Indonesia and Singapore will begin the joint development of a floating solar farm in Batam next year with a goal of generating around 2 GW of electricity that will be transported to Singapore via undersea cables.
If the timeline proceed on schedule, Batam will be the first location in Indonesia to have a major commercial photovoltaic (PV) plant operating on a large scale.
Indonesia currently has only a handful of PV plants, with each less than 50 MW of capacity. A PV plant with a capacity of about 150 MW in West Java is predicted to start operations only in October this year.
“Singapore is more ready today to absorb photovoltaic electricity on a large scale,” Rachmat Kaimuddin, Deputy Minister in the Coordinating Ministry of Maritime Affairs and Investment who is tasked with supervising the project said.
According to analysts, this project is a mutually beneficial attempt, with Singapore looking to switch from natural gas to renewable energy, while Indonesia would benefit from foreign investment that would enable it to exploit its abundant natural resources and geographical advantage, according to analysts.
Fabby Tumiwa, executive director at the think-tank Institute for Essential Services Reform think-tank noted: “Gas prices are high and volatile. The Batam PV project will not only offer competitive pricing but will also make Singapore’s power tariffs stable and predictable. For Indonesia, it means increased investment.”
Indonesia now relies mainly on affordable fossil fuel to generate electricity. This is because the government caps the price of coal sold to power plants, making PV electricity less competitive at present, according to Fabby Tumiwa.
This makes Singapore an ideal buyer of Indonesia’s output.
“The Batam solar farm is expected to have 40% local content with parts and equipment sourced locally,” said Rachmat.
For the project, an Indonesian consortium comprising Adaro Energy, TBS Energi Utama and Medco Energi will work with a Singapore consortium that includes Keppel Corporation, he said.
An increasing number of foreign investors in Indonesia are funding the manufacture of PV materials and devices. They are attracted by the country’s ample natural resources and the government’s accommodating policies, such as reduced income taxes for the first six years of operations and import tariff exemptions.
Indonesia has what it needs to support the making of solar cells. It has 211.8 billion tons of quartz sand resources, 700 million tons of zinc ore resources and 9.4 billion tons of nickel ore resources, according to government data.
The government said it is committed to developing a national solar PV value chain to support domestic renewable energy deployments as it gradually pulls out from fossil fuel electricity.
