The Emerging Indonesian solar PV market: plenty of opportunities... and challenges

BY PAUL

BY
PAUL

Completely emerged in all the developments in Indonesia we're learning that, as with most emerging economies, there's a big difference between what is announced and what will be realized.

So here´s a short update on what you should know:

Electricity rates
According to the latest regulation, the electricity tariffs that customers are paying will be increased every 3 months for the year of 2013 with the last increase in October of this year. It will end up being Rp 1352/kWh or about 13.5 dollar cents/kWh. Adding up to a15% price increase in one year. At such price increases it will soon be possible to offer grid-parity propositions in the residential and commercial segment.

Tender for 172.5 MW
The grid-connected market for larger projects will be kick-started with a competitive bidding process, auctioning 172.5 MW of capacity at 72 locations. The max. tariff is set at $0,25 and can be $0,05 higher when the developer sources over 40% local content. When the tender starts is still unsure. Expectations are that this will be somewhere mid-august, though it's well possible that it's postponed until September or even October. 

Solar-hybrid solutions
A very interesting market in Indonesia, and probably one of the fastest growing, will be in diesel replacement through solar hybrid solutions. There are already projects built in this segment through the 1000 islands scheme which aims to install 700MW of solar for distant communities.
In these communities with micro-grids, prices of electricity can become as high as $0,35 to $0,50 so if you have the right proposition (and connections), solar could be a no-brainer in these area's. 
More regulation on enabling IPP's is announced already, which should make it even more interesting to develop such projects.

Announcements
When you follow the news around the developments in Indonesia you'd expect that already 500MW could be installed within a year. With First Solar signing a MOU with PJB on Bali for 100 MW, LDK announcing a 100 MW order and  SGI-Mitabu aiming to develop 250MW of which 50MW on Sumatra. According to our local partners these projects are mostly talk, and they will start much smaller. 
The keys to success will be in strong local partnerships, overcoming the challenges of financing, bureaucracy and logistics, educating the government and utility and actively developing projects for PPA's.

So those will be the focus of the meetings and workshops during the trade mission first and foremost.

Let me know your feedback, insights and questions and I'll be sure to follow up!

Are you already looking at Indonesia as a potentially interesting new market for your company to enter? Consider joining our Solar PV Trade Mission to Indonesia in September!  More info can be found here: http://www.pvtrademissionindonesia.com/

 

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