Achieving Low Solar Energy Price in Indonesia

The report analyzes how the GCC region and India achieved low solar energy prices through supportive policies, streamlined procurement, and reduced financing costs, contrasting these with Indonesia's challenges including high local content requirements and developer-borne infrastructure costs.

• Indonesia's renewable energy development is hindered by a pricing conflict where developers find power purchase prices too low to recover investments, while the state-owned utility PT PLN considers them too high.
• In Indonesia, renewable energy projects are disadvantaged because they compete against subsidized coal generation, as prices are linked via the Biaya Pokok Pembangkitan (basic cost of generation).
• The GCC region and India have achieved record-low solar prices through a combination of plummeting solar panel costs and significantly reduced financing costs.
• India's Solar Park Scheme reduces project costs and risks by requiring state governments to provide land, statutory clearances, and common infrastructure, whereas in Indonesia, developers are responsible for road and transmission infrastructure.
• High interest rates from local Indonesian banks (10–11%) and short tenors (maximum five years) increase the levelized cost of energy (LCOE), especially for renewables which are more sensitive to financing costs than fossil fuels.
• Indonesia's local content requirements, which mandated a minimum of 40% in 2017 and aimed for 60% by 2019, increase project costs because local solar manufacturing is not competitive with international prices.
• India's attempt to protect domestic manufacturers via a 25% safeguard duty on solar cells and panels starting July 30, 2018, led to higher quoted tariffs and some project cancellations.
• The UAE and Saudi Arabia have utilized sovereign wealth funds and long-term PPAs to attract billions in investment for large-scale renewable projects.

APA

Suharsono, A. (2020). Achieving Low Solar Energy Price in Indonesia. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/low-solar-energy-price-indonesia.pdf

Chicago

Suharsono, Anissa. Achieving Low Solar Energy Price in Indonesia. International Institute for Sustainable Development, 2020. https://www.iisd.org/system/files/publications/low-solar-energy-price-indonesia.pdf.

Wikipedia

{{cite report |last1=Suharsono |first1=Anissa |title=Achieving Low Solar Energy Price in Indonesia |publisher=International Institute for Sustainable Development |date=March 2020 |url=https://www.iisd.org/system/files/publications/low-solar-energy-price-indonesia.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{suharsono2020achieving, author = {Suharsono, Anissa}, title = {{Achieving Low Solar Energy Price in Indonesia}}, institution = {International Institute for Sustainable Development}, year = {2020}, month = mar, url = {https://www.iisd.org/system/files/publications/low-solar-energy-price-indonesia.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }