IESR: The Use of Rooftop PV in the Business Sector Brings Three Benefits at Once

Semarang, June 14, 2022 – The growing popularity of the climate change issue and environmental sustainability is slowly affecting people’s consumption and spending patterns in various fields from household needs to tourism. A global survey conducted by The Economist shows an increase in spending on sustainable products from year to year from 2016 – 2020. Not only about the product materials/materials that are used as a reference, but also the emissions generated during production. Energy use is a crucial factor that determines the sustainability of a product/service.

Handriyanti Diah Puspitarini, a senior researcher at the Institute for Essential Services Reform, explained that if a business entity uses renewable energy such as rooftop solar panels, there will be three benefits at the same time.

“There are three benefits that can be obtained simultaneously by using rooftop PV, namely energy efficiency, increased reputation (branding) through sustainable business practices, and operational cost savings, which means that the profit obtained will be maximized,” explained Handriyanti.

Handriyanti continued, Indonesia has enormous solar energy potential reaching more than 7,000 GW. In Central Java itself, there is a market potential of 9.8% early followers and early adopters in the business and commercial sectors.

“This group (early followers and early adopters) is a group who already has basic information about rooftop PV, and wants to install it but still needs to be given more comprehensive information and given more attractive financing options such as installment schemes with long tenors and competitive interest,” she said.

Head of the Central Java Energy and Mineral Resources Office, Sujarwanto Dwiatmoko, expressed his support for the business, tourism agency and hotels that are committed to using clean energy, reducing water usage and doing energy efficiency systematically.

“This support and appreciation will be in the form of a certificate that we will hand over to businesses that systematically perform resource efficiency (energy and water) as well as those who install rooftop PV or use renewable energy,” he explained.

Local supermarket network, Aneka Jaya, has seen electricity bill savings of 50-60% per month after installing a rooftop solar power plant in one of its self-service units.

“Due to the pandemic, we have to find ways to be more efficient, one of which is reducing electricity bills. After we found out about PV rooftop, we started surveys and looking for vendors,” explained Indaru Imam Susilo, manager of Aneka Jaya Kalipancur.

Imam continued that his party took a performance-based renting financing scheme in which he did not issue an initial investment, but paid monthly based on the energy produced for 15 years (according to the agreed contract).

Cahyo Danu Sukmo, Sub Coordinator of Tourism Business Development, Youth, Sports and Tourism Office of Central Java Province, said that currently the tourism sector, especially in Central Java, is moving towards sustainable tourism, means the tourism activity is not exploitative and prioritizes the empowerment of local communities.

“We are also starting to focus on developing tourist villages with green tourism guidelines, including following the energy supply guidelines,” explained Cahyo.

The government through the Ministry of Energy and Mineral Resources keeps encouraging the use of renewable energy, especially rooftop PV in various sectors. Solar energy has even been included in the national strategic program to pursue the renewable energy mix target of 23% by 2025.

“One of our supports is through the latest policy, namely the Minister of Energy and Mineral Resources Regulation No. 26/2021 which regulates PLN customers who install rooftop PV,” said Mustaba Ari Suryoko, Coordinator of Business Supervision Services for Various New Energy and Renewable Energy, Directorate General of EBTKE, Ministry of Energy and Mineral Resources.

Although until now the implementation of the Minister of Energy and Mineral Resources Decree 26/2021 is still facing obstacles, Mustaba stated that his party continues to evaluate and find a win-win solution so that the regulation can be implemented.

Mustaba also stated that his party is collaborating with the United Nations Development Program (UNDP) to provide incentives for rooftop PV new customers through Sustainable Energy Funds (SEF) grants.

Yovi Rahmawati, from UNDP, explained that this grant is valid for new rooftop PV customers, who start installing in November 2021.

“This program itself is still running until November 2022, the application is submitted via the website and the team will verify it,” said Yovi.

Financial Support for the Energy Transition in the Residential Sector

Jakarta, June 9, 2022 – The potential for the use of rooftop PV in the residential sector is one of the largest in accelerating the energy transition and achieving Indonesia’s renewable energy mix target. Appropriate policy instruments and attractive financial support are some of the supporting factors in encouraging the massive adoption of rooftop solar PV in Indonesia.

Andriah Feby Misna, Director of New and Renewable Energy, stated that Indonesia has several national targets, i.e achieving a 23% renewable energy mix by 2025, reducing emissions by 29% with own efforts and 41% with foreign assistance by 2030, and achieving net zero emission by 2060.

“For this reason, the Ministry of Energy and Mineral Resources has developed various strategies such as green RUPTL at PLN and encouraging the use of rooftop solar in the household sector and including them in national strategic programs. As support (on rooftop PV), we issued the Minister Regulation No. 26/2021,” she explained. 

Feby added that the current number of rooftop solar customers is 4,377 households, and there has been significant growth since the issuance of a ministerial regulation that regulates PLN customers who install rooftop PV in 2018.

