Renewable Energy Becomes Attraction for Investors

Semarang, 4 July 2023 – Electricity is not only the essential need for households, but also drives economic activity to a large industrial scale. In addition to the need for a reliable electricity supply, large-scale industries are starting to pay attention to the source of the electricity supply. In fact, for export-oriented industries, the production process needs to be carried out with minimal emissions in advance since the implementation of carbon footprint calculations on products exported to certain countries. This means that goods or components of goods produced n from fossil energy generation will receive a higher carbon tax.

Central Java Province, which is currently developing a number of regional industries, pays close attention to the development of alternative energy sources other than fossils. This was said by the Deputy Governor of Central Java, Taj Yasin Maimoen, in his remarks at the Central Java Renewable Energy Investment Forum 2023 which was organized by the Institute for Essential Services Reform (IESR) in collaboration with the Central Java Energy and Mineral Resources Provincial Office, Tuesday 4 July 2023.

“The growth of industrial infrastructure is accompanied by high growth in energy needs. Currently it is not just energy, but energy that comes from new, renewable energy,” said Taj Yasin.

Taj Yasin added that Central Java has abundant potential for renewable energy, but its utilization has not been optimal. To drive the use of renewable energy, the Provincial Government of Central Java is promoting the installation of PV rooftops on government buildings.

“From the installation of rooftop PV in government buildings, it shows that there are 30-40% savings on electricity bills for the institutions that install them,” he said.

Previously, the Executive Director of IESR, Fabby Tumiwa, said that the availability of electricity from clean energy is the main attraction for investors to invest in one country.

“If we want to increase investment competitiveness, we must increase the availability of green energy. The supply of electricity from renewable energy is a new indicator for investors to invest their capital,” said Fabby.

Sakina Rosellasari, Head of the Central Java Investment and One-Stop Service Office (DPMPTSP), stated that Central Java is currently designing 23 projects to be offered to investors. Part of the project is related to the development of renewable energy.

“Investment interest is already approaching pre-pandemic times. We hope this meeting will improve communication and encourage investment realization in Central Java,” she said.

This trend is in line with the Indonesian Low Carbon Development study, that efforts to reduce GHG emissions must be carried out in an integrated manner in development plans to push Indonesia out of the middle-income country trap by ensuring economic growth of 5%.

IESR in KemBali Becik: The Role of Rooftop Solar PV Adoption in Bali’s Tourism Business

Bali, July 21, 2023 – As part of the joint effort and commitment towards a clean Bali, post-pandemic economic recovery, and addressing the challenges of the climate crisis, Purpose Climate Lab presents KemBali Becik as one of the solutions for recovery. The Institute for Essential Services Reform (IESR) is also participating in the KemBali Becik Campaign in 2023, held in Ketewel Village, Sukawati District, Gianyar Regency, Bali on Friday, July 21, 2023. The event carries the theme “Stand out in the market by standing up for sustainability.”

KemBali Becik serves as a collaborative platform involving various sectors in Bali, with the word “Kembali” meaning “return” in Indonesian, and “becik” translating to “good” in Balinese. KemBali Becik aims to engage the Government, businesses, and the Balinese community as drivers of economic decarbonization, particularly by implementing climate solutions in the tourism industry. During this event, an assessment and capacity building session are conducted for tourism businesses registered on KemBali Becik’s green page. The capacity building aims to assist these businesses in implementing concrete actions to ensure their sustainability in terms of food waste, energy, and transportation.

In her opening speech, Michelle Winowatan, Strategy Manager at PCL, emphasizes the importance of embracing sustainability to support the progress of Bali’s business and tourism sector.

“By mobilizing the tourism businesses and raising awareness among tourists to participate in supporting green recovery efforts in the tourism sector, we can build a collective force to decarbonize the economy and realize an environmentally friendly and economically resilient Bali,” says Michelle.

Alvin Putra Sisdwinugraha, Researcher of Power Systems and Renewable Energy at IESR, hopes that the event’s attendees, mostly business stakeholders, will increasingly recognize and understand the significance of sustainable, eco-friendly energy in influencing various aspects of long-term business sustainability.

