Indonesia Unveils New Renewable Energy Regulation

Apr 2020

The Indonesian government has introduced new regulations to reinforce its commitment to have renewables to contribute 23% of power production by 2025. The regulations are expected to kick-start renewable Energy projects currently stalled and lower the gap between actual and targeted funding for renewable projects.

The Ministry of Energy and Mineral Resources has decided to eliminate the Build, Own, Operate, Transfer (BOOT) scheme that is said to reduce projects’ bankability. PLN, Indonesia’s state-owned electricity company, will also be allowed to sign power purchase agreements without undergoing bidding, under certain conditions. In addition, PLN will be ordered to buy electricity from hydropower plants attached to government-built reservoirs, from state-funded waste-to-Energy power plants, and from state-funded renewable Energy power plants. The new regulation also provides more guarantees for government-backed renewable plans.

In order to meet its goal, the Indonesian government also has started a study to replace aging fossil fuel-fired plants with renewable Energy plants. The country has 2,246 diesel-fired power plants (PLTD) which are over 15 years old, along with 23 coal-fired power plants (PLTU) and 46 combined-cycle power plants (PLGU) that are over 20 years old. Currently, PLN is gathering data and plans to conduct study at the power plants.

Indonesia derived 12% of its Energy requirements from renewable sources as of 2019. Renewable Energy development in the country has been hindered by the lack of consistent and market-relevant enabling policies.

(Source: Jakarta Post)

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