Solar PV Answers Industrial and Commercial Needs to Provide Green Products

Semarang, October 06, 2021 – The Commercial and Industry sectors are potential partners to accelerate the penetration of renewable energy. The increasingly strong market demands for green products encourage the commercial and industrial sectors to switch to environmentally friendly technologies in order to maintain their existence in the global market. Solar PV is a strategic choice for the commercial and business sectors considering its relatively fast installation, as well as the availability of solar energy sources that are evenly distributed throughout Indonesia. In addition, investing in solar PV can reduce production costs.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) explained that currently in line with efforts to reduce greenhouse gas (GHG) emissions, the industrial sector is faced with the obligation of the economic value of carbon. Especially for goods that are exported such as to European countries, America and Japan. The carbon footprint of a product that exceeds the specified maximum will be taxed. In addition, public awareness about sustainability issues is increasing, as stated by a survey by WWF and The Economist which found that searches on search engines with the keyword ‘sustainability’ increased by more than 71% during 2016-2020.

“Shareholders of companies have asked that all these companies commit to use 100% renewable energy. So if we want Central Java to become an industrial center, access to renewable energy must be facilitated,” said Fabby at a webinar organized by IESR with the Central Java Government entitled “Rooftop Solar Energy for the Commercial and Industrial Sector in Central Java” (6/10/2021).

In general, in terms of adoption, the number of rooftop solar PV users in Indonesia is increasing. Based on data from the Directorate General of EBTKE, until last August 2021, there were 4,133 rooftop solar PV customers in Indonesia, with a total installed capacity of 36.74 MWp. Judging from the capacity of rooftop PV by region, Central Java and DIY were ranked third with a rooftop solarcapacity of 5.83 MWp.

Chrisnawan Anditya, Director of Aneka EBT at the Ministry of Energy and Mineral Resources, explained that the government has given priority to the development of rooftop solar power plants considering its huge potential, fast installation, and very competitive prices.

“The medium-term strategy that is being pushed for the development of PV is rooftop solar which is targeted at 3.6 GW by 2025. In addition, we also continue to encourage utility-scale PV,” explained Chrisnawan on the same occasion.

To support infrastructure and services towards the energy transition, PLN must also improve on preparing grid adaptations and adapting to a business model that accommodates large amounts of renewable energy.

“This rooftop PV has an impact on the current PLN grid due to its intermittent nature. So PLN must provide a standby unit to supply electricity when the power generated by the PV rooftop cannot meet the existing electricity needs,” explained M. Irwansyah Putra, General Manager PLN Central Java – DIY.

Irwan also explained that in supporting the carbon tax mechanism, PLN has issued an REC (Renewable Energy Certificate). By purchasing this certificate, PLN will distribute electricity obtained from clean energy to the industry.

Questioning policies to encourage renewable energy in Central Java Province, the Head of the Central Java Province ESDM Office said that his party had prepared various policies. However, according to him, to encourage certain changes, in this case the transition from fossil energy to renewable energy (Solar PV-ed), policy support alone is not enough.

“Change will happen more quickly if it is driven by a market driven mechanism, so it’s not just complying with certain rules. The Central Java ESDM Office has tried to make policy packages that cover this market aspect with input from various parties such as the government, universities, and NGOs,” explained Sujarwanto.

The Central Java Regional Government also provides assistance to the commercial and industrial sectors in Central Java which are transitioning to green industries. “There are several steps taken to implement the green industry, i.e. training, facilitating certification for the green industry as well as awarding the green industry. Several companies in Central Java received this award,” explained M. Arif Sambodo, Head of the Industry and Trade Office of Central Java Province.

Opportunities for the commercial and industrial sectors to adopt solar PV are getting wider with the availability of various Solar PV investment schemes such as installments and leases. Anggita Pradipta, Head of Marketing for SUN Energy, said that there are three schemes offered by SUN Energy for prospective rooftop solar PV customers, namely Solar purchase, Performance Based Rental, and Solar Leasing.

