The Indonesia government has recently announced new investments to cultivate its domestic PV industry. Specifically, the government will spend US$4 billion to raise the domestic production capacity for polysilicon. Increasing the availability of this key material is expected to help lower the costs of domestically produced PV modules. According to a related article from Arab News, polysilicon prices reached a 10-year high in 2021.
The Indonesian government has become proactive in supporting the localization of PV product manufacturing. Having an abundant supply of affordable PV modules produced by local factories will expedite the development of PV projects across the country.
Indonesia has set the target of installing 5.3GW of PV generation capacity by 2030. To build up the domestic polysilicon sector, the US$4 billion investment will be distributed between two manufacturing projects. Referring to a statement from the Deputy for Investment and Mining at Indonesia’s Coordinating Ministry for Maritime and Investment Affairs, Bloomberg reported in late January that the Indonesia government will support the construction of a polysilicon plant in Batang. This is additional to another polysilicon plant that is being set up in North Kalimantan. The plant in Batang is worth US$800 million and will have an initial production capacity of 40,000 tons. The plant in North Kalimantan is worth US$3.2 billion and will have a production capacity of 160,000 tons. The plant in Batang is scheduled to enter operation this July.
According to the coverage by news agencies and renewable energy news websites, the contributions from the two plants will lead to “excess supply” in the Indonesian market. Whether such scenario will also bring about a rapid reduction in the costs of domestically produced modules and thereby accelerate PV project development is something that remains to be seen.
Also in late January, Indonesian coal producer PT Mitrabara Adiperdana Tbk announced the formation of a renewable energy joint venture with Masdar, which is owned by the government of the UAE. The new entity will be developing and selling solutions for the commercial and industrial segments of the Indonesian energy market.