Students and teachers take a look at a solar farm at SMP 9 state junior high school in Jakarta. The government plans to install rooftop solar panels on all assets and offices of state-owned companies across Indonesia (The Jakarta Post/Ricky Yudhistira)

The government plans to install rooftop solar panels on all assets and offices of state-owned enterprises (SOEs) across the country by 2025 as part of efforts to increase the renewable energy use in the country’s energy mix.

The ambitious project, which is expected to be able to generate 1.4 gigawatts peak (GWp) of electricity is estimated to cost about Rp 143 trillion (US$986 million). The estimate was made by PT LEN Industri, which will provide the technology for the master plan of the solar energy project.

“We expect to finance it from the green fund and also the SOEs’ budgets. This year we hope we can start with 40 megawatts [MW],” LEN Industri Operational 1 director Linus Sijabat said recently

The green fund to which he referred as a financing option was launched by eight Indonesian banks in cooperation with the World Wide Fund for Nature (WWF) Indonesia in May last year. The banks include Artha Graha Indonesia, BRI Syariah, Bank Central Asia, Mandiri, Muamalat, Bank Negara Indonesia, West Java and Banten Development Bank and Bank Rakyat Indonesia.

“We hope to access these banks soon, to finance the rooftop projects,” Linus said.

According to the LEN Industri blueprint, in the business model for this solar project about 70 percent of the funding will come from banks and the remaining 30 percent from state-owned infrastructure financing company PT Sarana Multi Infrastruktur (SMI), combined with related parties and engineering, procurement and construction (EPC) contractors. A special purpose vehicle (SPV) will be formed to lead the project and deal with the SOEs.

The solar energy project will be implemented in all SOE assets all across Indonesia, covering at least 10 business sectors, from state energy giant Pertamina’s fuel stations to the food-stock warehouses owned by state logistics company Bulog.

“There are also toll roads, airports, railway stations, mines, SOEs factories, SOEs offices, plantations and ports. Next year we aim to install 100 to 200 MW in this project” Linus of LEN Industri said.

The project is also an effort to help the government reach the 23 percent renewable energy contribution to the national energy mix by 2025.

As of December 2018, the clean energy contribution to the mix was still below 10 percent, while for the electricity sector it had reached 12.4 percent.

SOEs Ministry undersecretary for mining, strategic industries and media affairs Fajar Harry Sampurno said that to help reach the target the government had secured the commitment to use more solar-energy from more than 30 SOEs.

“It’s still a commitment [from the SOEs], but now we will identify the potential in each of the SOE’s assets, whether it’s their building or land [on which to place the solar plant],” he said previously.

Solar energy accounts for 3 percent of the total 23 percent target of renewable energy in the national energy mix by 2025, equivalent to 6,500 MW. At present, solar energy accounts for fewer than 1,000 MW.

However, of the 6,500 MW target from solar energy, state electricity firm PLN can only supply 15.38 percent or 1,000 MW, as stipulated in the recent electricity procurement business plan (RUPTL).

Energy and Mineral Resources Ministry Director General for New and Renewable Energy FX Sutijastoto said the SOEs’ push into solar energy would help to reduce the price of solar panels and also to create a new industry of panel manufacturing.

“If we could have a new solar energy power plant with solar panels of 300 MW per year, the electricity price from it could be reduced to only 4-5 US cents per kilowatt hour [kwh]. It would create a new market and help to boost local manufacturing,” he said.

It has long been a prerequisite for the competitiveness of renewable energy against coal-fired electricity that the price hovers at 4-6 US cents per kwh. Institute for Essential Service Reform (IESR) executive director Fabby Tumiwa concurred that SOEs could be the driver of the solar panel market and industry.

He said the majority of households in Indonesia still considered the price of a solar panel to be too high. Currently a solar panel with a capacity of 1 kilowatt peak (KWp) is priced at Rp 18 million (US$1,268)

“But the usage of solar panels will grow if the price drops. The production cost will also decline following an increase in sales,” Fabby said.