RFP – Economic and Development Assessment in Coal – Producing Region (Lahat)

Institute for Essential Services Reform (IESR) is a think-tank in the field of energy and environment. IESR encourages transformation into a low-carbon energy system by advocating a public policy that rests on data-driven and scientific studies, conducting capacity development assistance, and establishing strategic partnerships with non-governmental actors. As part of IESR effort to increase public and government awareness and carry out studies to the decision maker, currently, IESR is conducting social and economic research in the coal region in Indonesia. This study aims to provide recommendations to the government on other potential economic sectors besides coal and natural resources in order to create new green employment.

In order to have a comprehensive analysis of the economic sector, IESR sees the opportunity to develop other sectors that support low-carbon economic growth at the sub-national level. The implication of global coal decline is predicted to impact the economic system, not only at the local but also at the provincial level. Determining potential sectors to be developed needs accurate calculation and analysis to decide which one suits the most with the local characteristics and government plans. Thus, IESR needs a comprehensive assessment of the effect of energy transition on the local economy and the opportunity presented particularly in promoting renewable energy development and circular economy.

Proposals will be accepted until 24:00 Indonesian Western Standard Time (WIB, GMT+07) on Wednesday,  27 September 2023. Any proposal received after the deadline will be regarded as inadmissible. Please kindly send the proposal to Program Manager Sustainable Energy Access IESR, Marlistya Citraningrum, at citra@iesr.or.id and cc: rizqi@iesr.or.id for inquiries and submissions.  Please include “RFP Response – Economic and Development Assessment (Lahat)” in the email subject.

 

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RFP-Economic-and-Development-Assessment-in-Lahat-Sept-2023

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ASEAN Grid Interconnectivity as the Start of Renewable Energy Security in the Region

press release

Jakarta, 13 June 2023 –  To reach energy security sustainably and to face challenges of global climate change, Indonesia’s chairmanship in 2023 needs to be a strong leader in the decarbonization efforts of the energy sector in Southeast Asia. region. Institute for Essential Services Reform (IESR) views that Indonesia can further its regional cooperation and collaboration on innovation, technology, renewable energy research, and push for clearer and enticing policies to boost investments in the renewable energy sector.

As a region, ASEAN has committed to reach a 23% energy mix target in primary energy and 35% capacity of renewable energy installed by 2025. Furthermore, to expand the regional electricity trade , integrate the region’s power grid, and to strengthen the reliability of the power grid, ASEAN is currently building the ASEAN Power Grid (APG).

The Executive Director of the Institute for Essential Services Reform (IESR), Fabby Tumiwa, explains that the project to interconnect ASEAN’s grid through ASEAN Power Grid (APG) could be a starting point for ASEAN member states to boost renewable energy capacity in the electricity sector and shift their dependency to fossil fuels. Indonesian chairmanship in ASEAN 2023 with one of its main focus being Sustainable Energy Security has to be utilized to push ASEAN member states to focus on efforts to decarbonize their energy systems. 

“Indonesia has the chance to lead ASEAN to transition their energy, amplifying the renewable energy mix, and to reduce fossil energy. Indonesia has given examples for other ASEAN member states to have a more ambitious target that aligns with the Paris Agreement. One of which is to push ASEAN member states to end CFPP operations before 2050 and to push agreements between ASEAN member states to build cell industries, solar modules, and energy storage (battery),” Fabby Tumiwa assessed. 

ASEAN itself has a capacity of 7.645 MW on the existing interconnecting grid in the ASEAN Power Grid project, according to a presentation from the Sub Coordinator of the Electricity Program MEMR, Yeni Gusrini, in the IESR Webinar titled Toward a Decarbonized ASEAN. In the future, the interconnection grid will be added in capacity to around 19.000 – 22.000 MW and covers a wider area.

“ASEAN Power Grid contributes towards the economic development in ASEAN by helping fulfill energy demand in ASEAN and to develop regional industry player’s growth. On the first phase, the electricity grid in Laos, Thailand, Malaysia, and Singapore has been connected through the Lao PDR, Thailand, Malaysia, Singapore Power Integration Project (LTMS-PIP), which has been the pioneer of the power trade mechanism that has transmitted 100 MW from Laos to Singapore, utilizing the existing interconnection,” Yeni explicated. 

