Solar power central to Indonesia's clean energy transition

Jakarta

AS INDONESIA races to meet its net zero emissions target by 2060, solar power and demand for clean energy from Singapore will be key factors in the country's move to lessen its dependence on fossils and coal.

Energy transition has now entered into the lexicon of both the energy sector as well as the wider public as climate change awareness continues to grow.

To meet its commitments made during COP26 in Glasgow last year, Indonesia is now aggressively moving towards renewables, including solar power.

But before achieving decarbonisation by mid century, the current government must accelerate renewable deployment to meet the target of 23 per cent renewable energy mix by 2025 as stipulated in the 2014 National Energy Policy.

Given that the current share of renewables is only 11.2 per cent, that target will be difficult to achieve, noted a recent report by the Institute for Essential Services Reform (IESR).

The report, titled Indonesia Energy Transition Outlook 2022, added that in the last 5 years, renewables added only400 MW annually, accounting for just one-fifth of the capacity that has to be added each year to reach the 23 per cent target.

"Given the renewable shortfall, the government must undertake serious evaluation, finding and removing underlying causes for the low number of renewable energy projects in the last 6 years," the report said.

"Meeting the renewable energy target by 2025 is a real test of the government's credibility and indicates its capability to attain more challenging decarbonisation effort by 2060 or sooner."

In the report, IESR said that within the renewable energy mix, solar power has great potential for growth.

With electricity generation accounting for over 40 per cent of total emissions in the energy sector, decarbonisation of this sector is crucial for the country to achieve its net-zero target.

The key to raising the renewable contribution to the overall energy mix will be new investments into the power sector.

As at September 2021, the power sector received US$3.6 billion of new investments of which US$2.5 billion was for fossil-fuel based power plants. Renewables accounted for US$1.1 billion of the total investments.

"The current investment trend is far lower than what Indonesia needs to deeply decarbonise its power sector," the report noted.

"Our study shows that Indonesia needs to see at least US$19 billion to US$23 billion in the power sector alone if the country were on track to fully decarbonise its energy system by 2050."

In the same study, it was calculated that from 2020 to 2030, solar photovolataic (PV) investment should range between US$2 billion to US$7 billion annually to increase solar PV's share in total power generation to 24 per cent by 2030.

"Solar electricity generation should see a massive increase from only 0.05 percent in 2020 to 24 per cent by 2030, if Indonesia were to follow a zero emissions pathway by 2050," the report said.

Singapore will be a key player in Indonesia's solar power industry's development, the report went on to say.

"Electricity exports to Singapore have drawn strong interest from developers as the country plans to import 4 GW of low-carbon electricity by 2035."

Solar energy demand from Singapore has lead to 4 development agreements in Batam and the Riau islands with a total solar PV capacity of 9.67 GWp and 12 GWp of battery energy storage capacity.

"The development is expected to bring in at least US$7.5 billion of investment in solar farms alone, US$3.6 billion from the battery energy storage systems and an additional US$90 million to US$120 million for the estimated 30 km ultra-high voltage DC submarine power line," the report said.

Separately, Singapore's purchase of solar power from Australia could add another US$2.5 billion in investments for Indonesia for passing a 4,200 km subsea power line through Indonesian waters.

"All these developments could serve as a good learning experience for Indonesia's local partners in building gigawatt-scale solar PV while waiting for the realisation of the growth in the domestic market," the report said.

Indonesia has emerged as a hotspot for solar energy development but it is not the most progressive in Asean, said Marlistya Citraningrum, programme manager, Sustainable Energy Access at IESR.

"Several regulatory frameworks need to improve such as ease of doing business, tariffs, incentives and competitive procurement as well as improvements in public awareness and preparedness of local human resources," she said.

"When Indonesia (puts) together the right mix of regulatory support, fiscal and financial incentives, market readiness, we can then speed up our solar deployment."