Unlocking Solar Energy Investment Opportunities in Indonesia’s Batam

Batam is rapidly emerging as a strategic location for solar energy investment in Indonesia. Located just 20 kilometers south of Singapore, the island benefits from high solar irradiance, a stable climate, and integrated port and industrial infrastructure. Its designation as a Free Trade Zone (FTZ) and home to two Special Economic Zones (SEZs) enhances its competitiveness for energy developers and manufacturers.

As Indonesia pushes forward with its decarbonization agenda and cross-border energy trade gains momentum, Batam offers a compelling case for long-term solar infrastructure and clean energy production investments.

National energy targets drive local opportunity

Indonesia’s energy transition framework is anchored by the Just Energy Transition Partnership (JETP), a US$20 billion initiative signed in November 2022 with support from the United States, Japan, and other partner nations. Under this plan, Indonesia has committed to peaking its power sector emissions by 2030 and reaching net-zero in the sector by 2050, ten years ahead of the previous timeline. The country also aims to raise the share of renewable energy to 34 percent of its electricity mix by 2030, up from around 17 percent today.

To operationalize these goals, the government released the JETP Comprehensive Investment and Policy Plan (CIPP) in 2023, which estimates that Indonesia will require at least US$97.3 billion in investment between 2023 and 2030. The Ministry of Energy and Mineral Resources revised its Electricity Supply Business Plan (RUPTL) in early 2025 to align with these goals. The updated plan calls for 71 gigawatts of new power generation by 2030, 70 percent of which will come from renewable sources. Solar is expected to contribute 17 gigawatts of new capacity during this period.

These national goals are now driving sector-specific opportunities in places like Batam, where industrial demand, export potential, and SEZ-backed incentives create a unique business environment for solar developers and manufacturers.

Batam’s advantages in location, regulation, and demand

Batam’s equatorial position ensures consistent year-round solar irradiance. The island receives an average of 5.03 kilowatt-hours per day per kilowatt of installed capacity and experiences relatively stable weather patterns, making it suitable for both ground-mounted and floating photovoltaic (PV) systems. Batam’s role within Indonesia’s economic architecture also supports its attractiveness. It is designated as a Free Trade Zone and hosts two Special Economic Zones — Batam Centre and Nongsa — offering simplified licensing, reduced tax rates, and access to customs and logistics facilities.

The island’s proximity to Singapore and Malaysia creates advantages not only in terms of technology partnerships and skilled labor but also in regional energy trade. Singapore has committed to importing up to six gigawatts of low-carbon electricity by 2035, while Malaysia’s southern states are experiencing growing energy demand for industrial and logistics activity. Batam’s seaborne access, industrial zoning, and available land or reservoir space for solar projects make it one of the few locations in Indonesia that can directly serve these markets.

Investment opportunities in Batam’s solar energy sector

Significant solar investment opportunities in Batam span utility-scale power generation, floating solar installations, component manufacturing, and cross-border energy exports, each underpinned by policy support, strategic location advantages, and growing regional energy demand.

Utility-scale solar power projects

Batam has seen growing interest in utility-scale developments, driven by both domestic demand and export ambitions. According to PLN’s revised 2025 RUPTL, Indonesia targets 17 GW of additional solar power capacity by 2030, with Batam designated as one of the regional nodes for solar expansion due to its SEZ-backed infrastructure and grid readiness.

The Aslan Energy Capital project, announced in May 2025, is expected to deliver 1,200 MWp of capacity over multiple phases. The project is tied to green hydrogen production aimed at export markets, indicating commercial viability beyond PLN’s traditional offtake model. In May 2025, the government hosted a tender clarification workshop for the project, attracting developers from Singapore, South Korea, Japan, and the UAE, reflecting international appetite for Batam-based solar infrastructure.

Solar generation costs in Indonesia now range between US$0.041 and US$0.068 per kilowatt-hour, depending on region and system size. Batam’s FiT rate for large-scale projects, adjusted at 1.2×, falls near the higher end of that range, favoring investor returns in the earlier years of a 30-year PPA.

Floating solar developments

The Duriangkang Floating Solar Plant, expected to span 1,600 hectares, will have a nameplate capacity of 2.2 GWp, making it the world’s largest floating solar project by surface area. Developed by Sunseap (now part of EDP Renewables), the project is expected to supply both local energy needs and potential export flows to Singapore through subsea cables.

Floating solar technology is gaining traction in Indonesia, especially where land constraints coincide with industrial growth. Batam has over 20 mapped reservoir and retention pond sites that could support medium- to large-scale floating PV installations. Floating systems also reduce evaporation from reservoirs, a benefit in drought-sensitive provinces, and align well with ESG-focused investment mandates that emphasize land use efficiency and water conservation.

PLN and PT TBS Energi Utama are developing the 35 MWac Tembesi floating solar project, which is expected to be operational by late 2025. The project serves as a template for smaller-scale, modular deployments on utility-managed reservoirs.

Solar manufacturing and component assembly

Indonesia has committed to increasing the Domestic Component Level (TKDN) for solar modules to 60 percent by 2026. Batam, with its industrial estates and port infrastructure, is one of the few locations that could meet this goal at scale. The island is already home to manufacturing facilities for electronics and shipbuilding, providing a skilled labor pool and component sourcing ecosystem.

