Analysis: Indonesia’s solar energy bet: Cautious optimism
President Prabowo Subianto recently launched the country’s massive solar power program at a ceremony in Bali, marking the construction of 14 solar power plants across the country. The projects form part of Indonesia’s push to develop 100 gigawatt-peak (GWp) of solar power capacity, aimed at providing reliable electricity to isolated villages, accelerating the transition to clean and renewable…
Indonesia's ambitious solar energy initiative recently launched by resident Prabowo Subianto in Bali has garnered cautious optimism. The nation aims to develop 100 gigawatt-peak (GWp) of solar power capacity, which would provide electricity to remote villages, accelerate the shift to clean energy, and enhance energy self-sufficiency.
However, achieving this goal may prove challenging due to several factors. The country has only utilized 1.5 GW of its estimated 3,294 GWp solar power potential, making solar power a significant opportunity. At 8 to 20 US cents per kilowatt-hour (kWh), combined solar-BESS systems are considerably cheaper than diesel power plants, which currently generate electricity at 55 to 65 cents per kWh.
Prabowo's plan to replace 13 GW of diesel power plants with solar energy could save Indonesia Rp 73.9 trillion (US$4.2 billion) annually.
Despite these advantages, the timeline for the 100 GWp solar program is ambitious. The program's development will face obstacles such as land availability and institutional capacity constraints. Many proposed sites are unsuitable, including swampy areas prone to flooding. Moreover, the program will distribute solar capacity across 80,000 villages managed at the Red and White Cooperative level, a task that presents difficulties considering most cooperatives were only established in mid-2025.
Another hurdle is integrating the additional solar capacity into PLN's existing power system. PLN is currently bound by long-term power purchase agreements with coal-fired power plants, resulting in an oversupply of coal-generated electricity and limited room for renewables. Additionally, there is little financial incentive for PLN's grid to adopt solar power, given that coal-fired power costs around 5.7 cents per kWh.
The program's distributed model may find its strongest rationale in serving villages currently underserved by PLN's grid. Prabowo's de-dieselization plan aims to replace diesel power plants in isolated regions with solar power. This approach could potentially meet most or all of a village's power needs through modular solar plants combined with battery storage. However, scaling this model nationally, particularly in villages already connected to PLN's predominantly coal-powered grid, presents challenges.
Furthermore, Indonesia's 2025-2034 RUPTL still expects a 40 percent increase in fossil-fuel power generation. Distributed solar projects are more challenging to finance than utility-scale plants unless individual projects can be bundled into larger investment portfolios.
Written by urgent.news from The Jakarta Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
