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ndonesia surpassed another milestone in generating power from renewable energy after Singapore’s energy development company Equis signed a contract with Vestas, the wind power technology leader in Denmark, for the construction of a 65-megawatt wind power generation plant on a 30-hectare wind farm in Jeneponto, South Sulawesi.

Equis will invest up to US$150 million in the country’s first wind power project, which is scheduled to start operations in early 2018 under a 30-year build-operate-transfer system. State electricity company PLN will pay 10.89 US cents/Kilowatt hour.

We are confident the Equis-Vestas project can be a good business model for the development of wind power on other islands across the archipelago as Denmark and Vestas are both seen as leaders in developing wind power technology.

In fact, Denmark claims to have sourced 40 percent of its total commercial energy from wind power. Even more encouraging is the commitment, made by Equis and Vestas in Copenhagen while the contract was signed on Monday, to explore other areas in Indonesia for wind power projects.

Last December, President Joko “Jokowi” Widodo launched a photovoltaic power plant project of state-owned PT LEN Industri as an independent power producer in Kupang, East Nusa Tenggara province. Wind and solar programs as well as hydropower and geothermal endeavors will support the government plan to source
23 percent of the country’s power from renewable energy by 2025.

As solar and wind power generation relies more on technology rather than fuel, the price of this type of technology should continue to fall.

In many countries, notably in the tropical region, solar power is being adopted rapidly, even in places where there is no grid — it is cheaper and quicker to stick panels on the roofs of huts in villages than to build a centralized power station.

The Energy and Mineral Resources Ministry and PLN should initiate a nationwide campaign to enhance the development of solar and wind power, notably in rural areas where the the rate of electrification is still less than 60 percent.

However, a well-structured incentive package would be needed in order to encourage small independent producers to harness hydro, wind and solar power for electricity. The government should expedite the licensing bureaucracy and offer generous tax incentives to attract global companies to use Indonesia as a base to grow their ASEAN markets.

As a source of energy that constantly requires new technology, investors in wind and solar power should receive all the support they need including a reasonable level of feed-in tariffs so that their power can be transmitted to the national grid.

In several places throughout the tropical region, wind turbines and solar cells are now a cheaper way of generating electricity than fossil fuels with subsidies to encourage their use.