The Amend of the MEMR Regulation on Rooftop Solar PV Has the Potential to Undermine the Interest of the Residential Market

Jakarta, 6 January 2023 – The Ministry of Energy and Mineral Resources (MEMR) is revising the Minister of Energy and Mineral Resources Regulation No. 26/2021 concerning rooftop solar PV connected to the power supply grid owned by the holders of power supply business licence for the public interest (Izin Usaha Penyediaan Tenaga Listrik untuk Kepentingan Umum) or commonly referred to as IUPTLU. This change is intended to address the difficulties with installing rooftop solar PV that has occurred in the last year since the ministerial regulation was officially issued.

In the public hearing that was held on Friday, January 6 2023, the Ministry of Energy and Mineral Resources presented substance changes, including there is no limit to the maximum capacity of 100% installed capacity of a rooftop solar power plant, but based on system quota, electricity exports are abolished (no longer counted as bill deduction), capacity costs for industrial customers is nullified (no longer 5 hours), and the transition rules for existing customers are enforced within a certain time.

“Since it was promulgated in August 2021, MEMR Reg No. 26/2021 practically does not work because PLN refuses to implement it. As a result, the government’s target of 450 MWp of additional solar PV capacity in 2022 was not achieved. This revision seems to be a meeting point between the government’s interests and PLN and accommodates PLN’s interests in reducing the potential for electricity exports from solar PV users due to net-metering regulations considering the overcapacity conditions. But AESI regrets that this accommodation has the potential to reduce the economy and interest in residential rooftop solar PV, which has the potential to grow,” said Fabby Tumiwa, Chairman of the Indonesian Solar Energy Association (AESI) in Jakarta.

Since January 2022, 10-15% rooftop solar PV capacity restrictions have occurred in various regions in Indonesia for customers, both residential on the kilowatt scale to industrial customers with capacities on the megawatt scale. This capacity limitation discombobulated the provisions of MEMR Reg No. 26/2021 (maximum 100% installed electric power) and reduced potential customers’ interest to adopt rooftop solar.

In the proposed changes to the substance of the Ministerial Regulation, the capacity limit of up to 100% will not be reinstated but will be based on a quota system with first come, first serve. This change directly responds to capacity restrictions occurring in the field. However, the technical determination of system quotas needs to be clarified, especially concerning renewable energy development plans in the regions. In addition, the period for setting quotas per 5 years is too long due to the dynamics of electricity supply technology.

AESI supports the determination of quotas by taking into account the reliability of the IUPTLU electricity network but proposes that capacity quotas be determined every 2 years, with a review conducted every six months.

Eradicating net metering by eliminating the export of electricity to the PLN grid, which applies to all customer categories without exception, will have major impacts on the residential (household) market. The current economic level of rooftop solar PV is still influenced by net metering because the household load profile is mostly at night. The absence of exports will lessen the reduction in household electricity bills and extend the payback period for purchasing a rooftop solar system, making rooftop solar unattractive for household customers.

“A market survey conducted by the Institute for Essential Services Reform (IESR) in 7 provinces in Indonesia in 2019 – 2021 shows that the economy of solar PV is an important and determining factor for residential customers to use rooftop solar. The majority of respondents also want to get savings of at least 50% and clear and fast installation procedures,” added Marlistya Citraningrum, Manager of the IESR Sustainable Energy Access Program.

The National Strategic Project (PSN) for rooftop solar PV with a target of 3.6 GW in 2025 and achieving the 23% renewable energy target requires community participation. With just a 20% market share for R2 and R3 class customers (3,500 VA and above), there is a potential of 400,000 households throughout Indonesia – equivalent to 1.2 GWp of rooftop solar if each instals a minimum of 3 kWp.

The impact on residential rooftop PV will reduce the benefits of creating green jobs through small-scale solar PV installation businesses targeting the household market segment, which has started to grow since 2018. With the potential for adoption spread across various cities in Indonesia, the residential rooftop solar PV market also contributes to the opening of green jobs, for example, technicians and installers, and the growth of MSME rooftop solar PV installers. If the latest revision of the MEMR regulation is passed with the currently proposed clauses, the growth and opportunities of these green businesses will certainly be hampered. AESI and IESR recommend that net metering be implemented for residential customers with export-import calculations which can be discussed later.

In the public hearing, there were many questions raised by solar energy developers (developers), installers (EPC companies), local governments, and rooftop PV users.

AESI assesses that instead of supporting the renewable energy transition, the revision of this regulation will hinder the addition of rooftop PV. For this reason, AESI proposes that the export of electricity from residential customers is still permitted on condition that the installed capacity is 100% of the customer’s power. This provision is reviewed within 5 years or after the residential rooftop PV reaches a cumulative 5% of the total installed capacity of generators in the system. 

