Indonesia

The Indonesian Ministry of Energy and Mineral Resources and state-run distribution utility, PLN, have partnered with USAID and NREL to evaluate the economic implications of solar energy deployment in Indonesia.

Study on the Impacts of Distributed-PV in Indonesia

Background

As part of their goal to increase the share of renewable energy in the national energy mix, the Indonesian government through the Ministry of Energy and Mineral Resources (MEMR) is encouraging the use of solar energy for electricity. In particular, due to declining technology costs and growing customer demand, the government has begun to implement distributed generation programs, including for distributed-PV (rooftop-PV).

To this end, the MEMR established a regulation to:

  • Accelerate the installation of DPV in PLN territory;
  • Promote the use of solar energy from DPV for customer self-consumption; and
  • Establish procedures for the installation of, transactions from and calculation of electricity produced by DPV.

In order to understand and help mitigate the potential impacts of increasing levels of DPV penetration and customer self-consumption, MEMR and PLN have commissioned a study through USAID and NREL. This study helped MEMR craft policy which maximizes DPV deployment with minimum adverse impact to PLN and helped PLN adapt their planning and procurement procedures for a smoother integration of DPV resources.

Study

The collaboration between MEMR, PLN, USAID and NREL focused on the impacts of the current net metering program in Indonesia. The study used data-driven analysis to inform the revision of the net metering rules as well as evaluating alternatives to net metering. Specifically the study concentrates on two key issues: 1) customer economic impacts, and 2) utility financial impacts under various scenarios of DPV deployment and customer compensation schemes for DPV.

Task 1 - Customer Economic Impacts

In order to understand what are the customer economics of DPV under various rates, regulations and compensation schemes, the analysis team used customer load profiles and solar data to model several representative DPV systems. These representative systems were used to quantify various economic indicators under each compensation scheme, which allowed a direct comparison of the impact these schemes had on incentivizing customer adoption of DPV systems. The figure below outlines the process of analyzing the potential impacts various compensation schemes on customer economics.

flow chart of work for indonesia-USAID-NREL project

Figure. DPV Customer Economic Analysis Framework

Task 2 - Utility Financial Impacts

The second portion of the study focused on qualitatively analyzing the short-term financial impacts of the various compensation schemes for PLN, including costs (e.g. foregone sales revenue) and benefits (e.g. avoided generation costs, line loss reductions). The focus on short term impacts allowed PLN and MEMR to craft regulations to maximize the benefits of DPV on their system without holding up the near-term development of the DPV market while also laying the foundation for longer-term analysis in the future.

flow chart for task 2 of USAI-NREL Indonesia work

Figure. Utility Revenue Impact Analysis Framework

Outcomes

The results from this study allowed:

  • PLN to anticipate and mitigate the potential adverse impacts of the integration of DPV in the planning, design, procurement and operation of their electricity system;
  • PLN to prepare and proactively provide policy recommendations, standards and tariff bases to MEMR; and
  • MEMR to understand how various public policies such as compensation mechanisms will affect distributed generation customer economics, which in turn will inform future policy decisions.
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