In July 2016, Ministry of Energy and Mineral Resources (MEMR) Indonesia announced the new regulation No. 19/2016 on power purchase from solar photovoltaic (PV) power generator by State Electricity Company (PT. PLN) . This regulation replaces the MEMR Regulation No.17/2013 which was revoked by the Supreme Court in 2014 due to local content requirement issues.
The new FiT is ranging from 14.5 – 25.0 US cent/kWh depending on the region. The total quota of solar energy project under this regulation is 250 MWp. The biggest quota is 150 MWp for the Island of Java, with the lowest tariff (14.5 US cents/kWh). Papua and West Papua have the smallest quota at 2.5 MWp with the highest tariff (25.0 US cents/kWh). The details of the FiT could be found in ASEAN Centre for Energy’s (ACE) newest publication, ASEAN Renewable Energy Policies .
The FiT includes the connection costs, and the price will be guaranteed for at least 20 (twenty) years. This means that project developers and investors could have a guarantee for their businesses.
The issues of local content are now regulated through the minimum standard set by the Ministry of Industry. The verification of local content will be conducted by auditors from the Ministry of Industry. The component and construction in the project should comply with the international or national standards. Project developers should complete the following requirements to apply for the project quota: (i) local content calculation for the whole system; (ii) certification of solar PV module and inverter; (iii) feasibility study and (iv) interconnection study. The details for feasibility and interconnection studies are explained in the regulation.
For projects with quota above 100 MWp in one area/region, each project developer could only apply for 20 MWp maximum. For projects between 10 – 100 MWp, each project developer could only apply for 20% of the quota maximum; while there is no limitation for projects below 10 MWp.
According to ACE’s publication on ASEAN Renewable Energy Policies, solar power has the biggest potential estimated at 560 GW, considering that Indonesia is located in the equator. However, the share of solar, especially in power sector is still very low. In 2014, total installed power capacity of solar is only 9.02 MWp. Some of the increase in the capacity can be attributed to non-policy drivers such as declining investment costs, generally high solar radiation in Indonesia and the on-going rural electrification projects. This new promising FiT rates may benefit solar power development in the upcoming years. Presently, there are around 305 MWp projects in the pipeline within the next 2-3 years.