“Climate solutions are integral to the business sector. Besides being profitable, businesses must also be sustainable to attract ESG-based (environment, social, and government) investments in clean energy. From an energy perspective, adopting rooftop solar PV (PLTS) is one of the long-term solutions, offering benefits in terms of electricity consumption cost savings, as many PLTS providers offer cheaper rates compared to PLN’s electricity prices. Practicing sustainability can also attract investor investments in local Bali businesses,” mentioned Alvin.

On this occasion, IESR introduces the Solar Hub platform for business stakeholders who wish to learn more about rooftop solar PV. Many have tried this platform, and some have expressed interest in installing rooftop solar PV.

“I hope that over time, more people will be interested in adopting rooftop solar PV as one of the measures to reduce emissions and utilize renewable energy in Bali’s business sector,” says Alvin.

Encouraging the Growth of Renewable Energy Investments in Central Java

Semarang, July 4, 2023 – Recognizing that renewable energy investments play a crucial role in addressing climate change and achieving the Paris Agreement, the Institute for Essential Services Reform (IESR), in collaboration with the Government of Central Java Province, held the ‘Central Java Renewable Energy Investment Forum 2023’ event. This activity is a platform to promote the potential of renewable energy investments in Central Java to achieve the target of a 21.82% renewable energy mix in Central Java Province by 2025. Exceeding the target with a renewable energy mix of 15.76% in 2022 has encouraged the Government of Central Java Province to proactively open doors for renewable energy investments to achieve the set targets and maintain regional economic competitiveness.

Fabby Tumiwa, Executive Director of IESR, explained that Central Java has abundant potential for renewable energy, particularly solar energy. According to IESR’s study, if 9 million residential buildings install rooftop solar power systems, it could generate 100,000 megawatts (MW). Additionally, if the 35 regent and mayor offices throughout Central Java install rooftop solar power systems, it would generate around 5 megawatts (MW) of solar energy. Fabby emphasized that the renewable energy potential in Central Java, including wind power plants, micro-hydro power plants, biomass power plants, and geothermal power plants outside of Central Java, reaches 198 megawatts (MW).

“The availability of renewable energy is now a key factor in attracting investments. Therefore, if we want to enhance investment competitiveness in Central Java, it is necessary to increase the availability of green energy supply. This becomes a new indicator for investors. The vast potential of renewable energy sources cannot be realized without funding for their development,” explained Fabby Tumiwa.

Vice Governor of Central Java Province, Taj Yasin Maimoen, explained that Central Java has abundant solar energy potential that is yet to be fully utilized. Therefore, the use of solar power plants needs to be accelerated. Since 2019, the Provincial Government of Central Java, through the Department of Energy and Mineral Resources, has installed solar power plants in every regional organization office, including the Central Java Regional Council and several educational institutions. The use of solar power plants is aimed at reducing carbon emissions and has economic benefits, such as reducing electricity expenses by around 30-40%.

“Central Java has competitive potential, including infrastructure support, workforce, and a strong commitment to investment. The renewable energy sector presents a new investment opportunity in Central Java, considering the growing needs of the manufacturing ecosystem, which requires alternative energy sources to meet its production. This potential needs to be managed together,” said Taj Yasin.

Sakina Rosellasari, Head of the Investment and Integrated One-Stop Service Agency (DPMPTSP) of Central Java Province, stated that Central Java has a general investment plan, to promote environmentally conscious investment policies (green investment). According to DPMPTSP records, there are 690 permits for self-supply electricity providers (IUPTLS), and the number of rooftop and steam IUPTLS is approximately 17 as of June 2023.

“There are several projects ready to be offered in the renewable energy sector in Central Java, including the development of mini hydropower plants in Banjaran and Logawa, Banyumas Regency, the construction of floating solar power plants in Wadaslintang Reservoir, the development of geothermal power plants in Candi Umbul Telomoyo and Baturaden, Banyumas Regency. Realizing investments in Central Java is expected to increase community income and provide employment opportunities,” stated Sakina.

Cahyo Purnomo, Director of Promotion for East Asia, South Asia, the Middle East, and Africa at the Ministry of Investment/BKPM, stated that the energy transition process cannot happen overnight; it requires time and commitment. The development of renewable energy is one of the efforts toward a low-carbon economy, and so creating a conducive investment climate is necessary.

“For example, in formulating regulations, predictability is essential for investors. We encourage direct investment based on a long-term perspective, not just for 1-2 years. Therefore, it is important to have a stable investment climate, and the formulation of regulations should involve all stakeholders; there should be no mere spectators,” said Cahyo. Learning Forum on Energy Transition and Climate Change Issues

press release

Jakarta, June 23, 2023 – The Institute for Essential Services Reform (IESR) launched the Energy Transition Academy platform, accessed via the academy.transisi website. The platform can be used as a forum for learning about energy transition and climate change issues. The birth of this platform cannot be separated from the development of the phrase energy transition, which is increasingly popular and frequently used in public spaces.

IESR highlighted the energy transition as shifting energy use from fossil-based to low-carbon and renewable energy sources, an inevitable process. The energy transition has become a global effort to reduce carbon emissions from fossil-intensive energy systems, one of the leading causes of an increase in the average global temperature reaching 1.1℃ in 2011-2020 compared to 1850-1900, according to the IPCC report.

However, IESR observes that the high outreach of the phrase energy transition is separate from the available literature, information, and learning platforms for the community. The availability of broad access to knowledge and information regarding the energy transition and the climate crisis can force the community to take actions that encourage more policies that accelerate the implementation of the energy transition and support the development of renewable energy in Indonesia. Based on an internal IESR survey, the difficulty in gathering this information is especially felt by groups such as journalists and academics who regularly have to write about the development of the energy transition and its follow-up issues.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), stated that the energy transition academy could be a means for people to participate in the energy transition by adding insight and capacity.

“One of the reasons we developed an energy transition academy is because we want no one left behind in this process. That the Indonesian people from Sabang to Merauke can get the opportunity to build, fill, and actively participate in the transition process that is happening,” said Fabby.

Irwan Sarifudin, Coordinator of the Clean Energy Hub, emphasized that by presenting learning that can be accessed quickly, the Energy Transition Academy platform tries to be an answer to the limited energy transition information with a composition consisting of academy classes, forums, and data visualization.

“At the launch of phase one, the first three classes were released, namely Fundamentals of Energy Transition, Introduction to the Energy Transition Roadmap in Indonesia, and Rooftop PLTS Training. In the future, there will be classes covering aspects of technology, economy, transportation, and industry as well as specific target user classes such as journalism classes which will be released,” said Irwan.

Irwan mentioned that participants could choose a competency level, starting from beginner to intermediate to advanced classes, with the latest easy-to-learn learning videos. Facilities that participants will obtain include online handbooks and learning videos. Irwan added that participants would get a certificate if they completed their learning class. The learning method used is asynchronous learning, allowing academy participants to manage their study time independently to make classes more flexible and efficient.

In the development process, IESR cooperates with academics to prepare modules and review learning materials so that they are by the learning principles that apply in Indonesia. Before the Energy Transition Academy, IESR launched the transition platform, which is a center for information and data visualization on the energy transition in 2020. The transition energy platform has accessed around 32,104 visitors in the last year. ***

Introducing Rooftop PV and Its Related Aspects to Students of SMK Negeri 7 Semarang

Semarang, 6 June 2023 – The Energy and Mineral Resources Office of Central Java Province is holding technical training on the construction and installation of rooftop solar PV in order to increase human capital in the electricity sector, new and renewable energy, energy conservation, especially for PV installations. The rooftop PV training was attended by 30 representatives of the third grade students from the Electrical Engineering major, SMK Negeri 7 Semarang.

The Head of SMK Negeri 7 Semarang, Haris Wahyudi, warmly welcomed this initiative and believed that the training was the right skill for his students.

