{ "title": "Indonesia’s Solar Future", "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2022/12/country-case-indonesia-solar-future-jacques", "canonical": "https://www.imf.org/en/publications/fandd/issues/2022/12/country-case-indonesia-solar-future-jacques", "overlayPath": "/en/publications/fandd/issues/2022/12/country-case-indonesia-solar-future-jacques/index.md", "summary": "The archipelago must overcome many challenges to wean itself off fossil fuels", "sections": [ { "heading": "Overview", "content": "- Indonesia has the least installed solar energy among G20 countries despite abundant year-round sunshine and more potential solar energy than all the world’s power plants combined.\n- In 2021 photovoltaics accounted for less than 200 megawatts on electricity grids in Indonesia, representing less than 0.1 percent of total installed capacity.\n- The country is the world’s largest exporter of thermal coal; the state grid, Perusahaan Listrik Negara (PLN), relies on domestic coal to power two-thirds of electricity generation." }, { "heading": "Barriers and political economy", "content": "- Perceptions that photovoltaic energy is expensive and high-maintenance impede adoption in many communities.\n- Coal’s cheap domestic extraction and long-term contracts offered by PLN to independent power producers locked the grid into guaranteed coal payments even as supply outpaced demand.\n- In outlying islands, diesel plants burn millions of liters of diesel at a cost of up to 22 cents a kilowatt-hour; these plants account for about 7 percent of Indonesia’s electricity capacity.\n- Co-firing coal with biomass (sawdust, household waste) is planned to trim emissions from coal fleet, but implementing this will require building a dedicated biomass industry from scratch." }, { "heading": "Recent developments and government targets", "content": "- In 2015 President Joko Widodo opened what was then the country’s largest solar power plant; the electricity it generates costs 25 cents a kilowatt-hour.\n- PLN signed power purchase agreements at less than 6 cents a kilowatt-hour for 50 megawatts of solar power in Bali.\n- The government added a multibillion-dollar solar project in the Riau Islands to national priority projects; if built, it could export clean energy to Singapore and catalyze domestic solar manufacturing.\n- The energy ministry approved a new 10-year business plan in which renewable projects make up more than half of planned new capacity, up 25 percent from the previous blueprint.\n- A 2021 regulation improved rooftop on-grid solar terms by cutting permit times and increasing the export allowance from 65 percent of excess electricity generated to 100 percent.\n- The 2021 regulation set a target of 3.6 gigawatts of rooftop solar capacity by 2025, which the government hopes will support more than 100,000 jobs and prevent 4.6 million tons of carbon emissions.\n- Conversations with about 30 developers indicated that 3.3 gigawatts of rooftop solar capacity was set to come online by the end of next year." }, { "heading": "Regional dynamics and deployment patterns", "content": "- Smaller grids reliant on diesel in eastern Indonesia are expected to see quicker solar uptake in the near term as the government seeks to retire thousands of diesel plants.\n- PLN reported that solar energy accounted for 0.1 percent of the electricity generated on Lombok in June 2019; by the end of that year the share had increased to 2.8 percent.\n- Nusa Tenggara is noted as having the best solar reserves in Indonesia; the regional government seeks 35 percent of electricity generation from renewables, mainly solar, by 2025—higher than the central government’s national target of 23 percent.\n- Remote off-grid areas (for example, Pukurayat in the Mentawai archipelago) have received basic solar electrification, though equipment durability and battery replacement remain challenges." }, { "heading": "Social and environmental benefits", "content": "- Renewable energy rollout can reduce indoor air pollution from fuels like firewood and kerosene, which cause thousands of pneumonia deaths every year among Indonesian children under 5, according to UNICEF.\n- The shift from kerosene/alito and open-fire lighting to solar lighting in communities reduces fire risk and improves household safety and health." }, { "heading": "Financing and decommissioning challenges", "content": "- Questions remain about how decommissioning of old coal plants will be financed; retiring 15 gigawatts of coal capacity by 2050 could cost $600 billion, according to State-Owned Enterprises minister Erick Thohir.