Feby does not deny that currently there are still barriers in the implementation of the MEMR Regulation No. 26/2021, but she said that her party is currently trying to find a win-win solution so that the regulation can take effect immediately.

In addition to regulations that are still not optimal, another obstacle to the use of rooftop solar in the household sector is the initial investment which is still relatively large for the community. However, there is still a large market potential in the household sector.

Fabby Tumiwa, Executive Director of IESR, explained that based on a gradual market survey conducted by IESR since 2019, the market potential for rooftop solar PV in the residential sector in a some big cities in Indonesia such as Greater Jakarta, Surabaya, Central Java and Bali reached 34 – 116 GW.

“The potential of the energy transition market in the household sector is huge. Those who fall into the category of early followers and early adopters need to be caught. Because they are quite familiar with their products (rooftop PV) and have the intention to install them, but are constrained by a large initial investment,” Fabby explained.

Respondents of the survey expect credit products from banks with a tenor range of 24-48 months with low interest.

Veronika Susanti, Digital Lending Division Head of OCBC NISP bank explained that the renewable energy sector is one of the concerns of the banking sector to obtain funding.

“Currently we have a solar panel financing program with two schemes. First, 0% credit card installments and cash loan for a maximum of 36 months,” said Veronika.

She added that her party was collaborating with solar panel service providers to make it easier for customers to access this rooftop PV financing scheme as well as to learn about technology so that they better understand the risks and opportunities of rooftop PV.

Fendi Gunawan Liem, founder and CEO of SEDAYU Solar also emphasized that the potential for the residential sector to grow and develop is enormous.

“The residential sector is the sector that has the latest solar panel installation regulations, but has the largest customer growth compared to other sectors,” said Fendi.

Banks as financial institutions need to see rooftop solar as a low-risk asset, for that it is necessary to study rooftop solar power technology so that they can make accurate risk analysis. Thus, banks can design more friendly credit schemes with more diverse tenors and lower interest rates.

South Korea Supports Indonesia to Reach Its Renewable Energy Target

Jakarta, 19 May 2022 Renewable energy is seen as a quick win to secure a global temperature rise of no more than 2 degrees Celsius, according to the Paris Agreement. Indonesia whose emission reduction targets 29% on self-effort and 41% by international assistance by 2030 is actively seeking a more effective way to secure its target. The remaining time to achieve the target is only around 8 years. Yayan Mulyana from the Foreign Policy Strategy Agency of the Ministry of Foreign Affairs Indonesia admitted that it’s hard but Indonesia is optimistic to achieve it.

Gandi Sulistiyanto, Indonesian Ambassador for South Korea, during his keynote speech in the webinar “Enhancing Investments from South Korea for Renewable Energy Development in Indonesia” hosted by the Ministry of Foreign Affairs Republic Indonesia on Thursday, 19 May 2022, said that both countries develop momentum and mutual interest in renewable energy investment. 

“Indonesia embassy in Seoul ready to support the Government’s target to have 23% of renewables in 2025. Meanwhile, South Korea aims to have 35% renewable shares in 2040. Both countries are in intense communications to develop EV battery manufacturers to support EV ecosystems that start penetrating the Indonesia market,” Gandhi said.

He added that in accordance with sustainability and human development, his office focuses on four sectors i.e: human development, science and technology, sustainable finance development, and national energy security.

Fabby Tumiwa, the Executive Director of IESR said that energy transformation is the heart of climate change mitigation. 

“Energy consumption in Indonesia is projected to increase 7-8 times than the current rate as a consequence of massive electrification of transportation and other home appliances, we have a double consequence of the situation i.e to replace the current fossil energy with renewable and to fulfill the growing demand at the same time,” he said.

Indonesia’s LTS LCCR document projects that there will be rapid emission reduction after 2030 if power generation is supplied by renewable 43% by 2050. It tries to be translated into the current PLN’s RUPTL that shows the government’s eagerness to deploy more renewable energy in the power sector in Indonesia. A study has shown that Indonesia is technically feasible and economically viable to achieve zero emissions by 2050 using 100% renewable energy. 

“IESR Deep decarbonization of Indonesia’s energy system study presents a step by step roadmap to achieve net zero in 2050 covering transportation, power sector, and industry,” Fabby added. 

Solar, whose residential potential – reaches up to 655 GWp will be the backbone of the renewable-based energy system.

Minho Kim, Komipo Korea State-Owned Company said that as a businessman, his company sees Indonesia as a potential market as well as a partner for renewable energy considering the abundant resources available. 

“Komipo already has operations in Indonesia for geothermal and hydropower projects. Later on, we plan to develop green hydrogen/ammonia as well,” Minho said.