“This training is a contextual skill to equip our students, whether they are going to do internships or join the labor forces. This competence is very necessary and very appropriate, we are grateful and grateful for being given the opportunity and having this activity at SMK Negeri 7 Semarang,” he said.

Haris hoped that this training could be motivating and useful, so that in the future there would be high opportunities for rooftop PV – related jobs to be filled by one of his students with good skills and provisions.

This rooftop PV training activity is one of the efforts made by the Provincial Government of Central Java through the ESDM Office to increase the knowledge and skills of the younger generation, so that they are able to take part in facing the energy transition.

Boedyo Dharmawan, Plt. Head of the Energy and Mineral Resources Office of Central Java Province in his remarks said that Central Java has abundant potential for new and renewable energy (NRE), many NRE practices have been built and utilized by the people of Central Java. He hopes that the younger generations will be able to understand and be ready to face the changes in the energy transition that will continue to occur in the future.

“Thirty-five districts/cities in Central Java Province have a lot of PV energy potential, and in the future, we will gradually abandon fossil energy because its availability continues to decrease, this is inevitable, we need to be prepared and ready to face it,” he said.

“Hopefully with this PV rooftop training, youths can build and take good care of PV management. Because if we only continue to encourage and massive development of solar energy, but the maintenance and maintenance is lacking, in the future this can become an opportunity and job opportunities for younger siblings in the future,” he continued.

In addition, Dharmawan also hopes that NRE programs can be supported by all parties, including the educational communities in Central Java Province.

“We really hope that the Education and Culture Office will encourage renewable energy development programs, so that State Vocational High School students in Central Java are ready to face energy transition,” he added.

Rizqi M Prasetyo, regional program officer of, Sustainable Energy Access, Institute for Essential Services Reform (IESR) participated as one of the speakers in the rooftop PV technical training, with the theme “The Green Superheroes: Solar Team is Saving the Planet!”. The presentation of the material began with a quiz on future PV – related job opportunities, which was enthusiastically followed by the participants.

“The material presented is clear, the delivery method is more exciting, so we don’t get bored listening, it combined with quizzes via cell phones, so the material is easy to understand, because the delivery method is so good,” said Aditya Arya Permata, one of the students.

Rizqi also gave descriptions of current and future climate conditions and employment opportunities. It is hoped that the training participants will be literate and have a high awareness that the development of renewable energy, especially solar energy, can open new jobs that are environmentally friendly.

“We hope that the solar PV training at this school can encourage and motivate the younger generation to become a generation that is environmentally conscious and understands the importance of the energy transition, so that in the future they will be able to contribute, innovate, and lead the process of transforming into a low-carbon economy through solar energy,” said Rizqi.

Apart from IESR, training materials were also delivered by the Energy and Mineral Resources Office of Central Java Province and PPSDM EBTKE. This training takes place from 6 – 9 June 2023 with materials covering Rooftop PV Policy and Development in Central Java, PV Regulations and Safety Procedures, PV Systems and Components and ends with the practice of installing rooftop PV.

A Privilege That Should Not be One

That night, I was sleeping. A furry creature suddenly jumped onto the bed and landed on my feet. I almost screamed until it meowed slightly – when my eyes got used to the total darkness in the room, I finally managed to see the homeowner’s fat tabby cat. 

It was a night I spent in Kepayang, a village deep in Musi Banyuasin regency in South Sumatra. There was limited electricity in the village from a small diesel generator and it only came online from 6 PM to 10 at night to conserve fuel. And so everything went dark afterwards; several houses had their own generator but they also rarely used it past 10.

No power grids? Well, I reached the village by the river – on a small machine boat departing from Musi River in Palembang, the provincial capital city. It was a three-hour journey with a short stop at a floating PERTAMINA station along the way. Truthfully, I was scared, but it was the shortest route – land transport was even more grueling and longer. 

The villagers were wishing for better, cleaner, more affordable energy access – and while an extensive power grid was less likely to come into the village shortly, renewable energy available locally could provide them with the option. But they did not know where to start. 

