Carbon Market Express JCM information report (No.1)
Recent trends of solar power project development and relevant policies and schemes in Indonesia
June 2, 2020

1. Potential of solar power generation
As Indonesia lies just below the equator line where the daylight is abundant, 【Updates of policies】
Latest updates of energy

there is huge potential for solar power generation. The latest Indonesia National policies

Energy Plan (RUEN [2017]) estimates solar power potential in the country as - RUEN (2017)
in 2017

207,898MW, which accounts for about half of the total renewable energy potential. - RUKN2019-2038
in Aug. 2019
- RUPTL2019-2028
in Feb. 2019
(Updated annually)

Solar power potential in Indonesia by region (Unit: MW)
Source: Made by Carbon Market Express based on RUEN [2017] data

In Indonesia, the National Energy Policy (KEN) [2014], which is a general policy 【Targets of RUPTL】
on energy and electricity, stipulates the renewable energy mix (incl. hydrogen and RUPTL2019-2028 plans
908MW of solar power

nuclear energy, etc.) target of 23% by 2025 and 31% by 2050. The latest National development by 2028.

Planned capacity changes

Energy Plan (RUEN [2017]) and General Plan for National Electricity 2019-2038 annually since it is based(RUKN 2019-2038) based on the KEN [2014] estimate the amount of solar power on latest economic

growth rate. Therefore,

generation needed to achieve the KEN’s target at 6,500MW by 2025 and latest target falls short of

the target of RUEN/RUKN.

45,000MW by 2050.

2. Status of solar power development
Indonesia’s State Electricity Company (PLN) has announced the total amountof installed solar power generation to be 152MW as of November 2019, consistingof Ground-mounted type: 137MW / Roof-top type: 16MW and On-grid: 90MW /Off-grid: 62MW. Currently, the largest solar power plant in Indonesia is a 15MW
ground-mounted solar power plant constructed in North Sulawesi Province in
September 2019. Furthermore, the construction of a 145MW floating solar power
plant is being considered in Cirata dam in West Java, the largest of its kind in1

South-East Asia. In order to activate the solar power development towards
achieving the targets set by national policies such as KEN and RUKN, theGovernment of Indonesia has been actively introducing incentive schemes topromote the introduction of solar power.

3. Existing JCM projects of solar power【JCM Info. in Indonesia】
In Indonesia, 37 JCM projects (incl. Model & Demonstration Projects) have been Information on the JCM
related activities in
implemented so far, including 4 solar power generation projects. All of 4 projects Indonesia is also offeredby JCM Secretariat ofmainly aims at captive consumption of generated electricity in their facilities and Indonesia website.

their power generation capacities are ranging from 0.5MW to 2MW.
2MW Solar PV Power Plant Project in Jakabaring Sport City
A solar power plant was installed at Jakabaring Sport City complex of South
Sumatra Province to supply electricity in the sport city and supply surplus
electricity to the grid. (Plant capacity was increased from 1.6MW as initiallyplanned.)
Introduction of 0.5MW Solar Power System to Aroma and Food Ingredients
Factory
A PV system was installed on the roof of Indesso Food Flavoring Factory locatedin Bogor, Indonesia and the generated electricity is consumed in the factory.
Installation of Solar Power System and Storage Battery to Commercial Facility
Solar power system (0.5MW) and storage batteries (100kW/111kWh) wereinstalled in a large commercial facility to supply electricity to lighting equipment,
while the surplus power during the day is charged to storage batteries for use
at night
Installation of Tribrid System to mobile communication’s Base Transceiver
Stations
TRIBRID systems were installed at mobile communication’s Base Transceiver
Stations to control three types of power used in base stations (grid power /diesel power, photovoltaic power and storage batteries) according to theelectricity load and the situations of electricity supply.
The share of solar power generation projects in Indonesia is thought to be small
due to difficulties dealing with the electricity procurement scheme and project
implementation requirements. The next chapter introduces related policies andrecent trends of solar power development in Indonesia.

24. Policies and trends of solar power development in Indonesia【Pricing rule of selling

price】
BPP<National average
PLN serving as the single off-taker of on-grid power in Indonesia has been power generation cost-> Negotiation with PLN
mandated by law to procure all the renewable energy from projects with a capacity BPP< National average
power generation costof 10MW or less since 2006. The Feed-in Tariff (FIT) scheme for solar power ->Max price=85% of BPP
generation was launched in 2016, however, procurement by PLN was inactive, and *BPP= Power generation
cost by PLN in the area

<Trend of renewable energy procurement scheme>

the bidding scheme replaced the FIT scheme in 2017. This tender system isadopting

Build-Own-Operate-Transfer(BOOT)

schemewhich

obligates

Independent Power Producers (IPPs) to transfer projects to PLN at the end of the20-year term of the Power Purchase Agreement (PPA). In addition, the upper limitof the procurement price is set low, which tends to prolong the payback period of
renewable energy projects and has been a factor in reducing the bankability of
most types of renewable energy projects in Indonesia.

