TotalEnergies ENEOS Expands Rooftop Photovoltaic Projects in Indonesia: How Distributed Energy Drives Industrial Decarbonization in Southeast Asia

The Increasing Role of Distributed Solar PV in Industrial Decarbonization in Southeast Asia

Southeast Asia is undergoing rapid industrialization and urbanization, with energy demand continuously growing. However, the region remains highly dependent on fossil fuels, especially coal and natural gas. According to data from the International Energy Agency (IEA), Southeast Asia is one of the fastest-growing regions for energy consumption, and its carbon emissions have doubled over the past two decades. Against this backdrop, distributed solar PV (particularly rooftop solar) has become an important tool for enterprises to reduce their carbon footprint and energy costs, thanks to its flexible deployment, short construction period, and ability to match industrial electricity loads.

In June 2026, TotalEnergies ENEOS Renewables Distributed Generation Asia Pacific announced the completion of the second phase expansion of the rooftop solar project at PT. Perusahaan Industri Ceres (Ceres) factory in Bandung, Indonesia. The factory is a well-known chocolate and candy manufacturer in Indonesia. The second phase added approximately 2,400 solar panels with a capacity of 1.4 MWp, bringing the total capacity of the rooftop solar system to 3.6 MWp. The first phase of 2.2 MWp was connected to the grid in September 2024. Together, the two phases can produce approximately 4,630 MWh of clean electricity annually, covering about 12% of Ceres' total electricity demand and significantly reducing its carbon footprint.

The business model for this project involves a 15-year long-term Power Purchase Agreement (PPA), with TotalEnergies ENEOS responsible for development, financing, construction, and operation. Ceres does not need to make any upfront investment and only pays for the electricity based on actual generation. This model is becoming increasingly common in emerging Southeast Asian markets, allowing companies to lock in long-term renewable energy supply without using capital budgets while avoiding the risk of electricity price fluctuations.

Industry Background: Potential and Current Status of the Indonesian Solar Market

Indonesia is the largest archipelagic country in the world, with a population of over 270 million. Sustained economic growth drives an average annual increase in electricity demand of about 5%. However, its power generation structure is still dominated by coal (about 60%), with clean energy accounting for less than 15%. The country has abundant solar resources, with an average solar radiation of about 4.8 kWh/m²/day nationwide, and a theoretical installation potential of over 200 GW. But as of the end of 2025, cumulative installed solar PV capacity is only about 0.5 GW, indicating a very low level of development.On the policy front, the Indonesian government has set a target for renewable energy to account for 23% of the energy mix by 2025 (currently around 12%), and in 2022 released the National Energy Master Plan, which explicitly supports the development of distributed solar PV. In 2024, Indonesian President Joko Widodo signed a presidential regulation allowing 100% foreign ownership of renewable energy projects (previously capped at 67%), opening the door for international investors. However, in practice, numerous obstacles remain, including: local component certification requirements, complex grid connection approval processes, monopoly procurement rules of the state electricity company (PLN), and a lack of uniform net metering policies (which vary greatly across provinces). These factors have led to Indonesia's solar deployment pace falling far behind neighboring countries such as Vietnam and Thailand.

TotalEnergies ENEOS is a joint venture between TotalEnergies and Japan's ENEOS, focused on distributed renewable energy projects in the Asia-Pacific region. Its decision to expand rooftop solar in Indonesia is driven by the country's manufacturing sector's decarbonization needs and gradually improving policy environment. The Ceres project is another benchmark project for TotalEnergies ENEOS in Indonesia; previously, the joint venture has deployed over 200 MW of distributed solar PV projects across the Asia-Pacific region.

Current Development Trends: Synergy Between Corporate PPAs and Distributed Solar PV

Phase II of the Ceres project exemplifies the typical "zero upfront" Corporate Power Purchase Agreement (Corporate PPA) model. This model is rapidly gaining popularity in Southeast Asia, driven by the following factors:

1. Cost competitiveness: Solar module prices have dropped significantly since 2023, with the global average price falling to around USD 0.10 per watt in 2025. This brings the levelized cost of electricity (LCOE) of rooftop solar below Indonesia's industrial electricity tariff (about USD 0.08–0.12/kWh), making the project economically viable without subsidies.

2. Corporate ESG commitments: An increasing number of multinational companies require their supply chains to use renewable energy. As a food manufacturer, Ceres can reduce carbon emissions to meet international customer standards and enhance brand image.

3. Policy incentives: The Indonesian government has introduced a "Renewable Energy Certificate" system, allowing companies to prove their emission reduction contributions by purchasing green electricity. Although distributed solar grid connection still faces restrictions, project developers can circumvent some approval hurdles through third-party ownership models.

In terms of project execution, TotalEnergies ENEOS handles full lifecycle management, from design, financing, construction, to operation and maintenance. Ceres only needs to provide rooftop space, without bearing technical risks or O&M costs. This "energy-as-a-service" model lowers the barrier for corporate participation, especially for medium-sized enterprises lacking solar PV technical experience.It is worth noting that industrial electricity in Indonesia is mainly monopolized by PLN, and the legality of self-generated electricity by enterprises once existed in a gray area. The 2024 amendment to the Electricity Law clarified that enterprises can build rooftop solar for self-use, and excess electricity can be sold to PLN (but the price is set unilaterally by PLN, with limited attractiveness). Therefore, most rooftop solar projects adopt a "self-generation and self-consumption" model, controlling generation capacity to 10-20% of the factory's total electricity consumption to simplify grid connection procedures. The 12% coverage of the Ceres project aligns with this strategy, avoiding complex negotiations with PLN.