The Indonesian Ministry of Industry has earmarked Batam for pilot-scale solar manufacturing partnerships, particularly for cell and module assembly. Local wages average around US$250 per month, while industrial land in Batam SEZs ranges from US$35 to US$70 per square meter per year, far lower than Singapore or Johor. Compared to other locations such as Bintan or Java, Batam offers greater connectivity, deeper supply chain integration, and immediate FTZ benefits that reduce import/export bottlenecks.

Component exports to Singapore, Malaysia, and the Philippines are feasible through Batam’s FTZ and international seaports. Integration with Singapore’s R&D ecosystem via Nongsa SEZ also offers opportunities for advanced cell design and lab-scale module testing.

Cross-border energy export projects

Batam has emerged as a critical node in Indonesia’s growing role as a renewable energy exporter. The Indonesia–Singapore Green Electricity Export Partnership, signed in September 2024, aims to develop up to 20 GWp of installed solar capacity across Indonesia, primarily for transmission to Singapore via high-voltage subsea cables. Batam’s geographical proximity, marine infrastructure, and SEZ support make it a preferred staging ground for these projects.

One of the flagship initiatives is Marubeni’s Galang Island solar project, developed in partnership with Tuas Power. The project is designed to generate 2.55 GWp of solar energy and store excess power in a 7 GWp battery system, enabling a consistent supply across variable conditions.

Construction commenced in early 2024, with the first 600 MW of power exports to Singapore scheduled for 2027. The total investment is estimated at US$9 billion, and the project is expected to generate 15,000 jobs and significantly boost domestic supply chains by sourcing key components locally.

The Energy Market Authority (EMA) of Singapore has committed to importing 6 GW of low-carbon electricity by 2035, with up to 4 GW allocated specifically to Indonesia-linked solar projects. Batam has been designated as a key receiving and transit hub in this strategy, given its short maritime distance, substantial infrastructure potential, and ability to support long-term PPA contracts denominated in Singapore dollars.

To facilitate this trade, submarine cable projects such as the GELT (Green Electricity Link to Tuas) are under development, with feasibility studies and environmental assessments already underway. These links are designed to support multi-gigawatt capacity and integrate seamlessly into Singapore’s national grid, which is being adapted for variable renewable inputs.

Beyond Singapore, there is growing discussion around regional power pooling via the ASEAN Power Grid, where Batam-based exports could eventually flow to Peninsular Malaysia and other Southeast Asian markets. This opens up a wider platform for developers to participate in bilateral deals and multilateral clean energy trade frameworks.

Feed-in tariffs support project bankability

Batam offers one of Indonesia's most attractive tariff environments for utility-scale solar projects due to its favorable location multiplier under Presidential Regulation No. 112/2022. Feed-in tariffs (FiT) in Batam are calculated with a multiplier of 1.2×, boosting project returns, especially during the first 10 years of operation under a 30-year PPA model. This enhances bankability and reduces the payback period, making Batam an appealing destination for solar developers evaluating long-term yields.

The following benchmark prices apply nationally and are adjusted using the regional multiplier:

Capacity Range	Benchmark Price (US¢/kWh)	1st to 10th Year	11th to 30th Year
Up to 1 MW	11.47 × F	11.47 × F	6.88
> 1 MW up to 3 MW	9.94 × F	9.94 × F	5.97
> 3 MW up to 5 MW	8.77 × F	8.77 × F	5.26
> 5 MW up to 10 MW	8.26 × F	8.26 × F	4.96
> 10 MW up to 20 MW	7.94 × F	7.94 × F	4.76
> 20 MW	6.95 × F	6.95 × F	4.17

Note: F is the location-based multiplier. For Batam (Riau Islands), F = 1.2.
Source: Presidential Regulation No. 112/2022

SEZ incentives and regulatory clarity

Batam’s special economic zones offer a range of tax and procedural incentives to support solar investments. These include investment allowances, faster depreciation of capital assets, lower taxes on dividends paid to foreign shareholders, and exemptions on import duties for renewable energy equipment. Developers establishing operations in designated zones may also qualify for corporate tax holidays of up to 20 years, depending on the size and nature of the investment.

The Nongsa SEZ further offers value-added tax exemptions on transactions within and between SEZ areas. Business licensing and approvals are streamlined through Indonesia’s centralized investment platform, making it easier for solar developers to set up and operate.

Investment models and entry routes

Foreign investors can enter Batam’s solar sector through various structures, including wholly owned PT PMAs, joint ventures with Indonesian firms, or public-private partnerships. Participation in cross-border projects often involves collaboration with local or regional utilities. Investors may also engage in hybrid projects that combine solar power generation with energy storage or green hydrogen development.

Access to SEZ benefits is contingent on meeting investment and operational requirements, but regulatory frameworks are clear and well-established for foreign ownership in the energy sector.

Conclusion

Batam offers a commercially viable and policy-aligned location for solar energy investment in Indonesia. As Indonesia intensifies its decarbonization efforts and regional demand for renewable energy grows, Batam can become a key enabler of utility-scale solar development, advanced manufacturing, and clean energy trade within ASEAN.

This article first appeared on ASEAN Briefing, our sister platform.