The Department of Energy (DoE) missed its renewable energy (RE) target amid a projected increase in the country’s power requirement.
This comes as Socioeconomic Planning Secretary Ernesto Pernia said the country’s energy requirement was seen to increase four-fold by 2040, or an average of 5.7 percent a year under a high economic growth scenario.
Despite this, however, the DoE said it has fallen short of achieving its RE goal, prompting the agency to review its program aimed at raising the country’s RE capacity by almost threefold by 2030.
“With the Philippines growing steadily over the past five years, the demand for energy has also been rising rapidly,” Pernia said in a speech at a forum on Renewable Energy and Waste-to-Energy PPPs in Makati City.
Socioeconomic Planning Secretary Ernesto Pernia. PHOTO BY RUY L. MARTINEZ
In 2018, Pernia said, the country’s dependable energy supply was at 21,241 MW while the total peak demand was at 14,782 MW. From 2014 to 2018, the Philippines’ total energy consumption has been growing at an average of 4.22 percent per year.
However, only around 7,300 MW of RE capacity were injected into the country’s energy mix based on DoE’s assessment covering the years 2011 to 2017, DoE’s Renewable Energy Management Bureau (REMB) Director Mylene Capongcol said in a chance interview in the same event.
“We still need to go a long way to achieve our RE goal,” Capongcol said.
On the other hand, National Renewable Energy Board Chairman Monalisa Dimalanta said: “Targets for some technology [have] exceeded by three times like for solar. But for others, we have not met the targets. If we average it, we have not met the target.”
NREB is the bureau guiding the DoE on the implementation of RE initiatives in the country.
Dimalanta said they intend to push further the harnessing of geothermal resources in the country by closely coordinating with the National Geothermal Association of the Philippines (NGAP).
They are also exploring ways on how to be more creative in providing assistance to developers as well as tapping financing so that the entire equity will not be earmarked for the pre-development phase since this stage requires significant investment, she said.
The DoE is currently reviewing the National Renewable Energy Program (NREP), which seeks to increase the RE-based power capacity of the country to 15,304 MW by 2030, almost triple its 2010 capacity level of 5,438 MW, the energy officials said.
Capongcol said the country’s existing renewables capacity was 5,000 MW by the time the DoE released NREP in 2011. She said there were delays in promulgating policy mechanisms including renewable portfolio standards for on-grid and off-grid areas, Green Energy Option Program, and RE market.
“What we’re doing is re-evaluate the program so that we can see why we did not meet the target, what work do we still need to do… For the new NREP, we’re looking at the timeframe 2020-2040,” Dimalanta stated.
Coal-fired power plants made up 37.8 percent of the total energy installed capacity of 23,815 MW followed by RE with 25.5 percent; natural gas, 20.9 percent; and oil-based facilities. 15.8 percent, according to the DoE’s 2018 Power Demand and Supply Highlights report.
Energy security is emphasized in the Philippine Energy Plan 2017 to 2040 of DoE which outlines anticipated changes and sets goals for the energy sector by 2040. The Philippines is heavily dependent on oil imports, making it vulnerable to price volatility.
Energy Secretary Alfonso Cusi said the DoE is committed to “explore, explore, explore” in its pursuit of energy independence, security, and sustainability through the effective and reasonable development of all indigenous energy resources in the Philippines.
DoE data said an annual average of only five wells have been drilled in the country from 2007 to 2017.
Last month, the Armed Forces of the Philippines said a leading energy company has started discussions on a “natural oil exploration project” with the military and officials in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) in the southern Philippines.
The resources in Liguasan Marsh in the BARMM is said to be rich in natural gas deposits and has the potential to rake in revenues for the country.
Brunei Shell Petroleum (BSP) has selected DXC Technology to improve end-user computing (EUC) capabilities through the deployment of digital solutions.
Terms of the agreement will see the technology giant set-up a “flexible local” EUC service operations offering designed to improve BSP’s connectivity.
The move – unveiled during a signing ceremony at The Empire Hotel & Country Club in Brunei – is aligned with BSP’s IT strategy of creating “direct employment opportunities” within the country’s IT industry, while adhering to “international best standards”.
Furthermore, the collaboration will potentially create employment for up to 50 local IT experts within the contract period.
