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Will clean energy startups help Indonesia hit its target for renewable energy?

Written by Khamila Mulia Published on 

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The transition is taking place, but more support is needed.

As an archipelagic country located on top of a ring of active volcanoes that hug the equator, Indonesia has abundant sources for renewable energy—solar, wind, and geothermal. It has the potential to generate 788,000 megawatts (MW) of power from renewable energy, which is more than 14 times the country’s current electricity consumption, according to the Lowy Institute. Recognizing this huge potential, the Indonesian government aims to bump up the share of renewables in its energy output to 23% by 2025, in line with the commitment to reduce greenhouse emissions by 29% by 2030.

In spite of its rich natural resources, Indonesia is the fifth largest greenhouse gas emitter, mainly due to forest degradation. Also, electricity isn’t evenly distributed across the nation. In 2019, the ministry of energy and natural resources estimated that at least 433 villages were not on the grid. Many of these villages are scattered in the eastern provinces of Papua, West Papua, Maluku, and East Nusa Tenggara.

“I used to work in shrimp farming, which requires high energy for aeration systems to maintain suitable oxygen level in ponds. But since the farm is not located in a big city, the power supply was unreliable and the power would go out once a week, sometimes without notice,” said Reynaldi Pradipta, co-founder and CEO of Sylendra Power, a startup that offers solar power solutions.

That experience shaped Pradipta aspirations to provide a resilient power supply for everyone, especially people who live in remote areas. Pradipta and his partners founded Sylendra Power in 2019 to offer an expandable and sustainable energy harvester that stores clean electricity generated from solar panels.

Sylendra Power’s energy harvester. Courtesy of Sylendra Power.

Emphasis on solar power

Because Indonesia has year-round sunlight, the clean energy startup ecosystem in the country is dominated by services related to solar power, including solar panel production and energy storage. One of the prominent companies in this sector is Xurya, which was founded in 2018 by a group of energy experts who want to boost the adoption of solar power in Indonesia.

“Indonesia can produce more than 200,000 MW of solar power, but its current utilization is only about 150 MW, or 0.075% of its overall potential,” said Xurya’s director of technology, Edwin Widjonarko.

Widjonarko earned his doctorate in condensed matter and material physics at the University of Colorado Boulder, and he spent around five years working at the National Renewable Energy Laboratory in the United States. In establishing Xurya, Widjonarko and co-founders Eka Himawan and Philip Efendy want to be the catalyst for renewable energy adoption in Indonesia. “One common misconception out there about the solar panel is that it costs a lot and is difficult to maintain. But actually, solar panel installation in Indonesia is relatively more affordable than in other countries due to plenty of sunlight, easy access to components, and cheaper labor cost. In addition, a solar panel can last up to 30 years with a 25-year warranty, which makes it a good investment,” he said.

For clients who want to make the change and use solar panels, Xurya provides a feasibility study and design consultation before installation, equipment sourcing, construction, permit and community management, as well as maintenance. The company specifically targets the commercial and industrial segments. In just two years, it has already wooed big-name clients, such as e-commerce unicorn Tokopedia and Plaza Indonesia, a prestigious shopping mall in Jakarta.

Widjonarko hopes that broader solar energy utilization will lead to two sustainable consequences—reduced carbon emissions and better energy distribution. He explained that, right now, Indonesia is powered by a number of major generators. The electricity generated is delivered through a network of overhead power lines before it is distributed to homes and buildings. Hiccups in this network lead to power outages or even major blackouts, like what happened in Greater Jakarta in August 2019.

Major cities like Jakarta need reliable energy infrastructure, and distributed generation is one way to achieve that. “Buildings that use our solar panels can act as small generators to deliver electricity to their surrounding environment when required. The more buildings use solar panels, the more energy reserves there are,” said Widjonarko.

Distributed generation is an important component of smart grids, which are electrical grids integrated with a computerized, two-way communication network, according to Live Science. Smart grids incorporate information and communications technology into every aspect of electricity generation, making them more reliable, more efficient, and more effectively managed.

The Indonesian government includes the development and utilization of smart grids in its national mid-term development plan for 2020–2024. It is a goal to increase the number and distribution of renewable energy generators, according to a statement issued by the energy ministry in September. The first phase of smart grid development is being carried out in Jakarta, Surabaya, Bali, Sumba, and Sulawesi.

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According to its website, Xurya has worked with 18 companies and produced more than 1.1 million kilowatt-hours of clean energy, which can power 792 homes. Xurya’s hope to see more buildings install solar panels is in line with the government’s “one million rooftops solar initiative in 2020” that was launched three years ago. Although the authorities have not shared statistics regarding the exact number of solar roofs in Indonesia, the government said this program is progressing nicely due to increasingly affordability of solar panels.

Startups working in the renewable energy sector play a key role in speeding along the adoption of renewable energy in Indonesia, according to Diyanto Imam, program director of New Energy Nexus Indonesia, a nonprofit organization that supports clean energy entrepreneurs with funds and incubation programs. “Most energy startups provide or are developing solutions to give better access for the public to buy, install, and use solar panels, not only in big cities but also in rural areas,” he said. “I believe with more support, these startups can add more options for renewable energy sources for the communities, and this will help the government accomplish its target.”

New Energy Nexus Indonesia is the most active institution in this segment in Indonesia. Since 2018, it has shaped the operations of 19 local startups, including Sylendra Power. On September 25, Nexus launched its first hackathon to design smart and renewable energy-based solutions that solve problems in the field of public health and productivity.

While solar energy is infinitely renewable, the resources that go into making solar panels are not. Their production carries negative environmental impacts. Scientists have pointed out that the manufacturing process for solar panels is hugely polluting, and they are difficult to recycle, which can cause major waste problems when they are decommissioned.

Widjonarko acknowledged the issue, but he believes the adoption of solar power is still necessary as part of the effort to increase the share of clean energy. “It is true the manufacture of solar panel produces emissions because they are not made using renewable energy. However, we need to start at some point. When we’re able to produce enough clean energy, we can use it for manufacturing needs later on,” he argued.

The entrepreneur believes there will be a solution for the disposal of solar panels soon, as there is currently a lot of research focused on improving the recycling processes for electronic waste. “As electronic waste recycling tech progresses, I believe it will also solve solar panel problems because its components are actually much simpler than those that are being used to build computers,” said Widjonarko.

Xurya’s co-founders, from left to right: VP of operations Philip Efendy, managing director Eka Himawan, and director of technology Edwin Widjonarko. Courtesy of Xurya.

Hope for better regulation and market education

Both Widjonarko and Pradipta believe that market education has been the biggest challenge in building energy startups, even though there is rising awareness about the importance of renewable energy. For solid change to take place, stakeholders from different public arenas need to work together. “I think industry players should work more closely with governments and academicians to create better curriculums regarding renewable energy, as well as to make ongoing campaigns for the climate change issue,” said Pradipta.

The founders of Xurya believe that public officials can put their weight behind one simple act to define clearer regulations for the renewable energy industry. “When we started, there were no clear legal grounds related to solar panel installations for commercial and industrial needs. The Presidential Regulation only came out two months after we launched. This was quite a challenge because the clarity of regulations is crucial in this business,” Widjonarko said.

Public officials are currently discussing a renewable energy bill that may reduce legal uncertainties in green projects. In September, the Coalition of Indonesian Civil Society for Clean Energy urged the government to finalize the bill soon.

One of the most important instruments in the bill is the Renewable Energy Portfolio Standard, which will require energy enterprises to outline their strategies to utilize renewable energy or increase its production. In the other words, the bill requires companies to offset their carbon emissions in concrete ways. Another important component in the bill is the recognition of renewable energy certificates, or “green tags,” which promote renewable energy as a commodity. With these certificates, any person or enterprise that generates renewable energy can sell unused reserves for profit, creating multiple channels of energy supplies. The new regulation is expected to concretize market mechanisms for the sector in Indonesia.

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This initiative can also open up opportunities for new startups that can utilize the resources of larger corporations in the energy sector. “We recently discussed this issue in a focus group involving environment activists, startup founders, and representatives of the energy ministry. As a new startup, we find it quite difficult to break the barriers to entry in this industry, so we hope the government can help facilitate connections between local startups and established companies,” Pradipta said.

Comprehensive regulation will also attract more investment to this industry. “The market will have a better knowledge of renewable energy, which creates more demand. Clear regulations also give trust and certainties for investors,” Widjonarko said.

The use of renewable energy has many benefits, not only for the environment but also for increasing economic growth in the long run. Although Indonesia’s clean energy startup ecosystem is currently in its infancy, the industry will grow as long as there is the right regulatory framework, better education, and continued support from the government and corporations.

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