflecting in this, we intervene in the country, for example through JETP, how we minimize dependence on fossil energy, can be in several forms such as reducing the output of coal-based power plants and creating new demand,” he explained. 

He also emphasized that Indonesia’s cooperation with Singapore for green electricity requires that solar modules and batteries must be produced in Indonesia, so that the demand that arises becomes a trigger for the PLTS industry in Indonesia to form. 

“We don’t want to only import in the future. We hope that a domestic industry will be formed while we are in the process of energy transition,” he said.

Antha Williams, who leads Bloomberg Philanthropies’ Environment Program stated that developing a homegrown solar industry is a key component to advancing Indonesia’s transition to clean, affordable, and reliable energy.

“By cultivating international partnerships to mobilize capital and scale domestic solar manufacturing capacity, Indonesia has the potential to realize its net-zero energy pathway goals through rapid deployment of clean energy projects. Bloomberg Philanthropies welcomes the opportunity to support Indonesia’s goal of becoming a leader in solar energy development.”

Fabby Tumiwa, the Executive Director of IESR, stated that over the last two years, a new market has emerged, utilizing solar PV not only for selling electricity but also for producing new value-added products, such as green hydrogen and ammonia. Based on IESR data, there are currently 10 green hydrogen and ammonia projects that have been initiated since last year, intending to use solar energy as their primary electricity source. These projects are currently in the study phase and are expected to be realized within the next 2-3 years. Fabby also pointed out that experiences from various countries, including some developing ones, demonstrate that constructing Gigawatt-scale solar power plants within a year is an achievable feat.

Fabby highlighted three essential supporting factors to encourage the development of solar PV, “Firstly, it requires political will and strong, active leadership from the government, along with the establishment of transparent and sustainable policies and regulations. Secondly, there is a need for the development of an integrated ecosystem, which involves defining quality standards and guarantees for solar modules, ensuring the availability of qualified and trained human resources. Lastly, it is crucial to foster the growth of an integrated and competitive solar PV manufacturing industry.”

Indonesia’s Chairmanship in ASEAN 2023 presents an opportunity to engage the public and raise awareness about the benefits of solar PV adoption. Public outreach campaigns, educational programs, and community-driven initiatives can inform people about the environmental advantages, economic benefits, and energy independence that come with solar PV usage. Building public support and understanding can facilitate smoother and more widespread adoption of solar PV technology. Besides that, Indonesia’s Chairmanship can set a precedent for solar PV adoption in ASEAN through policy alignment, regional cooperation, investment promotion and innovation. It is timely to promote and drive domestic solar industries and supply chains in parallel with fast deployment of solar projects. 

ASEAN Solar Summit 2023 Calls for ASEAN Leadership for Acceleration of Solar Energy in the Southeast Asia

press release

Jakarta, July 25, 2023 – Indonesia, as the current chair of the Association of Southeast Asia Nations (ASEAN) has taken a significant stride towards a sustainable and greener future with the successful inauguration of the ASEAN Solar Summit 2023. This momentous event, organized by the Ministry of Energy and Mineral Resources, in collaboration with the Indonesian Solar Energy Association (AESI) and the Institute for Essential Services Reform (IESR), convened esteemed leaders, experts, and stakeholders from across the globe to promote solar energy as a key driver in the region’s energy transition. 

Held in Jakarta, the ASEAN Solar Summit 2023 aimed to enhance and accelerate energy transition in ASEAN member states with solar energy, cultivates active solar-focused partnerships within the region and globally, boosts clean energy investment, and showcases successful solar stories for knowledge exchange. This monumental gathering was attended by high-level policy makers in ASEAN and partner countries, business players, financial institutions, and non-governmental organizations, that addressed vital aspects of solar energy deployment, including policy frameworks, technological innovations and sustainable investment strategies. 

In the remarks of Minister of Industry, Republic of Indonesia, which was delivered by Taufiek Bawazier, Director-General of Metal, Machinery, Transportation Equipment, and Electronics Industries at the Ministry of Industry of the Republic of Indonesia, he stated that the Ministry of Industry encourages the domestic solar energy industry. 

“However, the current domestic market with the scale of the economy has not been fully met yet. Coordinating and collaborating in the planning of solar power development is essential, involving small and medium enterprises (SMEs), relevant ministries, local governments, and the private sector. This way, the development of solar PV products can align with the specifications required for solar panel construction,” Bawazir said.

 He also added that currently, the domestic solar panel industry has made progress. Until now, the total production capacity of the industry has reached the equivalent of 1,600 MW. 

“Nevertheless, the specifications of domestically-produced solar modules must continue to improve to meet the demand of the current solar panel development plans, especially for modules with a capacity above 550 watts-peak. Moreover, it is necessary to explore upstream needs to meet national demands,” Bawazir continued.

 

Director General of NREEC, Ministry of Energy and Mineral Resources, Republic of Indonesia, Dr. Dadan Kusdiana highlighted that ASEAN possesses advantages in terms of solar supply chain, including abundance of critical minerals and key ingredients for solar components. It is important to bring insights from this summit to the ASEAN energy ministerial meeting next month to sound the call to action for a consolidated effort in increasing the implementation of solar energy in the region, and developing the solar industry’s supply chain within our country.   

“It should be carried out through strong cooperation and collaboration among ASEAN countries to massively increase the use of renewable energy, particularly solar energy,” Kusdiana said.

Fabby Tumiwa, the Executive Director of the Institute for Essential Services Reform (IESR), stated that meeting the Paris Agreement’s target to limit global temperature increase of 1.5 degrees and combat the climate crisis offers several new economic opportunities.