“This is a great milestone for Brunei and BSP especially in boosting the skills of our local IT professionals,” Dr Ceri M. Powell, managing director of BSP. “Through this, we hope to introduce a new generation of highly-skilled Bruneian IT professionals able to utilise new innovations towards improving ways of working.
“This will also move towards facilitating a more enabling business environment that will create spin-off opportunities, more importantly in industries beyond oil and gas, and improve Brunei’s business profile to attract foreign direct investment.”
BSP explores for, and produces, oil and gas from onshore and offshore fields for domestic consumption and export to international markets, with the Government of Brunei Darussalam and Royal Dutch Shell Group each owning a 50 per cent stake in the business.
“The oil and gas industry is in the middle of fundamental shifts – balance productivity to match demand and supply and cope with challenges of environment protection,” added Koushik Radhakrishnan, vice president and general manager of Asia, DXC. “It is where technology plays a defining role by permeating into the business to boost efficiency and performance.”
Radhakrishnan said the technology provider will also partner with BSP to provide DXC device-as-a-service (DaaS), delivered as a “next generational” digital EUC solution.
“As BSP gears up to lead the next wave of industry innovation, DXC brings global strategy with local execution, continues to grow its market presence in Brunei and is investing to hire and train skilled local talent to support the country’s mission of becoming a ‘next-gen-IT hub’,” Radhakrishnan said.
HO CHI MINH CITY, Vietnam, Sept. 3, 2019 /PRNewswire/ — The summit spotlights on Vietnam’s renewable energy goals with a key session on‘Vietnam’s Renewable Power Development Plan & Supporting Mechanisms’ by Mr. Nguyen Ninh Hai, Head, Renewable Energy, Electricity & Renewable Energy Authority (EREA),Ministry of Industry and Trade (MOIT).
MOIT also shares details on:
Direct Power Purchase Agreement (DPPA) & future RE development mechanism – Electricity Regulatory Authority of Vietnam (ERAV); Grid Connection for RE & Constraints – Electricity & Renewable Energy Authority (EREA), as well as Integrated Rooftop & Co-Generation in Commercial/Industrial Facilities — especially Energy Services Company model (ESCO), Policy & Mapping.
In addition, the Macroeconomic Outlook & Growth of Vietnam’s Renewable Power Sector is presented by Bank for Investment and Development of Vietnam (BIDV).
Vietnam’s solar output targets of 1 GWp by 2020 is explored in a session by Vietnam Electricity (EVN) – ‘Solar Rooftop Development Plan & DSM Program’. Senior reps from Indefol Engineering Solution, Vina Capital Group and Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ) share further insights on solar rooftop power development.
Vietnam’s successful solar projects — particularly Hong Phong 1 Solar Project in Binh Thuan by Ha Do Group and Sao Mai Solar PV1 project in An Giang by Sao Mai Group are also analyzed. Further, Vena Energy shares its perspective on – Utility-Scale Solar Farms — Sustaining the Heartbeat for Vietnam?
Besides joining a panel discussion on ‘Wind Energy Growth & Investment in Vietnam‘, Enterprize Energy presents on Wind Power Projects in Vietnam while Poyry Energy delivers a talk on Wind Energy Potential in Vietnam — Onshore, Intertidal, Offshore? RWDI Anemos, event’s Associate Sponsor,speaks on ‘Wind Effects on Ground-Mounted PV Arrays’.
Organized by Centre for Management Technology (CMT), other sessions include:
New Regulatory Developments for Vietnam Renewables – Baker & McKenzie
Recent Trends in Renewable Energy Project Financing in Vietnam – Societe Generale Corporate & Investment Banking
Green Bonds for Vietnam’s RE Sector? – DBS
Key Considerations in M&A transactions on Vietnam Renewables – Baker & McKenzie
Visit website or email [email protected] | call +65 6346 9218 for more information.
VN said more than 4,000 households have installed rooftop solar power systems over the past three months with a total capacity of 200MW. It estimated that an additional 300MW of rooftop solar power will be added by the end of 2019, helping to ensure the nation’s power security.
As traditional power sources run out, the development of renewable energy infrastructure, including rooftop solar power, is crucial to providing enough power to Vietnam’s growing population.