“For the commercial and industrial sectors who want to install solar panels but are constrained by the initial installation cost, we recommend taking a performance based rental scheme. With this scheme, the customer will be bound by a contract for 15-25 years, where all the costs of maintaining the solar PV unit will be borne by SUN Energy, after the contract ends, the assets will become the property of the customer,” explained Anggi.

Massive Utilization of Rooftop Solar Will be Beneficial to the Government and PLN

Jakarta, 28 July 2021- Revision of Ministerial Regulation Number 49 of 2018 concerning the Use of Rooftop Solar Power Generation Systems by Consumers of PT Perusahaan Listrik Negara (PLN), which aligns with the expectations of rooftop solar users will help the government achieve the target of 23% renewable energy mix by 2025 and have major economic, social and environmental impacts. This regulatory improvement can help Indonesia recover from the post-Covid-19 economy and fulfill its commitments to reduce greenhouse gas (GHG) emissions as stated in the Nationally Determined Contribution (NDC).

Until the end of 2020, Indonesia has only reached around 11.5% of the renewable energy mix. To catch up in the next 4 years, the Institute for Essential Services Reform (IESR) calculates that at least Indonesia must build 14-18 GW of renewable energy power plants.

“Observing the draft of the 2021-2030 Electric Power Supply Business Plan (RUPTL), we see that by 2025 the additional development of renewable energy is less than 14 GW. The government should involve the community and actors outside PLN to build renewable energy plants to achieve the 23 percent target,” said Fabby Tumiwa, Executive Director of IESR.

He stated that the communal works to realize the most potential use of renewable energy is by encouraging the adoption of rooftop solar panels on a large scale. Moreover, according to the results of the IESR market survey, there is a market potential of 9%-11% of households or about 7-8 million who are interested in installing solar rooftops. Furthermore, the price of solar PV technology is getting lower and more affordable by the public.

In the process of revising Permen No.49/2018, the government stated that it would improve several provisions, including changing the net-metering electricity export-import tariff to 1:1, extending the reset period from three months to six months, obligating a mechanism application-based services, expanding the licensing of solar rooftop installations to customers in non-PLN business areas, shortening the licensing process and building a Solar Roofing System Complaint Center.

IESR views that there is an effort to improve the economy of solar PV, which is better with the provision of a net-metering rate of 1:1 from the previous 1:0.65. From the market study conducted by IESR, the public’s interest in using rooftop solar PV is high, and they expect policies that will simplify the licensing and installation process as well as adequate economics. With a net-metering rate of 1:1, the payback period for PV mini-grid investments can be decreased from 10 years to less than 8 years.

This provision will affect the revenue of PLN but not significantly compared to the economic, environmental, and social impacts of the development of solar rooftops. The IESR simulation shows that if there is a total installation of 1 GWp of rooftop solar power, PLN’s income will only decrease by 0.58% with a net-metering rate of 1:1 and 0.52% at a rate of 1:0.65. On the other hand, PLN will take the benefit. With the addition of rooftop solar power plants, PLN does not need to invest more in new renewable energy plants to achieve the RUEN target and reduce the operating burden of gas-fired power plants for supply during the day – thereby reducing fuel costs.

The use of electricity from rooftop solar panels for industrial customers will also reduce the weight of government subsidies.

“Currently, PLN spends the basic cost of generating Rp 1,028/kWh. Meanwhile, the subsidized industrial tariff is Rp. 972/kWh. The use of rooftop solar power plants in the industry will substitute for electricity demand from PLN so that the load of subsidizing industrial customers will also be reduced, ” Fabby explained.

Although it has not been officially released, Fabby Tumiwa, who is also the Chairman of the Indonesian Solar Energy Association (AESI), appreciates the improvement and sees it as a breath of fresh air to encourage market development and the development of the PV mini-grid industry in the country.

“So far, the domestic solar PV industry has not developed because the market is still small, around 20-30 MW/year, so it still depends on imports. If Indonesia can reach 1-5 GW/year, it will be able to attract investment in the solar PV component supply chain, meaning that there is a new industry that absorbs workers,” said Fabby.

