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%.

Continuous Effort in Paving the Way for Solar Energy in Indonesia

press release

Jakarta, July 26, 2023 – The Indonesia Solar Summit 2023, hosted by the Ministry of Energy and Mineral Resources and co-hosted by think tank Institute for Essential Services Reform (IESR), affirms the commitment to accelerate solar deployment in the country.  Solar energy has made it significantly into Indonesia’s NZE pathway, projected at 61% of total electricity sources by 2060. A previous separate study by IESR placed solar energy as the backbone for a zero-emission energy system by 2050.

Minister of Energy and Mineral Resources, Arifin Tasrif, mentioned solar energy is a crucial strategy to achieve 23% of the renewable energy mix within the next two years before 2025. However, he also emphasized the significance of having access to technology and funding to successfully utilize solar energy and meet the renewable energy mix target. According to him, investment in solar energy will easily flow into Indonesia if there is a significant demand in the country. 

“There are two crucial factors that must be considered to accelerate the use of solar energy. The first is the availability of technology, which requires support from the industry. The second is the availability of international and domestic coverage that needs to be mobilized. The target for the renewable energy mix is 23% by 2025, but currently, it only stands at 12.5%, leaving only two years to achieve this goal. Additionally, the aim is to reduce greenhouse gas emissions by approximately 290 million tons in 2030, which has increased to 358 million tons. To achieve this, various efforts are being made, including de-dieselization programs and converting fossil-fueled motorized vehicles to electric motors, to absorb emissions,” said Arifin. 

The progress towards solar energy adoption in Indonesia remains slow. The actual installed capacity of solar PV in 2022 is 271.6 MW or far below the plan of 893.3 MW, based on data from the Directorate General of New, Renewable Energy and Energy Conservation (EBTKE), MEMR. There are several factors that have hindered widespread adoption of solar energy, including complications with land ownership, lack of local experience and unattractive tariffs. Whereas, the latest technical potential is at 3,295 GWp, acceleration of solar deployment will be critical in achieving renewable energy and NZE targets. In the short term, 18 GW of solar energy is needed to attain a 23% renewable energy mix target by 2025, with an investment value of US$14.1 billion, based on BloombergNEF and IESR study

With the announcement of Just Energy Transition Partnership (JETP) last year at G20 Summit 2022 in Bali, Indonesia – a comprehensive investment and policy plan is currently drafted in consultation with relevant stakeholders, covering early coal retirements, just transition measures, and acceleration of renewable energy development. The US$20 billion partnership aims to peak Indonesia’s power sector emission by 2030, and solar energy has become a significant part of the planning due to its techno-economic advantage and high potential for greenhouse gases emission reduction. The first version of such a plan will be unveiled in August 2023.

Rachmat Kaimuddin, Deputy Minister for Infrastructure and Transport, Coordinating Ministry of Maritime and Investment Affairs revealed that to build solar energy industrialization, Indonesia needs to prepare the demand first. 

“Reflecting in this, we intervene in the country, for example through JETP, how we minimize dependence on fossil energy, can be in several forms such as reducing the output of coal-based power plants and creating new demand,” he explained. 

He also emphasized that Indonesia’s cooperation with Singapore for green electricity requires that solar modules and batteries must be produced in Indonesia, so that the demand that arises becomes a trigger for the PLTS industry in Indonesia to form. 

“We don’t want to only import in the future. We hope that a domestic industry will be formed while we are in the process of energy transition,” he said.

Antha Williams, who leads Bloomberg Philanthropies’ Environment Program stated that developing a homegrown solar industry is a key component to advancing Indonesia’s transition to clean, affordable, and reliable energy.

“By cultivating international partnerships to mobilize capital and scale domestic solar manufacturing capacity, Indonesia has the potential to realize its net-zero energy pathway goals through rapid deployment of clean energy projects. Bloomberg Philanthropies welcomes the opportunity to support Indonesia’s goal of becoming a leader in solar energy development.”