Minho added that the emergence of the carbon market makes renewables a new hot commodity because it is needed. “As more companies join the RE 100 initiatives, the demand for clean energy is higher, therefore providing clean energy is no longer an option but a must as it is what is needed by the industry and demanded by customers,” he concluded.

Welcoming the Gigawatt Order of Solar Energy with Readiness of Qualified Human Resources

Jakarta, 20 April 2022One of the essential things in building a solar PV ecosystem in Indonesia is the readiness of its human resources. Measuring Indonesia’s readiness to enter the gigawatt order, the Institute for Essential Services Reform (IESR) in collaboration with the Ministry of Energy and Mineral Resources (ESDM) held a webinar entitled “Solar Energy Gigawatt Order, Is Indonesia Ready?” in the Indonesia Solar Summit 2022.

The General National Energy Plan (RUEN) targets a solar PV capacity of 6.5 GW in 2025. It opens up opportunities for high solar PV demand. RUEN also mandates the use of solar cells at a minimum of 30 percent of the roof area of ​​all government buildings, and 25 percent of the roof area of ​​luxury houses.

Anthony Utomo, Deputy Chairperson of the Indonesian Solar Energy Association (AESI), views that this opportunity needs to be met with the availability of local workers to provide, install, maintain and maintain solar PV. 

“AESI in the solarpreneur program collaborates with universities so that training (related to rooftop solar PV) is available to the community, the installation can be served properly, and in the end it can create new jobs,” explained Anthony.

Ratna Muntiowati, Marketing Director, TotalEnergies Renewables DG emphasized that seeing the development of solar PV getting more and more widespread in Southeast Asia, therefore, in the near future, the solar PV market will not only be in Indonesia. Moreover, she stated that the curriculum of renewable energy should be applied in all science majors.

“Tantangan yang kita hadapi dalam instalasi di atas bangunan ialah struktur bangunan tidak terlalu kuat. Hal ini bisa juga dimasukkan ke dalam kurikulum pendidikan.Bahkan saat ini, Standar Nasional Indonesia (SNI) untuk civil construction, sudah memasukkan ketentuan untuk instalasi solar panel. Ini yang bisa diimplementasikan oleh lembaga pendidikan. Sehingga saat ada instalasi atau desain pabrik baru (untuk PLTS atap), sudah diperhitungkan sesuai SNI,”ujarnya.

Daniel Pianka, Universitas Kristen Immanuel (UNKRIM), Yogyakarta sepakat bahwa pelatihan dan edukasi energi terbarukan memainkan peran penting dalam membangun SDM yang berkualitas. Berdasarkan pembelajaran dari pemasangan 10 kWp panel surya di universitasnya, Daniel mengungkapkan bahwa kemampuan SDM yang mumpuni dalam melakukan instalasi panel surya turut menentukan keawetan sistem panel surya yang digunakan.

“Instalasi yang belum baik misalnya menyambungkan kabel hanya dengan isolasi (perekat) akan membuat kabel mudah terbakar jika ada daya yang tinggi. Instalasi yang berkualitas akan membuat sistem surya panel bisa digunakan lebih lama,” tuturnya.

Lebih lanjut, Daniel menjelaskan UKRIM telah membangun program energi. Program ini bertujuan untuk melatih mahasiswa, yang dominan berasal dari daerah 3T (Terdepan, Terpencil dan Tertinggal) untuk menjadi teknisi, melakukan instalasi yang rumit dan merawat PLTS.

“Program ini diharapkan mampu menghasilkan SDM yang terlatih dan termotivasi untuk terjun dalam sektor energi terbarukan, menciptakan banyak proyek energi berkelanjutan, gaya hidup yang lebih baik dan emisi karbon yang rendah,” tukasnya.

Di sisi lain, Eng Purnomo Sejati, Kepala SMK Ora et Labora, BSD menuturkan pihaknya senantiasa beradaptasi terhadap dinamika sektor energi di Indonesia. Semula, sekolahnya dirancang untuk memenuhi kebutuhan SDM pembangunan PLTU 35 GW. Namun, penyesuaian target baru terkait energi terbarukan maupun rencana moratorium PLTU, mendorong lembaga pendidikan yang ia pimpin bertransformasi menuju energi terbarukan.

“Sejak tahun lalu, kami bermanuver untuk membuka area lain seperti energi terbarukan dan surya. Kami sudah melakukan penetrasi dan bermitra dengan perusahaan terkait. Kami juga ingin mengembangkan kendaraan listrik, industrial internet of things (IIOT), dan perawatan gedung dan fasilitas. Bidang ini kami lihat yang akan sustain ke depan,” papar Purnomo.***

“The challenge we often face is the improper rooftop structure that is weak for solar PV installation. This issue can also be included in the education curriculum. Now, the Indonesian National Standard (SNI) for civil construction has included provisions for the installation of solar panels. Educational institutions can take this opportunity to implement. So when there is an installation or a new factory design (for rooftop solar PV), it has been calculated according to SNI,” she said.

