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Rapid Development in Indonesia’s Solar Energy Market

In today’s world, having an efficient energy infrastructure is critical for a country’s social and economic success. One of the major factors impeding a developing country’s economic development is a lack of adequate energy infrastructure. Many developing countries are currently experiencing frequent power outages and insufficient power supply access, which are having a negative impact on their populations.

Endorsed in an article by Indonesia’s Minister of Energy and Mineral Resources, the roadmap outlines a strategy for Indonesia to significantly increase its solar capacity, which currently stands at less than 1% of its potential. This industry outlook also demonstrates how Indonesia, as Southeast Asia’s largest economy, provides tremendous economic and environmental opportunities for global investors as it pivots away from coal, gas, and fossil-fuel power and toward a future powered by renewable energy. According to the findings of the report, the power sector could achieve this level of renewable energy generation by installing 18 GW of photovoltaic (PV) systems alone by 2025, with this rapid increase in solar deployment enabled by short lead times and plummeting costs.

Solar power can make a significant contribution to Indonesia’s energy transformation and emission reduction, if necessary reforms are made. We hope it can offer policymakers and related stakeholders the necessary reforms to unlock and scale up solar development in Indonesia.

– Executive Director, Institute for Essential Services Reform Indonesia

From another recently published report, Indonesia is poised to become a world leader in solar power, with all of the economic and public health benefits that investment in clean energy brings. Jakarta leaders have set a goal of reaching 23% renewable energy by 2025, an ambitious increase from the 13% renewable energy penetration in Indonesia’s primary energy mix in 2019.

“The acceleration of energy transformation has become the Government’s commitment to supporting a green economy, green technology, and green product, in line with the implementation of the Paris Agreement,” said Indonesia Minister of Energy and Mineral Resources. “Solar energy will become a mainstay in the strategy to develop renewable energy in an effort to promote the realisation of net-zero emission in 2060 or sooner, because of its enormous potential and more competitive prices.”

The World Bank’s Board of Executive Directors recently approved a US$380 million loan for the development of Indonesia’s first pumped-storage hydropower plant, with the goal of improving power generation capacity during peak demand while supporting the country’s energy transition and decarbonisation goals.

“The Indonesian government is committed to reducing greenhouse gas emissions through, among others, the development of renewable energy, energy conservation, and the use of clean energy technology. Emission reduction in the energy sector will be driven by new and renewable energy generation and application of energy efficiency,” said the Minister of Energy and Mineral Resources of the Republic of Indonesia.

Over 80% of the power generated for the Java-Bali grid, which serves 70% of the country’s population, comes from fossil fuels. The deployment of renewable storage to enable the integration of renewable energy into the grid is a critical measure to support Indonesia’s decarbonisation agenda. Pumped storage hydropower is essential in this approach.

The financial support will be used to help build the Upper Cisokan pumped storage hydropower plant, which will be located between Jakarta and Bandung and will have a capacity of 1,040 MW. The facility will have significant power generation capacity to meet peak demand, significant storage capacity to enable greater penetration of renewable energies and will alleviate increasing transmission loads on the grid due to its proximity to two large demand centres. As a result, consumers in Java and Bali will benefit from a more environmentally friendly and reliable supply of electricity.

The project will contribute to increased system flexibility and efficiency in balancing supply and demand, thereby improving the reliability and quality of electricity services in Java and Bali. It also intends to assist the government in incorporating variable renewable energy into the Java-Bali grid in an environmentally and socially sustainable manner.

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