The Indonesian Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan, has announced that Singapore is interested in importing solar panel electricity from Indonesia. However, he revealed that Indonesia wants the entire solar panel manufacturing process to be carried out domestically, including the production of batteries and other derivative products, with the final products then being exported.
“We know that Singapore is interested in importing solar panels and electricity from Indonesia, but we do not want to do it that way. We want the process to be end-to-end. We want to build the solar panel industry here, as well as the battery industry and other related industries. Only then can we export to Singapore and make it a win-win situation,” he said after attending the Indonesia Leading Economic Forum 2023 in Jakarta on Tuesday, March 14, 2023.
Therefore, Indonesia aims to export finished products rather than just raw materials, with Luhut estimating that the investment in building the solar panel industry could reach $50 billion or equivalent to Rp 769.4 trillion (assuming an exchange rate of Rp 15,389 per US$).
“Looking at the potential, the total investment could reach $50 billion,” he added.
Previously, the Secretary General of the National Energy Council, Djoko Siswanto, stated that the council is serious about accelerating the use of renewable energy, particularly solar energy through the use of Solar Power Plants (PLTS). However, developing renewable energy is not cheap, and Indonesia needs at least Rp 4 trillion to build solar panel production.
“I once had the idea of gathering State-Owned Enterprises to meet with the Minister of Finance and the Ministry of State Secretariat regarding the need for Rp 4 trillion in funding,” he explained in Energy & Mining Outlook 2023 on Thursday, February 23, 2023.
Indonesia is rich in renewable energy, but the utilization of solar energy is still far from its potential. As a country located near the equator, Indonesia has the potential to become a leader in solar energy development. However, with the limited use of solar energy, many believe that Indonesia is not serious about developing renewable energy.
This is also evident in the percentage of Domestic Component Levels (TKDN), which has not yet reached 50%. Djoko said that solar module components in Indonesia are often imported from abroad, which is still an unresolved issue. Developing renewable energy depends not only on market demand but also on the overall development of solar power plants.
“We have a factory, but it is only for installation purposes. It has not developed because many prefer to import. This is our challenge as to why TKDN has not reached 50%,” he explained.