Impact on the Energy System: How Distributed Solar Changes the Electricity Supply Landscape

Distributed solar has multifaceted potential impacts on Indonesia's and even Southeast Asia's energy system:

• Relieve grid pressure: Indonesia has many islands with weak grids. Large centralized power stations often require huge transmission and distribution investments. Rooftop solar generates electricity near load centers, reducing transmission losses (typically between 5-10%) and delaying the need for grid upgrades.

• Enhance energy security: Industrial users relying on a single grid supply face the risk of outages. Rooftop solar combined with energy storage (although the current project does not include storage) can provide a certain degree of self-sufficiency, enhancing resilience against natural disasters or grid failures.

• Reduce electricity costs: For high electricity-consuming enterprises, solar power can replace some expensive grid electricity. The Ceres project is expected to generate 4,630 MWh annually. Based on Indonesia's industrial electricity price of $0.10/kWh, it saves about $460,000 in electricity costs per year (excluding PPA discounts). This cost advantage will attract more enterprises to follow suit.

However, the large-scale promotion of distributed solar also poses new challenges to the power system:

1. Impact on PLN's business model: PLN has long relied on cross-subsidies (industrial users subsidize residential users). As the proportion of self-generation by high-value industrial users increases, PLN's revenue declines, potentially forcing it to adjust its tariff structure or charge grid connection capacity fees.

2. Distribution grids need upgrades: High penetration of solar PV can cause issues such as voltage fluctuations and reverse power flow, especially without unified technical standards. Indonesian distribution companies currently lack real-time monitoring capabilities for distributed solar.

3. Insufficient energy storage: The current project does not include battery storage, leading to a mismatch between solar output and factory load profiles (factories typically also have electricity demand at night). As the share of solar increases in the future, storage will become a necessary supplement.

Challenges: Policy, Financing, and Infrastructure Bottlenecks

Despite the success of the case, large-scale replication of distributed solar in Indonesia still faces multiple obstacles:

• Policy uncertainty: Indonesia's net metering policy has long been unstable. In 2023, "Net Metering 2.0" for rooftop solar was introduced, but the compensation standard was reduced from full retail electricity prices to wholesale prices, greatly undermining economic viability. Enterprises need a stable policy framework for investment decisions.

• High financing costs: Although large energy companies like TotalEnergies ENEOS can obtain low-cost financing, local small and medium-sized enterprises (SMEs) looking to self-build solar photovoltaic systems face high domestic interest rates in Indonesia (about 8-12%) and short loan tenors (usually 5 years), while the payback period for solar projects typically requires 7-10 years.

• Grid interconnection bottlenecks: PLN's grid connection approval process is lengthy, with stringent technical reviews, and requires project developers to bear the costs of grid upgrades. Many projects are delayed due to inability to meet PLN's technical specifications. Additionally, aging roof structures in some areas with insufficient load-bearing capacity also limit installation space.

• Local content requirements: Indonesia requires solar projects to use at least 40% locally manufactured components, but domestic production capacity is limited and prices are relatively high, leading to increased project costs. Import duties and value-added tax also add to equipment procurement expenses.

• Shortage of technical talent: Indonesia lacks qualified solar installation and maintenance engineers, especially in second- and third-tier cities. The long-term quality of project operation and maintenance may affect power generation guarantees.

Future Outlook: The Long-Term Role of Distributed Solar in Southeast Asia

Looking ahead 5-20 years, Southeast Asian countries like Indonesia will accelerate the deployment of distributed solar, driven by the following factors:

• Continued cost decline: The IEA expects the global solar LCOE to drop another 30-40% by 2030, making solar one of the most economical power sources in Indonesia. By then, even without policy subsidies, the returns on rooftop solar will be highly attractive.

• Policy improvements: The international community continues to pressure Indonesia to phase out coal power and raise its renewable energy targets. It is expected that around 2030, Indonesia will introduce clearer net metering policies and simplify grid connection procedures. Meanwhile, PLN may be compelled to open the distributed power market to more competition.

• Synergy with energy storage: As battery costs decline (estimated to drop to $50/kWh by 2030), the combination of rooftop solar plus storage will become standard, meeting factories' 24-hour electricity demand and further improving self-sufficiency. Companies like TotalEnergies ENEOS have begun exploring business models for distributed solar plus storage, and the Ceres project may potentially add storage in the future.

• Growth of green financing: Amid the wave of ESG investment, international financial institutions (such as the World Bank and Asian Development Bank) will increase loans and technical assistance for clean energy projects in Southeast Asia. Green bonds, climate funds, etc. will reduce project financing costs.

• Virtual power plants and digitalization: In the future, a large number of distributed solar systems can be aggregated through digital platforms to form virtual power plants (VPPs) and participate in ancillary service markets. This requires the widespread deployment of smart meters and communication infrastructure. Indonesia is currently advancing a nationwide smart meter replacement program.In summary, the collaboration between TotalEnergies ENEOS and Ceres demonstrates a viable pathway for distributed solar PV in Indonesia's industrial decarbonization. Despite numerous challenges, with technological advancements, policy improvements, and business model innovations, rooftop solar is set to become a key pillar of Southeast Asia's energy transition. The region is expected to enter a boom period for distributed solar PV after 2030, fundamentally reshaping its coal-dominated power structure.