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Promoting residential rooftop solar photovoltaics in Indonesia: Net-metering or installation incentives?

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  • Pramadya, Fazri Aditya
  • Kim, Kyung Nam

Abstract

The number of rooftop photovoltaic (PV) systems in Indonesia has increased massively following the implementation of the net-metering (NEM) scheme. However, it is still below the target due to high investment costs and low electricity prices. This study employs the System Advisory Model to conduct a techno-economic analysis to determine the viability of 2-kWp rooftop PV systems in Jakarta, Denpasar, and Kupang. The results show that the current levelized cost of energy (LCOE) exceeds the price of electricity. The net present value (NPV), payback period (PBP), and profitability index (PI) range from −975 to −424 USD, 10.3–12.5 years, and 0.72 to 0.88, respectively. These figures suggest that the existing NEM scheme is insufficient to render the rooftop PV system economically viable. However, sensitivity analysis results show that combining a 20 % installation incentive with a 40 % increase in NEM rates made rooftop PV systems more profitable in three cities. Furthermore, a location-based incentive scheme that considers varying solar irradiation levels can enhance the economic attractiveness of rooftop PV systems and foster widespread system adoption in Indonesia.

Suggested Citation

  • Pramadya, Fazri Aditya & Kim, Kyung Nam, 2024. "Promoting residential rooftop solar photovoltaics in Indonesia: Net-metering or installation incentives?," Renewable Energy, Elsevier, vol. 222(C).
    • Handle: RePEc:eee:renene:v:222:y:2024:i:c:s0960148123018165
    DOI: 10.1016/j.renene.2023.119901
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    References listed on IDEAS

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    1. World Bank, 2019. "Aspiring Indonesia—Expanding the Middle Class," World Bank Publications - Reports 33237, The World Bank Group.
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    1. Saez, R. & Boer, D. & Shobo, A.B. & Vallès, M., 2024. "Self-consumption potential and surplus compensation policy impact on rooftop photovoltaic systems in Spain," Renewable Energy, Elsevier, vol. 229(C).

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