I can go on with more stories (and I love telling them), but I will cut to the point: energy access, even a sustainable one, remains a big challenge in Indonesia. And when access becomes a luxury, having the option to choose an energy source is what, a utopia? 


Among all the privileges I have and have had, gaining access to (relatively) good electricity access is one thing I took for granted. As it is one of the essential services, it should not be a privilege to some – but when I had the chance to understand Indonesia (somewhat in the whole sense of inequality) by coming to numerous remote villages across Indonesia, including Natuna islands (do you have any idea where that is?); a helicopter view or a number showing nearly universal electricity access simply does not cut it.

In 2019, IESR probed energy access quality in two provinces with the least electrification ratio in eastern Indonesia using the multi-tier framework (MTF) developed by The World Bank’s ESMAP. The findings corroborated our initial hypothesis: access does mean quality and Indonesia’s current access indicator, the electrification ratio (ER), is no longer sufficient to promote productive uses and development. Over 70% of households surveyed received only Tier 1 electricity access; they only have power for 4-hrs/day and it can only be used to power small devices such as lamps and radios.

Prior to the study, we had argued that the government’s LTSHE program (distribution of energy-saving lamps kit to remote, unelectrified communities) should not be claimed as electrification, but rather pre-electrification, due to its very limited use for daily and productive uses. It is also important to redefine energy access and to look at and measure access beyond connections. Our recommendations include optimizing the use of local renewable energy, as renewables have proven to be a democratic energy source, and renewable technologies, including solar energy that has entered Indonesia’s mainstream energy policy, are much cheaper than costly grid expansion and diesel generators.

The luxury of choosing your energy source 

A couple of weeks ago, I saw a commotion on Twitter over Apple iPhone’s newest feature: Clean Energy Charging. It is only available in the US and per its official explanation: “…your iPhone gets a forecast of the carbon emissions in your local energy grid and uses it to charge your iPhone during times of cleaner energy production.” Comparing how we choose clean energy in Indonesia and the US is definitely an apple vs. orange debate – so let’s take a close look into Indonesia’s journey towards energy democracy.

Indonesia has a rigid, vertically integrated power system with one state-owned company, PLN, having sole operational authority over power generation, transmission, and distribution (for us muggles, it is effectively a monopoly). Okay, technically there are independent power producers and private companies having a business license (“wilayah usaha” or “wilus”) – but most of us individual consumers get electricity from PLN (then for the sake of discussion, I will refer to consumers as PLN’s consumers). Our power generation is still dominated by fossil energy (and ~60% from coal), so it is not hard to deduce that the electricity we are using now is also fossil-based. 

It was 2013, the year when consumers could “legally” pick their own energy source – through rooftop solar PV installation. That year, PLN’s president director issued an internal regulation permitting parallel operation of consumer’s rooftop solar PV with PLN’s grid. The terms: net-metering, 1:1 export import tariff, minimum bill applied. No big launch, not even a proper socialization – but it was one hell of a milestone.

At the individual level, solar energy is the only feasible renewable energy source we can utilize to power our activities (I have one on my roof!). And with this in mind, IESR began the groundwork to mainstream solar energy in Indonesia’s energy landscape in 2016 – playing a significant part in the issuance of the  first ministerial regulation on rooftop solar PV, driving active involvement of diverse stakeholders in promoting solar energy, pushing for better regulations (the OG ministerial regulation had been revised twice and replaced once), and until now, battling a setback as the ministry attempts to “limit” rooftop solar PV penetration.

We believe that energy is an essential service (among five: sandang, pangan, papan, colokan, paketan), and we firmly support the notion that consumers have the right to choose their energy source – renewable, more sustainable ones capable of delivering high-quality energy access. It should not be a privilege or a luxury. Between 2019 – 2021, we asked people across Java-Bali if they were willing to shift to solar energy – and there is a market potential (early adopters and early followers) of 13% in Greater Jakarta, 19% in Surabaya, 9.6% in Central Java, and 23.3% in Bali. Businesses also have similar interests: 9.8% market potential in Central Java and 21.1% in Bali. They are no small numbers, yes? 