\n- Investment attractiveness is improving as photovoltaic costs decline and policy reforms advance, but implementation by PLN will be crucial to realize rooftop and grid-scale targets." }, { "heading": "Key statistics (preserved exactly)", "content": "- 17,000 islands\n- 70 islands (Mentawai island chain)\n- 60 regions defined by government as underdeveloped\n- less than 200 megawatts (photovoltaics on grids in 2021)\n- less than 0.1 percent (share of total installed capacity in 2021)\n- two-thirds (share of electricity generation powered by domestic coal for PLN)\n- up to 22 cents a kilowatt-hour (cost of diesel-generated electricity in outlying islands)\n- about 7 percent (diesel plants share of Indonesia’s electricity capacity)\n- retiring 15 gigawatts of coal capacity by 2050 could cost $600 billion\n- 25 cents a kilowatt-hour (cost of electricity from 2015 solar plant)\n- less than 6 cents a kilowatt-hour (PLN power purchase agreements for 50 megawatts in Bali)\n- multibillion-dollar (Riau Islands solar project designation)\n- more than half (renewable projects share of planned new capacity in 10-year plan)\n- up 25 percent (increase from previous blueprint)\n- export allowance increased from 65 percent to 100 percent (rooftop on-grid solar regulation)\n- 3.6 gigawatts (rooftop solar target by 2025)\n- more than 100,000 jobs (employment target associated with 3.6 gigawatts)\n- prevent 4.6 million tons of carbon emissions (associated with 3.6 gigawatts)\n- 3.3 gigawatts (rooftop capacity conversations indicated would come online by end of next year)\n- 0.1 percent (solar share on Lombok in June 2019)\n- 2.8 percent (solar share on Lombok by end of 2019)\n- 35 percent (Nusa Tenggara regional renewable target by 2025)\n- 23 percent (central government national renewable target)\n- 31.9 percent (Indonesia committed emissions cut by 2030 under UNFCCC submission, September)\n\nSource: Indonesia’s Solar Future, F&D Magazine, Harry Jacques, December 2022. Canonical URL: https://www.imf.org/en/publications/fandd/issues/2022/12/country-case-indonesia-solar-future-jacques\n\n---\n\n Content in this bundle\n\n- Indonesia's Solar Future\n - Indonesia's Solar Future (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Indonesia's Solar Future (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2022/12/country-case-indonesia-solar-future-jacques" } ], "bullets": [ "[Markdown version](/en/publications/fandd/issues/2022/12/country-case-indonesia-solar-future-jacques/index.md)", "[Structured JSON version](/en/publications/fandd/issues/2022/12/country-case-indonesia-solar-future-jacques/index.json)", "[Bundle manifest](/en/publications/fandd/issues/2022/12/country-case-indonesia-solar-future-jacques/bundle-manifest.json)", "Authors: Harry Jacques", "Published: December 1, 2022", "Indonesia has the least installed solar energy among G20 countries despite abundant year-round sunshine and more potential solar energy than all the world’s power plants combined.", "In 2021 photovoltaics accounted for less than 200 megawatts on electricity grids in Indonesia, representing less than 0.1 percent of total installed capacity.", "The country is the world’s largest exporter of thermal coal; the state grid, Perusahaan Listrik Negara (PLN), relies on domestic coal to power two-thirds of electricity generation.", "Perceptions that photovoltaic energy is expensive and high-maintenance impede adoption in many communities.", "Coal’s cheap domestic extraction and long-term contracts offered by PLN to independent power producers locked the grid into guaranteed coal payments even as supply outpaced demand.", "In outlying islands, diesel plants burn millions of liters of diesel at a cost of up to 22 cents a kilowatt-hour; these plants account for about 7 percent of Indonesia’s electricity capacity.", "Co-firing coal with biomass (sawdust, household waste) is planned to trim emissions from coal fleet, but implementing this will require building a dedicated biomass industry from scratch.", "In 2015 President Joko Widodo opened what was then the country’s largest solar power plant; the electricity it generates costs 25 cents a kilowatt-hour.", "PLN signed power purchase agreements at less than 6 cents a kilowatt-hour for 50 megawatts of solar power in Bali.", "The government added a multibillion-dollar solar project in the Riau Islands to national priority projects; if built, it could export clean energy to Singapore and catalyze domestic solar manufacturing.", "The energy ministry approved a new 10-year business plan in which renewable projects