February 21, 2025
JAKARTA – A new manufacturing plant producing floating solar panel systems was officially launched in Batam on Feb 14 to tap opportunities created by a major deal to supply solar power from the Indonesian island to Singapore.
Surabaya-based Utomo Solar Panel Terapung Erpo (Usopater) will produce equipment, including anchors and pontoons, used in floating photovoltaic modules, its managing director Anthony Utomo told The Straits Times.
Usopater is an Indonesian company owned by Utomodeck Group that builds electric vehicle charging stations across Indonesia. Mr Anthony declined to give figures about the size of the investment to build the plant, which has been running for three months.
The 8,000 sq m Batam plant, which employs 100 workers, is one of the bright spots in Indonesia’s green energy market, with the industry seeing fast expansion despite the slow national adoption of solar power.
Experts have attributed the country’s slow embrace of green energy to the government’s continued preference for cheaper coal-fired power.
Singapore is set to start importing two gigawatts (GW) of renewable energy annually from Indonesia within five years, in what is the Republic’s biggest effort so far to import low-carbon electricity, ST reported in November 2024.
The imports would account for about 15 per cent of Singapore’s annual needs.
To attract investments, the Indonesian government is promoting floating solar farms located in reservoirs, or installing them offshore, to avoid the high costs of land procurement and having to relocate local residents.
“We are aiming to support that project,” said Mr Anthony, referring to the plan for Batam to export renewable energy to Singapore. “We are glad the government is imposing a 40 per cent local content (requirement).”
Until 2023, Indonesia applied a 60 per cent locally produced material requirement for solar farm systems, before reducing it to 40 per cent to woo more foreign investments.
In August 2024, the government announced a temporary regulation offering a 20 per cent local content requirement for any solar farms that could guarantee they could start operations by June 2026 at the latest.
The plan to export solar power has spurred investments in the manufacturing of components, according to a January 2025 report by the Jakarta-based Institute for Essential Services Reform (IESR).
“Foreign solar manufacturers are significantly increasing their investments in Indonesia… The surge in investment is driven by strategic initiatives, such as the Indonesia-Singapore Green Corridor project,” the think-tank report said.
In August 2024, Chinese solar panel manufacturer Suntech announced it would build a plant in Indonesia with an annual production capacity of 2GW. In October 2024, Houston-based SEG Solar broke ground on a facility that will have a 5GW solar panel capacity in Batang, Central Java.
Separately, Singapore’s Sembcorp Industries and Indonesian state utility Perusahaan Listrik Negara (PLN) have collaborated on solar development in Indonesia. Their first project was launched on Jan 20, 2025, in Indonesia’s new capital of Nusantara on Kalimantan.
The 50MW solar farm with a 14.2MWh battery storage system was built on 87ha of land and will help to power the new capital. The project is Sembcorp’s inaugural venture into large-scale solar development in Indonesia, Sembcorp said in a Jan 20 statement.
However, despite repeated pledges for ambitious decarbonisation targets, Indonesia has made slow progress in solar energy adoption.
South-east Asia’s largest economy has an installed solar capacity of just 718MW, far behind Vietnam’s 18.6GW, Malaysia’s 2.2GW and Thailand’s 4GW.
Mr Fabby Tumiwa, IESR executive director, told ST that the Indonesian government’s continued reliance on coal is caused by the coal price cap policy and unattractive purchase rate offered to solar farm investors. All power plants and solar farms must sell their generated electricity through PLN.
“With the prices of coal being capped at a guaranteed low price, that makes renewables much less competitive… Indonesia has abundant coal, and we use it a lot as well as export it,” Mr Fabby said.
Indonesia is the world’s largest thermal coal exporter, exporting 53 per cent of its national output of 811 million tonnes in 2024.
Additionally, coal miners in Indonesia must allocate 25 per cent of their output for PLN to use for electricity generation at a fixed price of US$70 (S$94) per tonne, regardless of the going market price, according to government regulations issued in 2020 and 2021. The benchmark Newcastle coal price has been hovering above US$100 per tonne between May 2021 and January 2025, according to investing.com.
Meanwhile, the use of rooftop solar panels for private homes has also failed to take off due disincentives created by PLN, said green analyst Firdaus Cahyadi.
Homes are allowed to install solar panels that supply only up to 15 per cent of their electricity needs, with the rest to be bought from the national utility company. These made such home installations a waste of funds, said Mr Firdaus, who is the founder of Indonesian Climate Justice Literacy, a think-tank.
He said it would be a major challenge for Indonesia to move away from reliance on coal, charging that coal tycoons have been major donors in the past two presidential election campaigns, if not longer.
Labelling these problems as systemic obstacles, Ms Katherine Hasan, a Jakarta-based analyst with the Centre for Research on Energy and Clean Air, called the unsupportive government regulations a hindrance to the investment climate for clean energy development, especially solar power.
She said Indonesia’s solar panels market has great potential, given its vast geography and ample sunlight.
“Indonesia can grow faster than its Asean peers if the government puts away all the obstacles,” Ms Katherine told ST, pointing out that Indonesian households are now aware that prices of photovoltaics have become affordable.
- Wahyudi Soeriaatmadja has been Indonesia correspondent at The Straits Times since 2008, and is based in Jakarta.