Fostering Courage to Resolve Dilemmas in Indonesia’s Solar Energy Industry Development

Jakarta, July 26, 2023 – Indonesia’s swift progress in the energy transition hinges upon the nation’s ability to cultivate a robust domestic solar energy industry. This imperative message was conveyed by Fabby Tumiwa, the Executive Director of the Institute for Essential Services Reform (IESR), during a compelling discussion at the Indonesia Solar Summit 2023 (26/07). Tumiwa emphasized that prompt government action is pivotal to address several critical aspects such as obtaining market data for solar PV, ensuring the bankability of the industry to facilitate obtaining business loans, adhering to the 40% local content requirement for domestic solar PV products, and surmounting the constraints within the solar industry’s supply chain. Moreover, the willingness to invest in the solar energy sector will play a pivotal role in shaping the trajectory of Indonesia’s solar industry growth.

Tumiwa accentuated, “Regulators must consolidate dispersed data regarding the emerging solar PV market, thereby providing potential investors in Indonesian solar PV manufacturing an insightful data. Additionally, Indonesia currently lacks tier-1 manufacturers, those compliant with bankability prerequisites. This shortfall impedes the production of highly efficient solar modules. The establishment of tier-1 solar manufacturing facilities within Indonesia would be a monumental stride.”

He further evaluated that once the bankability predicament is alleviated, it will not only invigorate larger-scale solar projects to set foot in Indonesia but also stimulate burgeoning market demand.

Similarly, Rachmat Kaimuddin, the Deputy Minister for Infrastructure and Transport, Coordinating Ministry of Maritime and Investment Affairs, Republic of Indonesia, reiterated the importance of proactively preparing the groundwork for solar energy demand to foster the development of a solar energy industry in Indonesia during the same event. He underscored that governmental intervention in shaping a solar energy market can be effectively achieved through the Just Energy Transition Partnership (JETP).

“The solar industry in Indonesia is still in its pioneering stages, relatively underdeveloped. Meanwhile, our power generation heavily relies on coal. Our objective is to establish a thriving solar industry, necessitating the cultivation of demand. Through JETP, we are intervening by reducing our reliance on fossil fuels and infusing renewable energy sources like solar PV. This demand extends beyond Indonesia’s borders, for instance in Singapore, where there’s interest in sourcing green electricity generated using modules and batteries manufactured in Indonesia,” elaborated Rachmat.

Pramudya, the Deputy Director of Power Plant Planning at the Directorate General of Electricity, Ministry of Energy and Mineral Resources, Republic of Indonesia, anticipates that the renewable energy mix will only constitute 11.3% of the targeted 23% by 2025. He posits that the gap in achieving this target can be addressed by the inclusion of solar power plants..

“Solar PV possesses a promising opportunity due to its potential for rapid development. While aiming to achieve the 23% renewable energy mix target, a substantial 15 GW of solar PV is required. However, the realization of this goal within a 2-year timeframe is subject to challenges, encompassing local content requirement considerations and the essential adaptation of network flexibility,” remarked Pramudya.

Wilson W. Wenas, a Solar Practitioner from ISG Solar, outlined three key strategies to expedite the growth of the solar industry in Indonesia. Firstly, it is imperative to select the appropriate solar energy technology, such as TOPcon, Heterojunction, Advanced Heterojunction and TOPcon, and Perovskite Solar Cell Tandem. Secondly, robust research and development initiatives should be primed to support the chosen technology. Thirdly, the collaboration should extend to machine makers, not solely module makers.

“Making an erroneous technology or machine maker selection could lead to catastrophic consequences,” he emphasized.

Additionally, Daniel Kurniawan, a Solar Energy Specialist at IESR, elucidated that investing in polysilicon technology stands as a strategic imperative for both the cell and panel sectors. He underscored that propelling the growth of Indonesia’s solar energy industry demands the presence of bold stakeholders willing to undertake investment risks.