Awaiting the Big Wave of New Energy Startups in Indonesia

Electricity is the lifeblood of humans today and fossil energy is the main support. But fossil energy will not last forever and exploration alternative energy will keep happening. The search for clean, cheap, and sustainable energy is the main principle of this new and renewable energy (EBT).

This is where countries compete. Aware of the limited availability of fossil energy such as gas, oil, coal, the search for new energy becomes unavoidable. Some have even managed to adopt it on a large scale like in China and Germany. Indonesia is slowly starting to follow suit.

Indonesia itself already has a number of non-fossil power plants ranging from hydropower, bioenergy, solar, wind, to geothermal. However, until 2019, the primary energy mix for power plants is still far from being dominated by coal (60,50%) and gas (23,11%). The capacity of the NRE power plant alone contributes 10.157 Megawatts.

The good news is that the number is always increasing, albeit slowly. The government has targeted long ago to achieve the target of the EBT mix of 23% by 2025 later. This trend towards green energy is an opportunity that startups are capturing newenergy. The relatively slow adoption of new energy technologies in Indonesia is followed by the Indonesian government's target of becoming an easy target for startups in this sector. A number of players have also appeared. However, as with e-commerce at the beginning of the last decade, there is still a lot of homework for renewable energy players to reach their market.

Opportunity

The government's target of getting 23% of the primary energy mix from NRE by 2025 is an opportunity for startups in this new energy sector, especially since electricity consumption always increases every year. The Ministry of Energy and Mineral Resources (ESDM) projects that electricity consumption in 2020 will reach 1.142 kWh/capita. They also encourage the development of electric vehicles and electric stoves to boost existing achievements.

The world trend is moving in that direction. Various initiatives were launched to reduce dependence on fossil fuels. If you live in London, finding a gas stove is impossible. Buying a motor vehicle in Europe will be a dilemma because the taxes and parking are so high. In China, the government is showering the electric car industry and its supporters with valuable support US$60 billion.

At the same time, global public awareness of the need for clean energy continues to strengthen. The crisis due to climate change is getting real and imminent. The easiest example is the massive flood in the Greater Jakarta area earlier this year. Some scientists believe the extreme rain that triggered the flood It was caused by climate change. Clean energy is becoming increasingly relevant in public policy making.

This means that the space for the new energy sector to grow is still wide open. Moreover, the potential for alternative energy in Indonesia is diverse and abundant.

Those who are already operating

The track of energy startups is still not long in Indonesia. The number of players can not be said much. One of the few players is Xurya. This startup was founded in 2018 with its flagship product, rooftop solar panels. Managing Director of Xurya, Eka Himawan said that Indonesia's position at the equator is a great opportunity for startups like them to harvest energy from sunlight.

According to Eka, the use of solar panels is by far the most likely to be sold to the market in terms of price, installation, and maintenance. This is much faster than choosing other alternative energy such as wind or geothermal.

"For installing solar panels, we can survey in just 10 minutes, it can be a proposal. For wind [power] I need data for a year, for geothermal it takes even longer, maybe around five years," said Eka.

Elsewhere, Warung Energi started its business with the premise of opening access to renewable energy for all at affordable prices. Along the way they become bridges for institutions that deploy energy development projects in rural and remote areas.

Similar to Xurya, Warung Energi's flagship product relies on solar power. The system they have is a solution for homes that have not been reached by PLN electricity with a power range that can be generated around 350 watts to 2.000 watts. Last year, Warung Energi worked on up to 20 systems spread throughout Indonesia.

Apart from Xurya and Warung Energi, there are several other players who have been recorded as working in the NRE sector. Weston Energy, Forbetric, Erenesia, Khaira Energy, and Shalendra Power are among them. Almost all of them have just passed the incubation and acceleration phases.

Hope in the sun

New Energy Nexus Indonesia, which for the last two years has been active in holding incubation and acceleration programs for startups in the renewable energy sector, said that Indonesia is still in its early stages.

"It is only in the last few years that the public has started to care about the issue of climate change and alternative energy," said Program Director of New Energy Nexus Indonesia, Imam Diyanto.

However, of all the existing products and initiatives, solar power is still the prima donna above all else. New Energy Nexus Indonesia, which has actively held incubation and acceleration for new energy startups for two years, said that there are at least four things that make solar panels the most popular renewable energy option.

Imam said that the availability of sunlight on almost the entire surface of the earth makes this energy the most accessible. In terms of installation, solar panels are also much easier than installing tools for other green energy power plants such as wind power which requires giant propellers or turbines for wind power.

"Care solar photovoltaics (PV) does not require special technology, even ordinary people can do it, so it is popularly installed in homes. High demand makes the scale of production also high, so that production costs can continue to decline," said Imam in his written answer.

Remaining obstacles

But solar power is not without its problems. Indeed, compared to other alternative power generation facilities and infrastructure, solar panels are more affordable and easy to install. However, in reality, the solar panel business still leaves homework for industry players.

Xurya, whose business is bridging solar panel producers with potential consumers, said that the assumption that solar panels are expensive is still quite often heard. Another problem that is no less complicated is that this business does not produce results quickly.

Big investments must be made with the assumption that the return on investment is rather long. Xurya, which received initial funding in 2018, admitted that this was a major challenge in convincing financiers in the solar panel business.

"This is a little different from Modalku and Investree, for example, putting money there, the return on investment is fast, three months can be returned. If here the return on investment is 10 years, so it is not easy for ordinary investors to enter this field," said Eka.

More effort is needed to introduce renewable energy, particularly solar power, to the market. Because even though the price of the device is still relatively expensive, the cost of maintaining solar panels is very small so that it can be said that even though the investment is large at the beginning, the owner does not need to spend a lot of money afterward.

"For example, a solar power system only requires annual maintenance in the form of cleaning the solar panels, while a diesel generator will require daily fuel and mechanical maintenance (engine oil, seal, bearing, etc.) every month," said the CEO of Warung Angin Abdul Karim.

Despite all that, this sector is expected to continue to grow over time. The world trend to shift to energy that is more efficient, environmentally friendly, with renewable supplies is the character of energy in the future.

Several countries have opened wide space for the development of the renewable energy industry so that businesses in this sector are more mature. The government also has a clear vision with a target of 23% of national needs being met through NRE by 2023. With the right regulations, startups in the renewable energy sector will be busier in the next few years.