【Amendments history】
MEMR Reg. No.50/2017
Since then, the procurement scheme has been frequently revised, and MEMR 1st amendment:Reg. No.53/2018
Regulation No.4/2020 announced in March 2020 abolished the conventional BOOT MEMR
2nd amendment:scheme by replacing it with Build-Own-Operate (BOO) scheme for renewable MEMR Reg. No.4/2020

energy projects with a capacity of 10MW or less, and the transfer of equipment toPLN after the PPA contract period is no longer required.
Furthermore, the regulation changed the selection process of IPPs for the solar
power sector from “Direct selection” to “Direct appointment”, allowing PLN toappoint a specific IPP without going through a bidding process, which is expected
to stimulate future project development.
<Promotion measures for Roof-top solar power generation>
In September 2017, the “One Million Rooftop Solar Initiative (GNSSA)” was 【Amendments history】
MEMR Reg. No.13 andlaunched by MEMR and other agencies to promote roof-top solar power projects No.16 were announced inin residential, commercial facilities, public facilities and industrial parks, with a 2019 to make more userfriendly scheme.

target of installing 1GW roof-top solar by 2020. Accordingly, MEMR Ordinance e.g. Scale of power plantneeds Operating License

No.49 of November 2018 stipulates the general procedures for PLN’s customers was raised (from <200kVAto <500 kVA, reduction of

to install roof-top solar power systems and introduces the requirements for capacity charge for power
application/approval to PLNs for the construction and installation of roof-top solar plant owner.
power plants, and also introduced the net-metering scheme that allows them tosell surplus power to PLN. However, progress on GNSSA and net-metering scheme
have been slow. Under the net-metering scheme, surplus power exported to PLN
is valued as low as 65% of imported power. This low pricing is causing longer
payback period of 7-8 years according to some studies, which is a barrier to entry
by operator to use the scheme.
3<Local Content Requirements (TKDN ) on solar power sector＞
Since 2010, Indonesia has introduced Local Content Requirements (TKDN) for 【Regulations on TKDN】- MOI Reg. No.54/2012
defines minimum
grids that require the use of local products and services. Also, Ordinance No.5 of thresholds of local
content requirement byMinistry of Industry stipulates that the minimum local content ratio for solar panels product types- MOI Reg. No.5/2017will be increased at 40% by 2017, followed by 50% in 2018 and 60% by 2019.
amended theHowever, currently, solar panels and other products manufactured in Indonesia requirements for solar
power project
are less competitive in terms of price and quality than products made by foreign - MOI Reg. No.4/2017
defines calculation
manufacturers, and installation cost using domestic products can be 20-40% method of local content

electricity infrastructure such as power plant, transmission grids and distribution

higher in some cases. Considering this situation, MEMR as supervising ministry has
kept the procurement ratio unchanged at 40% pending an increase based onrequests from stakeholders. Besides the regulation itself, TKDN may not be fully
applied to all projects in actual operation. Even so, the regulations may bestrengthened in the future, so it is necessary to carefully pay attention on futurechanges of regulation as well as operation. In addition, some relevant industry
groups such as Indonesia Solar Energy Association (AESI) and Indonesia Solar
System Producer Association (APAMSI) are actively involved in these issue.

5. JCM Financial Support Scheme
Recognizing the huge potential of solar power in Indonesia, the government
had set targets for the introduction of renewable energy, and has been
implementing series of incentive policies on solar power development. It isnoteworthy that in recent years, the system has been frequently modified toimprove the low bankability and usability issues caused by the relevant schemesof solar power sector. It is important for project developer to keep an eye on theongoing and possible changes in the future.
In addition, the JCM Financial Support Scheme can reduce part of theinvestment cost for introducing low/decarbonized carbon technologies andshorten the payback period of projects, so it can be a major incentive for
implementing solar power projects in Indonesia. The Financing Programme for
JCM Model Projects in FY2020, is currently open for proposals, and it can be anoption for entities who are considering solar power project development inIndonesia.
Written by Carbon Market Express / Overseas Environmental Cooperation Center, Japan (OECC)
Email：info@carbon-markets.go.jp

4Disclaimer: The Content in this report is based on information on April, 2020 and may change due toamendment of laws and changes in legal operations. Carbon Market Express / Overseas Environmental
Cooperation Center, Japan (OECC) bears absolutely no responsibility for any act taken by the user
involving the use of the Content. The user shall cite the source when using the Content as it is citedfrom Carbon Markets Express website.

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