New regulations approved by the Ministry of Energy and Mineral Resources (MEMR) on July 12 make it easier for local developers to invest in solar power farms in Indonesia.
The new government decree on purchasing electricity from solar PV power plants in Indonesia now gives developers and investment companies greater security as the energy generated will be paid by the utility company, PLN.
The aim is to provide better support mechanisms to create more utility-scale solar PV power plants across the country.
MEMR Regulation No 19 replaces the existing policy which dates back to 2013. Perusahaan Listrik Negara (PLN) is the designated utility company.
There will be a quota capacity on the installed capacity of amount of energy generated by solar PV power plants in each region. Tariffs will also vary depending on each location.
Quota capacities and purchase tariffs
The purchasing tariffs vary from 14.5 cents to 25 cents per kWh depending on the project location. The total quota of solar energy to be generated is 250MWp. Java has the largest quota capacity at 150MWp with the lowest tariff at 14.5 cents. The smallest quota is for Papua and Papua Barat which is 2.5MWp at the tariff of 25 cents.
For projects above the 100MWp quota, there is a size limit of 20MWp per developer. For projects between 10MWp and 100MWp there is a 20% limit and for anything under 10MWp there is no limit.
More importantly, the contract between the private company and PLN lasts for 20 years, meaning developers and investors can build their power plant knowing they will see a greater return on their investment.
As stipulated by the Ministry of Trade and Industry, local partners are still required to be part of the process. This is also great news for solar engineering, procurement and construction companies (EPCs) in Indonesia looking to make an impact.
It will be crucial for developers and investors to have an experienced local partner who can immediately assess project locations and aid the bidding process so the project meets the allotted quota for that region.
With over 10 years experience managing and implementing more than 100 different solar projects across Indonesia, Contained Energy is primed to take the lead in this role.
We will manage the project development and execution of the PV power plant and will oversee all maintenance of the site.