National installed power generation capacity reached 105 gigawatts (GW) as of May 2025. Of that total, coal-fired power plants still dominate with a capacity of 41.4 GW, or around 53% of total generation, based on data from Indonesia’s Ministry of Energy and Mineral Resources. This condition shows that Indonesia’s electricity system still relies heavily on fossil energy.
On the other hand, Indonesia has very large solar energy potential. Indonesia’s Ministry of Energy and Mineral Resources estimates the technical potential of solar power to reach 3,295 GW, far exceeding the current national power generation capacity needs. Even so, the utilization of solar power plants still faces various challenges, ranging from technical factors and investment to electricity supply reliability.
So, with such great potential, is solar power plant technology ready to replace the dominance of fossil-based power plants such as coal?
What Are the Advantages of Solar Power Plants for the Industrial Sector?
The use of solar power plants is increasingly being considered by the industrial sector because it offers various advantages, both from an operational and sustainability standpoint, including:
Renewable and Environmentally Friendly Energy Source
As a renewable energy source, solar power plants do not directly produce greenhouse gas emissions during the electricity generation process.
This characteristic makes it one of the solutions to support corporate decarbonization targets, especially for energy-intensive industries such as smelters and mining operations.
In addition, the use of solar power plants can help companies meet increasingly strict environmental standards in the global market, including demands from buyers in Europe and the United States who are increasingly concerned about the carbon footprint of products in the supply chain.
Relatively Easy and Flexible Installation
Compared to conventional power plants, solar power plant installation is relatively simpler and can be adapted to the characteristics of an industrial area.
Solar modules can be installed on the roof of production facilities through a roof mounting system, on empty land using ground mounting, or on pole structures (pole mounting). For mining areas that have waterlogged areas, solar power plants can also be developed in the form of floating photovoltaic (floating PV).
This configuration flexibility allows companies to make more optimal use of available space without having to change their operational layout.
Potential Long-Term Operational Cost Savings
Solar power plants have the potential to reduce operational electricity costs once the initial investment reaches its payback period.
This benefit is generally more noticeable at industrial facilities with high electricity consumption during the day, such as manufacturing plants and smelters, because solar energy can be utilized when electricity demand is at its peak.
The adoption of Rooftop solar power plants is also increasingly supported by Regulation of Indonesia’s Minister of Energy and Mineral Resources Number 2 of 2024, which provides regulatory certainty and ease of implementation, thereby opening up greater opportunities for industry players to optimize the use of solar energy as part of a long-term energy efficiency strategy.
Read More: 5 Unique Advantages of Solar Energy Over Fossil Fuels
What Are the Disadvantages of Solar Power Plants for the Industrial Sector?
Behind its various advantages, the implementation of solar power plant also has some limitations that need to be considered, especially for industries that require large amounts of energy supply and operate continuously, for example:
Intermittent Nature and Dependence on Weather
One of the main challenges of a solar power plant is its intermittent nature, meaning electricity production depends on the availability of sunlight.
The electricity output of solar power plant is affected by the day and night cycle, seasonal changes, and the level of cloud opacity, so it does not always produce a constant power output.
This condition poses a challenge for industries that require electricity supply 24 hours a day, such as smelters, metal smelting, and underground mining, because their production processes cannot stop when the sun sets.
Large Land Requirement
Industrial-scale solar power plants require a relatively large area to produce electricity with capacity comparable to conventional power plants.
This can be an obstacle for industrial zones, smelters, and mining areas that have limited operational land.
One alternative that is starting to be developed is floating photovoltaic (floating PV), which utilizes bodies of water such as flooded former mining pits. However, this solution also has limitations because it can only be applied to locations with suitable water body conditions.
Still High Energy Storage Costs
To improve the reliability of electricity supply from solar power plants, especially outside solar energy production hours, companies can integrate a battery-based energy storage system or Battery Energy Storage System (BESS).
However, adding BESS requires a much larger investment compared to a solar power plant system without batteries.
For the industrial sector, building a large-scale BESS to keep the electricity supply available 24 hours a day can become an additional capital expenditure (capex) that needs to be carefully calculated.