IESR views that the development of an interconnection grid that accommodates the integration of renewable energy in Indonesia needs to be accelerated so that it aligns with the Paris Agreement to net zero emission (NZE) in 2050.

“Interconnection between the islands in Indonesia and between the countries in ASEAN is one of the enabling factors of renewable energy integration. The existence of this interconnection will help solve the problem of intermittency and to maximize renewable energy usage, so that if there’s an oversupply such as solar PV in the daylight built in another location, the electricity can be transmitted to another place. Before that, ASEAN member states have to keep refurbishing their renewable energy investment climate in their respective countries and regionally with a more interesting regulation framework,” explained Deon Arinaldo, Program Manager of Energy Transformation IESR. 

Deon says, Indonesia is a country with the biggest economy and energy consumption rates in ASEAN, and has a massive energy resource. With ASEAN chairmanship this year and a supportive process and regulations for energy transition at the national level such as JETP and New and Renewable Energy Bill, this will make Indonesia an example and trigger the acceleration of ASEAN’s transformation process.

IESR believes that the decarbonization efforts are not limited to the government, but also involves the participation of various stakeholders, including private sectors, civil society, and international agencies. In this spirit of collaboration, Indonesia needs to invite all parties to join in the effort to tackle climate change and create a sustainable future for ASEAN. 

The Limited Option of Clean Energy for Remote Area Residents

Consumers can choose cleaner energy sources, but what if the choice is minimal? Or even none at all?

The government’s commitment to promoting renewable energy (RE) in Indonesia dates back several years. Furthermore, the signing of the Paris Agreement in 2015 to limit global temperature rise to 1.5 degrees Celsius makes the Indonesian government more serious about shifting fossil energy to cleaner energy by focusing on developing the electricity sector with renewable energy. At the same time, based on the Climate Action Tracker (CAT) assessment for the last 2 years shows that the Indonesian government’s policies, commitments and emission reduction targets are rated Highly insufficient or even lead to rising, rather than falling emissions.

With a considerable gap between the 2025 target and the results of the CAT Indonesia assessment showing inconsistencies with the Paris Agreement, boosting energy transition must continue to be pushed to a higher achievement rate, given the gap that is quite far from the “big” target of 23%. The government’s participation in enacting more ambitious policies and objectives in the energy transition is expected to breathe new life into cleaner energy policies for the community as the end customer.

The energy transition can, in reality, give Indonesian citizens optimism that there are cleaner and more sustainable energy sources for usage than fossil energy, energy with lower emission quality. Inclusiveness in accessing energy for all communities, especially in remote areas, is an important point in the energy transition carried out.

Is Diesel Still a Good Choice?

As is generally the case in the Adonara Island area, East Flores, NTT has power outages, diesel-fuelled generators and PLTD (Diesel Power Plant) are still “best friends” of residents there, at least for the last 4 years. Power outages that occur 2-3 times a day, for an unspecified period, make people with a “better economy” priority to have private generators. Then, what about those who do not belong to that group? Light from candles will be the main lighting in their house, or, they can enjoy electricity access from a neighbour’s generator if they are lucky enough.

The 62 units of the total 85 PLN power plants in the 2021-2030 RUPTL show the general usage of diesel power plants in NTT as a solution for delivering energy from the government. Diesel-based plants have often been used as a solution by the government to provide electricity in areas that are difficult to access. Indeed, the abundance of renewable energy types available can assist individuals in selecting greener energy sources, both small-scale (for example rooftop solar PV, biomass, and micro-hydro) and large-scale plants (hydropower, ground-mounted PV, geothermal).

In addition, this can also overcome PLN’s problems in the mobility of installing electricity networks in remote areas due to several things, including difficult location access, locations far from the existing grid and road infrastructure that has not been supported.

Capacity Development and Sustainability

If we only rely on outsiders for maintenance, especially in rural areas—which has always been one of PLN’s toughest problems in creating access to electricity—the ease of access and diversity of renewable energy growth sources will inevitably be obstructed. Without excluding the government’s right to provide electricity evenly to the community as stated in Article 2 paragraph (2) of Law 30/2009 on Electricity, the role of local communities as consumers is very large in helping the sustainability of renewable energy development.

The government should encourage local community participation in technical aspects of RE development so that in the future, local communities as final consumers are not only “recipients,” but also “experts,” with the potential to become “creators” capable of providing energy on their own.

