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.

Commercial and Industrial Sector Ready to Encourage the Use of Rooftop PV

Jakarta, March 15, 2022 – The development of rooftop solar PV in Indonesia in the last three years has been very rapid. Citing records from the Ministry of Energy and Mineral Resources, there is a significant increase in installed capacity from less than 1.6 MW in 2018 to 48.79 MW in 2021. This is certainly encouraging. Solar power has become a clean energy that costs one of the cheapest today. The massive use of solar energy is the Indonesian government’s strategy to achieve the target of a 23% renewable energy mix by 2025. In addition to large-scale PV projects, the government has launched rooftop PLTS as a National Strategic Project (Proyek Strategis Nasional – PSN) of 3.6 GW.

In addition to utilizing the technical potential of solar energy in the areas where it operates, there is a need in the commercial and industrial sectors to use clean energy in their production and business operations. Nurul Ichwan, Deputy of Investment Planning – BKPM in the webinar “Business Going Green” organized by the Ministry of Energy and Mineral Resources and the Institute for Essential Services Reform, said that as many as 349 multinational companies have issued commitments to use 100% renewable energy in their business activities (RE100).

“In addition, other regulations such as the carbon border adjustment mechanism which will be implemented in the European Union will certainly encourage companies to switch to renewable energy so that they can be competitive with market demands, the easiest is rooftop solar power,” explained Ichwan.

Ichwan also added that as an offtaker, PLN plays an important role in this energy transition process.

“The big consideration lies with PLN, if they cannot receive the maximum supply of renewable energy, this transition process will not run quickly,” he explained.

The industrial sector’s need to reduce carbon emissions was justified by Karyanto Wibowo, Director of Sustainable Development DANONE, who explained that his company continues to strive to reduce greenhouse gas emissions from its business activities, starting from energy efficiency, carbon offsetting, and installing rooftop solar panels on factory facilities.

“We plan to use 100% renewable energy (RE100) in 2030, currently we have installed rooftop solar panels with a total capacity of 6.2 MWp in 5 locations. With this installation, only 15 percent of clean energy is produced, we still have to catch up to another 85 percent until 2030,” he explained.

Karyanto continued that regulatory innovation for the power wheeling scheme would greatly assist the industrial sector in utilizing renewable energy.

From the developer side, George Hadi Santoso, Vice President of Marketing Xurya Daya, highlighted several problems with installing rooftop solar panels related to permits from PLN.

“We encountered many obstacles in West Java and Central Java. PLN is not responsive, and has not implemented regulations issued by the Ministry of Energy and Mineral Resources. We were once asked to become premium consumers first,” explained George.

The availability of export-import kWh meter is also still a problem with the slow flow of roof PV installations.

Aries, PLN’s APP Division, who was also present online clarified that the regulations currently being implemented by PLN still refer to the Minister of Energy and Mineral Resources Regulation 49/2018 which was revealed in the PLN Directors Regulations number 18 and 49. The derivative rules for the Minister of Energy and Mineral Resources Regulation number 26 /2021 which is an update of Ministerial Regulation 49/2018 regarding rooftop solar is still in the process of being drafted by PLN.

“Services at PLN units are strongly influenced by queuing conditions. It is necessary to reorganize the service mechanism in each unit so that all consumers can be served properly,” explained Aries.

Fabby Tumiwa, Executive Director of IESR and General Chair of the Indonesian Solar Energy Association, reminded that the Minister of Energy and Mineral Resources Regulation No. 26/2021 has officially taken effect as of January 22, 2022, so it should have been implemented by that date.

“I hope this condition can be resolved soon so that there is clarity for licensing arrangements from 15 days to 5 days,” said Fabby.

The service industry that attended the ‘Business Going Green’ forum shared their experiences for taking part in this decarbonization effort. Antonius Augusta, Executive Director of Deloitte Indonesia, stated that in his institution, emission reduction actions are derived to individual actions.

“Globally, we are committed to using 100% renewable energy by 2030 in office buildings and using electric vehicles as operational vehicles. In Indonesia itself, sustainability action is carried out by looking again at work methods to reduce business trips. Some employees have also used rooftop solar panels as a personal initiative to help reduce emissions,” explained Augusta.