“It can be achieved, if we collectively act boldly and ambitiously to transition our energy system from fossil fuel to clean energy. This is where solar energy plays a crucial role. Southeast Asia must ensure affordable access to solar technology by establishing a solar PV manufacturing and supply chain that includes polysilicon, ingot, and other components,” Tuwima highlighted.

He urged ASEAN to pursue strong cooperation in developing solar PV manufacturing capabilities and investing in the solar PV supply chain, with the growing domestic demand serving as an anchor market. 

“We request both the industry and energy ministries, in the upcoming ministerial meeting, to investigate the possibility of establishing an ASEAN solar PV manufacturing and supply chain. This initiative would strengthen our mutual economic interests and promote prosperity within the region,” Tumiwa said.

Andhika Prastawa, Chairman of the Advisory Board AESI, highlighted some challenges faced in developing solar energy in the country, including the competitiveness of solar, energy storage, and the high dependency on fossil fuels due to their reliable and continuous power at a relatively lower cost.

“Despite these challenges, we must remain optimistic and work towards breakthroughs in renewable energy, particularly solar energy. It not only provides us with clean energy but also promotes sustainability. The size of the domestic potential market is also attractive for the development of the manufacturing industry for solar PV and its components. However, significant efforts, research, and innovation are essential to support the industry and discover new approaches to harness solar energy efficiency,” Prastawa said.

ASEAN’s commitment to sustainable development extends beyond national borders, and the region actively collaborates on energy-related initiatives. The ASEAN Solar Summit 2023, hosted by Indonesia during its chairmanship for 2023, serves as a platform for fostering regional cooperation, knowledge exchange and partnerships in the solar energy sector. Through collaborative efforts, ASEAN member states can share best practices, pool resources, and collectively address common challenges in implementing solar energy projects and to attract collaborations as well as investments from its global partners. Such synergy will amplify the impact of solar energy development and accelerate the region’s transition towards a cleaner and more sustainable energy landscape.

Initial Steps to Nurture Renewable Energy Ecosystem ASEAN

Jakarta, 13 June 2023 – Southeast Asia is a region with the largest economic growth and energy demand. Economic growth followed by increase in energy demand in the region is projected to continue in the coming years. If the use of environmentally friendly energy sources is not anticipated, this economic growth and energy demand will become the main problem of increasing greenhouse gas (GHG) emissions in the ASEAN region.

In a webinar titled Towards a Decarbonized ASEAN: Unlocking the Potential of Renewables to Advance ASEAN Interconnectivity Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform stated that ASEAN has the opportunity to encourage the creation of a renewable energy industry ecosystem through the cooperation of the ASEAN Power Grid (APG) regional interconnection network.

“ASEAN power grid can be one of the supporting infrastructures to accelerate the use of renewable energy in ASEAN countries while waiting for its market share to grow. ASEAN countries can encourage supply chain cooperation in renewable energy technology, especially solar module cell technology,” he said.

Fabby added that Indonesia, as the holder of the ASEAN Chair this year, has the opportunity to encourage this initiative and encourage the transition of fossil fuel-based industries towards renewable energy. A greener industrial transformation is believed to have a multiplier effect in the form of creating green jobs in the future.

In line with Fabby, Yeni Gusrini, Sub Coordinator of the Gatrik Program at the Ministry of Energy and Mineral Resources stated that in the first phase of development, the ASEAN Power Grid had succeeded in transferring 100 MW of electricity from Lao PDR to Singapore.

“The first phase of APG development succeeded in connecting Lao PDR – Thailand – Malaysia – Singapore. Moreover, APG will be a contributor to economic growth that ensures sufficient energy throughout the ASEAN region,” added Yeni.

Indra Overland, Head of Center for Energy Research, Norwegian Institute of International Affairs, said it is important for ASEAN countries to start thinking about strategies to increase renewable energy in the country and in the region.

“We can take as an example Vietnam which has succeeded in massively adding its renewable energy capacity in the past decade. Strategies such as having a policy framework that supports the development of renewable energy including taxation and ease of licensing are very influential for investors’ interest in investing in the development of renewable energy in an area,” he said.

Added by Overland, one indicator of a country having good policy implementation is when the renewable energy sector has abundant investors.

Zulfikar Yurnaidi, Energy Modeling and Policy Planning Manager, ASEAN Center for Energy, acknowledged that the financial factor which is one of the inhibiting factors for renewable energy penetration in the network. He said that one of the focuses of ASEAN 2021 – 2025 is to build connectivity and integrate regional markets.

“Penetration of renewable energy must be translated into the addition of generation capacity. To support this, network modernization must be carried out to maintain network stability, flexibility, and toughness. All of this requires a large amount of investment, and the government’s current budget is insufficient to finance everything, so the role of private investors is needed here,” Zulfikar explained.

The existence of the ASEAN Power Grid will bring long-lasting socio-economic impacts. The hope is that the traded electricity is clean electricity produced by renewable energy generators. So, this clearly affects the location of fossil power plants which are still quite a lot in the ASEAN region.

Ahmad Ashov Birry, Program Director of Trend Asia, gave an example that Indonesia still has a pile of homework related to this fossil power plant. Starting from an early retirement plan for fossil-based power plants to the construction of new renewable energy-based power plants.

“In this series of processes (ending fossil-based plants and construction of new power plants based on renewable energy, ed), the community needs to be involved, so that they can anticipate the possible damage arising from each stage. So that the transition (energy, ed) that occurs is (transition, ed) that is just, and makes life prosperous,” he explained.