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Indonesia on course to become major solar power exporter

This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

The Jakarta Post - Indonesia sedang berkembang menjadi eksportir tenaga listrik besar

30 October 2021

By: Divya Karyza

 

Experts interpret recently announced solar power projects as harbingers of an export-focused strategy in which local and international companies look to sell clean power from Indonesia to neighboring countries.

Institute for Essential Services Reform (IESR) executive director Fabby Tumiwa said solar power exports would be largely driven by Singapore's plan to diversify its electricity supply with a focus on new and renewable energy (NRE) sources.

"There are tremendous opportunities for exporting renewable energy to neighboring countries, especially Singapore," he told The Jakarta Post on Wednesday.

He was referring to an announcement made two days earlier by Singaporean Trade and Industry Minister Gan Kim Yong that the city state was targeting 4 gigawatts worth of low-carbon electricity imports by 2035.

Rising demand for low-carbon electricity presents NRE power plant developers with new opportunities to export energy to Singapore or other countries of the region.

Anurag Chatterjee, who serves as APAC region business development manager at Norway-based classification and advisory services firm DNV, expects increasing intra-ASEAN energy trade thanks to rising regional demand due to population and economic growth.

Given the commercial interest in exports, Fabby, who also chairs the Indonesian Solar Energy Association (AESI), urged the government to ensure NRE power plant developers prioritized domestic NRE supply to help the country achieve the promised 23 percent NRE portion in the national energy mix by 2025.

The Energy and Mineral Resources Ministry's renewables director general, Dadan Kusdiana, said a solar power export trend would not affect domestic NRE supply, as the government continued to push for NRE usage in accordance with its 2021-2030 long-term electricity procurement plan (RUPTL).

"Several parties have shown interest in exporting low-carbon electricity, especially from solar power plants," he told the Post on Thursday.

As to how a solar power export trend might affect Indonesia's efforts to achieve the 23 percent target, Elrika Hamdi, an energy analyst with the Institute for Energy Economics and Financial Analysis (IEEFA), said the interesting question was who would get to claim the carbon reduction in joint venture projects.

"If the [carbon reduction] has been claimed by Indonesia, it cannot be claimed by Singapore, and vice versa," she said on Wednesday.

The carbon credits for solar power projects were usually claimed by the energy purchaser, said Chatterjee. Ownership for the credits associated with the clean energy generation of the solar arrays was assigned in the power purchase agreement (PPA), he added.

A joint venture between Indonesia and Singapore has agreed to develop a total of three solar power export projects.

PT Medco Power Indonesia, together with electricity retailer PacificLight Power Pte Ltd. (PLP) and electricity company Gallant Venture, will develop the pilot project, which is expected to begin exporting 100 megawatts-equivalent of nonintermittent electricity to Singapore in 2024.

Energy and Mineral Resources Minister Arifin Tasrif said Indonesia would continue to develop NRE to meet domestic needs and demand from surrounding countries so as to prevent a worsening of the climate crisis.

"The inaugural 100 MW solar power export from Bulan Island is a milestone for Indonesia to provide clean and renewable energy," he said at the Singapore International Energy Week on Monday.

Located on Bulan Island in Riau Islands and in close proximity to Singapore, the Bulan Island Solar PV Project is expected to have 670 MW of installed capacity in the initial phase.

A Sunseap Group-led consortium also signed a memorandum of understanding on Monday to develop solar power systems in the same province. The project is claimed to be one of the largest cross-border clean energy projects in Southeast Asia.

The Singapore-based solar energy developer will work on the project together with various partners, including property giant Agung Sedayu Group.

Once completed, the project is to have a combined installed capacity of 7 gigawatts-peak (GWp), Sunseap said in a statement. It includes a previously announced 2.2 GWp floating solar farm on Batam, Riau Islands. Coupled with multiple energy storage facilities totaling over 12 gigawatt-hours, the project is expected to provide 1 GW of nonintermittent solar power energy for Singapore and Indonesia.

 

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