Indonesia eyes $73 billion solar project to boost energy capacity

Indonesia's Ministry of Energy and Mineral Resources is spearheading a massive 100 gigawatt-peak (GWp) solar power plant project, aiming to significantly boost the nation's renewable energy capacity. Minister Bahlil Lahadalia outlined the development scheme, emphasizing a phased approach that prioritizes private sector participation. Business entities and independent power producers (IPPs) will be offered opportunities first, with the government, through Danantara, stepping in if prices are not competitive or if no private entities express interest.

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If the price is competitive, we will offer it to IPPs. If it is not competitive and no one wants it, the government will take over through Danantara using financing that aligns with the President's instructions to be efficient, effective, and affordable.

The ambitious project carries a hefty price tag, with an estimated investment of $73 billion, or over Rp1,140 trillion. Proponents highlight its potential to generate substantial savings, projecting annual energy subsidy reductions of up to Rp73.9 trillion. President Prabowo Subianto has set an aggressive target to complete the 100 GWp project within three years, a stark contrast to the country's current national power generation capacity of approximately 88 GW, which relies heavily on fossil fuels.

However, the project's rapid timeline faces scrutiny from industry experts. Raditya Wiranegara, Director of Research and Innovation at the Institute for Essential Services Reform, points to significant technical hurdles. He notes that domestic solar module production capacity is currently around 14 GW per year, creating a substantial gap between the project's needs and local manufacturing capabilities. Wiranegara stresses the importance of a realistic implementation phase to ensure sustainability and avoid disrupting system stability or industry readiness.

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As a comparison, currently all our electricity is 88 GW, from coal, oil, gas, and geothermal. And we will build 100 GW, and we are serious about it. Our target is 100 GW in three years.

Further challenges include the lead time required for constructing new factories or securing imports, which are considerable. The initial phase of projects is estimated to have a generation cost of US$5–US$6 per kilowatt-hour, excluding battery storage. The Indonesian Solar Energy Association's Chairperson of the Expert Council, Herman Da, has also weighed in on the project's complexities.

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Especially since domestic solar module production capacity currently stands at around 14 GW per year.