The big knowledge gap in local communities for technical problems should be filled with capacity development by the government and expert partners with a sufficient period so that the community can be independent or with less supervision from the central, not only 1 span short program and then not continued in the next period.

One example of capacity development applied to local communities by the government and experts is The Patriot Energi program. By approximately 1 year of the program, energy independence can be increased in the community base. With a specified time, the possibility of areas that have not been fully independent should exist. However, the expectation of local communities who can explore and utilize renewable energy more deeply with qualified technical capabilities far outweighs these doubts.  It is not improbable that in the future, renewable energy technologies will be created by distant villages where the only access to electricity was provided by non-clean energy.

A Privilege That Should Not be One

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

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

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

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

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

*****

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

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

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

The luxury of choosing your energy source 

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

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

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

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

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

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

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

 

Till we meet again.

Having Slow Solar PV Development in 2022, Indonesia Needs to Push the Implementation of Supporting Policies

press release

Fabby Tumiwa delivered his speech at the Shine Bright: Advancing G20 Solar Leadership event

 

Jakarta, 27 October 2022 – To achieve the target of a 23% renewable energy mix by 2025 and the energy system’s decarbonization by 2060 or earlier, Indonesia needs to seriously improve and implement policies that encourage the development of renewable energy, especially solar energy. The utilization of solar energy is believed to be fast and strategic to achieve these targets. Presenting the complete review of the development of solar energy throughout 2022 and providing a projection in 2023, the Institute for Essential Services Reform (IESR) published the flagship report, Indonesia Solar Energy Outlook (ISEO) 2023.

Arifin Tasrif, Minister of Energy and Mineral Resources of Indonesia on the event of Shine Bright: Advancing G20 Solar Leadership organized by IESR, said that based on IRENA data, the cost of electricity (Levelized cost of electricity/LCOE) has decreased significantly by 88% between 2010 and 2021, from USD 41.7/kWh to USD 4.7/kWh.

“But based on current practice in the industrial sector, we get offers of up to USD 3/kWh, including USD 4/kWh battery costs,” said Arifin at the Shine Bright: Advancing G20 Solar Leadership event organized by IESR with support from Bloomberg Philanthropies, and in collaboration with the International Solar Alliance, and the Indonesian Solar Energy Association.

Furthermore, he explained that based on the energy transition roadmap in Indonesia, solar energy plays an important role in electricity in Indonesia with 421 GW of 700 GW coming from solar.

“We need support from local producers and industries to fulfil local requirement content (LCR), considering that Indonesia has mineral potential and critical material for solar PV, battery, and electricity network, Besides, the aspect the easy access to cheap financing, incentive, and other financing facilities is very important to provide a financial feasibility study and increase renewable energy investment such as solar energy, “explained Arifin.

Fabby Tumiwa, Executive Director of IESR, said that in general, Indonesia made some progress since 2018, although it is relatively slow in encouraging the development of solar energy. According to him, some reforms are needed in regulations and their implementation, especially before the deadline for realizing the target, which is only three years left.

“Rooftop solar power plants that have the potential of 655 GW for building only, can be built quickly and involve community investment, without overburdening the government. Moreover, to expect additional renewable energy generation capacity from the implementation of PLN’s Business Plan (RUPTL) 2021-2030, rooftop solar power plants can meet a renewable energy mix target of 3 to 4 GW in 2025,” said Fabby.

Fabby added that the government and PLN need to allow permits for rooftop solar power plant installation.

“Availability of soft loan funds from financial institutions can support the adoption of household-scale PV mini-grid. Also, encouraging the adoption of solar PV in industrial areas, and non-PLN business areas needs to be done,” suggested Fabby.

ISEO 2023 stated that the progress of Indonesia’s solar energy can be seen from the decline in the price of solar electricity obtained through a power purchase agreement (PPA) made by PT PLN (Persero) with Independent Power Producers (IPP). Between 2015 and 2022, solar PPA prices declined by 78%, from $0.25/kWh to $0.056/kWh. 

Furthermore, in terms of the project pipeline, there are currently eight projects that have been tendered totalling 585 MWp in capacity. 

