The solar dragon stirs in Indonesia

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Indonesia has the largest economy in Southeast Asia and is bang in the middle of the so-called Sunbelt, the central strip of countries circling the globe where solar resources are reckoned to be the best. Yet despite enjoying these two crucial preconditions for exploitation of the sun’s energy, Indonesia’s PV market has yet to take off in any serious way.

But that could all be about to change. Last month, at the G20 summit in Brisbane, Indonesia’s newly elected prime minister, Joko Widodo, announced plans that could jump start a solar industry in the Southeast Asian island nation.

M Rusydi, director of solar developer, the Solar Guys International (SGI) Mitabu Australia, told the audience at this year’s Solar Energy South East Asia (SESEA) event held in Bangkok late last month, that the new president has announced a 35GW power plan, to include 20% renewables – of which 20% will be solar.

Geothermal is to be prioritised, followed by hydro power plants and then solar. Hybrid power plants are expected to play a large role in solar generation to decrease expensive diesel use.

Rusydi said the government has promised to streamline solar licensing and PPA applications, to introduce special economic zones to attract investors and private business, and to create a solar fund.

The changes are to help replace at least 20% of current diesel power use. “The focus is to replace existing diesel power stations on provinces relying heavily on diesel,” said Rusydi.

“The price of oil is going up, to power diesel, diesel is then subsidised, but when oil prices go up, diesel goes up and electricity prices go up,” said Rusydi.

The new “government, president, minister are aiming to get local government support, where we will develop power projects and develop a solar fund – this is a mechanism to have a pool of investors who want to participate in projects”, Rusydi explained to PV Tech.

Local authorities will provide local land, and national government will provide 25-year standard power purchase agreements to independent power producers.

Rusydi said the price of solar systems would be spread over 25 years, to gain a price that is competitive with diesel. “As diesel prices are still going up, solar will become more expensive so when we spread the cost over 25 years, we will get less than 10 cents per kWh,” Rusydi said.

The national government’s approach is not to award contracts through tenders, rather through direct appointment, Rysudi said. “We identify provinces and areas that need electricity and discuss with the local government and ask them to write a letter to minister of energy, to develop IPP solar projects,” said Rusydi.

IPPs are looking for other support for solar, particularly in the form of a feed-in tariff.  Rysudi said the national government was currently plans for such a mechanism.

The Indonesian province of East Nusa Tenggara’s Senator, Abraham Paul Liyanto, also spoke at SESEA and welcomed solar development in the province. “We need electric power to change social situation in the province,” Liyanto told PV Tech. “Solar is very welcome, we have high hopes for solar.”

The province is highly vulnerable to climate change, made up of over 2,000 islands, (of which a few are the only places one earth the Komodo dragon can be found). There are also 1.1 million people without electricity.

East Nusa Tenggarra currently suffers from blackouts up to five times a day. “The main key for development is electricity and infrastructure, infrastructure is limited,” said Liyanto.

Liyanto explained that current proposals for factories and hotels cannot go ahead without power, holding the province’s development back.  Liyanto said elections held this summer, electing President Joko Widodo, had placed a pro solar government, president and energy minister into power.

The capital of Indonesia, Jakarta, is also looking to start a rooftop solar market with legislation to be announced in January by the new minister of energy, Sudirman Said, revealed Liyanto.

“Solar will take off with the new policies,” he added.

In May last year, the two Australian firms SGI International and Mitabu Australia, merged to form SGI-Mitabu and develop a 50MW solar power plant in South Sumatra, Indonesia.

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