Indonesia Begins Construction of SE Asia's Largest Solar Power Plant

Jakarta. Indonesia is stepping up its efforts to reach clean energy targets with the construction of a 145 megawatt (MW) floating solar power plant, set to be the largest in Southeast Asia.

The project, with constructions underway in West Java, secured financing from state utility  company Perusahaan Listrik Negara (PLN) and Masdar of United Arab Emirates on Tuesday.

Solar may be Indonesia's best shot of reaching its short-term clean energy target, an energy expert told the Jakarta Globe. The government aims to have 23 percent of energy coming from new and renewable sources by 2025, but by the end of last year, it was only halfway to the target.

"In the short-term until 2025, the energy source with the most potential to accommodate the country's target is probably solar, because it is relatively the fastest to develop compared to other renewable sources,” said executive director of energy research company ReforMiner Institute, Komaidi Notonegoro.

Director General of New Renewable Energy and Energy Conservation from the Ministry of Energy and Mineral Resources, Chrisnawan Anditya, said that one of government’s priorities is indeed solar power plants. Besides being fast to create and having a high development potential in the tropical archipelago, they are competitive in price.

In fact, solar panel prices have dropped 60 percent in the last 6 years. With financing schemes from solar developers, Indonesians can even order home panels to be installed for free.

While solar power is now the cheapest it ever was — and the fastest growing renewable energy source worldwide — as of May last year, it  amounted to less than 6 percent of Indonesia’s total power generation. The country still depends largely on coal and fossil fuel-fired plants, accounting to some 85 percent of national electricity sources.

On the other hand, the true potential of solar power remains untapped. The country has the potential to generate 207 gigawatts (GW) of solar power, but only around 0.09 GW or less than 0.1 percent has been utilized. The National Energy Policy (KEN) aims to increase solar power generation to 6.5 GW in 2025 and 45 GW in 2050. 

One of the biggest solar power developers in the country, SUN Energy, has also announced plans to increase their Southeast Asian portfolio from 180 megawatts peak to 2 gigawatts peak, with its COO saying that "the wave of renewable energy is here to stay".

Issues to overcome
While the industry is promising, one reason there hasn’t been a mass adoption is that solar is still generally most accessible to upper-middle class citizens, said Notonegoro, who has over 20 years of research experience in renewable energy. 

“In some ways, it should be cheaper to use solar,” he said. “But if we count 24 hours, in one full day, there are some issues, because solar energy is intermittent.” 

This means that solar energy cannot be used to generate power for a full day, as panels may only capture 4 to 7 hour of daylight. After that, users have to either use batteries, buffers, or backups from other sources such as state electricity or a diesel-powered generator. 

Notonegoro predicts residential projects may be most prominent in upscale neighborhoods such as Menteng, Pondok Indah, Bintaro or BSD in Greater Jakarta.

To push the industry, he views that PLN, the single buyer of Indonesia’s electricity market, needs to guarantee it would purchase power produced from renewable sources.

“All renewables whether they are solar, geothermal or others, must be 100% absorbed by PLN,” he said. “It will be pointless if they’re developed but no one buys them.”

There is also an issue of rooftop PVs requiring large surface areas of land, which is why they are easier to install in factories than houses. “It's especially true for minimalist houses which have not enough space and the power generated may not be big enough,” he added.

As of June, there are 3,913 users of rooftop PVs in Indonesia, according to government data. While households account for the largest user segment, around 82 percent of all users, the largest power generation goes to industries, with only 25 users utilizing 29.8 percent of the total capacity.

Government efforts to ease pricing
Back in 2018, the Ministry of Energy and Mineral Resources issued a regulation which allows PLN customers to pay 65 percent of their total tariff if they switch to rooftop PVs.

Next regulation anticipated to ease pricing is the proposed Presidential Regulation regarding tariffs for purchasing electricity sourced from new and renewable energy. The draft, published last year, outlines different tariff schemes that would simplify purchasing, for example ceiling prices, feed-in tariff and contract prices.

Director General of New Renewable Energy and Energy Conservation Anditya said he hopes the regulation will soon be approved.

“I have to be optimistic [that we can reach our targets],” he said. “All eyes are on us, to see whether on December 31, 2025, targets are achieved.”

He emphasized that the shift to new and renewable energy needs strong support from all stakeholders.

“When the Presidential Regulation is issued, the development of new and renewable sources cannot just rely on the Ministry of Energy and Mineral Resources. Many ministries will need to be involved, including the Ministries of Finance, State-Owned Enterprises, Agrarian Affairs, Maritime Affairs and so on,” he said. “They each will provide legal aspects to synergise the development of renewable energy.”

The urgency to shift to clean energy isn't just than a matter of fulfilling the 2025 target or the Paris Agreement, to which Indonesia is a signatory.

Today’s atmospheric carbon levels are the highest they have been in hundreds of thousands of years, leading to catastrophic rise in global temperatures.

Lowering carbon emissions cannot be done without reforms within the power sector, which is responsible for nearly two-thirds of emission growth globally.