Indonesia wants to bring solar to its villages. Can it keep the lights on?

Key points:

 

• Indonesia has launched a US$71bn flagship programme aiming to install 100GW of rural solar capacity within three years.

• Meeting the deadline demands adding 33GW annually – far surpassing historical records and testing state utility PLN’s procurement capacity.

• Past rural mini grids rapidly degraded into abandoned assets due to unclear ownership, zero maintenance funds, and inadequate technical training.

• Only 1% of the planned 80,000 village cooperatives are operational, with critics warning these top-down entities lack commercial viability.

• Underserved islanders facing power rationing voice frustration as the government plans to export 3.4GW of clean electricity to Singapore.

 

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Indonesia is betting on solar to transform electricity access in rural communities to boost economic activity. But previous community solar projects have struggled to remain operational. 

Indonesia’s flagship 100GW solar programme, which includes the creation of 80,000 village cooperatives to help run the microgrids, is reportedly under way, with the government aiming to reach full capacity within three years.

On 25 August, President Prabowo Subianto formally launched the programme in Bali, inaugurating 14 solar projects across six provinces with a combined capacity of about 5.3GW. The government estimates this will cost around Rp1,140tn (US$71bn).

The ambition is unprecedented. But Indonesia’s previous attempts to roll out and sustain village-scale solar have often run into problems.

A policy brief by the Humanis Foundation describes the programme as “Indonesia’s most significant leap toward both universal energy access and decarbonisation”, with three key objectives at its core: closing the energy gap among rural communities, boosting the rural economy and providing 84% of the country’s 2060 net zero target. However, it warns that previous mini-grid systems have often deteriorated within a few years because of unclear ownership, inadequate maintenance funding and a lack of local institutional capacity.

Between 2011 to 2015, Indonesia built 500 community-scale solar PV systems in rural areas. By 2015, at least 10% had fallen into disrepair.

Sandra Winarsa, the brief’s author, said the cooperative model has barely gotten off the ground. Most are grid-connected plants selling power to the state electricity company, Perusahaan Listrik Negara (PLN), or part of an existing scheme to replace diesel generators with renewables. 

“They’re branding it under the 100GW programme,” she told Green Central Banking. “There is no implementation at this moment that links with a genuine cooperative model.”

Untapped potential

 

Indonesia has no shortage of sunshine. An Institute for Essential Services Reform (IESR) study published in 2021 estimated the country’s technical solar potential at between 3,300GW and 20,000GW.

“If we look at the resource potential, developing 100GW would represent only a small fraction of the solar energy resources Indonesia possesses,” said Fabby Tumiwa, IESR’s executive director.

But delivering 100GW within three years would still be an unprecedented undertaking.

To meet the target, Indonesia would need to install roughly 33GW of solar capacity every year until 2029 – far beyond anything it has achieved previously.

“In our history, we have never built that much capacity in a single year,” Tumiwa said.

Among the obstacles he identified are the volume of projects that must be executed simultaneously, the need for new procurement and investment mechanisms and overcoming regulatory hurdles.

A target of this magnitude cannot be achieved by the PLN alone, he argued, as its procurement system has never been tested at the scale required to deliver tens of gigawatts of solar capacity annually. Independent power producers will also need to participate. 

“There needs to be a new auction mechanism that allows the PLN to tender very large volumes of capacity,” Tumiwa told Green Central Banking.

There is also competing pressure from separate plans to export up to 3.4GW of renewable electricity to Singapore by 2035, generated from new plants. However, recent tensions have cast doubt on Indonesia’s commitment to the deal.

Competing demands

 

More than 2,400 islands make up the Riau Islands archipelago, just a few dozen kilometres from Singapore. Of these, 395 are inhabited, according to local government data.

Official data shows that 34 inhabited islands still lack access to the grid. Five are near Batam, six in Karimun, two in Anambas and 21 in Lingga.

Another 63 islands receive electricity for only around 14 hours a day, while residents on a further 12 have power for just five hours. When diesel generators are switched off or batteries run flat, communities are left without electricity until the following morning.

Pulau Panjang and Pulau Mubut, both in Batam’s Galang district, are among the islands with limited supply. Every evening, residents wait for the diesel generator to start at 6pm, knowing the lights will go out again at 11pm. Households pay between Rp210,000 and Rp270,000 (£10–13) a month for five hours of electricity.

“We’ve repeatedly asked the government to provide electricity whenever officials visit, but all we’ve received are promises,” Zuhrin, a resident from Pulau Panjang, told Green Central Banking.

Most islanders, like Zuhrin, are fishermen. Reliable electricity would allow them to make ice locally to preserve their catch, instead of buying it from neighbouring islands at additional cost.

“We could make our own ice in a freezer. With electricity for only five hours, it never has time to freeze,” he said.

On Pulau Mubut, residents are equally frustrated.

“We’re still living like this, yet the government wants to export electricity first,” said Guntur, another islander.

In 2022, villagers lobbied to have solar installed on the island. Two years later, electricity poles were erected and land was prepared. But the promised solar panels have yet to materialise.

“We were told to be patient, but it’s been more than a year and we’ve heard nothing,” Guntur said.

Meanwhile, Muhammad Darwin, head of the Riau Islands Energy and Natural Resources Department, said PLN’s 2026–2027 roadmap aims to provide full electricity access to 95 islands across the province. It will rely primarily on solar power, although some locations will also be connected through transmission infrastructure and subsea power cables.

The roadmap will test whether national electrification plans can translate into functioning electricity systems for remote communities.

“Broken monuments”

 

Mecan Island, in Batam’s Belakang Padang district, was equipped with solar power in 2018 using a special allocation fund worth Rp2bn.

After construction, responsibility for operating the system was handed over to the local community. Each household contributed around Rp40,000 a month to cover operating costs, repairs and maintenance.

However, the handover was not accompanied by adequate technical support. Villagers said they lacked the expertise and financial resources to carry out routine maintenance or repair the system when components began to fail. As problems mounted, the installation gradually lost its ability to provide reliable electricity. 

Sirai Island has experienced a similar fate, with its community solar system providing around three hours of electricity each night, according to the Riau Islands Energy and Mineral Resources Agency.

Junaidi Putra, head of the provincial energy division at the agency, said the provincial government lacks sufficient funding to rehabilitate damaged community projects across the archipelago.

“These islands have already been included in PLN’s electrification roadmap, so there is little we can do to intervene. It now depends on how quickly PLN moves,” he told Green Central Banking.

The Mecan and Sirai cases illustrate a central problem in Indonesia’s community-solar experience: installing a system does not guarantee a sustainable electricity service. Systems need a clearly responsible operator, the technical capacity to maintain them and dependable funding for repairs.

IESR says many projects have struggled because of unclear ownership. When communities take over without the technical and managerial knowhow to operate a plant, even minor faults can lead to shutdown. And because electricity is often provided as aid, with users paying nothing, there is rarely money for repairs.

The institute argues that whoever manages the system, whether a village-owned enterprise, cooperative or community group, must have the skills and funding necessary before construction begins.

“The plant should not be built first and only then should people start looking for someone to manage it. It needs to be planned from the beginning,” said Tumiwa.

It is a view shared by Winarsa of the Humanis Foundation. Money goes into building the plant, an operator might get a week or two of training, she said, “and that’s it”. Indonesians have a name for the results: “broken monuments”, she said. Abandoned systems often end up stripped of their components, with panels and cables sold for parts. “It’s really sad to see all that investment wasted,” she said.

Not every village project is doomed to failure. Six small islands offer a contrasting example, although their success has brought a new challenge. 

Akar, Panjang and Geranting in Batam, Sebong and Nuja in Lingga, and Jaga in Karimun have all received electricity from solar systems operated by PLN. Each household is allotted four amps of electricity, enough to power lights, televisions, electric fans and washing machines.

