Indonesia Conference Directory

Indonesia is still struggling to attract investors in developing the solar photovoltaic (PV) project. The government issued the first regulation on solar PV, announced in 2016. A revision on the local tariff regulation is conducted to reduce the rapid development of the solar PV investment. The major revision is made to change the contract scheme from a build-operate-own (BOO) to a build-operate-own-transfer (BOOT) scheme. This paper investigates how the new local tariff will drive investors and developers to invest in solar PV. This analysis is conducted to know the effectiveness of the policy and the risk of PV investment in Indonesia. Local tariff policy regulation targets PV developers to invest in the solar PV system areas. In the local tariff policy, each area has its PV energy tariff determined by the government. This research proposes a method for deciding demand by considering population data in selected regions to calculate the maximum PV demand of each area. The Levelized Cost of Energy LCOE is used to calculate the economic viability of the PV projects in selected areas in Indonesia. The results show that more than half of the selected areas are profitable for the PV project. The average profit of the projects of the selected areas is 3.21 cent USD per kWh. Most of the areas that have high PV demand have lower local tariffs. Therefore, these areas may not be profitable for developers. The new regulation also cuts the revenue significantly due to the new scheme contract.