Decarbonising residential sector of Indonesia by strengthening energy efficiency and rooftop PV policies

Abstract

Indonesia has ambitious targets to reduce its greenhouse gas emissions by 29 to 41% by 2030 and to achieve net-zero emissions by 2060. The residential sector in Indonesia consumes close to fifty percent of the country’s overall electricity demand. In the last decade, the residential demand for power has doubled, indicating a substantial rise. As a country with more than 17,000 islands, it is crucial to tackle the global warming implications including rising sea levels, significant drought risk, and rainfall fluctuations due to increased emissions arising from the surging energy consumption of Indonesia. Renewable energy installations, especially solar rooftop, and energy efficiency initiatives are some effective strategies to reduce Indonesia’s household emissions. Therefore, the purpose of this thesis is to study the decarbonisation potential of the residential sector’s supply and demand sides through energy-efficient appliances, efficient building envelope design, and rooftop PV deployment. This report majorly addresses the research gap in evaluating the impact of continuous revision to appliance performance standards and the impact of current efficiency standards fixed by the government. To answer the research problem, three scenarios from 2023 to 2030 are designed; business as usual, government policy, and ambitious. Using the bottom-up stock model method, the projected electricity consumption of four appliances (air conditioner, refrigerator, rice cooker, and LED lamps) was determined. For rooftop PV, the electricity production was forecasted using the PVwatts software, and scenarios were created based on government targets, and considering the high rooftop PV growth in Vietnam. Finally, the policy recommendations were proposed after analysing the electricity saved, mitigated emissions, and generating costs saved in these scenarios from the residential sector.
The analysis of Indonesia’s residential demand sector revealed that efficient building envelope and appliance alone can cut the residential sector’s electricity use by 18% by 2030. In addition, it was observed that the energy consumption of appliances could stabilise by 2030 as a consequence of aggressive energy efficiency policy measures. Among the four appliances analysed, air conditioners provide the largest energy savings (about 60 percent) due to their higher energy use and greater household penetration in coming years as a result of urbanisation and higher living standards. Existing mandated efficiency standards for refrigerators are well below the average efficiency in the market, preventing energy savings and market transformation to- wards efficient appliances. Significant financial savings owing to the elimination of fossil fueled power generation due to demand-side interventions amount to two billion US dollars. While analysing the supply side of Indonesia’s residential sector, it was observed that in ambitious scenario for rooftop PV may reach 79 GW by 2030 which would lead to decarbonisation of the supply side of residential side by 50%. In the optimistic scenario, the rooftop PV penetration in households could reach 64% by 2030, considering 1 kWp per house and the total rooftop area required for rooftop PV could be around 250 million square metres. The savings on the supply side resulting from the elimination of fossil fuel generation are close to 6 billion dollars. Considering the demand and supply interventions, the net demand for energy from the grid in the residential sector of Indonesia could be 165 TWh, 130 TWh, and 57 TWh under the three different decarbonisation scenarios. These measures can cut the net electricity consumption
from grid in the residential sector by 65%. These demand and supply solutions would enable Indonesia to achieve at least 20 percent of its NDC target by 2030, which is crucial given that the current emission contribution of residential buildings in Indonesia is close to 16%. The results clearly demonstrate the enormous potential for decarbonising the residential sector in Indonesia, both on the supply and demand sides.
This analysis resulted in some policy recommendations, one of which is that Indonesia could revise energy performance thresholds for appliances every two years as energy savings could double as compared to a scenario following the current revision cycle. The current efficiency standard for refrigerator is non impactful and may be ratcheted up soon. Like in the case of Vietnam, the Feed-in Tariff (FiT) could potentially increase the deployment of rooftop PV, so it is suggested to implement FiT for rooftop PV in Indonesia. For further research, it is suggested that financial constraints and economic impact of energy efficiency solutions from consumers’ perspective could be explored, energy savings from other widely used appliances like fans, CFL lamps could be investigated and the impact of setting minimum energy performance standards (MEPS) for rooftop PV in Indonesia could be further analysed.