make up more than half of planned new capacity, up 25 percent from the previous blueprint.", "A 2021 regulation improved rooftop on-grid solar terms by cutting permit times and increasing the export allowance from 65 percent of excess electricity generated to 100 percent.", "The 2021 regulation set a target of 3.6 gigawatts of rooftop solar capacity by 2025, which the government hopes will support more than 100,000 jobs and prevent 4.6 million tons of carbon emissions.", "Conversations with about 30 developers indicated that 3.3 gigawatts of rooftop solar capacity was set to come online by the end of next year.", "Smaller grids reliant on diesel in eastern Indonesia are expected to see quicker solar uptake in the near term as the government seeks to retire thousands of diesel plants.", "PLN reported that solar energy accounted for 0.1 percent of the electricity generated on Lombok in June 2019; by the end of that year the share had increased to 2.8 percent.", "Nusa Tenggara is noted as having the best solar reserves in Indonesia; the regional government seeks 35 percent of electricity generation from renewables, mainly solar, by 2025—higher than the central government’s national target of 23 percent.", "Remote off-grid areas (for example, Pukurayat in the Mentawai archipelago) have received basic solar electrification, though equipment durability and battery replacement remain challenges.", "Renewable energy rollout can reduce indoor air pollution from fuels like firewood and kerosene, which cause thousands of pneumonia deaths every year among Indonesian children under 5, according to UNICEF.", "The shift from kerosene/alito and open-fire lighting to solar lighting in communities reduces fire risk and improves household safety and health.", "Questions remain about how decommissioning of old coal plants will be financed; retiring 15 gigawatts of coal capacity by 2050 could cost $600 billion, according to State-Owned Enterprises minister Erick Thohir.", "Investment attractiveness is improving as photovoltaic costs decline and policy reforms advance, but implementation by PLN will be crucial to realize rooftop and grid-scale targets.", "17,000 islands", "70 islands (Mentawai island chain)", "60 regions defined by government as underdeveloped", "less than 200 megawatts (photovoltaics on grids in 2021)", "less than 0.1 percent (share of total installed capacity in 2021)", "two-thirds (share of electricity generation powered by domestic coal for PLN)", "up to 22 cents a kilowatt-hour (cost of diesel-generated electricity in outlying islands)", "about 7 percent (diesel plants share of Indonesia’s electricity capacity)", "retiring 15 gigawatts of coal capacity by 2050 could cost $600 billion", "25 cents a kilowatt-hour (cost of electricity from 2015 solar plant)", "less than 6 cents a kilowatt-hour (PLN power purchase agreements for 50 megawatts in Bali)", "multibillion-dollar (Riau Islands solar project designation)", "more than half (renewable projects share of planned new capacity in 10-year plan)", "up 25 percent (increase from previous blueprint)", "export allowance increased from 65 percent to 100 percent (rooftop on-grid solar regulation)", "3.6 gigawatts (rooftop solar target by 2025)", "more than 100,000 jobs (employment target associated with 3.6 gigawatts)", "prevent 4.6 million tons of carbon emissions (associated with 3.6 gigawatts)", "3.3 gigawatts (rooftop capacity conversations indicated would come online by end of next year)", "0.1 percent (solar share on Lombok in June 2019)", "2.8 percent (solar share on Lombok by end of 2019)", "35 percent (Nusa Tenggara regional renewable target by 2025)", "23 percent (central government national renewable target)", "31.9 percent (Indonesia committed emissions cut by 2030 under UNFCCC submission, September)", "**Indonesia's Solar Future**" ], "related": [ { "title": "Indonesia's Solar Future", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2022/december/indonesias-solar-future.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2022/december/indonesias-solar-future.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2022/december/indonesias-solar-future.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/publications/fandd/issues/2022/12/country-case-indonesia-solar-future-jacques/index.md", "json": "/en/publications/fandd/issues/2022/12/country-case-indonesia-solar-future-jacques/index.json", "bundleManifest": "/en/publications/fandd/issues/2022/12/country-case-indonesia-solar-future-jacques/bundle-manifest.json" }, "generatedAtUtc": "2026-09-15T18:15:07.480Z" }