Development of Solar Power Plant Systems in Indonesia
Picture 1.1: Ministry of Energy and Mineral Resources Indonesia
Numerous nations throughout the world have paid close attention to the use of solar energy as an alternative energy source to address the energy issue, particularly the petroleum crisis that has existed since the 1970s. In addition to its endless availability, its use does not generate any pollutants that could harm the environment.
Only about 10 MWp have been used out of Indonesia’s enormous solar energy potential, which is approximately 4.8 KWh/m2 or the equivalent of 112,000 GWp. Currently, the government has published a roadmap for the use of solar energy that sets the installed PLTS capacity by 2025 at 0.87 GW, or roughly 50 MWp/year. This figure demonstrates the significant market opportunity for the future growth of solar energy.
The government of Indonesia plans to move the capital to Kalimantan. The designation of parts of Kutai Kartanegara Regency and North Penajam Paser Regency in East Kalimantan as IKN will have an impact on the growth of various sectors. One important sector to support development is the energy sector. The biggest sustaining energy to support activities in a national capital city is electricity. The construction of PLTS can be realized to meet electricity needs in the East Kalimantan region and expected to realize the optimization of the potential of existing natural resources, namely utilizing Indonesia’s geographical conditions which are in the equator area and throughout the year get sunlight as solar power potential. Determining the right location for the construction of PLTS is the main key in meeting electricity needs at IKN. The construction of PLTS must pay attention to the impact of development on the environment, so that the need for environmentally friendly electricity based on renewable energy can be carried out properly.
Meanwhile, the West Kalimantan region is also considered to have a fairly high potential for solar energy. West Kalimantan’s potential to generate electricity with diesel is 2,202 GWP. With the ongoing process of building and moving the capital to Kalimantan, the government is committed to developing all areas in Kalimantan as well.
West Kalimantan Province has excellent solar potential to be developed into electrical energy. The potential of solar energy has an opportunity to meet the basic needs of electricity (lighting) in West Kalimantan, especially for isolated areas. Solar generators are built using local or provincial government budgets that will be published in the planning year. Therefore, actual data on electricity demand in West Kalimantan’s existing villages for 2024 is not yet available. In addition, based on the results of research on electricity use and the number of generators in the West Kalimantan region shows the number of solar generators in the West Kalimantan region as many as 60 generators, the most generators found in the Bengkayang region are 13 generators and the usage capacity is 0.41MWp. This number is still very likely to be expanded considering the current capital relocation process, the Kalimantan region is expected to be more densely populated so that the need for electricity use will increase. In achieving number 7 SDGs, namely Clean and Affordable Energy, the solar system must be able to answer electricity needs in the Kalimantan region, especially in West Kalimantan.
Picture 1.2: Hebronstar’s Analysis
With the energy transition becoming a global trend after action to mitigate the climate crisis, Indonesia has sought to integrate low-carbon energy systems into its national development agenda. The energy sector plays an important role in reducing emissions by 314 – 3,980 million tons of carbon dioxide gas through the development of renewable energy, energy efficiency and conservation, and the application of clean energy technologies. In this regard, efforts to build PLTS as a source of electricity supply in the new national capital are considered to be able to shift the dominance of coal-fired power plants as the main source of power plants so that it will reduce the number of CO2 gas emissions produced. Hence, this graph shows the Trends of Solar Power Investment in Indonesia by 2016 – expected 2022.
Picture 1.3: Hebronstar’s Analysis
Now, Indonesia’s solar power plant development already has a reasonably strong foundation in terms of policy. The potential that is available, nonetheless, has not yet been fully realized in the implementation stage. Technologically speaking, Indonesia’s photovoltaic (PV) industry is only able to produce solar modules and integrate them into solar power plants at the downstream stage, with solar cells still being imported. Despite the fact that solar cells are the most important and expensive component of the solar power plant system. The solar cell industry’s development is still limited by high prices. In an effort to lower the cost of solar cell manufacture and make it competitive with other energy sources, a variety of manufacturing technologies are regularly explored and developed.
Considering that only 55–60% of Indonesia has been electrified and that nearly all unlit areas are in rural areas remote from power plants, the solar panels which can be constructed almost anywhere, is an excellent alternative that should be developed. The government intends to offer 1 million 50 Wp Solar Home Systems for low-income communities between 2005 and 2025, as well as 346.5 MWp hybrid solar power plant for remote areas. The government expects to have 0.87 GW of installed solar power plant capacity by the year 2025.
New Regulations, New Investment Opportunities
The Ministry of Energy and Mineral Resources (ESDM) has officially issued new regulations regarding rooftop solar power plants (solar panel rooftops). This new rule is contained in the Minister of Energy and Mineral Resources Regulation No. 26/2021 concerning Rooftop Solar Power Plants Connected to the Electric Power Grid Holders of Business Licenses for the Supply of Electricity for the Public Interest (IUPTLU). Director General of New Renewable Energy and Conservation Energy (EBTKE) Dadan Kusniada said this new regulation was a refinement of the previous regulations to improve the governance and economics of Rooftop Solar Panel. This regulation was also issued to respond to existing dynamics and facilitate people’s desire to get electricity from renewable energy sources, including accommodating people who want to contribute to reducing greenhouse gas emissions.