By the end of June 2019, Vietnam had 89 wind and solar power plants with a combined capacity of 5,038MW, accounting for 9.5 percent of the country’s total power capacity.
It is expected that about 1,000MW of additional renewable energy will be connected to the national grid by the end of 2019, helping to ease power shortages.
EVN Deputy General Director Vo Quang Lam told the recent Vietnam Energy Forum 2019 that developing rooftop solar power helps reduce transmission costs and price pressure as well as increase energy use efficiency.
Vietnam currently applies a price of 9.35 US cents per kWh for rooftop solar power. The Ministry of Industry and Trade has proposed maintaining the price until 2021 to encourage the development of solar power.
Technical solutions have also been introduced to connect rooftop systems to the national grid.
In addition to providing favourable conditions in terms of policies and mechanism, technical solutions have been also implemented to connect solar power to the national grid.
Renewable energy experts said the country’s central and southern regions have big potential to develop for rooftop solar systems with solar radiation of 4.2 to 4.8kWh per sq.m per day.
They added that with supportive policies, the goal of installing 100,000 rooftop solar systems by the end of 2025 would be reachable.
Singapore’s Prime Minister Lee Hsien Loong recently explained in the country’s National Day Rally speech how the country will fight climate change, which he noted was “one of the gravest challenges facing humankind”.
The Prime Minister acknowledged that Singapore is already feeling the impact of global warming through hotter weather (Singapore is warming twice as fast as the rest of the world — at 0.25 degrees Celsius per decade — according to Meteorological Service Singapore), heavier rainstorms and rising sea levels and suggested that Singapore needed at least S$100 billion to build its defences against nature’s wrath.
The Prime Minister’s policy speech of the year starkly highlights the asymmetrical impacts of climate change: Rich countries and rich people can throw money at it, poor countries and the poor pay the price. But rich countries can and should and need to do much more, and Singapore is no exception.
Here are measures the city-state should embrace, as a matter of urgency, if it is to contribute to the fight against climate change rather than simply be on the frontlines of suffering from its impact.
AIR-CONDITIONING AND PLASTIC
First, the low-hanging fruit: Air-conditioning and plastic. Did you recently suffer freezing temperatures at the office in Singapore?
I’ve been to so many offices where people are wearing sweaters because the temperature is maintained at a level 40 per cent cooler than it needs to be.
With the stroke of a pen, Singapore could vastly improve its energy efficiency by mandating that temperatures in shopping malls and office buildings (and elsewhere, if legally allowed) should be a minimum of 25°C (Japan for example has decreed that all government agencies set their air-conditioners to no colder than 28°C during summer).
Singapore’s building code should also mandate building designs that don’t need to be cooled much in the first place.
Any visitor to Singapore can also immediately see that single-use plastic use in the country is shocking compared to Europe or Mumbai, for example.
Plastic is everywhere and everyone, from baristas to supermarket check-out staff, see nothing wrong with packing multiple layers of completely unnecessary plastic one on top of the other.
I’ve recently purchased cut papaya fruits, which came in a plastic bag inside a plastic container which check-out staff subsequently tried to place in a small plastic bag before storing it in a carry-on plastic bag.
Surely the country can ban single-use plastic with the stroke of another pen or at a minimum introduce a plastic bag fee of five or 10 cents at the very least, to make people more conscious about plastic in order to use it less.
Other single-use items like plastic straws, plastic coffee cups and plastic cutlery, however, need to go and be replaced by biodegradable ones.
Singapore should also fight plastic proliferation through more education: An unscientific sample of clothing shop assistants I polled had no idea for example that polyester is plastic and none knew that the production of polyester uses harmful chemicals, including carcinogens and causes significant environmental damage.
All knew, however, that we are today all breathing, eating and drinking plastic through our air, our food and our water.
ELECTRIC MOBILITY
Second, the country should embrace electric mobility.
It’s incredible that Singapore’s amazing public transit system is anchored around fossil-fuel-powered buses everywhere, gingerly polluting the air together with diesel-powered school buses and trucks and petrol-guzzling cars.
By now, Singapore should have been a showcase of electric mobility but instead it’s still trialling diesel-electric hybrid and battery-powered public buses in a very slow effort to convert Singapore’s fleet of 5,400 buses to cleaner energy sources by 2040.