“The batteries are recharged every day at 5pm,” said Armi, who coordinates the six power systems for PLN. Unlike on Mecan, the utility runs them directly rather than handing them to the community.

Together, the six installations have a combined capacity of 775 kilowatt-peak (kWp) and supply electricity to 897 households.

Households currently pay between Rp50,000 and Rp80,000 a month for electricity, less than one-third of what they previously spent on diesel generators that provided power for only five hours a day.

“It’s much cheaper,” Armi said.

However, its success has resulted in electricity demand rising. According to Armi, residents are now asking the government to expand the systems’ capacity as their energy needs increase.

The Humanis Foundation sees the same pattern in 16 government-built village systems it supports in East Nusa Tenggara (NTT), built in 2023 and 2024. Households that once used power for lights and fans now want rice cookers, which will not be possible without a new injection of capital. Monthly payments cover the operator’s wages and little else.

The new programme risks the opposite problem. Feasibility studies have looked only at current demand, Winarsa said, yet each village is meant to get about 1MW. In eastern provinces such as Maluku, Papua and NTT, where homes are scattered and there are few businesses to act as large, steady customers, she estimated some villages might use only 10-20% of that capacity.

“It’s a waste of money,” she said.

A “top-down” approach

 

As cooperatives are already the economic engine of many Indonesian villages, Winarsa said it makes sense to engage them in the rollout. However, until now they were formed by communities on a voluntary basis, whereas the 80,000 cooperatives involved are little more than “shells” set up on government orders. According to Winarsa, villages were told their annual village fund could be withheld if they did not comply, and many of the new cooperatives exist only on paper, with a chair and perhaps two staff. The government had set itself an objective of having them all up and running by March 2026. Yet, as of June, only 1,061 units were operational – equivalent to just 1%. 

Civil society groups had urged the cooperatives ministry to work with existing cooperatives with prior experience managing a business. 

“A genuine cooperative is bottom-up, where the community gathers and puts in their own money,” Winarsa said. “This one is really top-down.”

The model also needs a sustainable source of funding. Separate research estimates that a 1MW community solar plant requires upfront investment of around Rp22bn (US$1.35m), alongside annual operation and maintenance costs of around Rp330m ($20k).

The researchers argue that blended finance would be more sustainable than relying entirely on government grants. Grants could fund construction, while concessional loans support long-term operation and maintenance, giving local operators a more stable source of funding. 

Winarsa added that cooperatives should own the assets and households should pay for their electricity, but tariffs alone won’t cover replacing inverters and batteries every few years. “It has to have a mechanism where public money comes in,” she said.

With little official explanation outlining how the plants will be made sustainable, industry associations have proposed that cooperatives hire energy service companies or engineering firms to run the plants, subsidised by government, according to Winarsa.

Winarsa called the village element the most “fragile and unclear” part of the solar programme. Ideally, the cooperatives ministry would help create demand for power by identifying businesses that could become anchor customers, rather than leaving it to the energy ministry and PLN alone. “I don’t know whether they have been talking to one another,” she said of the energy and cooperatives ministries.

Neither the Ministry of Villages nor the Ministry of Cooperatives answered questions put to them by Green Central Banking.

Indonesia has demonstrated that it can install solar systems in remote communities. The harder test for its 100GW programme is whether it can create institutions and financing models capable of keeping those systems running long after the panels are first switched on.

“If Indonesia wants to achieve 100GW within three years, it cannot rely on business as usual,” said IESR’s Tumiwa. “It will require policy breakthroughs, regulatory reforms and more innovative ways of working.”

As Elbinsar Purba of the ISEAS – Yusof Ishak Institute warned: “If the new vision falls short, it will add to Indonesia’s litany of failures at meeting energy transition targets.”

 

Additional reporting by Soraya Kishtwari.

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