The cumulative installation of 1 GWp of solar rooftop can absorb direct labor of 20,000 – 30,000 people per year (conservative figure) and reduce GHG emissions to 1.05 million tons per year. The development of this rooftop solar power plant will be useful for the Indonesian government in recovering the economy after Covid-19. Also in 2021, the warranty period for the Energy Saving Solar Lamp (LTSHE) package for the 2018 program year will expire. This pre-electrification program is part of the calculation of the national electrification ratio, so the government needs to immediately continue efforts to provide access to energy, for example by using rooftop solar power plants with a minimum capacity of 0.5 kWp to 1 kWp – which can be used for productive community activities.

“The USAID study for the Ministry of Energy and Mineral Resources also found a large economic impact reaching USD 18 million in each installation of 2,000 rooftop solar panels for an average capacity of 4.5-5 kWp. Nationally, this will move the sluggish economic conditions back. The benefits are far greater for the community than the potential loss of PLN income,” he said.

The Ministry of Energy and Mineral Resources has reportedly also proposed rooftop solar become a National Strategic Project (PSN) with a target of 3.6 GW in 2025. Thus, the revision of Ministerial Regulation No. 49/2018 is crucial to support the achievement of this target.

Total support from the Government is required for a promising solar energy

“Solar cells will be the new promising commodity in the future, just like oil now,” said Fabby Tumiwa during his explanation in the REinvest Indonesia – China forum.

The forum aims to bridge the two countries in renewables investment collaboration. Indonesia is actively seeking a way to provide cleaner, cheaper, and more reliable energy sources in order to revitalize its current energy system that heavily relies on fossils. Meanwhile, China faces global force as well to reduce its carbon emission due, and pledge to be carbon neutral by 2060. As the two countries have things in common to reduce carbon emission, dialogue to bridge the needs is set-up. 

Fabby Tumiwa, in his capacity as the chairman of Indonesia Solar Association and Executive Director of IESR, said that Indonesia needs to accelerate the renewables deployment to seize the target of RUEN i.e 23% renewables in national energy mix and further to be zero emission in 2050. Even though the government of Indonesia set the target to be net zero emission in 2070.

Solar PV can be the prime mover and key to achieving the decarbonization target. This is in line with the global urgency to have deep decarbonization. Mentioned by IEA in the latest report that solar and wind will dominate the energy system in the future up to 78% of power generation in 2050, in which solar should increase from 160 GW now to 650 GW in 2030. On the same occasion, IEA emphasizes the urgency to scale up renewables in this decade to achieve zero-emission in 2050. In terms of a strategic point of view, solar is a bit more privileged as it is able to be installed modularly. In the future solar energy is a popular commodity just like oil in the present day. 

However, the promising future is not coming without any flaws. There are a bunch of situations that hold back the acceleration of the solar PV industry in Indonesia. 

PLN’s oversupply condition is one of the most significant barriers to solar deployment. The situation makes it hard for both the government and private sector to penetrate renewables into the electricity system. 

Meanwhile, Eka Satria, CEO Medco Power Indonesia, highlighted some points including the preference of the government and Indonesian market to choose short-term low-cost energy sources, the uncertainty of policy and regulation, BPP vs local content requirements, and also land acquisition issue. 

As the chairman of the Indonesian Solar Panel Producers Association (APAMSI) Linus Sijabat shares things that should be prepared by the foreign investor in this occasion China, before penetrating the Indonesian market. Supply chain management, especially related to the local content requirement becomes his key point. 

“Foreign and domestic cooperation is required for products of more than 60% whose prices are competitive, the quality is internationally certified, and the market is sustainable,”

The willingness of the government must be shown in the regulation such as RUPTL (general planning of electricity compliance) so private investors will be able to see the potential market for renewables in Indonesia. Moreover, in Indonesia PLN stands as the single buyer for electricity. Besides the chance that should be visible in the planning document, another enabling environment for renewables investment must be ensured as well.

‘Kampung Surya’ Initiatives (The Sun Village) Invites Residents to Work in the Solar Energy Sector

pelatihan anak muda memasang plts atap di jakarta

As the name implies, the colourful walls in the houses immediately greet the eyes when entering Kampung Warna Warni at RW 3, Kebon Pala Village, Cililitan, East Jakarta. Gathering at the Citizens’ Hall (Balai Warga), about 10 (ten) people who were dominated by young people, wearing masks to meet Covid-19 protocols, wanted to get technical training on the installation of rooftop solar held by IESR in collaboration with one of the solar PV development companies, ATW Solar, to residents who are members of FAKTA (Forum Warga Kota Jakarta), or Jakarta City Citizens Forum.