In China, Shenzhen took less than five years to turn all of its 16,000 buses and 20,000 taxis to electric ones. Surely far wealthier Singapore can do the same or better? It’s not credible to argue that the technology is not mature enough when China, with a gross domestic product per capita 15 per cent of Singapore’s, can showcase it in such spectacular fashion.
Clean mobility in Singapore would also be vastly improved with the introduction of bicycle lanes everywhere. I never fail to be surprised by the priority given to cars over both pedestrians and cyclists in Singapore. This makes no sense to me: Electric bicycles are amazing. They solve air pollution problems in cities at a stroke because 35-50 per cent of e-bike trips are substituting car trips.
The advantages of electric bicycles don’t stop there. E-bikes cost less to buy and maintain than cars and require fewer resources to manufacture and little infrastructure (think about parking, useless spaces that we could use so much more intelligently).
BACKING RENEWABLE ENERGY AND REFORESTATION
Third, the city-state’s sovereign wealth funds, with US$1 trillion under management or more between them, should divest from fossil fuels worldwide by exiting investments in non-Singaporean oil, gas and coal companies.
They should instead ramp up their investments in clean technologies and renewable energy as well as back reforestation initiatives closer to home.
At the same time, Singapore should redouble its efforts to ensure that the petrochemical plants on Jurong Island, currently the star jewels in Singapore’s manufacturing economy, are operated to the highest environmental standards.
Climate change can be solved through a combination of powering the world with renewable energy by 2050 at the latest, combined with reforestation.
Singapore should do its part in fighting the drivers of sea level rise: What good is it to invest in fossil fuel infrastructure through your sovereign wealth funds while at the same time having to spend S$100 billion to defend the country from the impact of these investments?
While Brazil’s Amazon burns, Costa Rica’s experience offers hope for South-east Asia: Rampant logging cut the country’s forest cover from 72 per cent in 1950 to 26 per cent in 1983. It’s back up to 52 per cent today and a key reason is its 23-year old programme of payment for environmental services, promoting conservation.
This Costa Rican program can be replicated in South-east Asia where Singapore’s financial muscle can, literally, create another lung for the Earth.
LEADING BY EXAMPLE
Finally, Singapore should also deploy its substantial financial muscle and diplomatic prowess to back domestic and regional renewables as well as grid connectivity among neighbouring countries.
It should lead by example: Singapore has enough land area to generate significant amounts of electricity from the sun (150 to 250 megawatts of ground-mounted solar power could be deployed per square kilometre).
It could also modify its building codes to require all new buildings to have solar rooftops; it could reclaim land from the sea (under its current, stricter environmental impact assessment regime); it could build more floating solar power plants; it could connect to renewable energy parks that it would co-develop and co-finance in neighbouring countries; and it could complement these sources with waste-to-energy and reservoir storage.
Globally, far, far more needs to be done to fight back against global warming. Countries large and small, rich and poor, should all do their (proportionate) part. While Singapore’s contribution to global warming is small (its emissions are far less than other, larger economies), the city-state is wealthy and on the frontlines of the suffering that climate change inflicts.
It should therefore implement a comprehensive green new deal as well as push for far stronger and better financed regional efforts.
As PM Lee said recently: “we should treat climate change defence like we treat the Singapore Armed Forces — with utmost seriousness… These are life and death matters.”
Indeed, the evidence is clear: The time for forceful action is right now.
ABOUT THE AUTHOR: Assaad W Razzouk is Group Chief Executive and Co-Founder of Sindicatum Sustainable Resources, a global clean energy company headquartered in Singapore. This piece first appeared in Eco Business.
Read more at https://www.todayonline.com/commentary/how-singapore-can-help-prevent-climate-change-instead-spending-s100-billion-adapting-it
SUMBAWA, Indonesia — The late afternoon sun was glaring over the remote fishing village of Kwangko in Sumbawa island. Braving the summer heat at the end of July, Anti sat outside, in front of a water tap, filling clear plastic bags with water.
Later, Anti would freeze the water bags and sell them to fishermen for 1,000 Indonesian rupiahs, or 7 cents, a piece. The water bags filled her entire fridge, except for the bottom shelf reserved for the day’s catches.
