Innovators in Indonesia advancing renewable energy as per the Indonesian government strategy that is pushing to almost triple, shortly, the share of renewables in the country’s energy mix. Let us see how.
The Indonesian government promises to almost triple the share of renewables in its energy mix in the next three years. That would reverse an investment climate in which fossil fuels saw 3 times more capital than renewable energy between 2016 and 2019. It would also require the nation’s monopoly power provider, Perusahaan Listrik Negara (PLN), to approve new projects at a rate that entrepreneurs don’t expect now. Moreover, all the distribution to customers is strictly handled by the state-owned company.
Accordingly, entrepreneurs work with global networks to improve the state’s literacy and risk appetite. One network is the Clean Energy Investment Accelerator. The CEIA works as a joint endeavor coordinated by Allotrope Partners, World Resources Institute (WRI), and the United States National Renewable Energy Laboratory (NREL) to accelerate renewable energy solutions for large electricity consumers in key emerging markets. CEIA brings together corporate buyers in Indonesia and magnifies their joint ideas to develop an enabling regulatory environment for accelerating renewable energy investment and use.
“How renewable energy fluctuates were claimed to be the greatest risk by potential investors to Indonesia,” says Rio Pramudita, a business development analyst for developer Akuo Energy. Because of the intermittent nature of renewable energy, the state-owned company must be ready to supply the client if renewable energy is unavailable. “Renewable energy faced some hurdles because they have to ‘pay’ for the uncertainty that PLN has to bear,” says Pramudita. In that context, a range of partners use a range of tools to promote the country’s renewable ecosystem.
Can renewable energy thrive in Indonesia’s current energy landscape?
Since its inception in 2018, CEIA has formed a taskforce in Indonesia that comprised of more than 25 corporate buyers. These corporate buyers are global firms with operations in Indonesia. They are among the companies who wish to source their energy from renewable sources but have discovered there is limited supply.There are reasons to discern a clean-energy economy growth curve in the country.
Independent Power Producers (IPP) that generate renewable energy remain limited in Indonesia. Currently, they supply 26 percent of national energy, and most lack transmission and distribution connections to sell energy directly to end users. Building distribution lines, of course, is expensive: The other option is to lease existing ones through PLN. “Transmission and distribution lines are a strategic asset of the state,” says Gina Lisdiani, director of Allotrope Partners Indonesia, part of the Clean Energy Investment Accelerator Indonesia.
“Because Indonesia is an archipelago, this transmission and distribution network becomes even more critical,” adds Lisdiani.
Although this means that IPPs generally cannot sell directly to end consumers, or be off the grid, some companies in Indonesia use their own solar panels to operate their factories and manufacturing facilities. For example, PT. Coca Cola Amatil Indonesia has this kind of solar panel arrangement with a capacity of 7.13 MW. However, an arrangement such as this is not completely off the grid. If something goes wrong and the supply falls below what the factory requires to run, PLN would supply electricity to the factory.
If industry has more supply than it needs (such as during the Eid Mubarak vacation period), they can sell it to PLN, a practice known as net metering. PLN smiles on this innovation, perhaps because it improves electrical supply without requiring new investment. “Net metering exists in Indonesia. In some cases, the PLN can reduce the price by roughly 35 percent. The process for obtaining a permit, or simply determining whether it is possible, is not uniform and depends on the location and permit by PLN regional office in the area,” adds Lisdiani.
Private-sector renewable energy purchasing
For generating and distributing renewable energy without running into the corruption that comes with permits, CEIA has worked with PLN to create and disseminate a Renewable Energy Certificate (REC). “It is hoped that it could serve as a catalyst for PLN to build and/or permit more renewable energy projects,” says Lisdiani.
Renewable energy certificates provide a simple way for businesses, institutions and individuals to offset their carbon footprint and support renewable energy. As more companies proclaim commitment to climate action and renewable energy, purchasing RECs allows businesses to source their energy from renewable sources. When demand rises, the possibility to create renewable energy power plants rises with it.
