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tate oil and gas firm PT Pertamina and electronic component maker PT LEN Industry signed a memorandum of understanding (MoU) on Monday to establish a solar photovoltaic (PV) industry as a source of alternative energy in Indonesia.

The agreement would pave the way for Indonesia to produce the solar cells it needs to build solar power plants instead of importing them.

Pertamina expects the cooperation will bolster the development of solar-cell power production in the country, which currently contributes around 17 MWp (megawatt peak), or 0.05 percent, to the total available power in the country.

The company said the domestic solar PV industry would be an attractive venture due to the growing demand for solar-powered lighting for streets, airports, infrastructure, housing, offices and other sites.

“The government through Presidential Decree No. 5/2006 requires that by 2025 solar-powered energy should account for 0.2 to 0.3 percent of the country’s total energy supplies,” Pertamina president director Karen Agustiawan told reporters on Monday.

She said the 0.2 to 0.3 percent of total national energy supply was equivalent to 1.000 MWp; therefore there was a need to increase by over 65 MWp per year from the current capacity of 17 MWp.

The government has been aiming for renewable energy to fulfill 25 percent of total domestic energy demand by 2025.

Solar PV, she added, was the right solution to national electricity needs especially in the country’s remote areas.

Most of the archipelago’s remote areas supply their electricity needs by utilizing diesel oil-fueled generators.

The PV power generation method employs solar panels that consist of a number of solar cells that convert solar radiation into direct current electricity using semiconductors.

Currently, the national solar PV industry only produces modules and systems, while the solar cells that serve as the main component for solar-powered power plant are still imported.

Karen said that the cooperation between Pertamina and PT LEN Industry would complete the Indonesian solar PV industry cycle.

“By establishing a solar PV industry, we can increase the utilization of renewable energy which later will promote a national self-sustainability of solar power and create jobs, as well as triggering economic development,” she said.

In May 2011, Indonesia signed an MoU with South Korea to promote business partnerships in a number of economic fields including the solar PV industry.

Apart from solar energy, the government is also eyeing other options for providing access to electricity in certain regions of the country through potential hydro-energy production.

As reported earlier, the government and the state electricity utility PLN have embarked on a 10,000 MW fast-track program in which some new power plants will use water for generating electricity.

Data from the Energy and Mineral Resources Ministry in June shows that the national electrification rate currently stands at almost 70 percent.

The ministry aims for a national electrification rate of 73.65 percent in 2012.