Indonesian competition to net zero



Coal-dependent Indonesia has huge solar potential, but progress towards a net-zero economy has been slow, explain Daniel Kurniawan and Fabby Tumiwa Institute for Essential Services Reform (IESR), an Indonesian think tank.

In 2021, the Indonesian government announced its goal of achieving net zero emissions by 2060 at the latest. The central role of the sun has been confirmed by the country’s Ministry of Energy and Mineral Resources (MEMR), IESR, International Energy Agency (IEA) and International Renewable Energy Agency (IRENA). As reported by the IESR in its “Indonesia Solar Energy Outlook 2023” report, solar deployment has fallen far short of carbon emission reduction requirements.

The world’s fourth most populous nation – with 275 million people – is Southeast Asia’s largest economy and is expected to become the world’s seventh largest by 2030. The world’s 15th largest country by land area, it contributes 3 terawatts of technical solar energy production capacity. peak (TWp) – 20 terawatt peak depending on land use. About 1.5 TWp of this potential, which occupies 2.5% of Indonesia’s land area, could support a zero-emissions energy system by 2050, according to an IESR study titled “Deep decarbonization of Indonesian Energy System.”

Cost competitiveness, modularity and availability ensure that solar energy would be the leading source of electricity in most zero-energy models in Indonesia. Solar and, to a lesser extent, wind will generate 55% of Indonesia’s electricity by mid-century, according to the IEA’s model, which is consistent with keeping the global temperature rise this century at 1.5C. IRENA estimates that 800 GW to 840 GW of solar energy could supply 54 to 62 percent of Indonesia’s electricity by 2050. Both scenarios would require greater power system flexibility, expansion of electricity transmission infrastructure, inter-island connections and energy storage.

Current progress

However, data from the Ministry of Energy shows that Indonesia had only used 270 MWp of solar energy by the end of December, which is about 0.01% of the lowest technical potential. Uncertainty in policy and regulation is combined with a lack of planning and implementation in the electricity market controlled by the state-owned enterprise Listrik Negara (PLN), which produces, transmits and distributes electricity.

For example, although PLN’s 10-year electricity development plan – until 2030 – calls for 4.7 GW of solar power, including 3.9 GW in operation by 2025, last year only eight projects with a total generation capacity of 600 MW were in the pipeline, all of them provided before the power plan drafting.

PLN has also tendered the first phase of a plan announced last year to replace 500 MW of small diesel plants in remote locations, but unfavorable results mean the procurement round will be rescheduled, delaying the project. The aid program has been criticized for the lack of an open auction schedule, which has led to market uncertainty.

Bright spots

However, there have been successes. Solar power purchase agreements (PPA) prices fell 76% from 2015 to 2020, from $0.25/kWh to $0.058/kWh. The drop is 84% ​​(below $0.04/kWh) when considering two record low bids in PLN subsidiary Indonesia Power’s equity partner selection exercise for floating solar projects in Singkarak and Saguling with a total generating capacity of 110MW. This year, PLN companies published RFPs for a 100MW floating solar project at the Karangkates Dam, as well as the second phase of equity partner selection for utility-scale solar and wind farms.

Rooftop solar has grown moderately since net metering regulations were introduced in 2018, but restrictions imposed by PLN have slowed installation. In 2021, Energy Minister Arifin Tasrif drew up a decree that every kilowatt-hour that net-metered solar owners put on the grid would receive a full kilowatt-hour discount on electricity bills, instead of the 65 percent credit paid by PLN.

The Minister of Energy also streamlined the application process for net metering, but PLN, citing network capacity problems, decided not to implement the new system and subsequently limited the capacity of the net metering system to 10-15 percent of the consumer’s electricity connection.

With fewer net-metered customers arriving in 2022 than in previous years, Jakarta is trying to find a middle ground to ease PLN’s capacity fears, with proposals including eliminating net metering and applying quotas to applications. While industrial solar could benefit from any removal of capacity constraints, residential solar and small business use are expected to suffer from the increased payback period of net metering systems.

printed edition of pv magazine

The current number pv magazine celebrates China’s journey from solar newcomer to installing more than 100 GW(AC) of panels this year – Vincent Shaw and Frank Haugwitz mark a remarkable 20-year journey. We look at what Indonesia needs to achieve its net-zero goal, and also explore the revival of the solar renaissance in Europe through vibrant fairs and grand design.

The Indonesian government and PLN still have a lot of work to do to make solar decarbonization a success. Momentum was created by last year’s presidency of the G20 economic group and the signing of Indonesia’s Just Energy Transition partnership with several multilateral lenders to finance the transition from coal to clean energy.

The early retirement of coal and the widespread adoption of solar energy are critical to the country’s goal of limiting peak emissions from the energy sector to 290 megatons of carbon dioxide.2 by 2030, and renewable energy sources will generate 34 percent of electricity this decade.

Through its Energy Chairmanship of the Association of Southeast Asian Nations, Indonesia can strengthen the role of solar power in the context of regional energy security by cooperating within and beyond the power system, including promoting the region’s solar power supply chain. Although the path is winding, the path to clean, affordable and fair energy – the backbone of solar energy – is clear.

About the authors: Daniel Kurniawan is a solar energy policy analyst at IESR and has participated in solar energy consulting with government agencies, local and international entities. He was previously a solar cell researcher and trained in materials science.

Fabby Tumiwa is CEO and founding member of IESR and chairman of the Indonesian Solar Energy Association. He has worked for more than 20 years on various energy policies and regulations.

This copy was amended so that Indonesia’s technical solar potential should be measured in terawatt peak (TWp) rather than petawatt peak (PWp) as stated in the print edition..

David is a passionate writer and researcher who specializes in solar energy. He has a strong background in engineering and environmental science, which gives him a deep understanding of the science behind solar power and its benefits. David writes about the latest developments in solar technology and provides practical advice for homeowners and businesses who are interested in switching to solar.

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