Indonesia, Vietnam looking to lead the way in solar power for Southeast Asia

Indonesia and Vietnam have both set new targets for renewable energy generation in the hopes of joining Thailand in leading the way for solar power in Southeast Asia.

Countries all over the world are under pressure to eliminate carbon emissions from sectors such as coal-fired power stations as the historic Paris climate accord, a landmark global agreement to curb pollution, comes into effect after being signed last year.

According to government officials from both Vietnam and Indonesia, the two countries are aiming to each have an annual solar power capacity of 5 gigawatts (GW) from 2020, up from almost nothing now.

Hoang Quoc Vuong, Vietnam’s Vice Minister of Industry and Trade, said that construction only takes a short time so the changes will come very quickly.

The two countries will be offering opportunities for subsidies via so-called feed-in tariffs (FIT), which will allow producers to lock in sales of renewable energy at fixed prices for a few years. This is to counteract initial costs which are traditionally seen as a big deterrent to solar projects.

One Vietnam official said that a subsidy is needed if they are going to promote solar power.

“Feed-in tariffs have been issued so that the (5 GW) target can be achieved,” said Maritje Hutapea, director of various kinds of energy at the Renewable Energy Directorate General under Indonesia’s Energy Ministry.

France’s Engie is in talks with Indonesia’s government-owned power company PLN for two solar projects of 200 megawatts (MW).

In terms of developing solar power in Southeast Asia, Thailand is the current front runner. A government official said the country’s installed capacity reached about 2 GW in August, beating its 2016 target of 1.7 GW.

Meanwhile, Malaysia is planning to add 1 GW of solar power capacity by 2020, or 250 MW per year, up from its current capacity of 267 MW, said Energy, Green Technology and Water Minister Maximus Ongkili.

The Philippines has met a previous target of 500 MW for solar. But as the new government is still in the process of reviewing the country’s energy mix, no fresh targets have been set so far.

Some analysts are also cautious of Indonesia and Vietnam’s solar targets, saying that although it is a good move in the right direction, the targets may be too ambitious and difficult to achieve.

Coal is also still likely to remain a major source of energy in Southeast Asia, despite the growth of solar power in the region, as fast-growing demand means that the region needs to double its power generation capacity in the next decade, government and industry officials said.