The ice packs and the fridge signify important milestones in this isolated village that’s roughly a three-hour drive from Sumbawa airport. Electricity took its time to reach this part of Indonesia. The village relied mostly on diesel-fueled generators, which provided at most four hours of light in the evenings. The lack of electricity has kept fishermen fearful of rotting fish, or selling their catch at reduced prices in the afternoon before they turn sour.
In 2017, the state-owned power company known as PLN finally succeeded in connecting the village to the grid. The Jokowi government has an ambitious goal for Indonesia: 100% electrification by 2024.
“Ordinary citizens are forced to deal with the air pollution from surrounding coal plants, diesel generators, and increased frequency of irregular weather. If Indonesians care about quality of life, then they must care about this issue.”
— Ery Wijaya, senior analyst, Climate Policy Initiative of Indonesia
But the country’s energy push makes for a poor show of its climate goals. Under the Paris climate agreement, the country has pledged to reduce its carbon emissions between 29% to 41% by 2030. Yet Indonesia’s energy sector continues to rely heavily on oil, coal, and gas. The country has an energy mix of 39% oil, 33% coal, 20% gas, and 8% renewable energy sources combined in 2018, according to the Ministry of Energy and Mineral Resources of Indonesia.
To be sure, the government has set a goal to increase the share of renewable energy in the national energy mix to 23% by 2025, and Indonesia’s archipelagic structure is proving to be an opportunity to optimize renewable energy sources. Several projects have been introduced in parts of Indonesia to showcase the country’s renewable potential.
The bank has worked with the private sector in Indonesia on geothermal projects. But it’s also currently preparing a project on geothermal with the government, said Florian Kitt, ADB Indonesia’s energy specialist.
“We’re also looking forward in helping the government [on] its energy strategy to increase renewables. What we’ll exactly do there is yet to be seen,” Kitt said.
The bank’s efforts to support the government on grid development — as seen in Kwangko village — also has its links to helping the country increase its renewables. Currently, renewable energy sources contribute to 2.6% of total energy in Sumbawa island, an increase from less than 0.1% in 2018, according to Firman Sulistyawan, planning manager at PLN in Sumbawa.
“Really the focus was [on] expanding the grid to provide more access to people, so increased access, and enabling PLN to have stronger grids that enables the possibility to actually include renewables,” Kitt said.
Many of the grids in Eastern Indonesia are “not strong enough” to take on large-scale renewables, he said.
ADB no longer funds “dirty energy.” Yet it still funds fossil fuel and “selective” coal projects, leading watchdogs to question whether there is a disconnect between its policies and commitments to help address climate change.
The projects seem to echo ADB energy director Yongping Zhai’sstatements in 2018 about the bank’s commitment to helping its member countries embrace renewable forms of energy, in which he ensured that “as we meet our own climate finance targets, ADB’s lending portfolio has no place for ‘dirty energy.” In 2017, he said the bank approved over $2 billion for renewable energy and energy efficiency projects.
But for Indonesia to achieve its national determined contributions in line with the Paris agreement, at least in the energy sector it shouldn’t just focus on remote areas, as demand for electricity in these places are often much lower than in more developed regions, said Ery Wijaya, senior analyst at the Climate Policy Initiative of Indonesia.
“The contribution wouldn’t [be] too significant as the demand of electricity in the remote area is very small compared to demand in [the] Java-Bali area,” he told Devex.
Zubaede, one of the residents in Kwangko. He said the arrival of electricity has reduced the time it takes for him to finish a boat from almost one month to a week. Photo by: Jenny Lei Ravelo / Devex
Barriers to Indonesia’s renewable energy push
There are however real barriers hindering the country from tapping into more renewable energy sources. Apart from weak grid infrastructure, there’s the issue of finance, space, and making renewables an attractive investment for the private sector.
Get development’s most important headlines in your inbox every day.
A costing done in 2015 by the Indonesian Ministry of Energy and Natural Resources estimated the required investment for the country to meet its 23% renewable energy target is at over 1 trillion Indonesian rupiah — over $70 million.
Introducing renewables also requires large swathes of land. One to two hectares of land will be needed for example for a megawatt of solar energy, Kitt said. That’s more than twice the size of a standard FIFA football pitch.
Indonesia has a huge geothermal energy potential, but it comes with a lot of risks.
“You don’t know what’s going to come … out of it. So you need to be very careful. My colleague who processes the geothermal project, her first item of priority is nobody should die,” he said.
And there’s the cost question.
“It will cost millions and millions and millions … investments right before you can actually specify what is there,” Kitt said. “The problem for developers, if you drill into the ground and there’s nothing, then you’ve just lost $20 million to $50 million,” he said.
The government’s current policy on geothermals stipulating power purchase agreements can only be made once a resource has been found also leaves little incentive for developers to explore, according to a 2018 report by the International Institute for Sustainable Development’s Global Subsidies Initiative.
Its coal subsidies are also proving to have huge market advantages over, and disincentives for renewables. The government has put a price cap on coal consumed for public power generation to keep costs low amid increasing global coal prices, Wijaya said. This while the government imposes tariffs for renewable energy projects designed to lower local generation costs.
“Despite the obligation of PLN to purchase power from small scale renewable energy (up to 10 MW), [independent power producers] of renewable energy are still struggling to achieve financial close at current electricity tariff,” making Indonesia’s renewable energy development growth move “slowly” toward the target, he said in an email to Devex.
Indonesia’s financial market, dominated by banks, also often lend in the short-term, can be unfamiliar or have limited knowledge of renewables, and therefore more cautious in their lending to the sector. Insurance companies and pension funds meanwhile “typically invest in liquid financial instruments through the bond market,” which, Wijaya said, is “not interested to play in [a] new high-risk market such as [a] renewable energy project.”
The relevance of renewables
With the energy sector ranking second to forestry in contributing to the country’s carbon emissions, Wijaya said ordinary citizens should pay attention.
“Ordinary citizens are forced to deal with the air pollution from surrounding coal plants, diesel generators, and increased frequency of irregular weather. If Indonesians care about quality of life, then they must care about this issue,” he said.
Where Indonesia is sourcing its energy however seemed a mute discussion for communities that have waited so long for some power. In Kwangko, low-income households also get energy subsidies from the government, with households paying an average of just 50,000 Indonesian rupiahs, or roughly $4, for a month of electricity.
Syaiful Baharudin, who aggressively pushed for Kwangko village’s electrification when he was still the village head, said in jest to a group of visiting journalists, ADB staff, and PLN representatives: “We can now understand the meaning of independence because we’re also free from darkness.”
And the electricity paved the way for a number of things: roads, easier water access, increased livelihood opportunities for the villagers, and dreams.
Anti said she no longer needs to pay 500 Indonesian rupiahs to watch a couple of movies or travel some distance to bring back water to the household. Her husband, Wahidin who now heads the village, hopes that an asphalt road and street lights will follow the electricity.
“Hopefully in 2020 we’ll see improvement,” he said.
Editor’s note: The reporter traveled to Sumbawa with the support of ADB. Devex maintains full editorial control of the content.
MANILA, Philippines — The Department of Energy (DOE) will not implement a moratorium on coal power plant developments until the country meets its goal of attaining energy security.
DOE Secretary Alfonso Cusi said the agency would not close its doors to coal power projects as it has adopted a technology neutral policy to build the country’s capacity to ensure affordable, adequate and reliable power supply while sustaining economic growth.
“The Philippines, in the (Energy) Trilemma Index (of the World Energy Council), is number one in environment sustainability, energy security and accessibility. These are the areas we need to improve,” he said.
“Coal still serves a purpose for our baseload (requirements). And we are pushing for nuclear as an option,” the energy chief said.
Therefore, no moratorium would be put in place against coal power plants, Cusi said.
“A moratorium on any tech might be a disservice to our energy security,” he said, noting applications to build coal plants would depend on the capacity needed by the country.
Meanwhile, consumer group Murang Kuryente slammed the DOE’s ‘technology-neutral’ policy which ruled out a moratorium on the construction of coal-fired power plants in the country.
“Secretary Cusi’s remarks betray a parochial mentality that focuses on megawatts produced while dooming consumers to paying more for unreliable and polluting energy,” Murang Kuryente spokesperson Gerry Arances said.