Daniel Pianka, Immanuel Christian University (UNKRIM), Yogyakarta agreed that training and education on renewable energy play a significant role in shaping the quality of human resources. Based on lessons learned from the installation of 10 kWp solar panels at his university, Daniel revealed that the ability of qualified human resources to install solar panels also determines the durability of the solar panel system used.

“Improper installation, for example connecting cables only with adhesive tape will lead to burning cable, as comes the high power. A quality installation will make the solar panel system last longer, “he said.

Furthermore, Daniel explained that UKRIM had built an energy program. This program aims to train students, who predominantly come from 3T areas (frontier, remote, and left behind area) to become technicians, perform complex installations and maintain solar PV.

“This program is expected to produce trained and motivated human resources to engage in the renewable energy sector, creating many sustainable energy projects, better lifestyles, and low carbon emissions,” he said.

On the other hand, Eng Purnomo Sejati, Principal of Ora et Labora Vocational School, BSD said that his party always adapts to the dynamics of the energy sector in Indonesia. Initially, the school was designed to meet the human resource needs of the 35 GW coal-fired power plants construction. However, the adjustment of new targets related to renewable energy, as well as, the plan for a PLTU moratorium, has encouraged the educational institutions he leads to transform into renewable energy.

“Since last year, we have maneuvered to open up other areas such as renewable energy and solar. We have penetrated and partnered with related companies. We also want to develop electric vehicles, industrial internet of things (IIOT), and maintenance of buildings and facilities. We look at this field that will be sustainable in the future, “said Purnomo.

Showing Leadership in G20, Indonesia Needs to Increase Solar PV Development

JAKARTA, 20 April 2022 – Carrying the energy transition as the main topic of Indonesia’s presidency at the G20, Indonesia needs to show its leadership in pursuing a more massive renewable energy capacity, especially solar energy. Indonesia can also learn from the experiences of the G20 countries in encouraging the growth of solar energy and accelerating the spread of solar energy.

The Ministry of Energy and Mineral Resources of the Republic of Indonesia and the Institute of Essential Services Reform (IESR), in collaboration with BloombergNEF and the International Solar Alliance (ISA), held a workshop to take lessons from G20 countries in encouraging the application of solar power relevant to developing countries. The workshops were also not limited to policy frameworks, fiscal and financial instruments, market readiness, and human resource development.

Ali Izadi – Najafabadi, Head of Research APAC, BloombergNEF, expressed his optimism that Indonesia has the potential to accelerate the energy transition.

“Some analysts say Indonesia lags behind other G20 countries in renewable energy, especially solar power, but I believe Indonesia can catch up. Indonesia has many opportunities to reform policies or special regulatory measures focusing on improving the energy economy and the environment,” said Ali.

In line with Ali, Rohit Garde, Senior Associate for Solar Energy Financing at BloombergNEF, said that BloombergNEF measures state policies in the electricity sector and carbon policies. For example, Germany and England have 84% and 83%, respectively, which indicates that both countries have good procedures for PV mini-grid. Meanwhile, the Levelized Cost of Electricity (LCOE) of PV mini-grid in India, China, UAE, and Chile is the lowest due to high levels of solar radiation and large-scale PV mini-grid development. Meanwhile, the LCOE of PV mini-grid in Indonesia is the highest due to its small scale and high cost of capital.

“Indonesia must increase its ambitions by revising regulations and removing development barriers,” added Rohit Garde.

One of the important issues in Indonesia’s leadership in the G20 is the energy transition. Yudo Dwinanda Priadi, Expert Staff to the Minister for Strategic Planning at the Ministry of Energy and Mineral Resources, said that the power plant plan already has an Electric Power Supply Business Plan Electricity Supply Business Plan (RUPTL) 2021-2030. A greener RUPTL is a cornerstone of achieving zero carbon by 2060.

“Solar Power Plants (PLTS) have the largest optimization in Indonesia and will reach 4,680 MW by 2030. Therefore, solar energy has the most abundant potential. In addition, the cost continues to decline, and the rapid development of PV mini-grid technology has made solar power generation a priority. The development of rooftop PV mini-grid also includes better implementation and incentives for people who want to install rooftop PV mini-grid. The government has issued the Minister of Energy and Mineral Resources No.26/2021, and the rooftop PV roadmap is in the process as a National Strategic Program (PSN),” said Yudo.

On the other hand, Fabby Tumiwa, Executive Director of IESR and General Chair of the Indonesian Solar Energy Association (AESI), said solar energy development in Indonesia is relatively slow with several obstacles.

“In 2021, only 0.001 percent of its technical potential will be implemented. However, rooftop solar power generation has continued to increase in the last three years, and that is due to the support from government regulations. RUPTL 2021 is a signal to increase five times to 4.7 MW, and there are also other projects such as exports to Singapore, Riau Islands, and Batam. Therefore, this project has the potential for massive solar energy development,” said Fabby Tumiwa.