“In terms of utility-scale solar power plants, Indonesia has the potential for floating solar power plants. Its future development can make Indonesia a leader, and at the same time realize Indonesia’s leadership in terms of energy transition and use of solar energy in the G20 and ASEAN,” said Fabby.

Dr Ajay Mathur, Director General, of International Solar Alliance said solar energy is a potential energy source to be developed considering the increasingly competitive price of the technology.

“The International Solar Alliance (ISA) is proud to associate with the Institute for Essential Services Reform (IESR) to drive forward our common goal of making solar electricity the energy source of choice across the world. Solar Energy is the world’s most abundant and clean energy source, but also the global energy imperative to drive international climate action due to its fast-decreasing cost,” said Mathur.

At the same time, IESR and ISA signed a memorandum of understanding to accelerate the adoption of solar energy in Indonesia. ISA is an international institution that has various experiences and members from many countries. It has carried out innovations and facilitation to support solar energy development globally. The scope of the collaboration between ISA and IESR includes mapping the domestic solar industry, capacity building, and identifying financing schemes.

ISEO 2023 considers that the establishment of the ceiling price-based pricing in Presidential Regulation No. 112/2022 is expected to provide more space for developers to submit their bids. This regulation has been drafted since 2019 and initially considered feed-in-tariff instruments to encourage the development of renewable energy, especially small scale. 

To encourage the effective implementation of PR 112/2022, a clear and transparent auction mechanism is needed, as a regular and planned auction schedule, as well as providing regulatory certainty and ease of licensing.

ISEO 2023 notes that local content requirements (LCR) are still one of the main obstacles in the auction of solar power plants in Indonesia. Based on Minister of Industry Regulation No. 5/2017, the minimum LCR value of goods for solar module components must reach at least 60% since 1 January 2019. However, the realization of the LCR of solar modules currently only reaches 47.5%. Moreover, the efficiency and price of domestic solar panels still do not meet the requirements of international financing bankability standards. 

“The government needs to review the solar module LCR value provision policy based on industry readiness while preparing a long-term solar module industry policy to decarbonise Indonesia’s energy system,” said Daniel Kurniawan, Researcher, Photovoltaic Technology & Materials Specialist at IESR and Lead Author of ISEO 2023.

On the adoption of solar PV, although the Ministry of Energy and Mineral Resources has issued Ministerial Regulation No. 26/2021, some of its provisions have failed to be implemented, resulting in the slow growth of solar power plants. PLN’s oversupply of electricity is suspected to be the cause of the limitation of rooftop solar power plant (PVP) utilization to 10 to 15 per cent of capacity by PLN in early 2022. If it continues, it will be difficult to realize the solar targets that the government has set, such as the government’s 3.6 GW rooftop solar PSN target by 2025, and the 2.3 GWp solar project pipeline of 31 declarators at the Indonesia Solar Summit 2022.

“The government, in this case, the Ministry of Energy and Mineral Resources and PLN, needs to immediately provide a solution to this issue. Not to hinder adoption at a very early stage of adoption but to nurture the growth of rooftop solar until it reaches self-sufficiency. This can be achieved by providing a stable policy environment for market growth and development of the solar industry,” said Daniel.

The Indonesia Solar Energy Outlook (ISEO) 2023 report was first launched this year. Initially, the progress of solar energy development within the framework of the energy transition was integrated into the Indonesia Energy Transition Outlook (IETO) report.

Shine Bright: Advancing G20 Solar Leadership Indonesia Solar Energy Outlook (ISEO) 2023 Launch and High-Level Conference

What:

  • The event brings together policymakers at national and sub-national levels, business players, investors, and other important stakeholders to further commit their contributions to accelerate gigawatt-order of solar energy in Indonesia.
  • IESR’s first flagship solar report, Indonesia Solar Energy Outlook (ISEO) 2023, will be launched during this event; highlighting the role of solar energy for Indonesia’s decarbonization effort.
  • Recommendations and commitments from the event will be communicated prior to G20 high level meeting in November 2022.

Why:

  • Indonesia has committed to a net-zero economy by 2060 or sooner. This requires acceleration of renewable energy utilization in the country.
  • Solar energy has been identified as key to achieve 23% renewable energy target by 2025.
  • The government of Indonesia pledges 3.6 GW rooftop solar national strategic program until 2025, PLN commits 4.7 GW of IPP projects in their newest business plan.
  • Indonesia is poised to showcase energy transition project as part of its G20 presidency 2022.
  • India, holding G20 Presidency 2023 and home to International Solar Alliance (ISA), is a global leader in solar deployment and is expected to continue the energy transition agenda.