The selection of vendors and suppliers who also have a strong commitment to sustainability is one of Pricewaterhouse Coopers (PwC) Indonesia’s strategies. Marina Mallian, Human Capital Business Partner of PwC Indonesia, explained that the company is more focused on sustainable actions that are integrated in the daily activities of employees, such as prioritizing local meeting destinations as well as doing carbon offsetting.

“Installing renewable energy such as solar PV is a bit difficult, because the building (office) is not ours. Even for changing vehicles to EVs (electric vehicles), we have concerns about the availability of battery charging infrastructure.”

Regional Leadership Determines Indonesia’s Energy Transition

Jakarta, March 9, 2022 – The Ministry of Energy and Mineral Resources recorded an increase of 217 MW in mid-2021. This brings the total renewable energy generating capacity in September 2021 to 10,807 MW. Nationally, Indonesia’s energy mix is ​​still dominated by fossil energy up to 85%. The Indonesian government has taken the initiative to accelerate the penetration of renewable energy in the energy mix, one of which is through the RUPTL (Electricity Supply Business Plan) document for 2021 – 2030. In this document, the government targets the addition of electricity from renewable energy plants by 51.6% or 20,923 MW. Cooperation with various parties, including local governments and the private sector is important to achieve the RUPTL targets and accelerate the energy transition in Indonesia. One of the focuses of the Indonesian government is to increase the installed capacity of renewable energy by including rooftop solar in the national strategy program.

Minister of Energy and Mineral Resources, Arifin Tasrif, in his remarks at the Governor’s Forum for Energy Transition, which was held on March 9, 2022 by the National Energy Council in collaboration with the Institute for Essential Services Reform (IESR) emphasized the role of local governments in Indonesia’s energy transition.

“Local governments are expected to make policies that are more in favor of developing new and renewable energy (EBT) and support energy saving efforts. Support can be seen from the Regional Medium Term Development Plan (RPJMD). The RPJMD which is oriented towards energy transition and green energy-based economic acceleration will be a key factor in the success of the energy transition in the regions. The Regional Energy General Plan (RUED) will also be a reference for making energy transitions in the regions.”

A total of 22 provinces have had Perda RUED until March 2022. One of them is Southeast Sulawesi. The Southeast Sulawesi Provincial Government has issued an Appeal Letter to the Governor of Southeast Sulawesi Regarding the Construction of Rooftop PV Installation.

“The government of Southeast Sulawesi has made efforts to encourage investment and development of new and renewable energy through solar PV and geothermal power plants (PLTP), hopefully they will become role models throughout Indonesia,” said the Governor of Southeast Sulawesi, Ali Mazi.

In addition, several regions have a fairly high renewable energy target, such as West Sumatra at 51.7% in 2025. Audy Joinaldy, Deputy Governor of West Sumatra, on the same occasion stated that his party is working on diversifying energy sources and one of the priorities is the installation of rooftop PV.

“Every year we install PV rooftops, especially for households that have not received PLN electricity. The installation of PV rooftops is also carried out in government buildings, as well as floating PV on Lake Singkarak,” he explained.

Audy added that one of the big obstacles for local governments to develop renewable energy is limited access to funding. So it needs assistance from the central government for financial access.

In response, Musri, a member of the National Energy Council, said that the government has issued supporting regulations such as the Minister of Energy and Mineral Resources Regulation 26/2021 which is expected to attract consumers to use renewable energy such as rooftop solar power plants, but there are further technical problems such as the PLN network.

“If we talk about the energy mix, of course this is not only from the electricity sector, other sectors such as transportation also play a role. To encourage the energy transition in Indonesia, local wisdom must be encouraged so that the steps taken are in accordance with the potential and the local social context,” Musri explained.

The province located in the eastern part of Indonesia, West Nusa Tenggara, is targeting 25% renewable energy in its energy mix by 2025. Zainal Abe, Head of the ESDM Office of West Nusa Tenggara, explained that his party is currently drafting a Governor’s Regulation on green energy.

“Hopefully in the future, the roofs of government offices, especially the MEMR Office can use rooftop solar panels,” said Zainal.