“They [corporate buyers] are also concerned about whether a renewable energy power plant has reached its break-even point. They would rather fund and incentivize generation that is not yet profitable [so they can realize higher returns in the future]. This is critical in order to assist project developers who wish to launch a renewable energy project in Indonesia,” Lisdiani says.
These enabling conditions and potential incentives are essential for project developers from the start of the project. “A new project developer without a portfolio will face enormous challenges. One of them is obtaining financing from a bank,” Lisdiani explains. “And REC has the opportunity to play a significant role in resolving some of the issues.”
The first solar off-grid system in Indonesia to serve communities
Despite hurdles, there are reasons to discern a clean-energy economy growth curve in the country. Akuo Energy, a renewable energy developer, has developed the first solar off-grid electrification systems that powers three villages in Berau, Kalimantan.
Because Akuo Energy is off-grid, it both generates and distributes energy directly to customers without running through the state pricing system. This project was mostly funded by the Millennium Account Challenge Indonesia and United States Agency for International Development (USAID). The solar off-grid is managed by a joint venture between Akuo Energy and the village-owned company (Badan Usaha milik Desa; Bumdes), with the latter owning the majority.One common misconception is that since Indonesia is a tropical country situated on the Equator, we would have been able to deploy solar energy everywhere.
The joint venture was able to obtain the required permit by presenting their project in front of the ministry, emphasizing the importance of electricity access in these three villages and how their distance from the transmission line is so far that the state-owned company cannot benefit from it. There is also a regulation that restricts the price they may charge customers; the ceiling is the price set by the state-owned company. If the joint venture wishes to raise the price above what the state-owned company has set, they must present the case to the Regional House Representative with rigorous justification.
“One common misconception is that since Indonesia is a tropical country situated on the Equator, we would have been able to deploy solar energy everywhere,” says Pramudita, who trained as a mechanical engineer. “There is a lot of heat in Indonesia, but what we need for solar panels are photons. As a result, different renewable energy technologies would be appropriate in different parts of Indonesia.”
Some parts of Indonesia are cloudy most of the year, while others are not. East Nusa Tenggara is one of the few places in the world where it is never cloudy. “Other locations such as some parts of Sumatera, the south coast of Papua, and West Java are not suitable for solar panels but are suitable for wind turbines,” explains Pramudita. Indeed, a study shows that Sukabumi and Garut, in West Java, are among the potential sites for wind turbines.
In a challenging environment, organizations and businesses such as these show a way forward. CEIA brings together renewable energy buyers and consolidates a unified voice to the government, whereas Akuo Energy is able to operate off-grid solar panels. This demonstrates a few of the opportunities for patient renewable energy investment in Indonesia.
Solar Panels are an effective and low-maintenance way to generate your own renewable energy. Here’s why you should consider installing them on your roof!
Why Should You Consider Solar Panels?
With energy prices rising to pre-pandemic levels, many of us have noticed that our energy bills have begun to rise in recent weeks. And if you’ve been with the same energy supplier for a long time, you’re likely on a standard variable tariff. Which means that if your energy costs haven’t increased in recent weeks, they’re likely to in the near future.
Now’s the perfect time to consider investing in photovoltaic (PV) solar panels. Today’s investment could result in decades of savings, add value to your home, and help you to drastically reduce your household’s carbon footprint. Solar power is on the rise in the MENA region, with investment reaching $1 trillion in the 2019-23 period in the region. Here we’ll look at some of the reasons why you should consider installing them on your roof.
Can solar panels really save me money?
Absolutely! Switch-Plan estimates that by installing solar panels, you can save anywhere from £85-£200 per year GBP with a full solar array. Depending on the size of your solar array and the daylight hours in your region, your solar array could become profitable in less than 10 years. If you’re a DIY enthusiast, you may be able to install your own solar panels, drastically reducing your costs.
