SOLAR ROOFTOPSOLAR ROOFTOP

CASE FOR INDONESIA

Centre for Science and Environment

New Delhi, India

Table of Contents

• Solar Rooftop/Decentralised Systems for Indonesia

• Indian Solar Sector

• Falling Prices of Solar Energy• Falling Prices of Solar Energy

• Increasing Electricity Tariffs

• Dependency on DG Sets

• Reduce Burden on the Grid

• Other Renewable Energy Options

• Conclusion

SOLAR ROOFTOP/DECENTRALISED

SYSTEMS FOR INDONESIA

Solar systems or decentralized solar systems makes

sense for Indonesia for a variety of reason

▫ Solar is becoming one of the cheapest source of power

▫ Respite for customers from increasing electricity tariffs▫ Respite for customers from increasing electricity tariffs

▫ Reduce dependency on diesel at times of power cuts

and for remote villages

▫ Increase access in remote villages

▫ Reduce burden on the grid

▫ Climate change reasons

PRESENT POWER SCENARIO

Renewable Energy, 18.18%

Gas, 8.19%

Diesel, 0.30%

Nuclear, 2.05%

Hydro, 13.59%

Solar –25.54%

Small Hydro Power - 7.21%

BioPower -13.42%

Waste to Power - 0.19%

Coal, 58.32%

India has an installed capacity of 330,860 MW of power

generation, out of which 60,157 MW is of renewable energy.

Per capita consumption of India 1,075 kWh in 2015-16

Renewable Energy

Wind –53.64%

• Launched in 2010

• Set the target of installing 20,000 MW of grid

connected and 2,000 MW of off-grid solar power by

NATIONAL SOLAR MISSION

connected and 2,000 MW of off-grid solar power by

2022

• Now the target has been increased to 100,000 MW

of solar power by 2022

SOLAR POWER IN INDIA

2 2 9 32 481 1,686 2,647

3,744

6,763

12,289 14,751

-2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

• Initial Stage: Feed-in Tariffs were provided since the cost of solar was high, developers needed financial support

• Reverse bidding has resulted in reducing cost of solar so much that now benchmark tariffs are not needed. There is no financial support – not even available subsidies – viability gap funding are being used.

-

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18 (October

2017)

JNNSM Phase I (2010)

CERC Benchmark Tariff

Lowest Tariff Quoted

Average Tariff Quoted

INR/kWh INR/kWh INR/kWh

CSP 15.31 10.49 11.48

SOLAR: REDUCTION IN TARIFF

Batch ICSP 15.31 10.49 11.48

SPV 17.81 10.85 12.16

Batch II SPV 15.39 7.49 8.77

From Rs 10.49 being quoted in 2010, the lowest bid was of Rs 2.44 per unit was quoted in auctions for Bhadla Solar Park won by ACME Solar in May 2017.

SOLAR: REDUCTION IN TARIFF

5.08 4.94 4.82 4.78 4.69 4.41 4.34

3.25

2.62 2.44

3.47

200

400

600

800

1000

1200

1400

1600

1.00

2.00

3.00

4.00

5.00

6.00 Capacity Lowest Bid

• In the last two years, the price of solar has halved and now has achieved grid parity in Indian market. This is because of the 1. Reducing costs due to sharp fall in Chinese module prices2. Massive economies of scale brought in by 10 GW of auctions3. Risk mitigation by protecting developers from discoms’ failure to pay

0

200

-

Jharkhand, 2016

UP -SECI, 2016

Gujarat -SECI, 2016

Karnataka -SECI, 2016

Chhattisgarh -SECI, 2016

UP -NTPC, 2016

Karnataka -NSM, 2016

AP -SECI, 2016

Karnataka, 2016

Telangana -NSM, 2016

Maharashtra -SECI, 2016

Rajasthan -NTPC, 2016

Rajasthan -NTPC, 2016

Madhya Pradesh -

SECI, 2017

AP -SECI, 2017

Rajasthan -Bhadla

IV, NSM, 2017

Rajasthan -Bhadla

III, NSM, 2017

Tamil Nadu, 2017

1,690

1,442

1,000 1,000

1,200

1,400

1,600

1,800

Capital Costs (In lakhs per MW)

SOLAR: REDUCTION IN COSTS

800 691

587 531

-

200

400

600

800

1,000

2010-11 2011-12 2012 -13 2013-14 2014-15 2015-16 2016-17

The capital costs have fallen by over 70% in the last 7 years and the oversupply in the global markets on account of Chinese manufacturers are the major reason for it.

Solar Park to bring in

economies of scale

Manufacturing Support

Transmission support

• Rs 970 crores as capital subsidy

• SECI enhancing the local

• Solar parks were developed with government support to helps in land acquisition for the developers.

