The Cirata floating solar farm in in West Java. (Photo: PLN)
Indonesian state electricity company, Perusahaan Listrik Negara (PLN), announced on Tuesday (Jan. 30) through its subsidiary responsible for power generation, Indonesia Power (IP), that it plans to add 1.06 GW of clean energy this year. The company continues to collaborate with other foreign governments in advancing the “Green Indonesia” (Hijaunesia) energy transition project.
The Director of Business and Commercial Development from PLN IP, Bernadus Sudarmanta, stated that the goal for this year is to establish 5 solar power plants with a total generating capacity of 500 MW. Among these, there will be three floating solar power stations located at the Jatigede Dam, Gajah Mungkur Reservoir, and Kedung Ombo Reservoir. The remaining two will be built on land, located in Banyuwangi and Pasuruan.
The project funding primarily comes from financing provided by member countries of the Just Energy Transition Partnership (JETP) and other organizations. JETP, led by the Group of Seven (G7) industrialized nations, offers financing plans such as loans to assist developing countries in transitioning to clean energy. Indonesia itself, is considered the largest beneficiary of this initiative, with the amount of 20 billion USD.
In accordance with Indonesia’s Electricity Supply Business Plan (RUPTL 2021-2030), Indonesia Power plans to develop 7 GW of Green Energy distributed in 108 sites across the entire country.
Bernadus acknowledges that achieving this year’s goals presents several challenges. In addition to seeking an additional 500 MW of collaboration, there are also obligations to comply with the government requirements such as localization ratios and electricity cost targets. To accommodate more intermittent energy sources like solar power, PLN is also simultaneously upgrading its systems. He emphasized, “apart from contemplating energy transition, we also have to consider the economic efficiency and ensure the stability and sustainability of the power system.”
The “Fostering Effective Energy Transition 2023” research report released by the World Economic Forum (WEF) in last June indicated, Indonesia ranks fourth in the Energy Transition Index among Southeast Asian countries.
The World Economic Forum assesses countries based on their clean energy usage, decarbonization efforts, infrastructure, regulations, and fiscal capabilities to drive the country’s energy transition. In the case of Indonesia, the main challenges in energy transition are regulations and investments.
The report highlights that, “in the absence of direct subsidies, the current tariff mechanism does not allow renewable energy projects to compete fairly with fossil fuel-based infrastructure, limiting their financial viability.” Additionally, “discrepancies in planning and policy considerations and a lack of transparency, add a layer of complexity for investors.”
In other report, World Economic Forum also gave Indonesian government some suggestions to accelerate the energy transition, including formulate a renewable energy pricing policy, enhance transparency in green energy certification, and simultaneously eliminate regulatory barriers, to facilitate industry collaboration and development.