The declining cost of solar and wind in the past decade has made the use of renewable energy even more massive. Currently, with an investment of IDR 15-20 million, people can enjoy environmentally-friendly electricity from the solar rooftop for up to 25-30 years. In the labor sector, various groups of people, without higher education requirements, can take part in carrying out solar panel installation by following short practical training and are applicable. 

However, if we look deeply at the lifetime of solar rooftops and the calculation of the payback period, the investment value is competitive. According to the IESR calculation, the return on investment period ranges from 7 – 10 years. After this period, it can be said that solar rooftop users enjoy cheap, clean, and environmentally friendly electricity.

For 2 (two) days (25-26 / 3), all participants enthusiastically engaged in the training facilitated by trainers from ATW Solar. On the first day, participants received a basic understanding of roof-top PV technology, various installation networks, components, and safety induction during installation. Meanwhile, on the second day, despite the intense heat, the participants, who were dominated by teenagers, remain enthusiastic to practice the installation of solar panels at the Citizens’ Hall (Balai Warga). ATW Solar also opens opportunities for participants who have the potential and interest in rooftop solar power plants to become freelance workers for ATW Solar so that they can handle projects in the nearby area. This was confirmed by Chairiman, VP Retail, and Residential ATW Solar. He revealed that in terms of job opportunities, installers will be needed in the future. According to him, the Indonesian government has set a target of one million solar rooftops. However, until now only about 3000 PLN customers have used rooftop solar.

“Currently, only 3,000 PLN customers are using the rooftop solar PV, whereas the target is one million users, so there are still around 997 thousand houses that will install rooftop PV. If for one installation we need 4-5 people, meaning that we need more personnel to work on it,” said Chairiman.

The Executive Director of IESR, Fabby Tumiwa, in his remarks, stated that the Kampung Warna Warni is now called as Kampung Surya initiative must belong to the local community. So that the program will sustain.

“This first batch was trained by ATW and continued for on-the-job training and we hope that some can become freelancers for the rooftop PV installers. Later on, those who participated in this training can train other people in this village or even in the next village” said Fabby.

A similar sentiment was conveyed by the chairman of the Jakarta City Citizens Forum (FAKTA), Azas Tigor Nainggolan, “Rooftop PV is a technology that will be widely used in the future, so we must be prepared to take the offered opportunity, not only become spectators.”

Bagas Septiansah, Head of the Regional Youth Organization (Karang Taruna) RT01 RW 03, Kelurahan Kebon Pala, who was one of the participants admitted that he could understand the installation process training easily.

“Previously, I only saw solar panels in large buildings in Jakarta without me knowing what it was. However, after this training, I got a better understanding of the use of solar panels and the process of using solar energy into electrical energy for daily activities,” he said.

Bagas is committed to sharing the knowledge he has gained with the youth group he leads as well as maintaining of the solar panels that have been installed at Balai Warga. 

One of the participants, Iskandar, apparently has been installing off-grid solar panels for a long time, only he felt that his knowledge had increased after attending the training, especially about hybrid and on-grid PV rooftop.

“At home, after installing an off-grid solar panel, I felt that there was a reduction in electricity payments because I use solar cells and PLN electricity alternately. With the 40 Wp power solar PV, my electricity bill payments can go down by 20 percent,” he added.

This Kampung Surya initiative is the first in Jakarta, where it’s not only installing Solar PV but also empowers residents as skilled personnel for installers. With this initiative, it is hoped that clean energy will be increasingly enjoyed by all people because clean and high-quality energy is the right of every citizen. Through the training scheme and the installation of PV mini-grid for public facilities, the community can see and enjoy the benefits of installing a rooftop PV mini-grid, such as the emergence of jobs, getting clean electricity, and also being environmentally friendly. 

We Discover Indonesia has Higher Technical Potential of Solar Energy, IESR Encourages the Government to Update Renewable Energy Potential Data

March 18, 2021 — Indonesia has a higher solar power technical potential than 207 GW, which the official data released by the Indonesian government through the Ministry of Energy and Mineral Resources in 2017. Institute for Essential Services Reform (IESR), in collaboration with the Global Environmental Institute (GEI), presented the result of their research in the launching of the study Beyond 207 Gigawatts: Unleashing Indonesia’s Solar Potential (18/3). 

Fabby Tumiwa, Executive Director of IESR, in his speech explained that based on technical potential and land suitability, solar power in Indonesia could reach 3000-20,000 GWp.

“If the minimum technical potential, 3 GW, is utilized effectively, it can meet 7 (seven) times the electricity consumption of 2018,” he said.

IESR measures this technical potential using geospatial data, therefore suitable land for PV mini-grid can be identified.

Fabby added that this study recommends the government update data sources on renewable energy for providing a better signal for developing solar energy in the future.

“Indeed, it will also increase the confidence of various parties involved in solar energy development that Indonesia can rely on solar power to meet clean energy needs. Besides, this study supports PLN’s efforts to develop solar power and local governments in implementing the Regional Energy General Plan, ”he said.

At the global level, the Indonesian government can use the data to strengthen its commitment to global climate action, as stated by Jiaman Jin, Executive Director of GEI. GEI, in particular, has a program to assist developing countries in developing renewable energy by providing capacity building, technical and financial assistance.

“China and countries in Southeast Asia have collaborated on a global climate action program, including Indonesia. To achieve the Paris Agreement, today, about 29 countries have targeted carbon neutrality by relying on renewable energy. Other tools to be carbon neutral are carbon storage and carbon trading (carbon credit). These two things are also what China is currently developing, “he explained.

To achieve its commitments under the Paris Agreement, Indonesia is trying to reach the target of 23% renewable energy mix by 2025. Nevertheless, until the end of 2020, only 11.5% was realized. Meanwhile, in the National Energy General Plan (RUEN) itself, the government has a target for solar power development of 6.5 GW by 2025.

“However, the target is currently under review, and it turns out that solar (photovoltaic (PV)) is targeted to represent a third (17.6 GW) of the total net power generation of 48 GW by 2035 in the national energy grand strategy prepared by the Ministry of Energy and Mineral Resources and the National Energy Council (DEN). About 60 or 76 percent are expected to come from utility-scale solar power including floating solar PV, “said Daniel Kurniawan, Lead Author of the Study Report” Beyond 207 Gigawatts: Unleashing Indonesia’s Solar Potential “.

Daniel explained that out of 23 types of land cover, the IESR research team chose the suitable land type for PLTS development. Only 9 (nine) types of land cover were selected for mapping the technical potential of the PV mini-grid.

“Man-made forest and dry agricultural land mixed with shrubs are also included in the calculated land types, which is why these three lands were found to be acquired in the development of the solar power plant 3 x 7 MWp project, in Lombok and the solar power plant 21 MWp project in Likupang. North Sulawesi, “he explained.

Using the most optimistic scenario, 9 (nine) types of land cover covering an area of ​​1.9 million km2, the results obtained from the calculation of the technical potential of PLTS are very abundant, reaching 19.8 TWp, which is 95 times higher than the government’s estimate.

“The greatest technical potential is in Kalimantan, Sumatra, West Java, and East Java,” explained Daniel.

Moreover, talking about the General Plan for Electricity Supply (RUPTL) (2021-2030) that is being drafted by PLN, Daniel explained that until today, there is no definite information regarding the allocation of the target capacity for solar power from a total of 3.7 GW of a combined capacity plan for power solar, water, and garbage in the upcoming RUPTL.

Technical Potential Data Will Motivate Optimization of Solar Power Plant Development

Furthermore, the latest technical potential study data launched by the IESR can also be used by local governments to optimize renewable energy development. Daniel gave an example of Bali and Sumba as two islands in Indonesia that already have sufficient capital in terms of the consistency of the local government in encouraging the use of solar power through the policies they issued and also have higher technical potential of solar power.

Director of Various New Energy and Renewable Energy of Indonesian Ministry of Energy and Mineral Resources (EMR), Chrisnawan Anditya, on the same occasion, said that his party would update the data on the technical potential of solar power in Indonesia.

“Further, we are also trying to identify the sun’s potential according to the transmission line. The better the transmission line, the bigger the solar power plant development. However, if the location is outside the transmission line, we will develop it through off-grid, “said Chrisnawan.

Having comparable perception with Chrisnawan, the Executive Vice President of the New and Renewable Energy Division of PLN, Cita Dewi, said that PLN is committed to increasing the development of renewable energy. However, due to the COVID-19 pandemic, PLN is still dealing with conditions of low demand for electrical energy.  

“The demand crisis is likely to last 2 to 3 years. However, our approach to pursuing renewable energy targets includes accelerating the completion of solar, hydro, geothermal power generation and considering converting 5,000 diesel power plants to solar. The potential of solar after converting is 2 GW, “said Cita.

From the developer side, Andhika Prastawa, Chairman of the Indonesian Solar Energy Association (AESI), said that the results of the study are beneficial for developers to explore more opportunities to invest in solar PV in Indonesia. Notwithstanding, according to him, this must still be in line with the government’s support in establishing friendly policies for solar PV developers.

“The economy of solar PV is already competitive, but until now the net metering regulation is still at 6.5, it should be changed to 1, so that it has a good psychological impact on the solar PV market,” Andhika added.

Agreeing with Andhika, Herman Darnel Ibrahim, a member of the National Energy Council hopes that there will be reforms in the net metering policy. He also emphasized that in terms of installation, solar PV is the easiest renewable energy to develop because it is available in almost all places in Indonesia, so it is easy to harvest in the form of the solar power plant, and has various scales so that it is quickly built.

Wirawan, Acting President Director, PT PJB Investasi appreciated the results of the IESR study and offered to calculate the technical potential of about 192 dams and reservoirs spread across Indonesia.

“The water catchment area in Indonesia is approximately 86 thousand hectares. This is also a huge potential for the development of floating solar, “he suggested.

Indonesia Solar Potential Report

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Bringing Indonesia to The Gigawatt Club:  Unleashing Indonesia’s Solar Potential

With energy transition becoming a global trend following action to mitigate climate crisis, many countries have integrated low-carbon energy systems into their national development agenda. Indonesia has the highest energy demand among ASEAN members, and fossil fuel resources still dominate Indonesia’s energy and electricity mix: less than 12% primary energy supply was from renewable sources, and the renewables only provided ~14.9% of Indonesia’s electricity generation in 2020 (IESR, 2021). Although Indonesia has established its renewable energy targets, i.e., 23% of primary energy mix by 2025, renewables growth in the country is slow, even stagnant over the years.

Indonesia is often called a frontier market for renewable energy, and that includes solar energy. While the technical potential is high, up to 207 GW according to Ministry of Energy and Mineral Resources, solar generation in the country is less than 1% – this slow growth is a combination of several inhibiting factors: lack of consistent and supportive policies, the absence of attractive tariff and incentives, as well as concerns on grid readiness. Solar energy will be key to open the doors for other renewables in Indonesia; along with the current government’s plan to issue presidential regulations on renewable energy pricing and deployment.

To support accelerated solar deployment in Indonesia, in March 2020, the Institute for Essential Services Reform (IESR) signed an MoU with the Global Environmental Institute (GEI) to collaborate on renewable energy development. To this end, we conducted two training sessions and technical exchanges on technical potential analysis of renewable energy resources by applying the Renewable Energy Implementation (REI) toolkit.

To date, with the supports from GEI, IESR has completed a GIS-based nationwide solar PV technical potential assessment in Indonesia. The assessment report is produced to provide detailed information for related stakeholders in identifying prospective locations for solar power plants at any scale, feeding energy planners and driving more ambitious solar development in Indonesia. The interests and growth need to be nurtured, yet the big question remains: what more Indonesia can do to enter the gigawatt solar installations?

Presentation Materials

Daniel Kurniawan

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GEI

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ESDM Central Java

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Liujianhua

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