Fabby also added several reasons for the obstacles to the energy transition in Indonesia, such as the Domestic Component Level (TKDN).

“Problems in project development such as land and regulations on the Domestic Component Level (TKDN); existing projects require solar module devices from 40% to 60%, and this has not been met by industry in Indonesia and has not received financial assistance from the state; negotiations are quite long while other countries tend to be faster. The Vietnamese government has strong political will and commitment, regulation, implementation, and incentives for tariff policies related to net metering. What is also important is the policy certainty and transmission of the State Electricity Company (PLN),” said Fabby.

Kanaka Arifcandang Winoto, the Senior Business Developer from Mainstream Renewable Power, explained how Indonesia needs to accelerate to meet the renewable energy mix target of 23% in 2025.

“Indonesia is the largest energy consumer in ASEAN, accounting for almost 40 percent of ASEAN’s total energy use. With the significant potential of solar, geothermal, wind and hydropower resources, Indonesia is well-positioned to develop in a low-carbon energy system,” he said.

According to Kanaka, Indonesia is a key player in achieving 1.5℃, so cooperation with all stakeholders is needed to identify a national roadmap for realizing economic growth and climate security.

Dyah Roro Esti, Member of the DPR, Commission VII, explained that his party is open to public input, especially on renewable energy policies that are being discussed in the DPR RI.

 “Data from DEN, Indonesia must optimize 2.5 GW, and each area has potential, both solar and wind. Therefore, it is necessary to have the motivation and political will to cooperate with local governments in optimizing and realizing this potential. The House of Representatives (DPR) is working on the New Renewable Energy (EBT) Bill and will be open to suggestions. However, the EBT Bill (RUU) is still under discussion,” explained Dyah Roro.

On the other hand, regarding policies at the regional level, Ngurah Pasek, Head of the Sub-Division of Environment and Regional Development, Bappedalitbang Bali Province, added that Bali has implemented Perda 29 of 2020 concerning the General Plan of Regional Energy (RUED) whose derivative is Pergub 45 of 2019 about Bali Clean Energy.

“Installation to regencies and cities in Bali Province, which currently has reached 8.5 MW. The target of the Bali Provincial Government regarding budget refocusing is how the installation of solar rooftop solar panels in offices or companies can run well,” he said.

The development of rooftop solar power plants is also happening in Central Java. Nathan Setyawan, Sub-Coordinator of Natural Resources and Environment, Central Java Regional Development Planning Agency, explained some progress in supporting renewable energy in his area.

“Central Java is the only province that has developed and integrated economic recovery and the use of renewable energy. In 2021, we will encourage not only provincial governments but also regents and mayors and the private sector to implement rooftop solar power plants.”

He emphasized that increasing public awareness and support from the Ministry of Energy and Mineral Resources would encourage the use of communal solar power plants in remote areas. In addition, Nathan hopes that the availability of affordable clean energy supporting technology will help develop the local renewable energy industry.

“Hopefully, there will be a mini silicon valley to develop new renewable energy-oriented industries,” he added.***

Looking for Funding Schemes and Readiness of Solar PV Project Development

Workshop Financing Solar Energy - Indonesia Solar Summit

Jakarta, 20 April 2022– The issue of financing is still one of the big obstacles in developing renewable energy such as rooftop solar power plants in Indonesia. There is a large gap between the government’s agenda to accelerate solar penetration and access to funding for both developer and household projects. Difficult access to funding can also be a challenge for the development of solar energy in Indonesia.

Enthusiasm to develop solar energy is growing rapidly in Indonesia. At the Indonesia Solar Summit 2022, at least 31 parties are committed to installing solar PV with a capacity of up to 2,300 MW. The availability of cheap financing mechanisms can support the achievement of these commitments.

Elvi Nasution, Director of Solutions Initiatives, explained that there is one financing scheme that is not widely available, namely project financing. Project financing is limited financing of a new project that will be carried out through the establishment of a new company (separate from the existing company). The project finance provider can be a bank or a special financial institution (special mission vehicle).

“Compared to Malaysia, Thailand and the Philippines, project financing in Indonesia is relatively expensive. The contributing factors include government guarantees, the amount of debt, and the structure of the electricity business which is currently monopolized by PLN, so developers often encounter difficulties because there is only one offtaker in Indonesia,” explained Elvi.

Jagjeet Shareen, Assistant Director of General International Solar Alliance, in the same forum saw the importance of the role of financial institutions such as banks to participate in accelerating solar penetration.

“Providing training to bank employees is important to make them understand the character of solar business and calculate the financing risk for it. The cost of installing solar PV  may still be relatively expensive, but it’s actually not that expensive because the cost of solar continues to decline,” he said.

