Thanks to its vast solar energy potential, Indonesia is on the verge of becoming a leading force in the solar photovoltaic (PV) industry, particularly within Southeast Asia.
At the Indonesia Solar Summit held in Jakarta on August 21, 2024, Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan underscored the crucial role of expanding the green energy sector, including solar energy, to maintain Indonesia’s status as a key energy exporter and to foster a sustainable energy industry.
This move aligns with Indonesia’s energy transition goals and aims to decrease reliance on fossil fuel exports. According to data from Bank Indonesia (BI) and the Ministry of Energy and Mineral Resources, Indonesia’s fossil fuel exports in 2023 amounted to 518 million tons, valued at USD 43 billion. The country also exported significant quantities of pipeline gas and liquefied natural gas (LNG), totaling USD 8 billion.
The focus is also on reducing dependence on imported solar panels by developing domestic manufacturing capabilities. The state-run electricity company PLN is working to engage global solar panel manufacturers to establish production facilities in Indonesia, aligning with efforts to boost local component use.
In 2023, Indonesia’s renewable energy capacity reached 13,155 MW, with hydropower, bioenergy, and geothermal power leading the way. Solar energy capacity, however, lagged behind, at just 573 MW. To address this, the government is accelerating the development of solar power plants (PLTS), including new projects in West Java, West Sumatra, and East Java.
Challenges remain, such as the high dependence of solar power on weather conditions, which necessitates backup generators and increases costs. Additionally, market imbalances and the dominance of PLN as a single buyer for renewable energy pose obstacles. Experts suggest that government intervention, such as power wheeling mechanisms and subsidies, could help resolve these issues and encourage further development.
Executive director of ReforMiner Institute, Komaidi Notonegoro, and Institute for Essential Services Reform (IESR) executive director, Fabby Tumiwa, both stress the need for a comprehensive national strategy, including fiscal incentives and streamlined licensing processes, to foster the growth of Indonesia’s solar PV industry. Developing value and supply chains for solar PV is crucial for meeting energy needs, creating jobs, and positioning Indonesia as a regional solar hub.
With a strategic approach and continued investment, Indonesia has the potential to lead in the global solar PV market, drive economic growth, and support a sustainable energy future.
