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Considering Public-Private Synergy

6/12/2020
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One untapped potential framework to allow Indonesia to move beyond the politics of energy is the real commitment and synergy among the public and private sector.

One such case study can be found in “GNSSA: Gerakan Nasional Sejuta Surya Atap” (1 million solar rooftop movement), supposedly act as the virtual hub for accelerating solar rooftop technology through collaboration between several public and private entities. Although being successful to attract several entities to declare their involvement with the movement and has been doing some campaign and workshop targeting both public and private sector, there is still a setback for the adoption progress.

The slow progress in adopting solar rooftop technology is partly to the lack of awareness from the end-users (residential, commercial or industrial) or/and due to the fact that the most-awaited solar rooftop regulation (ministerial regulation of energy and mineral resource No.49/2018) does not live to the expectation. The policy is marketed quite well, except for the fact that the reality does not match with its so-called “exporting electricity” campaign. It can be clearly seen that the discount of 35% of exported energy and only with 3-months carrying “exported energy credit” period (before the credit expires) make it harder for end-users to truly realize the financial gain offered by solar rooftop. Not to mention the dis-incentive (such capacity charge and emergency energy charge) for the industrial users who want to build the solar rooftop at their facility.

Meanwhile, there is already a sign of readiness coming from most of private sectors, such investor, financial institution, project developers, EPC company, O&M contractor, and start-ups to be involved in the “solar revolution” in Indonesia. The problem is, there has not been any significant demand or/and favorable financial benefit for them.

Looking at this situation, there is a greater need for utilizing and mobilizing public sector as engine of growth. Fortunately, one does not need to device new policy or regulation to really shows the commitment to renewable energy, especially solar technology. Look no further than re-assessment of presidential regulation No. 22/ 2017 on the obligation for every state-owned/public building to utilize solar rooftop at least covering 30% of their roof space area. Based on this statement alone, if the public sector takes this regulation seriously, there is no reason that the mission for 1 million solar rooftop installation and mega or even giga-watt scale solar rooftop capacity can’t be achieved.

As mentioned above, one untapped potential to address renewable energy barrier in Indonesia and to allow this country to join the global “energy transition” is via synergy and complex coordination between the public and private sectors. One of concrete action for the public sector to take upon in order to stimulate and building the ecosystem is through creating Feed-in-Tariff (FiT) program.

The public sector who is the implementor of FiT scheme will offers its respective solar rooftop capacity/quota to be developed by private sectors under such scheme. One thing to note is to the extent that FiT under this public-private synergy will have a narrow focus on developing solar rooftop at state-owned/public buildings. Therefore, putting emphasize on the great importance of public sector commitment and contribution to make this program successful, for instance by offering the free access to their roof space to be developed as solar rooftop at certain size which will be selling its generated energy at certain established tariff per contractual agreement.

As for the size of projects, in order to benefits from economies of scale, the offered solar rooftop should range from minimum in order of tenths to hundredths kWp, representing commercial-scale solution. Meanwhile, to guarantee stream of revenue, the off-taker of generated electricity should be appointed as well, either using existing utility company, or creating a new special purpose entity.

Once the public roof space area has been identified and is available to be developed as “public-private solar rooftop project”, the public sector will appoint its authority who will be in charge to collaborate and coordinate with several stakeholders from private sector to specifically design, build, own, and operate the solar rooftop. The private sector can involve in various ways, starting from project managers, consultant, individual/institutional investors, banks, EPC and O&M contractor, or even to digital start-up company.

The lesson learned from other countries is pretty constructive, in which the public sector plays a crucial role during the early stage of renewable energy technology adoption. In the midst of continuous decrease in solar attractiveness along with wait-and-see strategy played by private sector, at first approximate, the FiT program seems to be a corrective step. The program should be designed in such way, so that initially it will be able to counter-act the damping effect of the current regulatory framework. It also needs to be an adaptive and scalable program, in a sense that the tariff for each project can be adjusted, while the capacity quota and its allocation will need to be evaluated and offered according to the underlying situation.

All in all, the public-private synergy can be considered as potential and opportunity for Indonesia’s solar rooftop growth story. Unfortunately, potential and opportunity alone is not adequate to bring about a revolution, the extreme importance of a strong will and committed action is needed to make it happen.

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Collaboration
FiT

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