Singapore's Sunseap Group says it plans to spend $2 billion to build the world's largest floating solar farm and energy storage system in neighbouring Indonesian city Batam, which will double its renewable power generation capacity.

The floating photovoltaic system is expected to have a capacity of 2.2 gigawatt-peak (GWp), and will be located on the Duriangkang Reservoir in Batam Island spanning around 1,600 hectares, Sunseap said in a statement.

The company and Batam Indonesia free zone authority, Badan Pengusahaan Batam (BP Batam), said they signed a memorandum of understanding on Monday for the project.

"This single project will double our entire portfolio, more importantly build our capability towards hyperscale solar and energy storage projects," Frank Phuan, co-founder and chief executive of Sunseap told Reuters.

"Floating solar systems will go a long way to address the land constraints that urbanised parts of Southeast Asia face in tapping renewable energy," said Phuan.

Sunseap Group is a solar energy system developer, owner and operator in Singapore, with over 2000 MegaWatt-peak (MWp) of solar energy projects contracted across Asia.

In March, it completed a 5 MWp floating photovoltaic system offshore Singapore along the Straits of Johor.

Construction of the project, which will be financed through bank debt and Sunseap capital, is due to begin in 2022 and is planned for completion in 2024, the company said.

According to Sunseap, the energy generated and stored will supply non-intermittent solar energy around the clock.

A portion of the green energy will be consumed within Batam, while the balance could potentially be exported to Singapore approximately 50 kilometres away via a subsea cable. Batam currently has a total power generation capacity of 540MW from gas, steam and diesel plants, according to BP Batam's website.

"This investment by Sunseap will be a timely boost for Batam's industries as they seek to reduce the carbon footprint of their operations," Muhammad Rudi, chairman of BP Batam said in the statement.

Sunseap is in the process of weighing an initial public offering in the city-state.