• “Must Run” status for solar plants

• Net metering policy for grid connected solar rooftop plants

• Green corridors reduces

SUPPORT MECHANISM FOR SOLAR

Support for Solar

Solar Purchase Obligation

Reducing investment in

coal

Exemptions & Other Incentives

the local manufacturing industry by creating demand for them

reducesevacuations

• No charges on open access

CEA has said that there is no need for enhancing coal capacity in the near future apart from the ones in pipeline.

• Excise & Custom duty exemptions for most of the Equipment, Machinery etc

• 10 year tax holiday

• Favourable global costs trends helped all countries including India

• Government ambitions has resulted in flood of investment, further reducing the costs because of economies of scale

• Policies that have been critical for the development of RE sector

• Grid integration is not a challenge up to a significant share of

LEARNINGS FROM INDIA

• Grid integration is not a challenge up to a significant share of renewable energy

• Distributed generation could be a valuable tool to address energy access and deal with cuts in urban areas

• Other benefits:

▫ Reduced need for polluting coal power plants for which finances are harder to acquire

▫ Distributed generation may help in reforming discoms which supply subsidized electricity

SOLAR’S TIME IN THE SUN

Costs in India and China are at USD 0.65 per Watt-peak and USD 0.80 per

Watt-peak, lowest as it has ever been. It is expected to stabilize below USD

0.50 per Watt-peak.

FALLING PRICES ACROSS THE GLOBE

0.050

0.020

0.070

0.050

0.080

0.080

0.110

0.090

0.110

0.120

India

Mexico2014 2015 2016 2017

0.400

0.070

0.060

0.049

0.080

0.140

0.220

0.069

0.085

0.178

0.250

0.080

0.096

0.180

0.300

0.090

- 0.050 0.100 0.150 0.200 0.250 0.300 0.350

China

USA

Japan

Germany

USD/KWh

SOLAR ROOFTOP COSTS IN INDONESIA

(as estimated in 2014)

4,000

5,000

6,000

USD/KW

-

1,000

2,000

3,000

4,000

2015 2020 2030 2040 2050

Source: IEA, 2014

USD/KW

1300

1500

1700

1900

USD/KW

CAPITAL COSTS IN INDONESIA

(as estimated in 2017)

Source: Mott McDonald, 2017

500

700

900

1100

1300

Indonesia Thailand Phillipines Malaysia Myanmar India

USD/KW

In 3 years, the estimates have fallen from USD 1800-4800 per watt-peak have fallen to USD 1100-1700 per watt-peak.

0.10

0.12

0.14

USD/KW

LCOE IN INDONESIA

(as estimated in 2017)

Source: Mott McDonald, 2017

-

0.02

0.04

0.06

0.08

Indonesia Thailand Phillipines Malaysia Myanmar India

USD/KW

ELECTRICITY PRICES IN INDONESIA

Categories of Customers Electricity Tariffs Range (USD/kWh)

Special Category – Subsidized 0.01 – 0.08

Residential 0.01 – 0.10

Business 0.02 – 0.10

Industrial 0.01 – 0.09

Government 0.04 – 0.10

Consumers paying higher tariffs than the generation cost of electricity of rooftop systems more than 0.06 per unit

• Although subsidised, S-2 and S-3 category consumers• Customers with a connection of more than 900 V-RTM under R-1, R2 and R3

• B-1 with capacity of 1300 VA and higher, B-2, B-3 category of consumers • Categories higher than I-1 1300 VA capacity • P-1 with capacity of 1300 VA and higher, P-2, P-3 category of consumers

INCREASING TARIFFS

• Stages of subsidy withdrawal under President Joko Widodo

▫ Stage I – 2014

� Cut 280 trillion rupiah (USD 24 billion) subsidy bill by increasing tariffs for its top electricity consumers by 10-11% for all consumers and 5.5% for government and households

▫ Stage II – 2016▫ Stage II – 2016

� Fall of subsidies to IDR 59.23 trillion in 2016

▫ Stage III – 2017

� Subsidy for 900-VA customers would be gradually revoked starting from January to May 2017

• Only 4.3 million 900-VA and 450-VA customers would be eligible for cheap electricity and receive government subsidies

POWER QUALITY & OUTAGES IN CITIES

• According to news reports, major cities in Indonesia like

Bandung, Surabaya, Medan, Semarang etc. are facing

problems with both quality power and outages

• Asian Development Bank (ADB) report quotes power

outages as one of the most important factors inoutages as one of the most important factors in

hindering business operations in Indonesia

• Among foreign investors, the Japanese companies

complained about power shortages.

• Power voltage levels were fairly low throughout the 25

locations monitored through the WRI-Prayas initiative

SOLAR FOR THE ACCESS IN REMOTE ISLANDS

• Based on this analysis, changes in population density account for only 18%

of the differences in electrification ratios.

