1. Overview 

The Indonesian Government recently responded to concerns about the country’s stalled solar sector by passing a Regulation entitled ‘Purchase of Power by Perusahaan Listrik Negara from Solar Photovaltaic Panel Plants’ (Regulation 19). Regulation 19 was passed on 12 July 2016 and replaces Regulation No. 17 of 2013, entitled ‘Purchase of Power by Perusahaan Listrik Negara from Solar Photovaltaic Panel Plants’ (Regulation 17). 

Regulation 19 includes a mechanism for capacity allocation, with capacity quotas to be allocated by the Government on a first-come, first-served basis. The Government intends to offer at least 5000 MW of solar PV capacity by 2018. 

Projects which have already been awarded under Regulation 17 will now be required to sign a PPA by 12 October 2016, so as to ensure their project is not revoked by the Government. 

2. Pre-qualification 

Any interested developers will need to pre-qualify with the Directorate General of New and Renewable Energy and Energy Conservation (EBTKE). Pre-qualification documents required by EBTKE include, for example, corporate documents, proof of financial capability and Indonesian taxation documents. 

3. Allocation and Quotas 

The previous tendering process for solar PV projects, has been removed in favour of a first-come, first-served allocation mechanism. 

EBTKE will publish quota allocations online, and those allocations will remain in place for two months. Only pre-qualified developers (refer to previous section) may apply for quota from EBTKE. 

Developers may make their submissions online. Developers are required to submit documents relating to the amount of capacity applied for, as well as feasibility and interconnection studies, certification of their solar module and inverter, and a self-assessment of the local content requirements. The capacity that a developer can propose is limited as follows:   

Available capacity

Per developer cap

Greater than 100 MW

20MW

Between 10 – 100MW

20% of offered capacity

Less than 10MW

No limit

In addition, the number of proposals that can be approved per round per region is limited to three for each developer. However, following the lapse of one month following EBTKE’s quota allocation, a developer who has already been allocated capacity for three projects may apply for further capacity within the same region. 

4. Feed in Tariffs 

The rate of the Feed in Tariff (FiT) for any solar PV project will depend on the project’s location. The rates vary between: 0.145 USD/kWh (for Java) and 0.25 USD/kWh (for Papua). A list of FiT rates for each region for round one is included at the end of this e-bulletin. 

Unlike Regulation 17, Regulation 19 requires all developers of solar plants to fully comply with the local content requirements, as detailed in the Ministry of Industry’s Regulation No. 54/M-IND/PER/3/2012 of 2012 on ‘Guidelines to Utilize Domestic Products in Erecting Electricity Infrastructures’. 

Developers will be required to certify that they are meeting the local content levels, by appointing an approved official verifier. The results of those verifications must be submitted to the EBKTE within the 30 day period immediately prior to the commercial operation date. A copy of those results must also be supplied to PLN. Developers which fail to comply with local content requirements will be given a 60 day grace period in which to comply. If developers continue to fail to comply, then their tariff will be reduced on a basis which is proportionate to the amount of local content actually utilised. 

5. Power Purchase Agreements 

Under Regulation 19, PLN is to provide a “model PPA” to the Ministry of Energy and Mineral Resources by the end of August 2016. The model PPA will include a 20 year term from commercial operation. 

6. Timetable 

Regulation 19 sets out a project timetable to incentivise developers to proceed promptly to commercial operation. That timetable is:  

  1. PPA with PLN must be signed within 1 month  
  2. Financial close must be achieved within 6 months of signing the PPA  
  3. An electricity generation license (IUPTL) must be obtained following financial close. A copy of the IUPTL must be submitted to EBTKE and PLN within three working days of receipt.  
  4. Commercial operation must be achieved within 12 months of obtaining an IUPTL for project capacities up to 10 MW or 24 months for those over 10 MW. 

Tariffs will be reduced if commercial operation is not achieved within the timescales outlined above. Reductions of 3%, 5% and 8% will apply for delays of up to three, six and 12 months respectively. Other delays and sanctions, such as termination for further delays are expected to be dealt with under the model PPA. 

7. Round one quotas and FiTs 

Round one will consist of an offering of 250 MW (in aggregate) across 22 regions within Indonesia. The table below sets out the regional quotas and their respective FiT rates.   

Region

Capacity Quota (MWp)

FiT

(USD/kWh)

DKI Jakarta

150.0

14.5

Jawa Barat

Banten

Jawa Tengah and DIY

Jawa Timur

Bali

5.0

16.0

Lampung

5.0

15.0

Sumatera Selatan, Jambi, and Bengkulu

10.0

15.0

Aceh

5.0

17.0

Sumatera Utara

25.0

16.0

Sumatera Barat

5.0

15.5

Riau and Kep. Riau

4.0

17.0

Bangka-Belitung

5.0

17.0

Kalimantan Barat

5.0

17.0

Kalimantan Selatan and Kalimantan Tengah

4.0

16.0

Kalimantan Timur and Kalimantan Utara

3.0

16.5

Sulawesi Utara, Sulawesi Tengah, and Gorontalo

5.0

17.0

Sulawesi Selatan, Sulawesi Tenggara, and Sulawesi Barat

5.0

16.0

NTB

5.0

18.0

NTT

3.5

23.0

Maluku and Maluku Utara

3.0

23.0

Papua and Papua Barat

2.5

25.0

Source: Regulation 19

Round two quotas cannot be offered until the two month period for which the round one offering remains online has lapsed or 80% of the round one quota has been utilised.