A Comparative Assessment of Policy Induced Diffusion Pathways for Utility Scale Solar PV: Case Study of Indonesia

Abstract

Utility-scale solar PV is projected to play a pivotal role in achieving Indonesia’s 2050 net-zero energy target. However, current uptake is limited. This study seeks to identify a cost-effective pathway to increase the capacity of utility-scale solar PV in Indonesia through supportive policies that ensure equitable cost distribution between the government and the industry. A novel Market Penetration Optimization Model (MPOM) is developed and applied in simulation mode to assess existing policies and optimization mode to determine new policy recommendations and compare three diffusion pathways. Results show that current price-based policies are deemed insufficient to stimulate growth in the solar PV market, only covering approximately 13% of the investment cost required by the industry. Thus, necessitating a reactivation of Feed-in-Tariffs (FiT). The optimal FiT rates required to balance the cost to the government and the industry range from 0.39 to 1.47 cents $/kWh for the most economic pathway during the initial ten-year post-construction period. The IDT-based pathway necessitates the lowest initial investment cost while yielding the highest revenue from electricity sales, demonstrating its superior cost-effectiveness compared to both the supply-based and linear pathways. This study enriches the literature by exploring the financial implications of policy and diffusion pathway selections. The model's adaptability to various technologies, different countries, timelines, and capacity targets enhances its applicability for future endeavors.