Regulatory Support: Key to Unlock Indonesia’s Solar Potential

Jakarta, February 24, 2022 – The development of solar energy in Indonesia since 2018 has been increasing, although not significantly. The Ministry of Energy and Mineral Resources noted that there was an increase in installed capacity for rooftop solar to 48.79 MW at the end of 2021 from only 1.6 MW in 2018. Progressive developments have also occurred in utility-scale PLTS, with the lowest PLTS electricity price being below 4 cents USD/kWh. One of the reasons for the increasing adoption of rooftop solar, apart from developing technology, is also due to the policy of the Minister of Energy and Mineral Resources Regulation number 49 of 2018 as the first official rule regarding rooftop PV.

The Institute for Essential Services Reform (IESR) projects an increase in the capacity of rooftop PV in the next 10 years, which will come from the government setting a target for solar PV of 4.7 GW in the RUPTL 2021-2030. The enactment of the Minister of Energy and Mineral Resources Regulation number 26 of 2021 provides new hope for PLN customers who will install rooftop PV because this new rule is considered beneficial to all parties.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), and Chairperson of the Indonesian Solar Energy Association (ISA) in a webinar entitled “Indonesia Solar Chapter: Unlocking the Unlimited Potential to Embrace a Greener Future” (24/2/2022) stated that solar energy continues to grow in Indonesia both for household and utility-scale.

“In the coming years, solar energy has promising potential in Indonesia because the government has quite a lot of targets for using solar PV, such as the target of 3.6 GW in 2025 and replacing diesel with solar plus battery,” he said.

However, Fabby underlined a number of challenges in the development of solar PV in the country such as the policy framework that is not strong enough, as well as the role of PLN as the sole off-taker for the electricity produced so that the development of solar PV is highly dependent on the condition of the PLN grid. The Local Content Requirement (LCR) for solar panels also makes investors less confident to invest in Indonesia.

“The domestic solar panel industry is not yet mature enough to produce tier-1 solar modules. IN which for bankable PV projects, they are required to use a tier-1 module,” he explained.

Fendi Liem, Founder/Managing Director of PT Selaras Daya Utama (SEDAYU), agrees that the clarity of government regulations is the trigger for the exponential growth of rooftop solar. The issuance of the Minister of Energy and Mineral Resources Regulation 49/2018 has undeniably provided a sense of security for both investors and potential customers of rooftop solar power plants since 2018. Fendi reminded all government stakeholders to accelerate coordination and synchronization when there are new regulations.

“We often encounter rules that are out of sync between institutions in the government. This of course creates a bad impression from the entrepreneur. The desire to invest can be reduced because the rules between government institutions are not in harmony,” explained Fendi.

Fendi sees 2022 as a momentum for the rise of rooftop PV after the MEMR Ministerial Regulation 26/2021 applies which provides more benefits for rooftop PV customers, don’t let this momentum pass by. One of the government’s homework is to capture this momentum by strengthening the policy framework so that both developers and consumers will no longer hesitate to invest in rooftop PV.

Erik Peper, Country Director of Indonesia Infunde Development, sees the development of solar energy to accelerate the energy transition in Indonesia as the right thing to do. However, there are a number of obstacles such as scalability, land acquisition, and project clustering. Erik also sees that there is still uncertainty from the Indonesian government to use clean energy technology.

“The energy transition must be prepared carefully and look at the possible developments of the situation in the future. Technology that is currently cheap/economical may become expensive in the future. If there is a financial cost (of the transition) let be it, as in the long run it will be beneficial, it should be treated as an investment.”

IESR Launches the Study of Renewable Energy Technical Potential Map Study in Indonesia

Jakarta, October 25, 2021 – A comprehensive renewable energy potential map needs to be prepared to support the energy transition towards utilizing 100 percent renewable energy and achieving zero emissions in Indonesia by 2050.

Indonesia’s renewable energy technical potential data still refers to the General National Energy Plan (RUEN) of 443.2 GW. This data has not been updated since 2014. Moreover, the RUEN data is also much lower than the actual potential of renewable energy.