Significant Roles of Subnational Governments to Lead the Decentralization of Energy Transition

press release

Bali, 30 August 2022–The post-pandemic economic recovery by staying focused on making ambitious climate mitigation efforts through low-carbon development is a step that needs to be taken by local governments. The success of low-carbon development is also inseparable from planning for a just energy transition. The commitment of various parties, including local governments and communities to promoting the energy transition, is crucial considering that decentralization of the energy transition will have multiple impacts.

The Governor of Central Java, Ganjar Pranowo, said that through the Central Java Energy and Mineral Resources Office, he was actively pushing for energy transition efforts in his region. Energy transition policy instruments such as governor’s circular letters, regional secretaries, and various initiatives such as the declaration of Central Java to become a solar province in 2019, are ways to attract the private sector and the public to utilize renewable energy through the adoption of rooftop solar. Until Q2 2022, the total installed PLTS capacity in Central Java Province reached 22 MWp. The Central Java Provincial Government also supports the use of other renewable energy that is abundantly available, such as livestock manure biogas and micro hydro power plant(MHP), with government programs or encouraging community collaboration.

“Asymmetric decentralization by inclusion with (treatment-red) specifically in every location. With collective awareness, the potential for renewable energy in the area is checked and stimulated,” said Ganjar. This, according to Ganjar, will encourage a faster transformation.

Central Java’s climate commitment is also shown by starting to use electric vehicles as provincial government official vehicles.

Togap Simangunsong, Expert Staff of the Minister of Home Affairs for Social Affairs and Inter-Institutional Relations, Ministry of Home Affairs appreciated the good practices carried out by the Central Java Provincial government. He said that his party and the Ministry of Energy and Mineral Resources are currently drafting a Presidential Regulation that strengthens the authority of regional/provincial governments in the administration of government affairs in the field of energy, mineral resources, and sub-sector of new and renewable energy.

“Through this, it is hoped that local governments can provide support in efforts to achieve the target of the new renewable energy mix as an effort to reduce greenhouse gas emissions so that local government commitments are made to accelerate energy justice following their authority,” said Togap representing the Minister of Home Affairs, Tito Karnavian in a webinar entitled “Energy Transitional Decentralization: Increasing the role of communities and local government” organized by the Institute for Essential Services Reform (IESR) and the Central Java Provincial Government.

In addition, Chrisnawan Anditya, Head of the Planning Bureau, Ministry of Energy and Mineral Resources said that the utilization of renewable energy potential will open up opportunities in building a green national economy and as an effort to recover the economy after the pandemic under the G20 Presidency’s theme, “Recover Together, Recover Stronger”.

“Each region has a special new renewable energy potential that can be used to improve the welfare of local communities. The difference in the potential for new and renewable energy between regions is a technical challenge, as well as a great opportunity for our energy system. This condition allows the sharing of energy based on new and renewable energy when the area experiences energy abundance or scarcity. For this to happen, an integrated electric power system (smart grid and super grid) is needed,” explained Chrisnawan on the same occasion.

Furthermore, strong leadership at the regional level will be able to mobilize the community to make the cooperation of energy transition. This was stated by Fabby Tumiwa, Executive Director of IESR. He said the initiative and leadership of the local government will be able to answer the problem of access and security of energy supply by utilizing the abundant renewable energy potential in the area.

“Indonesia’s energy transition requires the construction of hundreds or even thousands of gigawatts, renewable energy generation, transmission and distribution infrastructure and energy storage systems. But by starting to divide it into small units, the big problems can be more easily solved and carried out by more parties,” said Fabby.

He added, based on the IESR study, that the decarbonization of the energy system in Indonesia will cost USD 1.3 trillion by 2050, with an average investment requirement of USD 30-50 billion per year. This amount is 150%-200% of the current total investment in the entire energy sector.

“This investment need is costly and cannot be borne solely by the government and SOEs. But this large investment can be met if we take into account the potential of the contribution and innovation power of the community as well as the capabilities of local governments. Citizens’ contributions and innovations can mobilize funding from the government, local government and village governments, as well as funding from the private sector and non-governmental institutions,” he added.