Now, are current policies, business practices, narratives, even our own personal perspectives and lifestyles – sufficient in supporting the rights for us consumers, society, to choose our own sustainable energy sources? 

I had a hard time summarizing this long writing – so I just want to say thank you for reading this in full and for supporting our work. You can help us even more by sharing this with others.


Till we meet again.

Grasp the Knowledge of Regulations for Using Solar Rooftops for Renewable Energy Needs

Marlistya Citraningrum

Jakarta, March 21, 2023 – Currently, the use of rooftop solar power plants is being encouraged because it is believed to be able to meet future energy needs. As a mainstay of pursuing a 23% renewable energy mix in 2025, rooftop solar PVis targeted to be installed up to 3.6 Giga Watt (GW). To support this, the government continues to intensively promote the installation of rooftop solar PVin both households and industry. Marlistya Citraningrum, Program Manager for Sustainable Energy Access, Institute for Essential Services Reform (IESR) explained there had been a long journey for solar energy in Indonesia. This started before the 1980s when development and research on solar energy began. Until then, the use of rooftop solar PVhas developed until nowadays.

“Before the 2018s, there was a PT PLN board of directors regulation regarding the use of photovoltaic electricity by PLN customers. The law contains that the installation of rooftop solar PVis allowed to operate in parallel with the PLN network, the export of excess electricity is permitted with a net-metering scheme, a 1: 1 rate,” said Marlistya in the EBT Zone event on Tuesday (21/3/2023).

Furthermore, Marlistya mentioned, afterwards, there was Minister of Energy and Mineral Resources Regulation No. 49 of 2018 concerning the use of the rooftop solar PV system by consumers of PT PLN. The regulation stipulates that the installation of rooftop solar PV connected to a network is permitted, the maximum capacity of rooftop solar PV is 100 of the installed power, measured from the ability of the inverter, the export of excess electricity is allowed with a net-metering scheme, a rate of 1: 0.65. In addition, there is an offset calculation at the end of the month, and excess deposits are allowed for up to three months. Technical and licensing procedures are explained, and a parallel fee is imposed for industrial customers.

“The Minister of Energy and Mineral Resources Regulation can be referred to as the “original” rooftop solar PV regulation. However, there was a change in 2019, where installing a rooftop solar PV requires an operating permit. Referring to the Minister of Energy and Mineral Resources No 12/2019, installations <500 kVA do not require an operating permit. Then, parallel industrial fees for industrial customers were reduced to 5 hours/month from 40 hours/month, and emergency costs were eliminated,” stated Marlistya.

Marlistya Citraningrum
Marlistya Citraningrum, Program Manager for Sustainable Energy Access, Institute for Essential Services Reform (IESR), on Zona EBT, Tuesday (21/3/2023)

With these various regulations, said Marlistya, there has been significant growth in rooftop solar power in the 2018-2020 range. Different factories install rooftop solar PV. With this growth, a new regulation emerged:MEMR regulation No. 26 of 2021. This regulation regulates that network-connected rooftop PLTS are allowed in all areas where public interest business licence (IUPTLU) holders are permitted. Net-metering scheme, 1:1 rate, offset calculation is done at the end of the month, and excess deposits are allowed up to six months.

“Unfortunately, this regulation will only be announced in 2022. When MEMR regulation No. 26 of 2021 was issued, there was an installation capacity limit of 10-15% or lower in all regions of Indonesia, as well as a fixed electricity export tariff of 0.65 according to the old MEMR Regulation. This limitation can be found when a consumer applies for a permit to install a rooftop solar PVat his home, then there is a reply letter from PLN containing these restrictions,” said Marlistya.

This capacity limitation, said Marlistya, occurs universally in Indonesia until consumer complaints arise regarding this matter through association institutions. Given these conditions, 2022 will be the first year in which the development of rooftop solar PVhas decreased compared to the previous year. Citing data from the Ministry of Energy and Mineral Resources for 2023, mentioned Marlistya, the growth of rooftop solar PV customers in 2018 reached 609, 1,064 in 2019, 1,334 in 2020, 1,787 in 2021, and 1,667 in 2022.