Fabby Tumiwa, the Executive Director of IESR, stated that over the last two years, a new market has emerged, utilizing solar PV not only for selling electricity but also for producing new value-added products, such as green hydrogen and ammonia. Based on IESR data, there are currently 10 green hydrogen and ammonia projects that have been initiated since last year, intending to use solar energy as their primary electricity source. These projects are currently in the study phase and are expected to be realized within the next 2-3 years. Fabby also pointed out that experiences from various countries, including some developing ones, demonstrate that constructing Gigawatt-scale solar power plants within a year is an achievable feat.

Fabby highlighted three essential supporting factors to encourage the development of solar PV, “Firstly, it requires political will and strong, active leadership from the government, along with the establishment of transparent and sustainable policies and regulations. Secondly, there is a need for the development of an integrated ecosystem, which involves defining quality standards and guarantees for solar modules, ensuring the availability of qualified and trained human resources. Lastly, it is crucial to foster the growth of an integrated and competitive solar PV manufacturing industry.”

Indonesia’s Chairmanship in ASEAN 2023 presents an opportunity to engage the public and raise awareness about the benefits of solar PV adoption. Public outreach campaigns, educational programs, and community-driven initiatives can inform people about the environmental advantages, economic benefits, and energy independence that come with solar PV usage. Building public support and understanding can facilitate smoother and more widespread adoption of solar PV technology. Besides that, Indonesia’s Chairmanship can set a precedent for solar PV adoption in ASEAN through policy alignment, regional cooperation, investment promotion and innovation. It is timely to promote and drive domestic solar industries and supply chains in parallel with fast deployment of solar projects. 

Solar Energy Plays Key Role in Energy Transition of Power System

Alvin

Jakarta, April 15, 2023 –  A careful planning strategy is essential to encourage the use of solar energy in the electricity system.  The Government of Indonesia and PLN (the national power utility) released the new Electricity Business Plan (RUPTL) 2021-2030, which sets out Indonesia’s future power capacity by increasing the number of New Renewable Energy (EBT) generators. The target of the EBT mix in the National Electricity General Plan (RUKN) is around 23% in 2025. It was stated by Alvin Putra Sisdwinugraha, Researcher of Electricity Systems and Renewable Energy at the Institute for Essential Services Reform (IESR), in the Solar Energy Talk #3 events, the results of collaboration between Solar Scholars Indonesia (SSI), IESR, PPI Australia, Korean Indonesian Research Association (APIK), Insygnia, and Solarin.

“Referring to the RUPTL, solar energy will play an important role in Indonesia’s electricity to achieve net zero emission (NZE), while the utility-scale is still the biggest contributor. However, this is not enough for Indonesia to pursue its 2050 decarbonization target,” Alvin Putra Sisdwinugraha stated.

Several potential clusters within the RUPTL are the mining sector, the tourism sector, the fisheries sector, Solar Power Plants (rooftop solar PV), floating solar PV, and other sectors with a total capacity of up to 2.1 Giga Watt (GW). Regarding floating solar PV, Alvin said the issuance of Minister of Public Works Regulation No. 6 of 2020 is a breath of fresh air for developing renewable energy in Indonesia because it allows the use of space in reservoir/dam areas of around 5% at normal water levels. Regarding these regulations, The Ministry of Energy and Mineral Resources (ESDM) has mapped out the potential for floating PLTS of 28.4 GW, with 4.8 GW of existing hydropower.

“Although the potential is quite large, unfortunately, there are no specific technical regulations regarding the safety of the dam/reservoir. This can be reflected in the development of a floating Solar PV in Cirata, West Java, which a private developer is carrying out,” he explained.

On the other hand, to encourage the use of solar energy, the government has signed Presidential Regulation (Perpres) Number 112 of 2022 concerning accelerating the development of renewable energy for electricity supply. This regulation strengthens the government’s commitment to energy transition in achieving the NZE. One of the things discussed in the Presidential Decree, said Alvin, is that the price for electricity from PLTS is based on the highest benchmark price.