• Electrification is a factor of the costs and difficulty of connecting rural areas

instead of population density

• Solar can provide electricity to remote islands

• Electrification in the

▫ Western part of the country as high as 99.98% (DKI Jakarta)

▫ Eastern part of the country as low as 47.8% (Papua)

• More than nine hundred permanently inhabited

ACCESS IN REMOTE ISLANDS-I

• More than nine hundred permanently inhabited Islands

▫ The non-availability of quality power can have severe spillover effects.

▫ Facing problems in business investment

▫ Logistical challenge for maintaining a reliable electricity grid supply

ACCESS IN REMOTE ISLANDS-II

• Electricity access is a matter of both policy and settlement patterns.

• In Indonesia, around 20% variation in electrification ratios is seen among the provinces. seen among the provinces.

• Both Funding from various schemes and geographical/settlement patterns determine the level of electrification and quality of power supplied.

• Still around 12-14 % of population has limited or no access to grid based electricity.

• Research shows that the last 10% of electrification is very costly.

• In this context solar power and other renewables can play an important role.

DEPENDENCY ON DG-SETS

• Power interruptions prompted to rely on private

generators

• Seeking services of a ‘Floating Power Plant (based on

diesel)’ from Turkeydiesel)’ from Turkey

• As per the CSE analysis, a diesel gen-set with efficiency in

the range of 0.3-0.6 liters/kWh and with average diesel

price of USD 0.68 per liter (current price in

Indonesia), would generate electricity at the cost of USD

0.2 to USD 0.4 per kWh.

• Electricity procurement prices in remote villages is as

high as USD 0.18 per kWh.

REGIONAL POWER GENERATION COSTSElectricity generation costs in Indonesia varies from USD 0.065 to USD 0.175 per

unit. The prices are higher in remote villages.

9.2810.14 10.210.398

12.1712.4312.7513.5413.6613.68

17.3217.52

12

14

16

18

20

6.51 6.51 6.51 6.52 6.54 6.627.77 7.86 8.07 8.1

9.01 9.2810.14 10.210.398

0

2

4

6

8

10

An ADB study with geospatial electrification planning for the island of Sumba in Nusa Tenggara Timur found that it would be less costly to use renewable off-grid technologies rather than grid extension to serve some 30% of the households remaining to be electrified.

INCREASE IN ELECTRICITY REQUIREMENT

5256

51

62

7583

300

350

400

450

500Sumatra Eastern Indonesia Java-Bali 457

Electricity demand is projected to increase two and half times in the next 10 years

151 162197

228261

298 31821 23

6036

44

52

2932

41 51

0

50

100

150

200

250

300

2015 2016 2018 2020 2022 2024 2025

200

• National average cost of generation in Indonesia is as

high as USD 0.18 per kWh in East Nusa Tenggara (NTT)

and Maluku.

• Cost of solar power procurement should encourage PLN

SOLAR SYSTEMS CAN HELP PLN

• Cost of solar power procurement should encourage PLN

to promote solar especially in remote islands and their

villages

• Help manage demand and reduce dependency on grid

• Beneficial for consumers who are paying tariffs more

than USD 0.06 per unit

• Help source the increasing demand through solar instead

of depending on fossil fuels

WHERE ALL OTHER RENEWABLE OPTIONS

CAN BE ADOPTED IN INDONESIA?

Type of Energy Option Potential Area of Application

Wind Areas with high wind intensity

Biomass Rural and agriculture

Tidal 54,720 Kms of coastlineTidal 54,720 Kms of coastline

Hybrid systems (like solar-wind, tidal-wind, floating solar etc.)

For Floating Solar PlantsIndonesia has around 93,000 square kilometers of inland seas (straits, bays, and other bodies of water). When 1 sqkms can have 100 MW, then even 0.1 % of this 93,000 sqkms can give around 9.3 GW

CHALLENGES WITH THESE OPTIONS

• Testing of solar and other renewable options as a viable business models on pilot project basis

• Development of regulatory models for governance of • Development of regulatory models for governance of these renewable energy options.

• Forecasting and grid integration of intermittent renewable power although not a challenge for 25 per cent RE share

• Addressing issues like tariff, subsidy, grid integration etc. to sustain a conducive ecosystem for these technologies.

POLICY GAPS

• Indonesia, today lacks ambition for renewable energy especially solar

that can pool demand and attract investment.

• Focus still lies in fossil fuels – when the country can take advantage of

lowered costs of solar for both access and power cuts

• Another important aspect for enhancing investment in the sector is the • Another important aspect for enhancing investment in the sector is the

supporting mechanism

▫ The regulatory framework including FiT should be supporting the development

of RE instead of acting as disincentive which it currently is.

▫ High taxes on auxiliary equipment - (aluminum frame, ethylene vinyl acetate

film, back sheet, junction box, silver solder ribbon and sealant etc) are taxed in

range of 13 to 20 per cent.

▫ Mandatory high domestic content requirement (25.63 per cent on goods

sourced, 100 per cent on services and 43.85 per cent on both combined)

PRIYAVRAT BHATI

Centre for Science & Environment

priyavrat@cseindia.org