According to government regulation no. 19 of 2014 on National Energy Policy, renewable energy is defined as energy derived from renewable energy sources.
Renewable energy sources are further defined as energy sources produced from sustainable energy resources, if properly managed, including geothermal, wind, bioenergy, solar, hydropower, tidal and ocean heat.
The government has also regulated energy-related business opportunities as stipulated in Presidential Regulation No. 10 of 2021 on Investment Business Activities which contains that the Positive List introduces a list of prioritized business lines that are entitled to certain fiscal incentives. Including renewable energy power plants that are entitled to corporate income tax reduction facilities.
Based on Ministry of Industry regulation No. 54 of 2012 Concerning Guidelines for the Use of Domestic Product for Electricity Infrastructure Development. The fulfillment of the target of 40% Domestic Component Level which includes water manufacture, diesel fuels cells, and solar modules. The Amendment of Regulation of the Ministry of Industry Number 05 of 2017 for electricity infrastructure development. The combined TKDN value for Solar Home Systems is 53,07% and for centralized or communal Solar Energy Generator (PLTS) it is 43,85%.
However, the Ministry of Industry has a target plan to increase TKDN in 2019-2020 to 76%, which is supported by the Ingot factory. The period 2020-2022 is expected to reach the TKDN of 85% with the presence of a solar-grade silicon factory. The last stage in the period 2023 – 2025, achieving a minimum TKDN value of 90% with the presence of a metallurgical grade silicon factory. This domestic component level (TKDN), at the ceiling price of 100%, resulted in a maximum equity IRR of 14%, leaving not much room for competitive bidding. Other hand, projects that use Tier-1 PV Modules can reach a maximum equity IRR of almost 21%.
Large companies in Indonesia engaged in the energy sector have realized the investment of low-carbon energy by targeting the solar power plant (PLTS) sector. In addition to saving electricity operational costs, investment in this PLTS can reduce environmental impact.
One of the companies in Indonesia that has successfully invested in this sector is PT Sumber Energi Surya Nusantara (SESNA) as a long-term partner with PT Indorama Polypet Indonesia (IPPI), namely by collaborating for the implementation of the PLTS Atap project with a capacity of 1.2 MWp.
The PLTS system will be implemented at PT IPPI’s factory located in Cilegon, West Java. It is estimated that one of these major projects will produce around 1,500 MWh of energy per year, which is equivalent to the disposal of 1,000 tons of CO2.
Clean electricity will determine the future of investment in Indonesia because the world will only accept products produced with the support of clean electricity. Meanwhile, investors will only invest in countries that provide clean energy. The government’s commitment strengthens the narrative by proclaiming that the new capital city in Kalimantan (IKN Nusantara) will eventually become a net zero carbon city, using up to 100% renewable energy supply. In the Electricity Supply Business Plan (RUPTL) for the 2021-2030 period, PLTS will have a portion of around 12 percent to provide greater opportunities for a greater mix of new renewable energy for Indonesia until 2030.
Achievement of the estimated green energy mix target of 23 percent by 2025 requires additional renewable energy generation capacity of around 4 gigawatts outside the PLN project. This opens up opportunities for green investment to flow, opportunities to grow the integrated solar power plant industry from upstream to downstream. Thus, Governments need to see this potential and lead the solar energy revolution for the energy transition in Indonesia.
Hebronstar Strategy Consultants
Rezanda Suteja / Associate Consultant
Source:
ESDM. 2021. Matahari untuk PLTS di Indonesia. ESDM. https://www.esdm.go.id/id/media-center/arsip-berita/matahari-untuk-plts-di-indonesia#:~:text=Potensi%20energi%20surya%20di%20Indonesia,adalah%20sebesar%200.87%20GW%20atau.
MapID. n.d. 4 Teknologi Energi Terbarukan di Indonesia. MapID. https://mapid.co.id/blog/623f14f05bf48a1851bfc222
Katadata. 2021. ESDM Targetkan Pembangkit EBT 130 MW Terpasang di IKN pada 2024. Katadata.co.id. https://katadata.co.id/happyfajrian/ekonomi-hijau/62d7c5b952dc5/esdm-targetkan-pembangkit-ebt-130-mw-terpasang-di-ikn-pada-2024
Direktorat Jenderal Energi Baru Terbarukan dan Konservasi Energi. 2015. Matahari di Kalimantan Barat Potensial Dijadikan Energi Listrik. EBTKE. https://ebtke.esdm.go.id/post/2015/09/21/956/matahari.di.kalimantan.barat.potensial.dijadikan.energi.listrik
Fathadi, S. 2016. Solar Panel: Solusi Hemat Listrik. Kompasiana. https://www.kompasiana.com/fathadi/630d6f6035578d7d814b9213/solar-panel-solusi-hemat-listrik?page=3&page_images=1
Solar Warrior. n.d. Signing Ceremony Kolaborasi dalam Implementasi Proyek PLTS Atap – PT SESNA x PT Indorama Polypet Indonesia. Solar Warrior. https://solarwarrior.co.id/news-and-media/detail.php?id=Signing%20Ceremony%20Kolaborasi%20dalam%20Implementasi%20Proyek%20PLTS%20Atap%20-%20PT%20SESNA%20x%20PT%20Indorama%20Polypet%20Indonesia
