Indef Proposes Renewable Energy Zones for Solar Power Development

The Institute for Development of Economics and Finance Green Transition Initiative (Indef GTI) has proposed a strategic approach to developing solar power plants, advocating for the creation of "renewable energy zones" within industrial areas. This concept aims to integrate the potential of renewable energy sources with the significant energy demands of industries, potentially developing up to 30 gigawatt peak (GWp) of solar capacity.

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The renewable energy zone concept has the potential to be integrated into industrial areas by bringing together the potential of renewable energy and the energy needs of industry within one area.

Imaduddin Abdullah, Director of Indef GTI, explained that industrial zones offer several advantages for renewable energy projects. These include leveraging existing power evacuation networks and absorption of generated electricity at discounted rates. Furthermore, manufacturing industries, smelters, and data centers represent a natural market for this clean energy. For companies subject to carbon border adjustment mechanisms and global climate commitments, sourcing clean energy becomes a compliance necessity, positioning these zones as hubs for Indonesia's reindustrialization.

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Industrial areas can lend power evacuation networks and points for renewable energy projects on surrounding land, then absorb the generated electricity at a discount.

Initial analysis by Indef GTI on eight special economic zones (SEZs) indicates significant economic potential. Integrating renewable energy within these zones could increase aggregate regional GDP growth from 5.95 percent to 6.30 percent. The impact could be even greater if this model is applied more broadly across other SEZs and industrial areas in Indonesia.

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This reduces project electricity costs. Another advantage is that the needs of manufacturing industries, smelters, and data centers also make them natural buyers.

Studies suggest industrial areas hold a substantial potential for solar power development, estimated between 21 GW. This includes 6-13 GW from within the zones themselves, utilizing factory rooftops and idle land or water surfaces, and an additional 7-8 GW from adjacent land for utility-scale solar farms paired with battery storage. While the 6-13 GW portion is considered low-hanging fruit, achieving ambitious national targets for renewable energy development will require considerable effort from policymakers.

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For tenants bound by the carbon border adjustment mechanism and global climate commitments, the supply of clean energy also becomes a compliance requirement.