Ambitious Renewable Energy Push; Indonesia Eager to Encourage the Development of Solar Energy
The Energy and Mineral Resources Ministry of Indonesia has recently been making efforts to encourage the development of solar energy around this vast Archipelago. On 20 August 2021 it issued Energy and Mineral Resources Ministry Regulation No. 26 of 2021 on Solar Rooftop Connected to the Grid of Power Supply Business License for Public Interest Holders (henceforth: Regulation 26/2021).
This regulation is part of government efforts to tap the country’s massive renewable energy potential (thereby cutting its traditional dependence on crude oil, coal and natural gas, while at the same time treating planet Earth with some more respect, reflected in the country’s ambition to become carbon neutral by 2060).
The Energy and Mineral Resources Ministry stated that it targets solar energy to reach a capacity of 3.6 gigawatt (GW) by 2025, something that requires investments worth at least IDR 45 trillion (approx. USD $3.1 billion). If achieved, this should cut domestic coal consumption by around 2.9 million metric tons per year.
Moreover, once the solar energy market becomes bigger in Indonesia, it should also encourage the development of a domestic solar panel manufacturing industry (these solar panels, which are known as rooftop photovoltaic power stations or rooftop PV systems, currently primarily originate from manufacturers in China).
Unfortunately, there’s a problem. Even though Regulation 26/2021 became effective on 20 August 2021, it cannot yet be implemented. Dadan Kusdiana, Director General of Renewable Energy and Energy Conservation at the Energy and Mineral Resources Ministry explained (on Monday 20 September 2021) that actual implementation of Regulation 26/2021 requires the issuance of a presidential regulation that regulates electricity purchase tariffs sourced from renewable energy (including solar energy).
The reason why Indonesia needs new regulations related to solar energy is because previous regulations turned out to be unattractive (and out-of-date). Regulation 26/ 2021 therefore amends Energy and Mineral Resources Regulation No. 49 of 2018 on the Utilization of Rooftop Solar Power Systems by Customers of Perusahaan Listrik Negara (Regulation 49/2018) that imposed general procedures and requirements for the installation of rooftop PV systems by customers of Perusahaan Listrik Negara (abbreviated as PLN).
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The full article is available in our September 2021 report. This report can be ordered by sending an email to info@indonesia-investments.com or a message to +62.882.9875.1125 (including WhatsApp).
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