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News Article.
Solar PV prospects: cloudy with a chance of sunshine
Indonesia
17 Dec 2019
Solar PV prospects: cloudy with a chance of sunshine

Indonesia is lagging behind its regional peers when it comes to solar power adoption. But while the government is still struggling to focus on renewable energy, specifically solar, private Indonesians are coming around to the technology.

Indonesia is close to a complete 100 percent electrification rate, the government claims. But while officials are fast to tout numbers – 98.83% in electrification rate as of November with a 99.9% coverage targeted by the end of 2019 – few are willing to discuss more the government’s plans in terms of the shift towards renewable energies.

Indeed, the opposite is taking place instead. While the country’s consumption of oil and gas for energy has plummeted in the past decade (38.81% in 2018 from 48.63% in 2008, and 19.67% in 2018 from 24.08% in 2008, respectively), its consumption of coal has leaped to 32.97% in 2018 from 22.92% in 2008, according to the Indonesia Energy Outlook 2019 report from the Indonesian Ministry of Energy and Mineral Resources (MoEMR).

Meanwhile, the same report noted that the energy consumption of renewables only increased marginally, to 8.6% in 2018 from 4.37% in 2008. This is a far cry from the 23% of renewable energies of the national energy mix in 2025. The prospect of gaining the remaining 17% in the next five years looks even less feasible considering that the 2019-2028 electricity procurement plan (abbreviated as RUPTL) allocated a significant portion towards coal power plants – up to 56.7%.

The decisions being taken by Indonesia may be attributed to the bleak global economic outlook. The World Bank has already slashed its global growth forecast on China-US Trade War fears to 3% in October 2019, down from 3.8% six months prior. The recent election result in Great Britain is further stoking concerns over Brexit. The trade dispute over palm oil between Europe and Indonesia is also adding even more pressure for the archipelago to find ways to maintain economic trajectory.

Currently, there is no clear push from the Indonesian government in regards to solar energy adoption. But it would be a mistake to completely disregard the country’s solar PV market. At more than 500GW of potential solar sources, according to the IEEFA, the benefit is too obvious for most Indonesians to ignore. This is perhaps why, earlier this year, the government launched the national movement called a million solar roofs (Gerakan Nasional Sejuta Solar Atap), which encourages citizens to install solar panels on their rooftops.

The movement has not caught on en-masse, but what development there is may still be considered encouraging. As of September 2019, the number of installed solar rooftop has nearly doubled (181% increase) according to data from the MoEMR. That’s more than 800 new solar rooftops out of the currently installed 1,435. This rise may be more aptly attributed to a number of regulations issued on the city level that mandatorizes the installation of solar panels on government-owned buildings, but the contributions of private Indonesian citizens should not be ignored.

Additionally, the non-governmental organization Institute for Essential Reform expressed confidence that solar adoption would exceed 300WM in 2020, citing increased interest. Already there are 5 WP (Watt peak) Solar Rooftop modules available for as low as Rp 100,000 (US$7) at online marketplaces such as Tokopedia and Blibli. And Youtube videos from local Youtubers discussing solar panels are raking in hundreds and thousands of views. Considering Indonesia’s huge market and the rapid rise of its Internet economy, there are considerable opportunities to be made in this area.

Umbrella at the ready
In the meantime, the Indonesian government can learn a lesson or two from its regional neighbor Vietnam, which has shown incredible foresight in terms of propelling its economic growth. Vietnam has benefited greatly from inking trade deals with various countries and economic blocs, including the EU while introducing policies that are business-friendly. Indeed, it has been a great public shame for the Indonesian President Joko Widodo that, as reported by Vietnam Insider in September of this year, 70% of companies surveyed by the publication chose Vietnam as their next investment destination. None of the remaining companies surveyed chose Indonesia, opting for Cambodia or Malaysia instead.

Not only has Vietnam surpassed Indonesia in its attractiveness for foreign investments, but it has also practically left Indonesia in the dust in terms of solar energy adoption. Based on data from the ASEAN Centre for Energy, Vietnam has increased its solar capacity significantly in the last two years – from only 134MW in 2018 to an expected 5.5GW this year. That’s nearly half of the total installed solar power capacity in Southeast Asia. It is further looking to add another gigawatt to the mix. Meanwhile, Indonesia is sitting on idly with only 53MW in installed solar power capacity by the end of 2018, according to data from the Institute for Energy Economics and Financial Analysis (IEEFA), only 24MW of which, including solar rooftop units, are currently installed and dispatchable to the grid.

A more rapid adoption of solar energy may be possible should Indonesia consider revising its regulations to benefit individual users, such as the Feed-in-Tariffs rule that are capped to the maximum local electricity tariff by retail – which, in areas with high-electricity demand such as the island of Java, is as low as US$0.07 cents per kWh. Compare that to the feed-in-tariff in Vietnam, which, in 2017, was as high as $0.0935 cents per kWh, or even its average retail price of $0.0803 cents per kWh. For industrial users, the government may consider lightening the rule that mandatorizes the use of local components in solar PV technology.

Germany, as an industry leader in solar photovoltaic systems, remains on the field to continually promote solar energy adoption in Indonesia. Recently, at an Indonesian-German Renewable Energy Day event in Jakarta in November, the German Ambassador to Indonesia Peter Schoof pledged Germany’s commitment to support Indonesia’s efforts to reach the national 23% goal of renewable energy in the national energy mix. If 2019 has been a cloudy year for renewable energies in Indonesia, there remains hope that there will be sunshine come 2020.

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