Indonesia is considering how to reduce its growing greenhouse gas emissions. The suspension of new coal power plants bodes well for Indonesia’s solar growth. However, the use of solar energy requires government actions, such as increasing the transparency of power purchase agreements and revising long-term power plans.

A new report jointly produced by BloombergNEF, Bloomberg Philanthropy, and the Indonesian Institute of Basic Services Reform (IESR) explores the potential contribution of solar energy to achieving Indonesia's renewable energy goals.

Indonesia hopes that renewable energy will account for 23% of primary energy by 2025. The power sector can achieve this level of renewable energy generation by installing only 18GW of photovoltaic (PV) systems by 2025. The solar capacity equivalent to the 154MW installed today has been increased by 100 times. This goal is achievable because photovoltaics can be deployed quickly. Photovoltaics is the most economical clean energy technology that Indonesia can quickly deploy.

The installation of 18GW of photovoltaics will require an investment of 14.4 billion US dollars, which is equivalent to more than 50 times the US$287 million invested in PV deployment in Indonesia in 2005-20. The “pipeline” of the Indonesian photovoltaic project currently under development currently totals 2.7GWac. If all projects are developed, this will translate into an estimated $3 billion investment. Access to capital is not the main challenge. On the contrary, Indonesia’s current regulatory framework and power market make it difficult to develop projects that can be financed. A better enabling environment is essential for attracting capital and accelerating photovoltaic construction.

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To increase solar energy ambitions beyond 2025, the Indonesian government is considering a possible long-term net zero emission target. Regardless of the time frame, achieving this goal will largely rely on the deployment of solar energy to reduce dependence on fossil fuel power generation. Specific policy commitments—to turn talks about new targets such as a coal suspension or carbon pricing into reality—can accelerate the pace of decarbonization and attract investors.Editor/XuNing