The group also said the DOE’s policy runs counter to the spirit of the directive issued by President Duterte in his State of the Nation Address (SONA).
During his latest SONA, President Duterte issued a directive calling for the reduction of the country’s dependence on coal for power generation with more gas and renewables.
“You cannot divorce the economic, social, and environmental effect of any technology from its output,” Arances said.
According to Murang Kuryente, the Philippines is one of the few countries in the world that insists in constructing new coal-fired power plants despite a global trend to halt their continued use.
“Coal makes consumer pay more in their electric bills, makes them sick, and destroys the environment. Renewable energy should not even be an alternative, but rather the first choice in our energy policy,” Arances said.
Read more at https://www.philstar.com/business/2019/09/01/1947960/doe-no-ban-coal-until-philippines-attains-energy-security#y3gRDY7Ulg5TFtX0.99
During the recent Jakarta Car Free Day on 28 July, Indonesia’s Minister of Energy and Mineral Resources, Ignasius Jonan, led a campaign called the National Movement of A Million Solar Roofs (Gerakan Nasional Sejuta Solar Atap) to promote the country’s solar rooftop utilisation.
The campaign is an effort to bolster solar installation as listed in Indonesia’s National Energy Plan (RUEN), which targets solar photovoltaic (PV) installation of 6.5 gigawatt (GW) by 2025 and 45 GW by 2050. However, solar installation in this archipelagic country has been seemingly stagnant over the years, with only 0.1 GW of solar installation (on-grid and off-grid) up to today. This means that Indonesia requires a tremendous effort to add 6.4 GW of solar addition in only six years if they are to meet the target set out in the RUEN. Indeed, there are doubts as to whether it is possible Indonesia can make such a leap.
Indonesia’s solar installation is also lagging when compared to neighbouring countries. Based on data from the ASEAN Centre for Energy (ACE), as of June 2019, solar installation across ASEAN is about 9.1 GW – a significant surge from only 0.03 GW in 2010. This growth is contributed by solar installation spurts in Thailand (3 GW), Malaysia (0.7 GW), Philippines (0.8 GW) and recently in Vietnam (4.5 GW) thanks to successful government incentive programmes for renewable energy.
Solar installation growth in these five countries resulted from well-designed incentives for renewable energy, mainly from the Feed-in-Tariff (FiT) system. In all these five countries, solar installation significantly increased after the establishment of FiT. Solar is enjoying a boom in Vietnam, which recorded 4.5 GW as of June 2019 – only two years after FiT was launched. This makes Vietnam the largest solar PV installer in ASEAN, with traditional pioneers Thailand now second.
Source: ASEAN Centre for Energy
Indonesia can take a leaf out of Vietnam’s book after their success in boosting solar energy. Vietnam and Indonesia are rich in coal reserves and still predominantly use coal in their power generation mixes, and both are still developing countries which have high energy demands in response to their economic growth. In addition, Indonesia and Vietnam both have similar electricity market structures under a single buyer model with one state-owned utility – in Indonesia, the State Electricity Company (PLN), and in Vietnam, the Vietnam Electricity (EVN) – as an off-taker. Noting these similarities, it is not impossible for Indonesia to replicate the success of Vietnam in generating more than 4 GW of solar installation in two years.
Price incentive, financial support
Using Vietnam’s success as a reference, there are four key points Indonesia can learn from.
The first is the right solar incentive price setting. Vietnam launched FiT rates for solar at US$0.0935 per kilowatt hour (kWh) in 2017 which was eligible in the first-round for plants that are commissioning no later than June 2019. The solar FiT rates were set higher than the electricity rate in the average retail price – which is at US$0.0803 per kWh – so it incentivises renewable energy developers and attracts investment, but it is also not too high a burden for EVN to pay.
In Indonesia, referring to the cost to PLN of procuring power (commonly referred to by its Indonesian acronym, BPP), the country’s renewable energy pricing, including solar, is capped to the maximum local electricity retail tariff – which is at around US$0.07 per kWh for high electricity demand areas like Java. This does not provide incentives for the generation of solar power since the local electricity tariff reflects the production costs from coal or other fossils.
