Estimating the impacts of financing support policies towards photovoltaic market in Indonesia: A social-energy-economy-environment model simulation

Abstract

This study develops a hybrid energy agent-based model that integrates the input–output analysis, environmental factors and socioeconomic characteristics of rural and urban households in Indonesia. We use the model to estimate the effects of four solar energy policy interventions on photovoltaic (PV) investments, government expenditure, economic outputs, CO2e emissions and the uses of steel, aluminium, concrete and energy. The results of our analysis call for the abolition of the PV donor gift policy, the improvement of production efficiency in the PV industry and the establishment of after-sales services and rural financing institutions. A 100 W peak (Wp) PV under this recommendation would be affordable for 80.6% of rural households that are projected to be without access to electricity in 2029. Net metering is the most effective policy for encouraging urban people to invest in PV in a situation where fossil energy prices are increasing and PV prices are declining. A donor gift policy may induce USD 51.9 new economic outputs for every Wp of PV operating to capacity in 2029, but would require a subsidy of USD 18.6/Wp. The recommended policies do not require subsidies and reduce CO2eq emissions and the consumption of aluminium, energy, steel and concrete by between 83.1% and 89.7% more than the existing policy. Several policy implications are discussed in response to these findings. As a contribution to energy modelling literature, the model can be used for other developing countries by merely changing its data.