Estimating Effectiveness and Efficiency of Solar Energy Policy for Indonesia: A Hybrid Agent-Based Model Analysis

Our study analyses four solar energy policies and their impacts on photovoltaic (PV) market potential, government expenditure, economic growth, and environment. The analysis uses a hybrid energy agent-based model dedicated to capturing the specific economic and institutional features of developing economies, particularly inIndonesia. We undertake an integrated approach to ABM by combining input-output analysis, life-cycle analysis, socio-economic data, and urban-rural analysis to obtain a comprehensive assessment. The result is a recommendation to abolishing PV grant policy in rural electrification programs. As a substitute, first, the government should encourage PV industry to improve production efficiency and provide after salesservice. Second, the government then should arrange financing scheme for the PV investment. Both policies will create PV market in 2050 for 65.1% and 67.6% respectively of rural households without electricity. Capital and interest subsidies cannot further increase PV market potential in rural area. In contrast, our study found policies of previous feed-in tariff and existing tariff cannot diffuse PV in urban households without additional capital and interest subsidies. Indeed, the net meteringscheme is recommended as the most effective policy to develop PV market in urbanarea.