Achieving Low Solar Energy Price in Indonesia

This report released by the International Institute for Sustainable Development (IISD) focus on five factors that drive renewable energy prices and review examples from the GCC countries and India to explore what Indonesia could learn from these experiences. These factors are:

1. Government targets and policy
2. Government procurement (auction design)
3. Land and grid access
4. Investor confidence and finance
5. Local content and import duty

Key Messages

• India and the Gulf Cooperation Council region have seen significant expansion in solar energy prices, while Indonesia has lagged in the growth of solar despite aggressive policy targets.
• Key differences include land acquisition policies, policy enabling conditions, and a stable environment that have spurred investment, as well as lower perceived risk in investment in these two regions compared to Indonesia.
• Studying the best practices in these two regions could offer strategies for more renewables in Indonesia and assist in meeting the country's renewable energy targets for 2025.

Indonesia could take several lessons from the Gulf Cooperation Council (GCC) countries and India in terms of the development of renewable energy and how to achieve low electricity prices. There is a common theme between GCC countries and India when it comes to creating a supportive atmosphere for developing renewable energy projects in the country: clear and supportive policies. The United Arab Emirates (UAE), Saudi Arabia, and India all have specific national programs for renewable energy that serve as their main roadmaps, such as Energy Strategy 2050 (UAE) and the National Renewable Energy Program (part of Saudi Arabia’s Vision 2030). These countries also did some intra-governmental restructuring to create a more streamlined decision-making process.