Is Grid Solar Power Still Attractive Amid Decreasing Fuel Prices? The Case of Indonesian Electrical Power

Abstract

The socialization of solar panel power in Indonesia has been massive since 2019; however, since 91.87% of the country’s electrical power comes from fuel, a massive amount of support is required to shift to renewable electricity sources. Ministry regulation No. 49/2018 on solar rooftop panel power has provided an export mechanism. However, many people have commented that this regulation does not entice consumers to use solar rooftop panels; in practice, it may not be applicable. In addition, the sharp decrease in fuel prices in 2020 may lead people to choose not to use grid solar panels. The objective of this paper was to analyze the impact of decreasing fuel prices on the attractiveness of solar rooftop power. Secondary data was collected on Indonesian electricity and fuel prices, correlated, and analyzed based on the trade-off of using a grid solar panel. On-grid solar panels need substantial early capital investment and a low electricity selling price (only 0.65 from the normal rate). Without an export import meter, this would not be effective as an oversupply of electricity from home would be a burden as it is not counted as an electricity export. Decreasing fuel prices for power plants makes grid solar panels unattractive, as the opportunity cost is small. Furthermore, the government still uses different prices (the contracted price, which is relatively stagnant), which may not refer to the actual price.