The project is mutually beneficial, with Singapore looking to switch to renewable energy while Indonesia benefits from foreign investment. - PHOTO ILLUSTRATION: ST FILE
JAKARTA: Indonesia and Singapore will begin the joint development of a floating solar farm in Batam in 2024 with a goal of generating around two gigawatts of electricity that will be transported to the Republic via undersea cables.
Should 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, each with less than 50 megawatts of capacity.
A PV plant with a capacity of about 150 megawatts in West Java province is expected to start operations only in October 2023.
“Singapore is more ready today to absorb photovoltaic electricity on a large scale,” Mr Rachmat Kaimuddin, Deputy Minister in the Coordinating Ministry of Maritime Affairs and Investment who is tasked with supervising the project, told The Straits Times.
The project is a mutually beneficial endeavour, with Singapore looking to switch from natural gas to renewable energy sources, while Indonesia would benefit from foreign investment that would enable it to exploit its ample natural resources and geographical advantage, according to analysts.
Mr Fabby Tumiwa, executive director at the Jakarta-based Institute for Essential Services Reform think-tank, told ST: “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.
Mr Fabby said Indonesians still enjoy very affordable coal-based electricity because the government caps the price of coal sold to power plants, making PV electricity less competitive at present.
This makes Singapore an ideal buyer of its output.
“The Batam solar farm is expected to have 40 per cent local content – with parts and equipment sourced locally,” said Mr Rachmat, a Massachusetts Institute of Technology graduate who recently joined the government from the private sector.
For the project, an Indonesian consortium comprising Jakarta-based Adaro Energy, TBS Energi Utama and Medco Energi will work with a Singapore consortium that includes Keppel Corporation, among others, he said.
Adaro runs businesses ranging from power plants to gold mines, while TBS has a joint venture that sells electric motorcycles. Medco is an oil and gas company.
In Singapore, a Keppel spokesman told ST on Friday that it was supportive of the green corridor project.
An increasing number of foreign investors in Indonesia are funding the manufacture of PV materials and devices, which convert sunlight into electrical energy.
They are attracted by the country’s abundant natural resources and the government’s accommodating policies, such as reduced income taxes for the first six years of operations and import tariff exemptions.
The latest entrant was California-based solar modules maker SEG Solar, which announced in June that it will spend US$500 million (S$676 million) to develop a facility in Batang, Central Java province, to make solar cells.
“Indonesia offers a supportive environment with favourable policies, taxation benefits and abundant silicon resources,” SEG chief executive Jim Wood said in a statement on June 23.
Indonesia has what it needs to support the making of solar cells.
It has 211.8 billion tonnes of quartz sand resources, 700 million tonnes of zinc ore resources and 9.4 billion tonnes of nickel ore resources, according to government data.
The Indonesian government said it is committed to developing a national solar PV value chain to support domestic renewable energy deployments as it gradually moves away from traditional fossil fuel electricity.
Mr Komaidi Notonegoro, executive director of the Jakarta-based ReforMiner Institute think-tank, dismissed criticism that the export of PV electricity would go against Indonesia’s national interests.
He said: “The Batam PV project would allow Indonesia to get decent sales proceeds from Singapore, which could in turn be directed at spending optimally on building other power plants at home.” - The Straits Times/ANN
