Indonesia to have its first and largest floating solar power by 2019

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JAKARTA (RambuEnergy.com) – Developing large-scale solar power plants in Indonesia has been facing slow-progress due to high land-price, which leads to high tariff purchased by the state electricity company Perusahaan Listrik Negara (PLN).

A United Arab Emirates (UAE) company Masdar has come up with a solution, developing a floating photovoltaic solar power with planned installed capacity of 200 MW with a planned investment of US$300 million.

The UAE company and Indonesian local partner PT Pembangkit Jawa Bali (PJB) on Nov. 28 has signed a cooperation agreement at the Indonesian Energy and Mineral Resources Ministry office to realize the project which will be built on 225 hectares of the Cirata hydroelectric plant reservoir, in West Java.

The two parties have agreed to set up a joint venture company to develop the project, in which PJB holds 51% and Masdar 49%. The project will be financed by 70% loan and 30% equity

In the first phase, the JV firm will develop 50 MW of installed capacity, with commercial operation date target set for the second quarter of 2019. Meanwhile, the second, third and fourth phases will have an installed capacity of 150 MW, and will come online in the first quarter of 2020.

CEO of Masdar Mohamed Jameel Al Ramahi said the two parties are still reviewing the electricity tariff of the project. “We will give the best tariff to the Indonesian government and are committed to providing competitive technical and commercial solution,” he said after signing the agreement.

Floating solar platforms will be naturally cooled by the surrounding water, which increases the efficiency of the energy yields significantly. A study has found that the natural cooling effect of the water beneath the solar cells makes them up to 11 percent more efficient than solar panels placed on land. In a synergistic effect, the floating platform helps reduce evaporation of the valuable water

The project is expected to support the Indonesian government’s drive to increase the renewable energy use in the country’s energy mix to 23 percent, said President Director of PJB Iwan Agung Firstantara..

In order to push down the costs and make the project viable, Energy and Mineral Resources Ministry promises to give additional incentives such as tax allowances and tax treaties between UAE and Indonesia and other incentives, pending on approval of the Finance Ministry.

The estimated investment for the project is expected to reach $180 million or around Rp2.4 trillion.

Deputy Energy and Mineral Resources Ministry Arcandra Tahar has called on investors to utilize local components as much as possible, and rely less on imported materials.

The two parties have yet seal power purchase agreement (PPA) with the state utility PLN which will allow them to kick off the construction. Arcandra Tahar wants the two parties to amend the financial model and costs structure in developing the project so that the power purchase tariff could be pushed down to below US$6.5 cent per kWh, far lower than PPA set in the past at above US$10 cent/kWh.

The signing of the agreement was a follow-up to a Memorandum of Understanding (MoU) between PJB and Masdar on July 16, 2017, concluded in Abu Dhabi, on the Development of Renewable Large Scale Power Projects in Indonesia.

PJB expects the power purchase agreement (PPA) with PLN will be signed by the end of this year.

President Director of PLN Sofyan Basir said that in the past two years, PLN has developed 2000 MW of solar power, with a combined investment of Rp20 trillion.

Masdar CEO Mohammed al-Ramah described the agreement as ‘major milestone’ of business relations between the two companies, starting with the largest solar farm in Indonesia.

Masdar is a wholly owned by the Abu Dhabi Government’s Mubadala Investment Company and a partner in the UAE’s transition towards a knowledge-based economy.

Indonesia will be the second country in the Southeast Asia to develop floating photovoltaic power plant after Singapore.

The Cirata Dam is an embankment dam on the Citarum River, which is located 100 km (62 miles) southeast of Indonesia’s capital city Jakarta. The dam was constructed between 1984 and 1988 for the primary purpose of hydroelectric power generation. Other purposes include flood control, agriculture, water supply and irrigation. (*)

Written by Roffie Kurniawan (email: roffie.kurniawan@gmail.com)