IESR Reveals Three Models for Managing Solar Power Plants in Indonesian Villages
The Institute for Essential Services Reform (IESR) states that the success of the 100-gigawatt (GW) PLTS programme at village level depends heavily on management models tailored to the institutional capacity and energy needs of each region. A one-size-fits-all approach risks hindering long-term economic benefits and project sustainability.
CEO Fabby Tumiwa of the IESR said village electrification and energy use for productive economic activities are key components of the national PLTS development agenda. Under this framework, Village Cooperatives (KDKMP) and Village-Owned Enterprises (BUMDes) can serve as operators, asset owners, or energy service providers.
Fabby noted that each village has distinct characteristics in terms of institutional capacity, funding ability, and market potential. ‘Business models cannot be uniformly applied across all regions,’ he said during a media briefing titled ‘Indonesia Chasing 100 GW PLTS: What Needs Attention?’ in Jakarta.
IESR has identified three primary management models for village PLTS, applicable based on regional readiness. The first model positions KDKMP as a mini-utility or electricity service operator, with asset ownership held by a third party. This scheme is best suited for newly formed or institutionally limited village cooperatives.
The second model makes KDKMP the owner of PLTS assets and battery energy storage systems (BESS). This approach could yield higher long-term revenues but requires stronger managerial capacity and financial support.
Meanwhile, the third model positions KDKMP as an energy service provider or energy-as-a-service (EaaS) operator. This scheme is suitable for villages not connected to the main grid with high productive energy needs. ‘No single business model can be universally applied, as each village has differing institutional and economic conditions,’ he said.
Fabby stressed the government must conduct detailed analyses before determining village PLTS development models. The Ministries of Cooperatives and Villages play a crucial role in mapping the readiness of each KDKMP, covering institutional capacity, financial readiness, community electricity needs, local commodity market potential, and opportunities to sell power to PT PLN (Persero).
Without thorough assessments, PLTS construction risks misalignment with local economic needs, preventing maximised investment benefits. ‘Without such analysis, village PLTS development risks not meeting local economic requirements,’ Fabby added.
National Solar Task Force
Alongside promoting village-level assessments, IESR proposed short-term strategic steps for 2026-2027 to accelerate the 100 GW PLTS programme. A key recommendation is establishing a National Solar Task Force to coordinate implementation across ministries, PLN, local governments, and businesses.
‘We also urge the government to develop a five-year implementation plan with annual targets, priority locations, financing models, procurement mechanisms, and clear success indicators,’ Fabby said.
On the regulatory front, the government is urged to expedite hybrid PLTS tariff regulations and expand their scope to support diesel generator (PLTD) decommissioning in isolated areas and reduce fossil fuel consumption in large-scale power systems.
PLTS project procurement transparency must be strengthened through evaluations of the Selected Supplier List (DPT), feasibility studies, and clearer role delineation between PLN Central, PLN Indonesia Power, and PLN Nusantara Power.
He also recommended revising rooftop PLTS regulations to include quota exemptions for customers installing BESS. Initial incentives are crucial to lower the still relatively high costs of energy storage investments.
For 2027-2030, Fabby said the government must undertake structural transformation to ensure sustainable national solar development. This includes adopting open bidding or competitive reverse auction mechanisms for PLTS procurement to enhance cost efficiency and project transparency.
The government is also urged to establish a centralised funding platform to support PLTS and BESS investments, supply chain development, and operations and maintenance services. Additionally, developing a national network for spare parts and PLTS maintenance services in strategic regions is vital for long-term system reliability.
‘In the human resources sector, solar energy workforce training must be expanded, covering installation, operations, maintenance, manufacturing, and battery energy storage system integration,’ he added.