Jagjeet shared India’s experience in providing massive training to bank employees which had a significant impact because the bank then became more familiar with PV rooftop projects, their risks and development opportunities.

Both Elvi and Jagjeet agreed that in order to accelerate the penetration of PV rooftop, synergies from various parties, such as financial institutions, need to study the financing structure based on the conditions and potential in each location.

PLN as the single offtaker in Indonesia also needs to transform its business model so that it is relevant to the current situation and in the future where renewable energy will have a larger portion. Especially for solar development, PLN needs to make regular auction plans and finalize the development plan (pipeline). Good and clear project planning will increase the confidence of investors and financial institutions to fund a PV rooftop project for instance.

Prospective users of rooftop solar power plants are more or less aware of the situation of developing solar energy in Indonesia, which still needs a lot of improvement. Erwin Kasim, one of the participants of the Financing Solar Energy Indonesia Solar Summit 2022 workshop, asked about the minimum subsidy for initial installation costs for households who want to install rooftop PV and what schemes can be considered to relieve potential PV rooftop customers.

The bank, as the party that is expected to provide a solution to this initial cost problem, emphasizes the government’s role in making policies that are friendly to all parties in the development of this rooftop solar power plant.

“The use of solar requires government intervention to create financing schemes, protect banks from repayment failures, and incentives for customers,” said a representative of Bank Rakyat Indonesia (BRI) who attended the same forum.

The government’s role in issuing a customer-friendly rooftop PV  financing policy is highly expected. Because at this time, financing through the bank occurs because of a business-to-business agreement between the developer and the bank without any special policy from the government that regulates the financing of rooftop solar power plants by the bank.

Indonesia Fosters Investment Mobilization to Achieve Gigawatt Order of Solar

Jakarta, 19 April 2022 – Indonesia’s presidency at the G20 2022 is a momentum to show Indonesia’s seriousness in accelerating the global energy transition and the national energy transition plan to achieve carbon-neutral 2060 or faster. One of the ways to achieve it is by accelerating the utilization of solar PV, which has a potential of up to 3400 Gigawatts in Indonesia. Through the Indonesia Solar Summit 2022 organized by the Ministry of Energy and Mineral Resources (MEMR) in collaboration with the Institute for Essential Services Reform (IESR), it is hoped that the commitment of local governments, electricity consumers, private and state-owned developers, regional owned-enterprises, and the community to encourage the adoption of solar PV and mobilize the required investment.

Representing the Minister of Energy and Mineral Resources (MEMR), Secretary General of the Ministry of Energy and Mineral Resources Ego Syahrial said that Indonesia’s energy transition roadmap to achieve Net Zero Emission (NZE) by 2060, solar energy will play an important role in national electricity supply, of which 587 GW capacity new renewable energy (NRE), of 361 GW or more than 60% will come from solar energy.

“The government has three major programs for utilizing solar energy, namely rooftop solar PV, large-scale ground-mounted solar PV, and floating solar PV. The implementation of these various programs requires contributions from many parties, not only the government, business area holders, and renewable energy developers, but also energy users, such as the commercial and industrial sectors,” explained Ego in his speech as well as opening the Indonesia Solar Summit/ISS 2022 event.

The commitment, continued Ego, to realize the 2.3 GW (accumulated) solar PV project in 2022 and 2023 which was declared by 31 companies and the plan to build a solar PV component factory in Indonesia is to re-energize its solar energy investment in Indonesia.

Ego added that the rooftop solar power plant itself is one of the quick wins in accelerating the use of solar energy through direct contributions from energy users, especially for industry to meet increasingly strong market demands for green products.

“Support from local manufacturers is also very much needed to fulfill local content requirements and provide great benefits for the country, especially in terms of job creation. Besides that, aspects of easy access to cheap financing, incentives, and other financing facilities are very important to provide financial feasibility and increase energy investment. renewable energy such as solar PV,” he said.

Michael R. Bloomberg, Founder of Bloomberg LP and Bloomberg Philanthropies and United Nations Special Envoy for Climate Ambition and Solutions, emphasized the importance of transitioning to renewable energy as one of the right solutions to achieving zero emissions. He continued that speeding up the investment in solar power will accelerate the green resilient economic development.

“Indonesia has the potential to be a global leader in solar power. This summit is an important opportunity to showcase and accelerate the country’s clean energy efforts before G20 leaders arrive in Bali this November. Solar is already cheaper than coal in many countries. The more we do to speed up investment in solar power, the faster we can cut emissions, create new jobs, and build a stronger and more resilient global economy,” Michael explained.

In 2021, IESR identified large-scale PV project pipelines totaling 2.7 GWac, with an investment value of US$3 billion. At the ISS 2022, the number of solar PV project pipelines committed by multiple companies amounts to 2,300 MW, consisting of rooftop PV (largest percentage), ground-mounted solar PV, and floating solar PV. To mobilize this investment potential, an attractive and supportive ecosystem is needed; including sound policies and regulations, comprehensive implementation of existing regulations, and support to drive the development of the solar PV industry supply chain in Indonesia. 

