Indonesia’s Ministry of Energy and Mineral Resources (“MEMR”) has set a solar energy target of 6,500 MW by 2025 and 45,000 MW by 2050. It is estimated at 207,900 MW. In 2023, the total installed solar power capacity was recorded at 573.8 MW (Rooftop and Non-Rooftop), most of which will come from the 145 MW (ac) or 192 MW (p) Cirata Floating Solar Project and Rooftop Solar (RTS) “) with a capacity of 141.14 MW.
In February 2024, the MEMR published MEMR Regulation No. 2 of 2024 on Rooftop Solar Power Stations Connected to the Electricity Grids of Business License Holders for the Provision of Electricity in the Public Interest (“Reg 2/2024”). This new regulation replaces MEMR Regulation No. 26 of 2021 (Reg 26/2021) on Rooftop Solar Power Stations Connected to the Electricity Grids of Business License Holders for Public Interest Electricity Supply. RTS enthusiasts have been waiting for this new regulation for a long time, as the introduction of Reg 26/2021 was delayed by more than a year. Reg 2/2024 is expected to revitalize the solar energy sector and encourage the installation of RTS systems, aiming to reach 3,600 MW by 2025.
One of the key changes in the new regulation is that RTS users will no longer be able to benefit from the export of solar power (Net Metering) from PT Perusahaan Listrik Negara (“PLN”), the state-owned electricity provider. This change has sparked debate as it could negatively impact residential and small business users. These users are subject to the previous rules that oblige PLN to buy exported energy from RTS to the PLN network at the level of 65% of exported energy (as stipulated in Regulation 49/2018) and 100% of exported energy (as stipulated in Article 49/2018). may find the new arrangement less beneficial in comparison. Reg 26/2021). However, MEMR justifies this change by highlighting PLN’s oversupply problem, especially on the island of Java.
Reg 2/2024 will impose a quota-based limit on RTS installations. PLN will determine the annual quotas, which can be segmented by a clustering system, which means that PLN takes into account the capacity based on the electricity system in PLN customer service units. In addition, this rule will also control when applications for installation of RTS to PLN are submitted once a year in January or July. This provision will create a new licensing framework that operates on a first-come, first-served basis, and the commercial and industrial sectors are likely to dominate these quotas. This regulation also specifies that in the absence of detailed regulations regarding the environmental attributes of RTS use, these attributes will belong to the government. Although there is no specific definition of which government agency will claim these benefits, PLN is likely to benefit from them. In addition, this regulation introduces provisions on fines that were not previously regulated. If an RTS customer operates RTS before receiving approval from PLN, PLN will impose a penalty calculated based on the total inverter capacity multiplied by 240 hours multiplied by the electricity tariff.
On the positive side, the new regulation will eliminate the 5-hour capacity charge guarantee for PLN’s industrial customer as one of the government’s incentives to support RTS. The new regulation will adopt a kind of positive fictitious decision that can be found in Indonesia’s public administration law. This method is expected to speed up the PLN approval process, which affects the application being considered approved if the PLN does not issue a letter of approval or rejection to the applicant within a certain period of time. This regulation will not directly affect the existing RTS consumer as they will still follow the existing rules regarding Net Metering benefits and will be renewed after 10 years of RTS operation.
However, Reg 2/2024 is expected to be a new hope for RTS energy in Indonesia and stimulate the industry, although RTS players and users have conflicting opinions. With government commitment and healthy competition among RTS players, the government is still optimistic to achieve a New Renewable Energy mix by 2025.
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