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Solar panels too pricey? Consider leasing rooftop instead
Power of the sun: Solar cells are installed on the rooftop of the Plaza Indonesia shopping mall in Central Jakarta
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Power of the sun: Solar cells are installed on the rooftop of the Plaza Indonesia shopping mall in Central Jakarta. (Courtesy of Xurya)
Building solar energy generators remains unappealing for entrepreneurs and the public alike because of the high upfront investment. Some businesses are making a breakthrough, leasing their rooftops for solar panels.
In its Indonesia Energy Outlook 2018 report, the Agency for Assessment and Application of Technology (BPPT) had a chilling word or warning: Unless the country reduces its dependence on nonrenewable energy, it will face a power crisis in as little as a decade.
A net importer of oil since 2004, Indonesia could become a net importer of other energy sources as well. The agency predicts the country may become a net importer of natural gas by 2028 and coal by 2038.
“Indonesia will still produce oil and coal, but it has to import to meet demand,” says Andhika Prastawa, the chairperson of Indonesia Solar Energy Association. “To mitigate the energy crisis, we need to explore other energy sources, like renewables.”
Renewable energy is seeing rapid growth globally. One of the most feasible clean energy sources is the sun. Unlike hydropower plants that require strong water currents or wind turbines that need high average wind speed, solar panels can work whenever and wherever there is sunlight. Moreover, solar panels produce multiple benefits, such as saving on electricity bills and slashing emissions.
Still, Indonesia has yet to effectively tap its enormous solar energy potential. As of 2018, Indonesia had 90 megawatts of installed on-grid solar PV capacity. That is a far cry from other Southeast Asian countries like the Philippines and Thailand, which had around 903 MW and 2.8 gigawatts of on-grid capacity, respectively.
Clean energy advocates and solar business players have cited the high upfront investment and a lack of information on the technology as major hurdles discouraging people from tapping into solar power. Prospective investors are still unconvinced that the long-term benefits will cover the sky-high initial costs.
Local solar power companies, like Xurya, Surya Utama Nuansa (SUN) and SMS NuEnergy, have come up with a novel idea — getting the owners of industrial and commercial buildings to lease their rooftops for solar panels.
Under this scheme, no upfront cost is needed. Building owners only need to pay for the solar power at lower rates than those offered by state-owned electricity company PLN. This will make investors save up to 10 percent on their electricity bills, the solar companies promise.
Contract details vary depending on the company and the size of the solar system.
Companies can count on the solar panels for power, making the system suitable for buildings in use seven days a week. “Our market is manufacturers and industries with a strong financial performance”, says solar contractor SMS NuEnergy technical director Amran Mohamad.
Some solar energy companies, like Xurya, only charge for the electricity used in the building rather than the total produced by the solar panels. “When we do the assessment, we tend to select buildings with six working days. In most cases, we don’t accept buildings with a two-day weekend.”
Moreover, the leasing system suits the commercial and industrial sectors even without storage devices like batteries. The solar panels generate power during the day, which can be used immediately to supply the buildings that start their activities when the sun shines.
In the leasing agreement, the solar system is owned by the solar companies. If one day the building owners want to terminate the contract, they have to pay the remaining price of the equipment.
“Users can end their long-term contract by paying off the installment to us,” says Xurya founder Eka Himawan. Building owners who want to end the contract can pay the solar company to cover the shortfall of the installation cost, which has been agreed by the two parties. This gives the building owner ownership of the solar panel modules.
Leasing can be an option for those interested in renewables but deterred by the hefty upfront investment. They can eventually buy the rooftop solar system if they wish, or continue renting it.
In Indonesia, most solar companies offer leasing options only to businesses rather than to households.
E-commerce platform Tokopedia, luxury hotel chain Grand Hyatt, shopping mall Plaza Indonesia, shipping company Mulia Bosco Sejahtera and furniture store Bika Living are among those leasing their rooftops for solar power.
Tokopedia has installed a solar canopy in the parking lot of its office building in South Jakarta, the Tokopedia Tower. “We want to support alternative energy,” says Tokopedia corporate communications vice president Nuraini Razak. “This may be a new initiative, but it can be the first step towards a [greener environment].”
Property developer Ciputra Group, the owner of the Tokopedia Tower, which was formerly named Ciputra World 2 Jakarta, seeks to install more solar panels at other properties in the future.
“We have surveyed some of our shopping mall buildings, and it is possible to install solar there,” says Ciputra Property director Sugwantono Tanto. “We hope other developers will follow suit [in this solar movement], so they can manage their electricity more efficiently and reduce their carbon emissions.”
