Indonesia’s Hybrid Plant Model Operational by March 18

A 1.2 MW hybrid plant is currently under development in a remote area of Indonesia aiming to provide 24-hours access to electricity for about 400 households in three villages. The project will be owned by the local community, offering a model for the development of solar PV in the country.

By March next year, the remote Indonesian villages of Merabu, Long Beliu and Teluk Sumbang in Berau Regency of East Kalimantan Province are to be fully served by a 1.2 MW hybrid power plant consisting of solar PV, lithium-ion energy storage and a distribution system.

The project is being developed by Akuo Energy, a leading French independent renewable energy power producer, which is present across the whole value chain, including project development, financing, construction and operation. The engineering, construction and procurement (EPC) contract for the 1.2 MW hybrid project is to be implemented by both Akuo Energy and Entrepose ENTREPOSE – PT Istana Karang Laut, a local Jakarta-based firm.

Co-financing is to be provided by Akuo Energy and Millenium Challenge Account (MCA) Indonesia, a trustee institution formed by the Government of Indonesia. MCA is currently running the Green Prosperity Project, a program aiming to reduce reliance on fossil fuels via the expansion of renewable energies.

Community-owned project: a model for the future?

Christophe Moyon, of Akuo Energy Indonesia explained that once built, village-owned company BUMDes will own the off-grid system. Akuo will only help BUMDes to operate and manage the installation, said Moyon.

Each household in the village will need to install a meter and the generated electricity will be sold to the them at a price on par with the unsubsidised PLN tariff, added Moyon.

PLN is Indonesia’s state-owned power utility. “For the retail market, PLN applies a single tariff throughout Indonesia based on their subscribed power/classification (from 900 VA, 1350 VA, 2200 VA etc). For the lowest classification, there are still subsidies provided by the Government of Indonesia,” explained Moyon. However, the 1.2 MW project will sell the produced electricity to the community based on PLN’s tariff for the 1350 VA class, which does not get subsidized by the state.

“There are more than 12,000 villages all around Indonesia that have no or very limited access to electricity as of today,” Moyon said, “therefore there is a potential of 6 GW (considering 500 kW for each village) of off-grid systems capacity to be developed in Indonesia.”

The 1.2 MW project by Akuo Energy is a great innovation that allows the electrification of rural Indonesia without the state to need to subsidize the retail purchase of electricity. The key is to learn as many lessons as possible from this project and apply them to new installations, improving the business model and giving confidence to more investors to step in.

Indonesia also recently introduced a new renewable energy law, aiming to encourage investment in large-scale solar PV plants connected to the grid.