Since the BPP is composed of the cost of fossil-based generation, this is unattractive for renewable energy developers as renewables are high in this archipelagic region. Learning from other ASEAN pioneers which have succeeded in significant solar PV addition, the government needs to invest in incentives before they can reap the rewards. After that, the government can further help reduce the price of renewable energy when the market is mature. Adjustment of the FiT or an incentivised price will enliven the stagnant solar PV market.
In addition to tariffs, support from the financial sector is important. In Vietnam, the banks and financial sectors are well-aware of solar PV projects, hence they are supportive of the standard power purchase agreement given by the utilities and can provide loans for developers since they see their projects are bankable. A lot of listed lenders for renewable energy projects in Vietnam are from domestic banks, but in Indonesia, the financial sector’s awareness of renewable energy projects leaves a lot of room for improvement. A credit guarantee to the bank is one way the government can support such projects, and capacity building and government facilities to rise these projects’ bankability is another option for Indonesia – in particular among state-owned banks.
Mature local industry
A mature local industry to support the demand of solar is vital. Vietnam has a mature solar manufacturing industry to cater to the high demand when FiT was launched. In Asia, Vietnam is the third-largest solar PV manufacturer with a capacity of 5.2 GW per year in 2016, after India and China.
Prior to FiT, the solar module production was mostly for export, but Vietnam’s manufacturing capacity has prepared the local market for FiT’s establishment. This way, it made sense for developers to use local solar modules rather than imported ones since they provided more economic benefit.
In Indonesia, solar PV production was 416 megawatt (MW) per year in 2017 according to the Association of Solar PV Manufacturers in Indonesia (APAMSI), which makes the local solar module price much more expensive than imported ones. Meanwhile, Indonesia has regulated that a minimum of 40 percent of local products have to be used for renewable energy projects. This certainly creates a burden for renewable energy developers as the prices of local products are still high – which discourages them from investing in renewable energy projects. Learning from this, the government needs to not only incentivise the purchase of electricity from solar, but also support the manufacturing capabilities of local solar manufacturers to increase their production capacity.
PLN buy in, less red tape
Thirdly, Vietnam’s EVN is open and welcoming of solar and renewable energy in their grid system – and have been improving their capabilities to adapt to these technologies. Investment to increase grid flexibility and capacity are required to ensure the intermittency from solar is well-handled, and EVN sees this intermittency as a challenge rather than a threat – hence motivating them to improve their grid capability. EVN also realises that more renewable energy will naturally decrease the intermittency effects as projects can compensate for each other in a large system.
Solar PV and wind are intermittent by nature. Nevertheless, other countries handle this by conducting thorough planning and advanced renewable energy forecasting. As a result, renewable energy penetration will enhance the utility grid system’s reliability instead of depending on fossil generation. Renewable energy will also help PLN to upgrade its monitoring and planning systems, and the capacity building and study of renewable energy grid integration will ultimately help PLN embrace solar PV adoption.
Finally, easing the process of getting permits and support from local government for solar projects are also critical in ensuring rapid solar deployment. In Vietnam, several local authorities in regions where solar potential is high have developed a regional solar roadmap for the region which identifies the allowable places and available capacity for solar developers to submit proposed projects.
Developers no longer have to deal with the lengthy process of getting permits, and in some parts of the region, local authorities even provide their own incentives on top of national incentives – such as land which can be rented by developers. This shortens the time spent on red tape and speeds up the amount of time spent on installation.
Indonesia can support its solar industry stakeholders by transforming the BOOT (build-own-operate-transfer) scheme into a friendlier scheme such as BOO (build-own-operate). Local governments’ participation needs to be improved to create streamlined policies which are in line with the national target and roadmap.
By adopting these four points from Vietnam, Indonesia will likely find it easier to hit their target in six years’ time. Vietnam has provided a very valuable lesson, and Indonesia should have learnt by now that achieving the impossible – installing 6.5 GW in less than six years – is possible if immediate actions and well-designed strategies are put in place.
Aloysius Damar Pranadi and Nadhilah Shani are research analysts under the Policy, Research, and Analytics Programme at the ASEAN Centre for Energy (ACE) in Jakarta. Established in 1999, ACE is an intergovernmental organisation within the ASEAN structure that represents the 10 ASEAN Member States’ (AMS) interests in the energy sector.