“The suboptimal data on the potential for renewable energy will affect the perspective, strategy, and decision making on the use of renewable energy in Indonesia. This data confusion will make the government and business actors unable to plan optimally the energy transition in Indonesia, and formulate policies to accelerate the use of renewable energy. Updating data is significantly strategic for the executives to plan Indonesia’s energy transition,” explained Fabby Tumiwa, Director of the Institute for Essential Services Reform (IESR).

IESR uses GIS to update solar, wind, and water technical potential data. Considering the variability and intermittent issues of these three types of renewable energy, IESR also examines the potential of biomass and pumped hydro energy storage (PHES) for complementing it. As a result, Indonesia has a total technical potential of solar, wind, hydro, and biomass energy of 7,879.43 GW and 7,308.8 GWh for PHES. 

“Biomass and PHES can be used as complementary sources to overcome the intermittent and variability issues of solar, wind, and water energy. Our calculation results show that the biomass potential reaches 30.73 GW. However, its efficiency is only 20-35%, so it requires PHES,” said Handriyanti Diah Puspitarini, Senior Researcher and Lead Author of the Study “Beyond 443 GW Indonesia’s infinite renewable energy potentials”.

This magnificent potential if utilized optimally will be able to meet all energy needs in Indonesia. The study of Decarbonization of Energy Systems in Indonesia, conducted by IESR and published last May, projected that energy capacity needs will reach 1600 GW by 2050. By utilizing 100% renewable energy, Indonesia can meet the electricity demand of 1600 GW and achieve zero emissions by 2050. Based on the study, its main contribution comes from 1,492 GW of solar PV (88% of the primary energy mix), 40 GW of hydropower, and 19 GW of geothermal and supported by optimal storage capacity.

The study “Beyond 443 GW Indonesia’s infinite renewable energy potential” also contains detailed data on the technical potential of solar, wind, water, biomass, and PHES in 34 provinces in Indonesia. This data can be adopted by the central and provincial governments to more aggressively promote and develop renewable energy projects that are decentralized according to their most prominent potential. Yet, it is still interconnected between islands and provinces to balance their energy supply.

“This renewable energy potential map can be further developed by considering the development to operational costs so that it can provide a more precise outline to stakeholders about the optimal location of renewable energy to be developed. Furthermore, the development of renewable energy can be realized with the support of the right policies and regulations,” added Handriyanti.

Through this study, IESR recommends that the government, first, improve data on renewable energy potential as the reference for planning in the energy and development sector, and conduct regular reviews as renewable energy technology matures. Second, the government and experts need to complete the technical potential map with a brief analysis of the network’s intermittent, variability, and grid readiness, including predictions of climate conditions in the next few years. Third, the government and stakeholders should start considering the development of the decentralized system and inter-island connections as a way to provide electricity from renewable energy that is accessible to communities throughout the island, especially remote areas. Fourth, the government needs to give more support to various renewable energy technology innovations so that they can open up opportunities for utilizing the huge potential of renewable energy.

Table : Technical Potential of Renewable Energy in Indonesia

Type

Technical potential

Scenario 1

Scenario 2
Solar photovoltaic (rooftop, ground mounted, and floating)

7,714.6 GW

6,749.3 GW
Micro- to small-hydropower, with capacity ≤ 10 MW

28.1 GW

6.3 GW
Onshore wind power

106 GW at 50 m hub height and 88 GW at 100 m hub height

25 GW at 50 m hub height and 19.8 GW at 100 m hub height
Biomass power (only from crop wastes and wooden biomass)

30.73 GW
Pumped Hydro Energy Storage

7,308.8 GWh

The study “Beyond 443 GW Indonesia’s infinite renewable energy potential” can be downloaded at the link s.id/Beyond443GW

The video of launch of the study “Beyond 443 GW Indonesia’s infinite renewable energy potential” can be watched on Youtube IESR Indonesia at https://youtu.be/eS_PQD3gEIs

Solar PV Answers Industrial and Commercial Needs to Provide Green Products

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Seizing and Keeping the Momentum of Solar Energy Rise

Jakarta, 9 September, 2021-In the past year, there was a dynamic change in the energy sector. The approaching deadline of the Paris Agreement and the latest IPCC AR6 report stated that our time shortened to keep temperature rise. It  has raised discourse about decarbonization and net-zero commitment from all around the globe. Rapid deployment of renewables is one of the keys to decreasing emissions as the energy sector is the biggest emitter. In fact, the cost of clean energy keeps coming down. Studies show that wind and solar are the cheapest for ⅔ of the world’s population which is about 77% of GDP and over 90% of the generations (BloombergNEF, 2020). 

