Indonesia’s isolated grids open for PV development

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A recent Asia Development Bank report found that Indonesia has 600 separate grids. Credit: Tom Kenning

Indonesia’s multiple isolated grids represent opportunities for intrepid solar developers, according to Andre Susanto, Clean Energy Consultant at Bluejay Energy.

Speaking at the Solar & Off-Grid Renewables Southeast Asia event in Bangkok, Susanto said the country’s current installed power capacity stands 47GW, as per the 'PLN Electricity Supply Plan 2016-2025'. This means there is 2.5GW of “easy” potential for variable renewables produced during the daytime, which is approximately 8.8% of the daytime peak load. However, Indonesia's many islands need to be account when andding renewables.

A recent Asia Development Bank report found that the country has 600 separate grids, not including the smallest sized systems and mini-grids. Of the 600, Susanto said there are around 150 different isolated grids of 50MW size or larger where renewables could be injected.

He added: “The grid integration challenge is one challenge that you will have to be creative with both the technology and the financial engineering of it. You’ve got to really talk to PLN, which is the state-owned utility company, and figure out how can I be a partner? How can I help you run the grid better and cheaper with my system?”

While developers coming in to build 100MW capacity projects are likely to face problems from PLN due to the limited isolated grid capacities, large solar plants offering tariffs in extreme lows of US$0.04/kWh will have no trouble signing PPAs with PLN in Java where the grid size is 33GW, said Susanto

This price threshold for PLN to get on board is particularly low in Java-Bali, so PV developers’ opportunities are in other areas, he added.

Elsewhere, Sumatra has installed power capacity of 8GW across four separate isolated grids, leaving around 5-6GW in the rest of Indonesia.

The challenge of having to achieve low solar costs then becomes an opportunity, because developers can look at the generation costs on each individual isolated island grid. Some of these island system costs can be as high as US$0.30/kWh. These are in remote areas, but they are not too remote to access via shipping to install solar systems.

Susanto said: “Your EPC costs may be increased by 60%, but you can get more than twice on the tariff. If you are willing to do that and take that risk, that’s an opportunity for you.”

In terms of off-grid there is also potential for 1GW solar installations given that there are 12,500 un-electrified villages, not including those villages where only a fraction of the population has access to electricity.

Susanto added: “Indonesia is complex and if you are going to back away from it you will be along with the rest of them, so you have to be the one who is willing to say I see the challenges and I'm willing to find a solution for [them].”

In August, a BNEF report said that Indonesia’s first ever feed-in tariff (FiT) for solar PV projects should generate attractive project returns in Java-Bali and Sumatra.

This article has been reviesd to include recent figures from PLN saying that Indonesia's current installed capacity stands at 47GW, as well as the figures on PPA signing and grid capacity in Java.

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