Dependence on Imported Components
Indonesia’s solar industry is currently still dominated by activities in the downstream sector, such as solar module assembly and system integration.
Meanwhile, solar cells, as the main and highest value component, are still largely fulfilled through imports.
This condition means that the development of solar power plants domestically is still influenced by the dynamics of the global supply chain, including fluctuations in component prices and supply availability from producing countries.
Read More: The Differences Between Petroleum and Gas
Can Solar Power Plants Replace Fossil Energy in the Industrial Sector Today?
A solar power plant is a realistic solution to reduce industrial dependence on fossil energy, but it cannot yet fully replace conventional energy sources in all types of operations.
Its use needs to be adjusted to the energy needs characteristics of each sector, especially in terms of electricity consumption patterns and the level of supply reliability required.
Sectors Suitable for Using Solar Power Plant
Solar power plants are most suitable for application in industrial facilities that have dominant electricity consumption during the day or that function as operational support facilities.
Examples include administrative offices in mining and smelter areas, employee dormitories, water treatment facilities, and cooling and ventilation systems that mostly operate during the day.
In addition, light manufacturing, logistics facilities, mining support utilities, and industrial commercial areas can also make use of solar power plants through self-consumption or peak shaving schemes to reduce electricity use from the grid or main power plant during peak loads.
In these conditions, a solar power plant acts as a complementary energy mix that improves energy efficiency, rather than as the sole source of electricity supply.
Sectors Not Yet Suitable for Solar Power Plant Alone
On the other hand, solar power plants cannot yet become the sole energy source for industries that operate continuously 24 hours a day, such as smelters, mineral processing facilities, mining operations without downtime, and energy-intensive industries such as metal, cement, and chemical production.
Production processes in these sectors require a stable and continuous electricity supply, so the intermittency of solar power plants has the potential to disrupt operations if not supported by an adequate backup system.
Electricity supply disruptions can cause production processes to stop, lower productivity, and even result in financial losses.
Therefore, in conditions like this, a more reliable supporting energy source is needed, one of which is Liquefied Natural Gas (LNG), to maintain supply stability while supporting the transition toward lower-emission energy.
Read More: The Upstream Oil and Gas Process Is More Than Just Exploration
What Are the Advantages of LNG as a Solution to the Shortcomings of Solar Power Plants?
One of the main advantages of LNG over solar power plants is that it is dispatchable, meaning it can generate energy as needed and be operated at any time without depending on weather conditions.
This characteristic allows LNG to provide a stable electricity supply to meet the baseload needs of industries that operate 24 hours a day.
On the other hand, solar power plants still play an important role as a renewable energy source, but their production is affected by the intensity of sunlight.
For this reason, LNG is often positioned as a bridge fuel or transition energy that complements the use of solar power plants by maintaining the continuity of electricity supply when solar energy production decreases, such as at night or during cloudy weather.
In addition to offering supply reliability, LNG also produces very low sulfur oxide (SOx) emissions, along with lower nitrogen oxide (NOx) and particulate emissions compared to coal, Heavy Fuel Oil (HFO), and diesel.
This makes LNG a choice for industries that want to reduce their carbon footprint without sacrificing operational reliability.
However, for LNG to play its role as a reliable bridge fuel, its availability needs to be supported by a well-maintained supply chain, from storage and distribution to regasification at power plant locations and production facilities.
The need for consistent energy supply chain management makes the role of an energy partner increasingly important, not just as a supplier, but as a party that understands the operational characteristics of each industry and is able to deliver solutions suited to its needs.
As an energy partner, PGN LNG Indonesia presents integrated LNG solutions to support reliable and efficient industrial operational continuity.
Find out how we deliver reliable energy solutions for your industry, read more here: LNG Provider for Your Industrial Energy.
References
- ESDM. Accessed 2026. Bukti Nyata Pengembangan Energi Terbarukan, PLTS Ground-Mounted Terbesar di Indonesia Resmi Beroperasi
- ESDM. Accessed 2026. Semester I Tahun 2025, Kapasitas Terpasang Pembangkit Meningkat 4,4 GW
- PMC. Accessed 2026. Solar power generation intermittency and aggregation
