The Jakarta Post
In terms of additional capacity, the solar photovoltaic power plant President Joko 'Jokowi' Widodo inaugurated in Kupang, East Nusa Tenggara province, late last year is rather meaningless ' quite tiny, generating only five megawatts, compared to the 35,000 MW of additional power needed within the next five years to prevent an electricity crisis.
But this solar power generation could mark a great milestone in the large-scale development of solar power across the tropical country, letting it become a major supplier of renewable energy.
The power purchase agreement between state-owned PT LEN Industri, as the independent power producer (IPP) that owns the solar power plant, and the state electricity company (PLN) could serve as a business model for private-sector investment in solar power development.
Yet more encouraging is that the Kupang solar power plant is connected to the PLN grid, meaning that the plant can feed in its power surplus, especially during the day, to PLN.
The high upfront cost of solar energy had long dampened its prospects in sunny Indonesia, but the clouds may have finally cleared with a wave of technological breakthroughs that have cut the cost of solar photovoltaic (PV) cells by more than 85 percent. The wave of new business models, like the one between PT LEN and PLN, also have improved the economic feasibility of solar energy.
Because solar power generation is more about technology, rather than a fuel that generates power, the price should continue to fall, as it has for cell phones. In many countries, notably in tropical regions, solar power is being adopted most rapidly, even in places where there is no grid ' it's cheaper and quicker to stick panels on the roofs of huts in villages than to build a centralized power station and run poles and wires.
The Energy and Mineral Resources Ministry and PLN should embark on a nation-wide campaign to enhance the development of solar power, notably in rural areas where the rate of electrification is still less than 60 percent. Our tropical sunbelt, with more than 50 percent solar radiation than temperate regions, is really the right place to harness solar power.
A well-structured incentive package should be developed to encourage more small IPP producers to harness solar power for electricity in cooperation with households to have photovoltaic panels installed on their rooftops.
In Singapore, for example, a solar leasing business model has been developed whereby solar electricity is sold to building owners who allow their rooftops to be fitted with photovoltaic panels.
The government should expedite the licensing bureaucracy and offer generous tax incentives to attract leading global solar companies to use Indonesia as a base to expand their ASEAN markets.
As a new source of energy that constantly requires new technology, investors in solar power should get all the support they need, including a reasonable level of feed-in tariffs for the power they transmit to the national grid and incentives for research to explore new solar applications on rooftops.