Indonesia is a coal-dependent country in which conventional power grids are problematic. The archipelagic nation is turning to floating PV (FPV) to help accelerate its energy transition. Sorta Caroline takes a look at the state of play for water-borne solar and the problems that still need to be overcome.
Indonesian state-owned utility Perusahaan Listrik Negara (PLN) wants 2.4 GW of floating solar generation capacity in 2025, under its 10-year business plan.
A report published by the Institute for Essential Services Reform (IESR) in November 2021 stated that PLN is constructing a 145 MW (AC) site at the Cirata Dam and a 60 MW (AC) project at the Saguling Dam, both in West Java, plus a 90 MW(AC) facility at Singkarak Lake, in West Sumatra.
The Cirata Floating Solar PV project is being developed by UAE-state-owned Masdar Energy and PLN subsidiary PT Pembangkitan Jawa Bali Investasi. The Ministry of Energy and Mineral Resources tells pv magazine – via its Directorate-General of New Renewable Energy and Energy Conservation – that Cirata was “36.38%” complete in December 2022, although it had been slated for completion that year. The ministry says domestic content requirements for the solar modules have hampered financial feasibility and the rough condition of the reservoir bed has complicated installation of the anchoring system.
The floating projects in Saguling and Singkarak are being developed by PLN unit PT Indonesia Power and 50%-state-owned Saudi developer ACWA Power which, in October 2020, offered to generate power for 30% less than the PLN tariff of $0.058/kWh, coming in at $0.041. “We saw the great potential of the country and its commitment to renewable energy and net-zero emission targets,” said Salman Baray, country director of ACWA Power Indonesia. “We are working very closely with the biggest government utility company in Indonesia, PLN, to support their requirements.”
Baray also cited the problems caused by having to source solar panels with sufficient Indonesian content. “A major challenge we are dealing with is meeting high local content requirements in place for solar – this is something all solar developers are facing and struggling to overcome,” Baray said. “In fact, it is almost impossible, at this stage, to meet the requirements for utility-scale projects and we hope that things improve greatly in this area.”
Made in Indonesia
Local content requirements are established by regulations 4/2017 and 5/2017, issued by the Ministry of Industry. The rules require 34% to 40% of equipment – including solar modules, inverters, and mounting structures – to come from Indonesian industry. All project services – such as logistics, installation, and construction – must be provided by Indonesian companies.
Regarding panel content, 60% is required to have come from Indonesian manufacturers. The plan is for the requirement to hit 90% by 2025, underpinned by local polysilicon, ingot, and metallurgical-grade silicon production, according to the IESR’s “Solar Energy Outlook 2023.” There appears zero chance of that happening, with the IESR stating the lack of Indonesian cell manufacturing means module assemblers can reach only 47.5% local content. Projects have fallen short of the regulatory requirement as a result.
Data released by the energy ministry in 2022 listed 21 Indonesian solar panel assemblers with a total annual production capacity of 1.6 GW. Module components including tempered glass, EVA film, and PV ribbons cannot be produced domestically.
No Indonesian solar manufacturer has reached 100 MW of annual production capacity. “If we need 150 MW of solar modules, no company can sell us that capacity,” said Baray. “We will need to buy it from at least two to three manufacturers, which will create all sorts of challenges including difficulty in getting financing. The other challenge is also the use of older technology, with a price that is almost 20% to 30% higher than, say, the cost of panels from China.”
Bankability fears
The lack of big solar companies has caused project bankability problems. The loans typically used by developers require companies to work with modules from tier-1 manufacturers. Tier 1 is interpreted as having supplied products to at least six projects in two years and having secured non-recourse finance from six commercial banks during the same period. Indonesian solar companies have been unable to reach that standard.
The IESR says the government must show flexibility on local content. “Indonesia has defined its green ambitions and is working toward it,” agrees Baray. “However, current restrictions will likely hinder achieving its goals. We need to develop local industries by creating enough demand, which will allow the local manufacturers to expand and take advantage of economies of scale. If our company pays to buy panels – with old technology at a higher price – this would increase the tariff. The PLN then has two options: Either to pass on the increased tariff to the customers or to approach the Ministry of Finance for subsidies.” The latter, Baray adds, should go directly to solar manufacturers, rather than reaching them via PLN and solar developers.