The Ministry of Energy and Mineral Resources has opened a channel for submitting input for this process until January 13, 2023.

IETO 2023: Anticipating the Energy Crisis by Utilizing Renewable Energy

Jakarta, 14 December 2022- The global energy crisis shows the vulnerability of fossil-based energy security, including Indonesia, where 67% of the energy mix comes from fossil energy. Facing the uncertainty of social, political, economic and environmental conditions regarding national energy security, the government needs to make a sustainable and just energy transition by optimizing the use of renewable energy sources to replace fossil energy sources. This is the main discussion of the Institute Essential Services Reform (IESR) flagship report entitled Indonesia Energy Transition Outlook (IETO) 2023.

The impact of the energy crisis can be seen in energy prices such as coal, natural gas and crude oil, which have soared 2-4 times in mid-2022 compared to 2019. It has made domestic coal producers more interested in exporting overseas, which has led to a depletion of domestic coal supplies. To overcome the problem of the energy crisis in the short term, the Indonesian government made various decisions such as maintaining the Domestic Market Obligation (DMO) policy, disbursing fossil energy subsidies which reached 650 trillion and adjusting fuel prices to reduce subsidy burdens. However, coal, oil and gas reserves are decreasing every year, and the pressure to overcome the threat of the climate crisis demands a long-term solution so that Indonesia is free from an energy crisis in the future.

“To provide affordable and safe energy, increasing renewable energy for electricity supply, transportation and industry and reducing fossil energy must be accelerated. The energy transition needs to be carried out gradually following social, economic and political conditions that affect policy direction and people’s purchasing power. However, the faster we increase the renewable energy mix, the lower the vulnerability to energy security and the cheaper energy prices in Indonesia will be. It was shown in some IESR study results. The key word is ambitious but also flexible targets,” said Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), at the Media Conference for the launch of IETO 2023.

The condition of European countries and the UK, which are currently experiencing high energy prices, is an example of using transition fuels, such as natural gas, as a wrong strategy. When there is a gas shortage, they temporarily increase fossil energy which denies global efforts to reduce greenhouse gas (GHG) emissions which cause climate change due to rising earth temperatures exceeding 1.5 degrees Celsius.

IESR encourages the government to complete all homework to boost the development of renewable energy and energy efficiency quickly.

“There is still a lot of work to be done to make the energy transition truly happen and sustainable, for instance adjusting National Energy Policy (KEN) and National Energy General Plan (RUEN), phasing out coal and gas subsidies, reforming prices and electricity subsidies, accelerating the termination of coal-fired power plants, developing the domestic solar cell and module industry, adjusting the grid code, as well as integrating transportation and industrial decarbonization strategies according to the zero-emission path. The government must pursue all these reforms quickly, and the community must continue to push for the transition to occur,” explained Fabby.

IETO 2023 also highlights the high level of public awareness of the energy transition. However, in general, energy transition readiness in Indonesia is still low, although several policies, supporting regulations and renewable energy development plans have been issued, such as the enhanced NDC, RUPTL 2021-2030, which contains a 51.6% portion of renewable energy and Presidential Regulation 112/2022 concerning Acceleration Development of Renewable Energy for the Provision of Electric Power.

“Several things still need to be fixed, such as the capacity limit for installing PLTS roofs by 15%, which certainly reduces the public’s interest in utilizing this technology and contributing to the renewable energy mix on a national scale. Based on a public survey that we have conducted, more than 60% of the people we surveyed agree to accelerate the cessation of using coal as the main source in the electricity sector and support the government to start paying attention to other sources such as solar radiation, water and wind. With this huge public support, the government must begin to be able to prove its commitment to providing a cleaner source of electricity for the whole community,” said Handriyanti D Puspitarini, Main Author of IETO 2023 who is also a senior researcher at IESR.

All discussions regarding the status and analysis of the energy sector to accelerate the energy transition are summarized in the Indonesia Energy Transition Outlook (IETO) 2023. Published in 2017 with the Indonesia Clean Energy Outlook (ICEO), which later transformed into the IETO in 2019, the IETO presents several new chapters with analysis depth.

“IETO will consistently highlight, measure and provide recommendations for accelerating Indonesia’s energy transition from year to year. Several reports providing in-depth analysis on specific aspects related to the energy transition such as aspects of energy transition funding, solar energy, and electric vehicles were published in separate reports entitled Indonesia Sustainable Finance Outlook or ISFO, Indonesia Solar Energy Outlook or ISEO, and Indonesia Electric Vehicle Outlook or IEVO, which complements the IETO analysis and recommendations this year,” explained Deon Arinaldo, IESR Energy Transformation Program Manager.

Supported by Bloomberg Philanthropies, IESR will hold discussions and launch the Indonesia Energy Transition Outlook 2023 report on December 15, 2022. The IETO 2023 report can be accessed at s.id/IETO2023-IESR.