October 4th, 2021
All you need to know about Indonesia’s solar energy plan to provide electricity for remote areas. What are the challenges and the solutions to take advantage of opportunities from abundant sunlight?
Researcher, The Purnomo Yusgiantoro Center
Assistant researcher, The Purnomo Yusgiantoro Center
The use of photovoltaics or solar panels that convert sunlight into electricity is growing rapidly around the world as it has become more affordable.
In Indonesia, the cost of solar panel systems has dropped by 90% to around Rp 13 million to Rp 18 million per kWp (kilowatt peak).
Indonesia should take advantage of this opportunity and prioritize the deployment of solar power systems in various regions, especially in leading, remote and disadvantaged (3T)areas.
Research shows this approach can significantly improve livelihoods and economic activity in the region.
Energy access in remote areas
Indonesia’s solar power capacity has grown by 250% in the last five years. From 43.1 megawatts (MW) in 2016, its capacity now reaches 153.5 MW by 2020. The government even plans to increase this capacity 14-fold to 2.14 gigawatts (GW) by 2030.
On the other hand, by 2020, five provinces in Indonesia have electrification rates (electricity supply) of less than 95%, namely Central Kalimantan, Southeast Sulawesi, Maluku, Papua, and East Nusa Tenggara.
The government should consider that solar power generation is not only a key means of accelerating the transition of energy to renewable energy but also a solution to ensure access to electricity in all regions – including 3T regions.
However, this LTSHE only provides limited lighting for up to 6-8 hours a day.
Electrification efforts should not only focus on providing lighting, but also ensure people can rely on electricity for a variety of productive activities, including education and agriculture.
Take advantage of opportunities from abundant sunlight
Indonesia has an irradiation intensity – or the amount of energy potentially received by a given area of sunlight – that varies from 3.6 kWh to 6 kWh per square meter per day.
Enough sunlight makes solar energy generation suitable for areas that are not connected to the power grid, or areas where connecting to the power grid is expensive and impractical.
In contrast to urban areas where access to electricity is already good, solar panels can have a very significant impact on communities in the 3T area.
In countries such as Nepal and India, off-grid electrification (outside the national electricity grid) through the use of solar panels even reduces carbon emissions as kerosene use becomes reduced. The practice has also improved the quality of children’s education and the income of local communities in the country.
What are the challenges of the electrification of solar power?
However, there are some challenges in providing solar power in remote areas.
For starters, off-grid solar power systems require more complicated technology than on-grid systems (connected to the national grid). For example, off-grid systems require batteries to store energy and also require inverters that convert electricity from batteries to be used in household appliances.
This additional equipment makes the cost of off-grid systems more expensive, which is two or three times that of on-grid, which can make it unattractive to investors.
These batteries and technologies also require maintenance, monitoring, evaluation, and eventually replacement, which can be a challenge for the local community.
What’s the solution?
There are several options for addressing the above issues.
Some examples include a combination of fiscal and non-fiscal incentives from the government, better community engagement, and long-term community development – not just through the provision programs.
First, governments can introduce 3D-focused programs – decarbonization, decentralization, and digitization – for example with increased capacity of BUMDes Bersama_ to better manage off-grid systems. After that, the government can appoint an effective regional leader as coordinator.
These things can be done in conjunction with increased local economic growth.
Various financing schemes can also be used to ensure the sustainability of solar energy programs in the 3T area. Examples include blended finance (raising funds from government and private sources) and crowdfunding.
The Indonesian Investment Authority (OJK) said it would prioritize renewable energy in the recently established Sovereign Wealth Fund (SWF). This is a great opportunity for SWF to focus more on energy development in remote areas.
However, these programs must also pay attention to the willingness and ability to pay.
Here, the use of the pay as you go scheme (pay as usage), or other schemes such as through the Sinari Generasi Indonesia agricultural trading platform where people can pay solar electricity bills with agricultural products, can be a way out.
Second, the government needs to consider the use of solar power in various small industrial sectors that usually do not use much electricity.
This can increase the productivity and efficiency of payment systems across those sectors – especially in commodity-based businesses such as agriculture, fisheries, crafts, and other small businesses.
Third, the implementation of smart microgrids – electrical systems equipped with automatic meters – can increase public participation in the provision of electricity.
Here, they can become electricity consumers as well as become producers by selling electricity produced from solar panels that they have.
Fourth, the government can provide incentives to support the development of solar panel manufacturing in the country.
This can take the form of lower taxes for manufacturers, so it can reduce costs while improving the quality of locally produced solar panels.
Finally, the government should accelerate the digitization of maps and territorial boundaries in the 3T area.
A clear depiction of boundaries will minimize the potential for land conflict in the region. This is especially important in the future as the construction of large-scale solar power plants becomes more prevalent.
If these challenges can be overcome, then solar energy can become Indonesia’s mainstay to provide electricity to remote areas. This will increase people’s productivity while supporting the government’s target to achieve 23% renewable energy in the electricity mix by 2025.
This article was originally published by The conversation, on September 04, 2021, in Basaha, Indonesia and has been republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License. You can read the original article here. The views expressed in this article are those of the author alone and not of the WorldRef.
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