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) stated that to achieve the renewable energy target of 23% by 2025 according to Presidential Regulation 22/2017, as well as the RUPTL target of 10.9 GW, additional renewable energy generating capacity of 4 GW is needed from outside of PLN. This addition can be contributed by solar PV, both rooftop solar and the use of solar PV in other PLN electricity business holders.

“From the declaration of the 2.3 GW solar PV project at ISS 2022, shows the enormous potential of solar energy in Indonesia. Indonesia can become a Solar Powerhouse in Southeast Asia with potential growth of 3-4 GW annually if it is fully supported. It opens up opportunities for green investment to stream, opportunities to grow the integrated solar power industry from upstream to downstream, and employment and become the driving force for post-COVID economic recovery. President Jokowi needs to see this potential and lead the solar energy revolution for the energy transition in Indonesia,” said Fabby Tumiwa.

The Indonesia Solar Summit (ISS) 2022 was held on 19 and 20 April 2022, highlighting support from the Coordinating Minister for Economic Affairs, Minister of Energy and Mineral Resources represented by the Secretary-General of the Ministry of Energy and Mineral Resources, Deputy Minister of State-Owned Enterprises, Deputy for Investment Planning at the Ministry of Investment, representatives of the Ministry of Finance, CEOs of national and multinational companies, and 15 speakers on Summit Day 2 workshop. ISS 2022 receives support from Bloomberg Philanthropies, Matahari Power, Utomo SolaRuv, BloombergNEF, International Solar Alliance, the Indonesian Solar Energy Association, and the Clean Affordable and Secure Energy in Southeast Asia (CASE) Project; and was attended by more than 600 participants online and offline.

Boosting Confidence for Solar Investors in Indonesia

Jakarta, 7 April 2022 – Located on the equator, Indonesia is blessed with abundant yet (unfortunately) untapped solar energy potentials. The Institute for Essentials Services Reform’s study titled, “Beyond 207 Gigawatts: Unleashing Indonesia’s Solar Potential” shows that based on land suitability there are 3 – 20 TWp solar potentials that may generate power up to 4,7 – 27 TWh annually. The huge potential is sadly not followed by proper utilization. The MEMR noted that until the end of 2021 total PV capacity in Indonesia is only around 200 MW. 

Fabby Tumiwa, the Chairman of Indonesia Solar Energy Association and the Executive Director of the Institute for Essential Services Reform, during the South Korea Renewable Energy Investment Forum, said that the solar market outlook looks promising especially since the end of 2021 when PLN announced its recent Business Plan (RUPTL) in which it gives spacious slot for renewable energy.

“Solar becomes government focus in RUPTL to reach the 23% RUEN target in 2025 as well the net-zero emissions in 2060 or sooner. Approaches on various types of PV i.e floating, and rooftop need to be done through the regulation improvement,” Fabby said.

Eka Satria, CEO of Medco Power Indonesia, shares his perspective on the current energy transition happening in Indonesia. He believes that the success of energy transition should be driven by policy. 

“Energy transition needs a different environment. We cannot just leave it to the market mechanism where people choose what kind of energy they want to have. Especially in the beginning, policy-driven action is needed,” Eka explained.

Eka added that the best practice in countries that have started the energy transition early is always initiated by the Government that sets up a policy to drive both energy providers and energy consumers to shift to renewable energy.

Byeongwoo Jeon, Managing Director of Global Business Department KEPCO KDN, shares his appreciation that renewable energy development in Indonesia is gaining traction yet a set of challenges still follow. 

“Land acquisition is our number one challenge. In the area where energy demand is high, we usually experience land shortages to install solar PV,” he said.

Jeon also highlighted the complex process to get financing for renewable energy projects. The current regulation such as the required local content and the process to get PPA (power purchase agreement)happening in the lengthy process makes renewable projects hard to get financing.

Fabby Tumiwa added that besides the PPA process that should be shortened, consistent regulation is also important to give investors and the business sector confidence in planting their capital in Indonesia’s renewable energy projects. 

“PLN must also implement the recent Ministerial Regulation number 26/2021 about rooftop solar customers to accelerate rooftop PV adoption,” he said.

The current MEMR’s regulation no 26/2021 about rooftop solar PV contains some improvements from the previous MEMR regulation no 49/2018 such as the 1:1 export-import tariffs, a longer reset period, and a shorter period to obtain approval for construction, but is not yet implemented by PLN though it is officially released by the Ministry of Energy and Mineral Resources as per January 2022.

