In a strategic move to enhance the solar energy sector, the Indonesian government has announced temporary relaxation in rules that have been a hindrance to development in the coal-dependent country. This step forms a significant part of the archipelago’s commitment to achieving net-zero emissions by mid-century.
Easing the Path for Solar Energy
Until 2025, the government has decided to lift the requirement that mandates the usage of mostly domestically produced materials in solar projects. With Indonesia’s first solar panel factory expected to commence production by that year, this relaxation can catapult solar energy generation by more than 4,000 times its current output.
A Priority for President Joko Widodo
This move aligns with President Joko Widodo’s priority of speeding up the energy transition. Relaxing the “local content” requirement is among over a dozen policy reforms, part of the $20 billion Just Energy Transition Partnership (JETP) that Widodo negotiated with the U.S. President and other wealthy countries.
Challenges Ahead for JETP
However, the JETP faces significant challenges, such as insufficient grants or low-cost loans and the hesitancy of private financial institutions to fund anything related to coal, including early retirements.
Indonesia’s Solar Ambitions
Currently, Indonesia’s solar production is less than Norway’s, with most of it shipped to neighboring Singapore. The government intends to increase solar power capacity fivefold in the next five years, but will require nearly $2.4 billion to achieve this goal.
Legal Reforms and Challenges
Among other legal reforms, the government must also overcome policies that block significant efforts to replace coal with renewable energy. This includes existing subsidies for coal-based electricity and restrictions on selling state assets that limit options for closing down coal plants.
A New Chapter for Renewable Energy in Indonesia
With these policy changes, Indonesia is paving the way for a brighter future powered by renewable energy. The investment plan encourages the legislature to provide a clear pathway for the early retirement of coal power, ensuring that this transition is legally feasible.
The move reflects a greater understanding of the urgency of climate change and a willingness to shift from traditional energy sources towards a cleaner, sustainable future.
This news is based on an article from thestar.com.my.