Solar companies are struggling to make sense of Indonesian government’s renewable energy policy

Published onAugust 15, 2019

Solar power companies in Indonesia are struggling to maintain their margins. The Indonesian authorities have announced a renewable energy mix target of 23% by 2025. To push installations of renewable energy, the government has introduced various regulations through different ministries. But, companies are protesting against some of the regulations as they feel these are not conducive for national solar power development. The Energy and Mineral Resources Ministry has introduced regulations on licensing of rooftop solar PV systems and feed-in-fees for exporting excess power into the grid of the state utility company PT Perusahaan Listrik Negara (PLN). This regulation presented a challenge to solar PV investors since their offer price to PT PLN was no longer tied directly to their respective production costs but rather to the cost of producing energy generally, from whatever source, in a given region. Also, the annual calibration of BPP gave rise to fluctuations in the price at which the companies sold power to PT PLN.