Bali is the first province in Indonesia to have a special governor regulation for clean energy and electric vehicles. In the Governor’s Regulation on Bali Clean Energy, the Governor of Bali encourages the use of renewable energy for various sectors, especially rooftop solar power plants. This effort is carried out to realize the vision of low carbon development in Bali and concrete steps for sustainable tourism.

“Due to the pandemic, Bali’s tourism has stumbled, after the pandemic, Bali has started to rise. Several tips have been implemented, such as the governor’s regulations and circulars regarding the adoption of rooftop solar power plants. Actually, the main target is tourism, but first, do a pilot in the government,” said Ida Ayu, Expert Staff to the Governor of Bali.

The plans and steps for achieving renewable energy targets in the Regional Energy General Plan (RUED) are also carried out by the Jambi Provincial government. The Governor of Jambi, Al Haris, through the Deputy Governor of Jambi, Abdullah Sani, emphasized his commitment to work together with the central and private parties to develop regional energy transitions because the resources they have are very sufficient, only to use and transform natural resources into energy that can be enjoyed by the Jambi community in particular.

The Jambi Provincial Government through the Department of Energy and Mineral Resources has also collaborated with IESR for the implementation of RUED and energy conservation efforts within the local government. Currently, the Governor of Jambi is in the process of issuing a governor regulation for the use of PV mini-grid as a substitute for energy subsidies.

Redefining Energy Access in Indonesia

Jakarta, 16 June 2022 – Energy is a primary necessity for all people. By having proper access to energy, people get the opportunity to improve their quality of life through education, social gathering, and even economic activity. Realizing its impact on human civilization, it needs serious attention, particularly in terms of its measurement and monitoring. However, the Indonesian government has an unclear method of measuring energy access around the country. Through the Ministry of Energy and Mineral Resources, the Indonesian government uses “ratio electrification” to define whether an area (a village, for instance) has access to energy or not. In other words, for instance, a village could possibly consist of fifty houses, and only one house has access to PLN’s services so it leads to the consideration as the whole village has been ‘electrified’ or already accessing electricity.

This facts was revealed by Marlistya Citraningrum, Sustainability Energy Access Program Manager, IESR in the webinar “Peeling the Onion: Monitoring, Evaluation, and Other Acronyms for Assessment and Learning in Energy Access” hosted by World Relief Institute (WRI) India

She also added that the government’s ratio electrification method only measures the tier-one electricity access, such as lighting which is often still not available 24 hours. There is no other technical aspect to define energy access in Indonesia.

The recommendation brought by the Institute for Essential Services Reform says that the Indonesian government must redefine energy access terms by including the quality of the electricity received by the community to define whether an area is considered electrified or not yet. 

The multi-tier framework approach can be utilized to define in which spot the quality of electricity in Indonesia. Multi-tier framework itself categorizes electricity from tier 0  to tier 5.

NoTierLoad LevelNotes
1Tier 00No access at all
2Tier 13-49 WTask lighting, phone charging, radio
3Tier 250 - 199 WMultipoint general lighting, TV, computer, printer, fan
4Tier 3200 - 799 WAir cooler, refrigerator, freezer, food processor, water pump, rice cooker
5Tier 4800 - 1.999 WWashing machine, iron, hair dryer, toaster, microwave
6Tier 52.000 W - higherFull access, such as air conditioner, space heater, vacuum cleaner, water heater, electric cookstove

Source: World Bank Document, Bhatia and Angelou 2015

A more comprehensive method to define energy access status is crucial to be implemented in Indonesia because once a method is not comprehensive, the measuring result is not representing the real condition and may lead to a misidentification. 

A pilot project of the energy delivery model by the Institute for Essential Services Reform in Boafeo, East Nusa Tenggara figured out that the community needs more than basic energy access. Community needs energy that can improve their livelihood and economy through coffee farming production, as well as improve the quality of education for their children. 

“If we refer to MEMR’s electrification ratio, we are not able to see the need to improve coffee farming production nor the hope to improve education output, because the village is already connected to the grid (PLN) in early 2021,” Marlistya explained.

She later emphasized that a misidentification of a condition may lead to the wrong offered solutions. Therefore it is very crucial to identify the actual issue and condition comprehensively. 

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.***