Solar project economics in three countries

This case study by Ember analyses the economic viability of 10 MW solar PV projects in Indonesia, the Philippines, and Viet Nam. It examines how Power Purchase Agreement (PPA) pricing, capital expenditures (CAPEX), and the integration of battery storage influence the Internal Rate of Return (IRR), while also discussing policy bottlenecks and regulatory reforms aimed at derisking clean energy investments in the ASEAN region.

• Project profitability for 10 MW solar installations is primarily driven by PPA terms and capital costs. A 10 percentage point change in new PPA prices can shift the Internal Rate of Return (IRR) by 33–45 percentage points, while a 10 percentage point difference in capital costs can result in an IRR change of 18%–41 percentage points.
• Integrating battery storage can significantly increase project returns, particularly in Indonesia and Viet Nam. In Indonesia, batteries can raise the IRR to up to 23%, and in Viet Nam to up to 7.3%. In Indonesia, the PPA ceiling price for solar plus battery is approximately two-thirds higher than for solar alone, reflecting a government priority for storage capacity.
• PPA ceiling prices for solar projects vary by location: Sumatra (Indonesia) has the highest at $0.09/kWh (dropping to $0.049/kWh in years 11–20), followed by the Philippines at $0.076/kWh and North Viet Nam at $0.053/kWh.
• Capital costs for 10 MW solar projects range from $4.3 million to $6.4 million, with batteries adding between $0.7 million and over $2 million. While current costs in Indonesia and the Philippines support a minimum 10% IRR, Viet Nam's capital costs would need to decrease by about 20 percentage points to reach a 10% IRR.
• Investment in ASEAN clean energy averaged $72 billion between 2022 and 2024, but this needs to nearly double to $130 billion to meet global climate goals.
• Various bottlenecks hinder investment: Viet Nam faced solar curtailment of up to 40% in 2022, causing equivalent revenue losses for developers. In the Philippines, plants are unable to dispatch due to delayed transmission studies and interconnection projects. In Indonesia and the Philippines, overlapping land rights and local approvals can delay timelines by over a year, reducing IRR by 0.6% per month of postponement.
• The Philippines has implemented the Energy Virtual One-Stop Shop (EVOSS) to digitalize permitting and the Green Lane Certification to expedite approvals. As of December 2024, 176 projects have green lane access, including 141 solar, hydropower, wind, geothermal, and biomass projects valued at over $70 billion.
• Regulatory updates are being implemented to improve bankability: Indonesia's Presidential Regulation No. 112/2022 and MEMR Regulation No. 5/2025 provide ceiling prices and PPA clarity. Viet Nam's Electricity Law of February 2025 and Decree No. 58/2025/ND-CP focus on bidding processes for PDP 8 and incentives for rooftop solar and storage.

APA

Ember (2025). Solar project economics in three countries. https://ember-energy.org/chapter/solar-project-economics-in-three-countries/

Chicago

Ember. Solar project economics in three countries. 2025. https://ember-energy.org/chapter/solar-project-economics-in-three-countries/.

Wikipedia

{{cite report |author=Ember |title=Solar project economics in three countries |date=2 December 2025 |url=https://ember-energy.org/chapter/solar-project-economics-in-three-countries/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ember2025solar, author = {{Ember}}, title = {{Solar project economics in three countries}}, institution = {Ember}, year = {2025}, month = dec, url = {https://ember-energy.org/chapter/solar-project-economics-in-three-countries/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }