What You Need To Know About Indonesia’s Energy Storage System

What You Need To Know About Indonesia’s Energy Storage System

  • InCorp Editorial Team
  • 12 May 2023
  • 4 minute reading time

Indonesia has recently launched a 5 megawatt Battery Energy Storage System (BESS). The new energy storage system is a device that enables energy from renewables to be stored and then released based on the needs of the customer.

The Battery Energy Storage System is a pilot project and is a concrete example of the government’s attempt to shift away from diesel-generated power and transition to cleaner energy. State Electricity Company (PLN) reveals that they have signed a Memorandum of Understanding.

Batteries are required to provide constant electricity supply to renewable energy plants, which are primarily intermittent, such as solar and wind power plants. The agreement was made with other state-owned bodies, such as the Indonesian Battery Corporation, to build the Battery Energy Storage System by 2022. However, no information has yet been revealed about the Battery Energy Storage System’s location or specific functions.

Aside from this, PLN also plans to convert 250 MW diesel-fired power plants to renewable energy by this year. This is because electric supply within the community is still required. To support the initiative, a Battery Energy Storage System is needed to support the initiative and become an integral part of the plan.

The Battery Energy Storage System will also be applied to all power plants under the PLN group. Subsidiaries of PLN involved in the Battery Energy Storage System project happen to be the primary electricity providers in Indonesia, such as PT Indonesia Power, PT Pembangkitan Jawa Bali, and others.

The Economic Benefits of the Energy Storage System Plan

The Energy Storage System Grand Plan

The plan to develop an energy storage system aligns with the positive growth in the renewable energy industry. This growth is also visible in countries like Indonesia, where the Central Government has set an optimistic target of 23% usage of renewable energy by 2025.

An independent organization called Agensi International Energi Terbarukan (IRENA) has predicted that Indonesia will be able to reach up to 31% of renewable energy usage by the year 2040.

Nicke Widyawati, the General Director of PT Pertamina Persero, shares that Indonesia has a vast BESS market. She further identifies that two primary industries have great potential in utilizing lithium batteries. The first one is BESS and the second one is transportation.

The Deputy for the Coordinating Ministry of Maritime Affairs and Investment, Septian Hario Seto, elucidates that BESS business is in line with the usage of photovoltaic solar that has been launched by the government and is to be utilized in remote areas. These areas do not require electricity transmission on a large scale. Therefore the BESS is considered sufficient to support the electricity needs.

The Tesla Deal

The Indonesian government has worked tirelessly to pull foreign investors to invest in Indonesia. Tesla has shown great interest in pouring funds into the country. There have been talks with Tesla, with plans to invest in Indonesia’s Battery Energy Storage System sector.

Tesla has an outstanding reputation in its production of technology that is carbon neutral. The BESS produced and used by Tesla has a relatively low negative environmental impact. Another interesting point is that the BESS can be built under various geographical conditions.

The meeting was held with Elon Musk as the CEO of Tesla, Luhut Binsar Pandjaitan as the Minister of Maritime Affairs and Investment, and Anindya Bakri, a conglomerate with a specific interest in the mining sector.

The Potential of The Energy System Storage

2021 was an important year for Indonesia as the government has issued necessary regulations to facilitate renewable energy growth and reach the ambitious goal of 2025. The Memorandum of Understanding is continuously being drawn up through the various construction projects planned and started.

The negotiations to support the initiative are also done with large foreign firms, all done to boost Indonesia’s renewable energy industry to show that this industry will only prosper. The Indonesian government is also assisting this sector by providing low-interest financing to bolster the installation and development of renewable energy.

PLN has and will continue to construct various breakthroughs for Indonesia’s renewable energy sector. They have been successful in doing so despite the COVID-19 pandemic, which had a massive impact on the nation. However, the government needs to ensure that the energy transition is done optimally so that there is no energy supply shortage due to their attempts to repair the environment.

The efforts shown have been immense and have positively motivated the transition to renewable energy. In this regard, Cekindo assists with matters related to business licensing and company registration should there be a desire to exploit the current benefits provided to business actors operating in the renewable energy sector.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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Frequent Asked Questions

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.

There are two main types, namely, primary business licenses and non-primary business licenses. The primary ones commonly apply to various industries, such as general and industrial business licenses. Additional non-primary ones are included, depending on the operations of your business. Examples of non-primary business licenses are operational and commercial licenses.

Yes, you must apply for it to be able to issue work permits for your foreign employees. This permanent business license is also a prerequisite for the applications for other business licenses and import licenses.