Indonesia has surpassed 700MW of installed solar PV capacity, according to a recent report from the Institute for Essential Services Reform (IESR). However, the think tank warns that this progress is insufficient to meet global climate targets. As of August 2024, the country's solar PV capacity reached 717.71MW, largely driven by the 145MW Cirata floating solar PV project, which was installed in November 2023.
Despite this milestone, Indonesia still has a substantial gap to bridge in its renewable energy transition. The country has a solar PV development pipeline of around 17GW, with state utility PLN planning to add approximately 3.2GW by 2030. Floating solar PV, in particular, has emerged as a key technology for Indonesia, which, as the world's largest archipelagic state, faces unique challenges in providing power to remote regions. Floating solar not only increases energy efficiency by lowering water temperatures but also helps conserve water resources by reducing evaporation.
The report highlights that solar energy development in Indonesia is also being driven by opportunities to export green energy to Singapore. With limited land available for renewable energy generation, Singapore is looking to import clean energy from countries like Indonesia and Malaysia. Indonesian exports to Singapore are expected to total 3.4GW, requiring approximately 7.56GW of solar PV capacity.
The IESR report also notes a 19% reduction in utility-scale solar PV development costs over the past five years, thanks to lower module prices and reduced soft costs. To further encourage solar adoption, PLN has introduced bundled procurement of various power plant types and formed strategic partnerships with its subsidiaries. Additionally, the report identifies a need for 746MW of flexible capacity, including energy storage systems, to support greater rooftop solar PV deployment.
In terms of financing, US$112 million has been allocated to Indonesia's solar PV development pipeline in 2024. While the country has made strides in solar energy, significant efforts are still required to meet both domestic decarbonization goals and international climate commitments.