Carbon Trading Implementation Needs to be Followed by Tighter Emission Limits

press release

Jakarta, March 1, 2023 – The Ministry of Energy and Mineral Resources (ESDM) began implementing a carbon trading mechanism in the coal-fired power plant (CFPP) sector on Wednesday, February 22, 2023. The Institute for Essential Services Reform (IESR) stated the implementation of carbon trading as a step forward, noting the need for tightening emission caps in the future. In addition, the results of carbon trading can be a source of Non-Tax State Revenue (PNBP), which, if appropriately allocated, can encourage investment in renewable energy and increase energy efficiency.

Carbon trading is finally implemented after being tested in several coal-fired power plants in 2021. The government has also established Technical Approval for Emission Limits (PTBAE) starting from the non-mine mouth (MM)/MM CFPPs with a capacity of 25 MW to 100 MW of 1,297 tons CO2e/MWh, up to Non-MM CFPP with a significant degree of 400 MW is 0.911 tons CO2e/MWh.

“Even though the carbon trading scheme has been implemented appropriately in Indonesia, the ceiling for carbon emissions set by the government is currently still relatively high, and no effort is required for CFPP owners to fulfill it. As an illustration, the intensity of carbon emissions in power plants in neighboring countries is 20% -40% lower than in Indonesia. This opens up opportunities to tighten emission limits for CFPP in the future,” said Executive Director of IESR, Fabby Tumiwa.

IESR believes that determining quota restrictions for CFPP will increase business actors’ awareness of the emissions produced and regulate CFP operations more efficiently.

Furthermore, this carbon trade regulates the replacement or carbon offsets if the generating unit produces emissions exceeding the Technical Agreement for the Upper Emission Limit of Business Actors (PTBAE-PU). This plant must purchase emissions from the PLTU unit that has emissions under PTBAE-PU and or purchase an Emission Reduction Certificate (SPE GRK).

“To increase the integrity of the offset mechanism and the real impact of reducing emissions by using the SPE instrument, the government must ensure normal emission reduction activities that can be traded on the carbon market. It is recommended that SPEs be prioritized from renewable energy generation to align this instrument with energy transition efforts to reach NZE 2060 or earlier. This SPE instrument can be an incentive for businesses and the public to build renewable energy generators,” explained Fabby.

IESR proposes that SPE be carried out to accelerate the installation of rooftop solar PV by consumers. The electricity generated by the rooftop solar PV and exported to the grid can become SPE and be used for carbon offsets. Revenue from SPE sales can increase consumer interest in installing rooftop solar power plants.

The Minister of Energy and Mineral Resources will give a written warning, and the allocation of PTBAE-PU for the subsequent carbon trading is around 75%. This applies to business actors who should refrain from participating in carbon trading by not submitting a plan for monitoring greenhouse gas emissions and revisions to reporting on greenhouse gas emissions.

“The existence of quota restrictions imposed by the government on business actors who violate the rules is a clear form that the government is committed to trading carbon as an instrument to reduce emissions. However, in practice, it requires strict monitoring,” mentioned Farah Vianda, Coordinator of the Sustainable Financing Project, IESR Green Economy.

The government has set the value of PTBAE-PU to 99 units of coal-fired power plants from 42 companies that will become carbon trading participants, with a total installed capacity of 33,569 MW. The price of carbon traded between CFP units in the country is estimated to be from US$ 2 to US$ 18 per ton.

“Ministry of Finance regulations governing carbon prices can be issued immediately to provide certainty for carbon trading activities. It is hoped that the carbon price applied will not be too far from the global average price,” Farah added.

Public oversight of the implementation of carbon trading also needs to be developed. Efforts to include a carbon trading mechanism in stock trading, which the Indonesia Stock Exchange is currently reviewing, will make carbon prices more competitive and promote transparency to attract investors and mainstream sustainable financing principles.***