Indonesia's solar power developers are hoping for improved land acquisition and permitting rules to help boost project development as the country seeks to scale up photovoltaic generation in the coming years, delegates heard at the Indonesia Sustainable Energy Week conference on 19 August.
Developers currently face different land approval processes across Indonesia, which is a significant issue since solar projects often require large land areas, said Mada Habsari, chairperson of the Indonesian Solar Energy Association (AESI).
Land acquisition has been in the spotlight since Indonesian president Prabowo Subianto firmed up a 100GW national solar target last year, up from under 2GW currently.
Vacant mining land in regions such as East Kalimantan and South Sumatra, could be used for solar facilities — on top of the more frequently discussed ground-mounted or reservoir floating models, said vice-president at state utility PLN, Ricky Faizal.
The government has identified about 9,000 hectares of land to help advance an initial 30GW tranche of the national 100GW solar target, said deputy minister for energy and mineral resources Yuliot Tanjung on the sidelines of the conference.
AESI believes PLN's process for selecting private developers for new solar projects could be further improved. There have been projects that have been awarded for construction based on lowest tariff bid, but subsequently fell through because land could not be acquired, said Refi Kunaefi, AESI's lead for the independent power producers taskforce.
An alternative approach where PLN requests initial plans from developers first, and then provides up to a year to secure land tenure before negotiating the final tariff rates, could be more feasible, Refi said.
Any changes to how state agencies engage private developers for renewable energy could be significant — the country's 10-year power development plan envisions the private sector to undertake over 70pc of new clean energy buildouts up to 2034.
Rooftop backlog
Demand for industrial and rooftop solar systems has grown quickly in the past two years, because of sustainability requirements multinational companies operating in Indonesia abide by, and more recently as a response to diesel shortages, said Emmanuel Jefferson Kuesar, chief executive of developer Sun Energy.
But the company has had to delay clients because Indonesia's rooftop solar quarter has been fully subscribed, he said.
Indonesia allocated about 485MW for grid-connected rooftop installations at the start of the year — 304MW of which were for projects already previously on waitlist. More broadly the latest 10-year power development plan envisions over 3GW of rooftop solar additions between 2025-2034, split into yearly quotas.
Rooftop solar development for now will be guided by quotas, which are updated every six months to a year, said Ricky. The utility is seeking to improve power system flexibility, and modernise distribution networks, to support a greater input of renewable power, he said.
Indonesia currently has over 120 solar facilities of under 1MW — the typical size of commercial rooftop installations — registered to issue I-RECs. Current-year Indonesian solar I-RECs were recently offered at under $3/MWh.
Financing headwinds
Project financing remains yet another roadblock, developers said, citing both institutional rules and recent headwinds.
Indonesian officials have often discussed the 100GW solar goal as spurring rural electrification and reducing dependency on diesel generators.
But distributed rural projects are harder to finance because of their smaller scale, Mada said. The AESI is working on aggregating rural projects to improve their financing prospects, and seeking blended financing opportunities, she said.
Some renewables projects that were previously bankable have been negatively affected by Indonesia's weakening currency and rising lending rates in the past months. Some institutional investors also have blanket bans on sectors such as mining, which becomes a roadblock to building solar projects for mining firms, Kuesar said.
But there are still opportunities with investors such as pension funds seeking long-term stable returns, since solar projects can sign power supply agreements of 20-25 years, he said.
