This post was initially published in Media Indonesia

The Minister of Energy and Mineral Resources, Ignasius Jonan, was under the spotlight when he announced an 80 percent decline in his electricity bill. This was the result of the photovoltaic (PV) solar panel that he installed on the rooftop of his official and private residences, which generates electricity from the sunray to reduce utilization of the electricity generated by the state-owned electricity company (PLN).

After experiencing firsthand how installing a rooftop solar panel actually helped save electricity cost, Minister Jonan immediately instructed his ministry to draft a regulation of the Minister of Energy and Mineral Resources. The regulation will specifically control and monitor the development of solar PV rooftop in housings across Indonesia to ensure that its benefits are widespread.

Minister Jonan is also praised for his efforts to ensure transparency in the process of making the policy by involving the private sector, PLN and civil society organizations.

For the electricity saving benefits from solar PV rooftop to be widespread nationally in Indonesia, three main challenges need to be addressed by the ministry in drafting the Ministerial Decree. First, there is a lack of data on the potential of rooftop to support the installation of solar panels.

Before installing and investing in rooftop solar panel, especially in urban and semi-urban residential areas, we need to calculate and visualize the rooftop’s capacity to capture sun radiation in kilowatt to ensure that the sunray captured by a panel can adequately fulfill the electricity requirement.

Today, the Ministry of Energy and Mineral Resources’ One Map (ESDM One Map) is the only official government portal that visualizes the potential of sun radiation in Indonesia with a pixel resolution of 0.9 to 1 kilometer.

Therefore, amidst the great enthusiasm to invest in rooftop solar panel in the housing sector, it is important for homeowners to fully understand the solar photovoltaic potential of their rooftops. This potential is affected by the house’s location and other factors that affect the performance of the solar panel, such as weather variation and rooftop orientation.

A study projects a great potential for the rooftops of housings and government, commercial and industrial buildings in Jakarta to capture sun radiation, with a capacity estimated at 2.5 giga watt.

Led by the Research and Development Agency (Balitbang) of the Ministry of Energy and Mineral Resources with the assistance of universities and research organizations, the drafting of this ministerial decree needs to require more detailed calculations and updates of data on rooftop capacity.

The data can be collected using a combination of aerial images (such as SPOT 7 images owned by LAPAN with a resolution of 150 cm), high-resolution satellite images, weather database and computational algorithm estimation.

Second, a majority of homeowners in Indonesia can’t afford a photovoltaic solar panel. The price of a solar panel module with a capacity of 1 kW peak (kWP) is estimated at US$1,000, with a total installation cost of up to $3,500. With such pricing, rooftop solar panel is only affordable for a particular segment of the society and not for a majority of urban and semi-urban residents in Indonesia with a monthly minimum wage of around $300-500.

The Ministry of Energy and Mineral Resources can at least reconsider the percentage set for the local content requirement (TKDN), the percentage of components that are manufactured in Indonesia, for photovoltaic solar panel technology, which is currently ranging from 34-39 percent.

Solar panel manufacturers who are interested in developing their businesses in Indonesia have reported that the significant local content requirement for solar panel technology has resulted in the higher cost for energy projects because of the relatively small production scale of solar panel in Indonesia. As a result, the prices of solar panel in Indonesia cannot compete with international prices.

The Ministry of Energy and Mineral Resources must cooperate and consult with the Ministry of Industry as the regulator of the local content requirement for solar panel to review and evaluate the effectiveness of the solar panel local content requirement. It is necessary for quality improvement and cost efficiency in the domestic production of solar panel. It is also necessary to identify the different supports that the two ministries can offer, along with research organizations, for the development of the Indonesian solar panel industry.

Third, owners of rooftop solar panels are currently unable to gain any income from selling electricity to PLN. The current mechanism set by the prevailing regulations imposes various costs on the owner and user of rooftop solar panels, especially if they wish to export or sell the excess electricity from the rooftop solar panel to PLN.

Unfortunately, the cost to install the parallel connection from the rooftop solar panel to PLN’s network is borne by the system owner/user. Such unfavorable situation is exacerbated by the fact that PLN will only use the excess electricity as deposits, so the panel owner/user will not receive any cash payment.

In a discussion on the latest policies concerning the rooftop solar panel with the representatives of PLN and the Ministry of Energy and Mineral Resources, it was found that PLN is currently formulating a conversion factor to generate profit for owners of rooftop solar panels who transmit the excess electricity to PLN.

This conversion factor will be multiplied by the capacity of rooftop solar panel owners to export electricity to the PLN’s network to generate income for rooftop solar panel owners and more electricity for PLN. The Ministry of Energy and Mineral Resources must make sure to formulate an appropriate and fair conversion factor for rooftop solar panel customers and PLN.

In addition to the three considerations above, a comprehensive and fair policy on rooftop solar panel in Indonesia must cover all sectors and not just housing. A strong demand from the commercial and multinational industry sectors for new and sustainable energy (EBT) can expand the renewable energy market in Indonesia.

Rooftop solar panel is currently considered the best option in the short term to start transforming energy in the commercial and industrial scope.

If the Ministry of Energy and Mineral Resources can issue an integrated policy to capitalize on the great solar potential across Indonesia, this will spur the growth of the national solar panel production and services with the potential to create around 130 thousand new jobs across Indonesia.