Financier’s Club: Financing Solar Energy in Indonesia – Discusses Solar Energy Financing Issues in Energy Transition

Jakarta, 18 March 2022– The financing of energy transition in Indonesia, especially in the Solar PV Power Plant, needs to be mobilized immediately. The technical potential of solar energy in Indonesia is enormous. Based on a study from the Institute for Essential Services Reform (IESR), the potential of solar energy in Indonesia is up to 20,000 GWp waiting to be harvested so that it can achieve a carbon-neutral target in 2060 or sooner, according to the government’s commitment. Financial institutions can capture various Solar PV Power Plant financing opportunities by identifying investments and risks. Identification of investments and stakes in Solar PV Power Plant financing, the obstacles financial institutions face in providing Solar PV Power Plant financing schemes, and innovative financing practices are discussed in the Financier’s Club: Financing Solar Energy in Indonesia. This activity was held in collaboration with the Ministry of Energy and Mineral Resources with IESR as a pre-event for the Indonesia Solar Summit (ISS) held in Jakarta.  

Opening the discussion, Sahid Djunaidi, Secretary-General of the Directorate General of Renewable Energy and Energy Conservation (DG EBTKE), emphasized that the emission reduction target can only be achieved if the country makes an energy transition as a fundamental step. The vast potential and short construction period make solar energy a mainstay in providing renewable energy in Indonesia. Several banks have provided financing schemes for rooftop solar power plants, but financing innovation is still needed to encourage more massive rooftop solar power plants. Currently, the Ministry of Energy and Mineral Resources (MEMR), in collaboration with UNDP, is conducting an incentive grant program for rooftop solar PV to support the development of rooftop solar PV in Indonesia.

“The challenge in developing solar power plants is in the financial sector because of the high risk, not many markets, and the lack of financing guarantees,” he said.

Coordination in policymaking and cooperation between parties is essential to achieving sustainable finance and climate targets. This was stated by Agus Edy Siregar, Deputy Commissioner for Financial System Stability of the Financial Services Authority (OJK). 

“The climate change mitigation agenda requires large funds and cannot be met only from the state budget, but also requires financing from the financial sector,” he added.

Edy said that OJK had compiled several documents on investment in several sustainable sectors, including a green taxonomy, carbon market preparation, and banking reporting related to the financed sector. It is hoped that there will be incentives and disincentive mechanisms in the finance and financing sector.

In addition, Enrico Hariantoro, Head of the OJK Integrated Financial Services Sector Policy Group, said that OJK has been supporting banking instrumentation for a long time to support sustainability financing (POJK 51/2017 POJK 60/2017). According to him, there are several risk aspects that banks are very concerned about, including technical understanding, how to guard the ecosystem, and the payback period. Furthermore, he argues that financing schemes for Solar PV Power Plant could be more varied and innovative, for example, combining elements from facilities, philanthropy, technical, and becoming one with KPR so that it is included in customers’ comfort level bankability of financial providers. OJK always encourages the acceleration of Solar PV Power Plant financing through regulation, of course, by considering the feasibility study (FS).

On the other hand, Adi Budiarso, Head of the Financial Sector Policy Center (PKSK) Fiscal Policy Agency (BKF), said that there is an Energy Transition Mechanism (ETM) to answer the challenges of the energy transition with the primary goal of shortening the economic life of the PLTU Clean Energy Facility (CEF), get additional greenhouse gas emission reductions by building a renewable energy Carbon Recycling Fund (CRF) to achieve Nationally Determined Contribution (NDC), and gain access to cheaper funding. 

BKF has implemented tax incentives for investments such as tax holidays, tax allowances, PPh DTP, VAT exemptions, import duty exemptions, tax and customs facilities, and exemptions from collecting PPh 22. According to Adi, the Indonesian financial system is ready to implement sustainable finance, supported by green taxonomy. In addition, BKF has conducted mapping with nine universities, associations, and stakeholders. Adi said that Regional Banks had the opportunity to help accelerate the Solar PV Power Plant development. Renewable energy has the potential to create electricity supply independently. The existence of BPR, the regional company, can be one of the doors for the entry of Solar PV Power Plant financing.

Edwin Syahruzad, President Director of PT Sarana Multi Infrastruktur (SMI), who was present on the same occasion, informed the participants that PT SMI has taken strategic steps in financing Solar PV Power Plant. In addition, PT SMI has provided financing for all types of renewable energy, such as hydroelectric power, geothermal power plants, wind power plants, solar PV power plant, and biomass. However, he said that PT SMI’s commitment to the Solar PV Power Plant project depends on the pipeline project. 

“The Solar PV Power Plant pipeline is more derived from rooftop Solar PV, and I think this is a potential that must be worked on. However, the approach is slightly different from on-grid  Solar PV Power Plants because rooftop  Solar PV comes from contracts with building owners where Solar PV Power Plants are installed. The building owners can come from outside of the electricity sector. The revenue model is also quite different. It is the domain of banks with building owner customers who can expand their business opportunities using rooftop solar PV,” said Edwin.