Author: Jason Deign, Solarplaza
Indonesia’s importance as a solar market looks set to grow following the announcement of a 5 GW goal at the Bali Clean Energy Forum. At the event, Indonesia’s Minister of Energy and Mineral Resources, Sudirman Said, launched a centre of excellence for clean energy “to accelerate the development of renewable energy, up to 23% of the national energy mix by 2025.” For the next four years, he announced, the centre will “support the development of the 35 MW electrification programs [sic], of which 25% or about 8.8 GW will come from renewable energy."
What remains to be seen now is how quickly Indonesia’s solar ambition can translate into projects on the ground. Some analysts have expressed concern over grid connections, but Jakarta-based clean energy consultant Andre Susanto said this was only likely to be a problem on some of the smaller island grids where generation is through old diesel plants. Elsewhere, he said: “There is enough peaking power plants and load followers to be able to handle solar PV power plants’ variability of power input during the day.”
Susanto estimates Indonesia’s grids could handle up 10% of peak load values in renewable generation, which could equate to up to 4 GW of solar PV. “If we do 10% of installed capacity that number can increase to about 5.5 GW,” he said.
Early attempts to foster solar in Indonesia led to renewable energy regulation that established a ceiling price for reverse auctions of projects pre-defined in terms of location and size. The regulation was overturned following a challenge by an Indonesian PV association, but not before seven projects had been awarded.One of these was a 15 MW plant in Kupang, East Nusa Tenggara, which was subsequently curtailed to 2 MW as a result of an inaccurate grid integration study. Three other plants, all in East Nusa Tenggara, in the Lesser Sunda Islands, are being developed with engineering, procurement and construction through US developer Conergy.
The plants, each of 1 MW, are being built in partnership with local construction companies PT Buana Energy Surya Persada and PT Indo Solusi Utama and are due to enter operation in the first half of this year. Conergy’s interest in Indonesia illustrates how the market, along with others in the region, is ripe for exploitation by solar developers.
Indonesia, which had almost 43 MW of PV installed in 2014, according to government figures, ranks 38th overall in terms in consultancy group EY’s latest Renewable Energy Country Attractiveness Index. And for solar PV it scores a respectable 29, ahead of nations such as Egypt, Greece or the Philippines.
The country’s attempts to foster green energy took a major step forward in 2014, when president Joko Widodo cut fossil fuel subsidies and removed a significant barrier to solar adoption.
“Similar to other Southeast Asian countries, the government sees solar as an important part of their energy strategy,” said Tyler Ogden, research associate at Lux Research in the US.