“Although it depends on the bidding scheme that will be implemented by the Government and PLN, pricing for PLTS based on the highest price benchmark is expected to provide room for more small-capacity PLTS to develop,” he remarked.

What is Solar Energy and How is it Developed in Indonesia?

PLTS Atap

Jakarta, December 19, 2022 – The role of energy is critical for increasing economic activity and national security. Thus, energy management, including supply, utilization, and exploitation, should be carried out fairly, sustainably, optimally, and in an integrated manner. Moreover, Indonesia has ratified the Paris Agreement and submitted its commitment to reduce greenhouse gas emissions with an unconditional target of 31.89% in 2030 with its capabilities and a conditional target (with international support) of 43.2%.

Based on the Deep Decarbonization of Indonesia’s Energy System study released by IESR, Indonesia can achieve the target of the Paris Agreement being carbon neutral by 2050. This decade is essential because Indonesia must reach peak emissions in the energy sector by 2030 and reinforce a mix of renewable energy in the electricity to 45%.

Developing the renewable energy sector is a mitigation action to reduce greenhouse gas emissions (GHG) and support sustainable energy. Hence, Indonesia continues to intensify the use of renewable energy. Solar energy is one of the renewable energy choices that continue to be encouraged for its use in Indonesia.

Quoted from the Sustainable Professional Development Module for Solar and Wind Energy Conversion, Ministry of Education and Culture, solar energy is obtained by converting solar energy through specific equipment into resources in other forms. Furthermore, French scientist Edmond Becquerel discovered that certain materials would give off electricity sparks when sunlight struck in 1839. Even though the sun is located about 149 million kilometresr from the earth, its rays can be used as a renewable energy source. In solar panels, the sunlight is converted into electrical energy using photovoltaic technology (photovoltaic/PV).

Based on the Indonesia Solar Energy Outlook 2023 report issued by IESR, solar power will play an essential role in deep decarbonization in Indonesia in 2060 or sooner in 2050; at least 88% of installed power capacity will come from solar power in 2050. Unfortunately, the use of solar energy in Indonesia has only reached 0.2 GWp of installed capacity and will generate less than 1% of total electricity generation by the end of 2021.

However, Indonesia’s solar energy progress can be seen from the lower price of solar PV electricity obtained through a power purchase agreement (PPA) entered into by PT PLN (Persero) with Independent Power Producers (IPP). The cost of PPA solar PV has fallen by around 78% from US$0.25/kWh to US$0.056/kWh between 2015 and 2022. For this reason, IESR predicts that at least with the addition of large-scale solar PV projects, decreasingsolar module prices, and improving the investment climate, solar PV investment per unit prices will continue to fall, approaching the world price trend. In addition, in terms of project pipeline development for large-scale solar PV, there are currently eight projects with a total capacity of 585 MWp (which have been tendered).

The Potential Role of the Industry and Community Sectors in Accelerating a Just Energy Transition

Semarang, 10 November 2022 – The energy transition has become the focus of many parties lately. It’s not only the government that has the responsibility to provide clean and affordable energy for the entire community, the industrial sector is also starting to switch to clean energy through various efforts. For companies, today’s global product competitiveness is also determined by how the manufacturing process is carried out efficiently and by using sustainable energy sources. The collaborative action of various sectors in the use of renewable energy will support the acceleration of the energy transition on a national level.

To take a closer look at various initiatives from the industry and community sectors, the Central Java Provincial Energy and Mineral Resources Office in collaboration with the Institute for Essential Services Reform organized the “Jelajah Energi Terbarukan” activity on November 10-11 2022. This activity visits several destinations focused on industries and villages that utilize renewable energy potential. This is the second activity, after last June a similar activity was carried out with a focus on different destinations.

The journey started by visiting CV Jaya Setia Plastik, in Demak, to see how the children’s toy industry saves electricity by installing a 470 kWp on-grid rooftop solar PV.

PLTS Atap di CV Jaya Setia Plastik
PLTS Atap di CV Jaya Setia Plastik

“Currently, what is actually installed on our roof is 1,300 kWp, but we have not used the other 470 kWp connected to PLN because we are currently constrained by regulations that limit the installation of rooftop PLTS to a maximum of 15% of the total installed power,” Wahyu representative of CV Jaya Setia Plastik explained. 

Djarum Kretek Oasis, which is located in Kudus, Central Java, also experienced similar challenges. Having several types of green industry initiatives such as the use of biomass boilers, rooftop PLTS, water storage ponds equipped with wastewater treatment facilities, Djarum is still determined to continue to increase its renewable energy capacity.

“Our roof area can still accommodate more solar PV, but due to regulatory limitations we have not been able to add capacity,” said Suwarno, Deputy General Manager Engineering at PT Djarum.

The limitation of rooftop PV capacity has become a concern of various parties because it has become one of the obstacles for consumers, especially the industrial sector, to install or increase the capacity of their rooftop solar. Currently, the Ministry of Energy and Mineral Resources and PLN are in the process of revising the Minister of Energy and Mineral Resources’ decree no. 26/2021 which regulates the installation of rooftop PV for PLN consumers.

Apart from utilizing solar rooftop, Djarum Oasis has also designed a sustainability scheme for its factory comprehensively covering various aspects, one of which is by utilizing the pruning trees of ‘trembesi’ (Samanea saman) planted on a number of toll roads as part of its CSR, as wood chips for biomass boiler fuel.

The first day’s journey continues towards the waste-to-energy plant Putri Cempo, which is in the Surakarta area. This plant has signed a Power Purchase Agreement (PPA) with PLN and will be on COD at the end of 2022. Elan Suherlan, Director of PT SCMP (Solo Metro Citra Plasma) explained, Putri Cempo waste-to-energy plant exists to overcome the waste problem in Surakarta city which can no longer be accommodated by the Waste Processing Site. PT SMCP, which won the tender for the plant construction, started its construction in 2021.

“Later Putri Cempo waste-to-energy plant will produce 5 MW of electricity and will be distributed to PLN,” said Elan.

What needs to be observed is a clear calculation of the greenhouse gas emissions resulting from this waste-to-energy plant.

The first day of “Jelajah Energi” was closed by visiting Krendowahono Village, which has utilized biogenic shallow gas for 30 households. Biogenic gas is produced from organic compounds such as plants and grasses that decompose with the help of bacteria. Because it comes from residues of organic compounds, biogenic gasses are generally found in shallow soil layers. Since its amount is relatively small and dispersed, biogenic gas must be compressed (increased pressure) so that it is easy to flow and use.

Several villages in Central Java have quite a lot of potential for biogenic gas, including Gabus Village, in Ngrampal District, Sragen, Rajek Village, in Grobogan, Bantar, and Pegundungan Villages in Banjarnegara, which can be used as an alternative energy source for cooking. The biogenic gas utilization installation is also relatively low and can be used communally.

Solihin, head of RT 6, Krendowahono Village, explained that the discovery of swamp gas started with residents who were going to make a well for a water source but when water was found at a certain depth, the water could actually catch fire.

“After we reported it and a team came to check it, turned out that this gas can be used for households,” he said.

Mrs. Uni, one of the beneficiaries of the swamp gas, admitted that by using the swamp gas she could save on cooking fuel quite significantly.

“Usually in a month I can use 4 of 3 kg of LPG gas, now it’s only 1,” she said while showing her kitchen. Uni admits that she still uses LPG gas as a fuel reserve for cooking because the stove from swamp gas only has 1 burner.

Currently the local communities are designing an operational system for the swamp gas network, starting from the operating hours of the machine, the amount of contributions, and maintenance costs.

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.***

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.

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.