Indonesia Celebrates Inauguration of Largest Floating Solar Power Plant in Southeast Asia

Today, the Cirata floating photovoltaic (PV) power plant, located in Cirata Reservoir, West Java, with a capacity of 145 MW(ac), was officially inaugurated. This achievement marks a significant milestone for Indonesia, as the country is now home to the largest floating solar power plant in Southeast Asia, surpassing Singapore's Tengeh floating solar power plant. The Institute for Essential Services Reform (IESR) recognizes the operationalization of the Cirata floating PV power plant as a crucial step in accelerating the development of large-scale solar power plants in Indonesia. The country's solar power progress had been stagnant since 2020, but the decreasing investment cost of solar PV has positioned it as the most cost-effective renewable energy source. Indonesia aims to harness the technical potential of Photovoltaic Solar Power Plants (PLTS), estimated between 3.7 TWp to 20 TWp, to support its target of achieving the electricity sector's peak emission reduction by 2030 at the lowest cost possible. IESR emphasizes the importance of optimizing the technical potential of floating PV power plants, which amounts to 28.4 GW across 783 water bodies in Indonesia. This optimization, according data from Ministry of Energy and Mineral Resources (MEMR), could lead to the development of large-scale floating solar power plants in at least 27 water body locations with hydropower plants. The total potential capacity is estimated at 4.8 GW, requiring an investment of USD 3.84 billion (IDR 55.15 trillion). Leveraging this potential will accelerate the attainment of renewable energy mix targets and expedite the achievement of net-zero emissions (NZE) before 2060. To unlock the full potential of floating solar power plants, IESR advocates for the creation of a regulatory framework that attracts businesses to invest in these plants. One suggested approach is offering an attractive rate of return on investment that aligns with the risk profile, reducing additional burdens. However, a concern raised by IESR is the assignment scheme employed by State Electricity Company (PLN) to its subsidiaries, prioritizing them for developing floating solar power plants. While this scheme benefits PLN, it poses challenges for investors by cutting their return on investment and risking the bankability of the project. Additionally, it may create unfair competition among business players, favoring those with large equity and potentially impacting overall investment interest, particularly from foreign investors. Fabby Tumiwa, Executive Director of IESR, suggests a solution involving government support to strengthen the capital of PLN and its subsidiaries through special state capital participation (PMN) for renewable energy development. Concession loans to PLN through PT SMI, convertible into share ownership in floating PV power plant projects, could also be part of the solution. With the support of definitive and binding regulations, Indonesia can harness the potential for investment and low-emission electricity from floating solar power plants. The government's issuance of Minister of Public Works and Public Housing Regulation Number 7 of 2023 in July, removing restrictions on the area of water bodies in reservoirs utilized for floating solar power plants, has opened up opportunities for larger-scale development. The regulation requires a recommendation from the Dam Safety Commission when using more than 20% of the water body area. Marlistya Citraningrum, Program Manager for Sustainable Energy Access at IESR, views this regulatory change as an opportunity to overcome land issues in solar PV development. Land availability, often an obstacle in solar PV development, can be addressed by utilizing water bodies in dams as potential sites for floating solar power plants. Despite these positive developments, Marlistya highlights the need for improvement in overall planning, tendering, and construction processes for floating solar power plants in Indonesia. While the Cirata floating solar power plant is a flagship project and a result of intergovernmental cooperation, the lengthy timeline from the memorandum of understanding in 2017 to financial closing in 2021 diminishes the attractiveness of investments in floating solar power plants in Indonesia. Furthermore, the development of supply chains for solar PV and floating PV components in Indonesia presents an open field of opportunities, including the production of solar cells and modules. This includes not only meeting domestic market demands but also exporting to foreign markets. Trina Solar, a Chinese tier 1 solar cell and module manufacturer, has collaborated with Sinarmas to establish an integrated solar cell and module factory in Kendal Industrial Estate, Central Java, with a production capacity of 1 GW/year.

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