Solar energy will be the backbone of decarbonization due to its flexibility to be installed on various scales, from household size to utility size scale. Thus, it makes possible a massive solar deployment in Indonesia “Indonesia has a huge potential of solar energy, with the declining cost of a solar energy system and its ability to be installed in various power scales, it will enable more parties to take part of this collective action to not only deploying renewable energy but also to fight the climate crisis,” Fabby Tumiwa, the Executive Director of IESR summarized his speech during the report launching of Scaling Up Solar in Indonesia: Reform and Opportunity.

Caroline Chua, a Senior Associate of Bloomberg NEF Southeast Asia, as well as lead author of the report, emphasized that achieving Indonesia’s renewable target of 23% in 2025 needs double effort from the current condition. 

“Indonesia’s 23% renewable energy target can be achieved by installing 18 – 23 GW of solar PV. Solar alone can help Indonesia to meet its 2025 target as it can be deployed rapidly and the technology is already available and getting cheaper day by day,” she said.

The economy of solar is getting more and more competitive, and in the future, it will outcompete coal power plants. The solar tariff in Indonesia has declined by 76% from 25 cents/kWh in 2015 to 5,81 cents/kWh in 2020. Daniel Kurniawan, IESR’s Solar analyst said that there is already interest from the market to bloom in Indonesia.

“The challenge here is really to replicate the solar procurement. I think the market is already sending a strong signal that they are interested in Indonesia and it can be achieved. The question now is how Indonesia can think not only to achieve its renewable energy target but also to decarbonize its energy system,” he said.

Earlier this year, PLN announced that it’s going to be net-zero emission by 2060. In their new draft of RUPTL the plan to retire old coal power plants is included.

“PLN presents a roadmap to be net zero-emission in 2060. In the new RUPTL we also give more space for renewable energy and include the plan to retire coal power plants. According to us, we will retire all coal power plants in 2056 and finally reach net zero-emission in 2060,” Zainal Arifin, Executive Vice President Engineering, and Technology, PT PLN explained.

Chrisnawan Anditya, Director of Various New and Renewable Energy, Ministry of Energy and Mineral Resources, agreed that solar will be the key to achieve Indonesia’s target as well as fighting climate change.

“We need to address the intermittency issue and develop an energy storage system. In our planning, we expected the energy storage system to come from the pump-hydro storage that can be developed in 2030,” he said. 

The commitment is renewed and updated to achieve net zero-emission, yet,  it needs to be manifested through concrete planning. So that all stakeholders in Indonesia can use this momentum to seize renewable energy deployment in Indonesia for a common and greater good in the fight against the climate crisis.

Scaling Up Solar in Indonesia – Reform and Opportunity

This report, jointly produced by BloombergNEF, Bloomberg Philanthropies and Indonesia’s Institute for Essential Services Reform (IESR)

Pointing to the draft of the Grand National Energy Strategy (GSEN), the Government has targeted 38 gigawatts of new and renewable energy by 2035, making solar PV a priority: divided into floating solar PV, large scale solar PV, and rooftop solar PV. Globally, the technology has become the most effective solution to reach the net-zero emission target by 2050, weighing the lower investment cost. IESR’s recent study on solar PV technical potential based on GIS mapping also shows up to 20,000 gigawatt-peak potential on suitable land across Indonesia. Solar energy would be key in achieving Indonesia’s climate target and decarbonizing Indonesia’s energy system; requiring strong commitments, well-prepared plans, including identification of feasible project pipelines, and satisfactory implementation. 

BloombergNEF in collaboration with IESR produced a special report on the solar PV landscape in Indonesia and how to scale up its progress. The report highlights solar PV’s growing role to decarbonize Indonesia’s power system, investment needed, and to raise solar ambitions beyond 2025. This report launch will discuss the content of the report and its recommendation to the Government, and to invite strategic stakeholders to strengthen their commitment for solar deployment in the country.