As the solar market in the area grows, and becomes more competitive, households have more options than ever.
Don’t solar panels only work on sunny days?
The MENA region is known for its hot and sunny climate. But solar panels still work on cloudy, rainy and overcast days. As long as the sun shines in the sky, your PV solar panels will generate energy for your home.
Want to generate energy through the night as well? Solar arrays can be combined with domestic wind turbines to create hybrid systems that generate energy through the day and night.
Would you like your energy company to pay you?
Around 50% of the energy generated by your solar panels throughout the day is fed back into the grid. The good news is that your energy companies can pay you for this via Feed in Tariffs. These pay a flat rate per kWh of energy generated which can further offset the cost of the grid energy you use.
You’ve paid your energy company enough over the years. Isn’t it time they started paying you?
Combine energy tariffs with Feed In Tariffs to optimise savings
It’s important to note that you don’t have to use the same company for your energy tariff and your Feed in Tariff. By comparing energy plans and FiTs from different companies, you can optimise your savings, offsetting the cost of your installation and helping it to become profitable faster. All while helping to reduce the MENA region’s reliance on fossil fuels and pave the way for a renewable future.
Solar operations and maintenance company Alectris has completed a project to automate asset management activity at a photovoltaic plant in Jordan.
Alectris implemented the initiative at the 11.5MW facility with MASE, a solar O&M provider in the Middle East.
The partnership between Alectris and MASE aims to automate and standardise asset management activity across new solar projects in the Middle East and North Africa (MENA).
As solar development has increased in the MENA region, O&M and asset management has “struggled to keep pace”, limiting long-term productivity prospects, said Alectris.
The partnership began in 2016 with MASE responsible for field operations and maintenance services on location, while Alectris provided operations and “legacy expertise” in global asset care.
“Working together, both businesses successfully improved the bankability of the project, which was financed by key development finance institutions operating across the region,” said Alectris.
The initiative involved the integration of Alectris’ ACTIS software platform for solar PV plant asset management, with all data monitoring streams gathered under the single platform to “improve oversight” into project activity.
Alectris managing director Vassilis Papaeconomou said: “Solar development in the MENA region offers a significant opportunity to invest in clean energy projects.
“But if this market momentum is to be maintained, it is imperative that operating plants offer security and stability of financial returns. By partnering with MASE, we’ve been jointly able to combine the latest in asset management software with leading experience in services activity.
“This will ensure that project owners and investors benefit from enhanced and efficient performance reporting and operational management, saving time, reducing costs and ensuring the plant delivers at its optimum. As a result, the plant delivered above expectations with an excellent performance ratio and availability close to 100% over the last three years.”
MASE chief executive Tareq Khalifeh added: “Throughout this collaboration, Alectris have proved to be reliable, dedicated and experienced with a wealth of knowledge that has been indispensable when working in an exciting but challenging market.”
GivePower is launching containerized, solar-powered water desalination and purification plants in Mombasa, Kenya and La Gonave, Haiti this quarter. Like GivePower’s debut solar-powered microgrid desalination plant, which went live in Kiunga, Kenya in 2018, these new projects will operate with Tesla’s powerwall battery storage technology.
At launch, both of the nonprofit’s new solar water farm projects will produce a maximum of 75,000 liters of water a day by coupling a 50-kW solar system with 120 kW-hrs of Tesla batteries; together this solar plus battery system will power two low-wattage, reverse osmosis desalination pumps that run simultaneously to ensure continuous operation.
When developing solar-powered desalination projects, pinning down the point at which the technology and the operating model make economic sense is key because the one of the biggest challenges with solar desalination is the amount of energy that it takes to desalinate sea water. Often, this outsized energy need means that a plant requires a larger solar array, which increases the cost of the project.
“We need to see that [these philanthropic] projects are economically viable – that these projects can continue to operate without ongoing funding from donors to keep the systems operational,” said Kyle Stephan, GivePower’s vice president of operations. In addition to building solar water farms, GivePower trains local technicians to operate the plants.
GivePower’s solar water farm systems cost just over $500,000, and they have a 20-year expected lifespan.
Commercial applications for GivePower’s solar water farm technology are not in the pipeline currently, according to Hayes Barnard, CEO of GivePower.
When it comes to developing commercial off-grid, solar-powered desalination systems for water-stressed communities, industry officials see solar microgrid players as particularly well placed to offer solutions.
Drought, saltwater intrusion and climate change are intensifying the need for solutions that use renewable energy to address water scarcity. Simultaneously, falling PV prices and energy storage innovations are making solar-powered desalination solutions more appealing.
So far, all of GivePower’s solar water farms are coastal well-based desalination plants. This is because 98% of the world’s water is in the ocean, and 73% of the world’s population live in coastal areas, where well water is susceptible to becoming brackish, Barnard noted. Additionally, off-coast solar desalination plants’ intake processes are expensive, and coastal well-based solar water farms do not stress underground aquifers.
For its project on La Gonave, which is off the coast of Port-au-Prince, GivePower is applying international building code seismic requirements for its solar water farm’s concrete foundation, and it is building a solar canopy that is capable of withstanding a category-four hurricane.
Initially, the nonprofit focused on providing solar-powered lighting to schools without electricity in the hope that this would open up educational opportunities for girls in developing countries. But quickly it became clear that helping communities achieve water security was key to addressing this issue because often girls were often missing school because their days were spent fetching water, according to Barnard, a GivePower co-founder. GivePower became an independent organization in 2016.
Last week GivePower’s solar-powered desalination technology received the UAE’s Global Water Impact Award for innovative small projects.
Solar deployment continued to pick up in the Middle East and North Africa in 2019, the Middle East Solar Industry Association has said in its annual report. Brian PUBLICOVER in a PV magazine article titled ‘Solar is gaining traction in MENA region – but plenty of obstacles remain’ and dated January 17, 2020, explains the whereabouts of such deployment.
The Middle East Solar Industry Association (MESIA) says energy investment in the Middle East and North Africa (MENA) region could hit $1 trillion in the 2019-23 period.
The organization cited statistics from consultancy Frost & Sullivan valuing the region’s operational PV capacity at $5-7.5 billion, with an additional $15-20 billion worth of projects set to come online by 2024.
However, policymakers in many countries are still struggling to find the right mix of legislation, technology, financing and procurement options to kick-start development, the region’s top solar industry group said in its Solar Outlook Report 2020.
MESIA noted a large gap among the region’s varied PV markets in terms of cumulative installations and development. Egypt, Jordan, Morocco and the United Arab Emirates lead on deployment with Saudi Arabia soon to swell their ranks. While a handful of countries including Pakistan and Iraq are struggling to bring more solar online, markets such as Tunisia, Kuwait and Oman are starting to add significant projects to the regional PV pipeline, said the association.
Regional policymakers are increasingly prioritizing distributed solar, led by Dubai. The most populous city in the United Arab Emirates launched its Shams Dubai program in 2015 to support residential PV and commercial and industrial solar installation. By October, Dubai had installed around 125 MW of distributed PV capacity at 1,354 sites, MESIA said.
The industry association also highlighted the important role played by the Dubai Electricity and Water Authority in getting commercial and industrial projects built, noting market drivers for the segment vary across the MENA region. Cuts to electricity tariffs in markets such as the UAE, Jordan, Oman and Saudi Arabia have played a role, backed by the establishment of supportive regulatory frameworks, particularly for wheeling and net metering, the regional body said.
The Egyptian authorities made significant progress on the massive Benban solar complex last year. Roughly 1.47 GW of solar capacity – including a wealth of bifacial and tracking projects – was commissioned at Benban by the end of November, MESIA said. The $4 billion, 1.8 GW complex will eventually feature 41 projects.
The Egyptian government wants renewable energy to account for 20% of its electricity mix by 2022, and 42% by 2035, including 52 GW of large scale and distributed-generation projects. It continues to look beyond feed-in tariffs with the Egyptian Electricity Transmission Co (EETC) and World Bank private sector arm the International Finance Corporation signing a deal in April to fund projects chosen via auctions, for example. The EETC signed a solar power purchase agreement with Saudi’s ACWA Power in October for the 200 MW Kom Ombo project, at a price of $0.0275/kWh. Construction is expected to wrap up in the first quarter of next year.
However, Egyptian energy demand is set to leap from 27.6 GW last year to 67 GW by 2030, MESIA said, citing Frost & Sullivan data. To facilitate renewables deployment, the country will need a competitive electricity market and will have to scrap subsidies for fuel and electricity tariffs dating back to 2016 while also facilitating the development of energy storage to support distributed PV roll-out, the industry group argued.
United Arab Emirates
MESIA describes the UAE as a regional “front runner” for PV and it made undeniable progress last year. Having launched commercial operations at the 1,177 MW Sweihan PV project, Abu Dhabi in November the allocated the fifth, 900 MW phase of the massive, 5 GW Mohammad bin Rashid Al Maktoum Solar Park for a record low power price of $0.01693/kWh. The solar park’s installed capacity currently hovers around the 713 MW range, MESIA said, noting the third to fifth stages of the project will be finished in the years ahead, with full completion scheduled for 2030.
The future also looks bright for solar in the wider UAE, particularly at utility scale. In November, the Emirates Water and Electricity Co closed submissions from developers for a 2 GW solar project at Al Dhafra. That project is set for completion by the first quarter of 2022.
MESIA said it expects a similarly sized tender early this year, as Abu Dhabi may be gearing up to install another 6 GW of solar by 2026. However, PV will have to compete with nuclear and rival renewables in future. With more intermittent renewables capacity coming online, MESIA expects the UAE authorities to start to include more energy storage capacity in future PV tenders.
MESIA said energy storage will be “pivotal” to the development of Jordan’s solar sector. The country has been developing storage capacity for a while, as it is struggling to stabilize its electrical transmission network while it brings significant amounts of large scale solar and wind capacity online.
“At this stage, Jordan’s capability to strengthen the grid, commitment to achieve increased energy efficiency and develop additional storage is key for the future market attractiveness,” the industry association reported.
The authorities launched a tender last year for a study on the feasibility of installing 30 MW of pumped storage capacity at the nation’s key dams, MESIA noted.
Saudi Arabia’s growing PV market continues to move from strength to strength, according to the association, which highlighted the 300 MW Sakaka PV plant – the kingdom’s biggest to date. The regional body also noted the Renewable Energy Project Development Office asked 60 pre-qualified companies to submit bids for “six solar energy schemes with a combined capacity of 1.5 GW” late last year, in addition to six projects the authorities started tendering this month.
However, while the country remains one of the most promising regional PV markets, the Saudi authorities still need to tackle key challenges, MESIA said. The government must collaborate more effectively with the private sector, among other things. It also needs to improve the regulatory environment and propose new business models to unlock the potential of its fledgling commercial and industrial solar sector, the industry group said.
MESIA sees Tunisia’s commercial and industrial solar segment as particularly promising but noted the market continues to struggle in the face of fossil fuel subsidies. The regional body argued the Tunisian government must introduce incentives such as tax breaks to encourage greater investment in commercial and industrial PV, among other policy considerations.
MESIA also noted the Tunisian authorities have overseen critical investments in grid infrastructure upgrades over the past year, in anticipation of $2 billion of anticipated foreign investment in the solar and wind sectors over the next three years. The Tunisian Ministry of Industry and Small and Medium Enterprises has said the expected influx of funds could support development of 1.9 GW of fresh renewables capacity by 2022.
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