MINISTRY OF ENERGY AND MINERAL RESOURCES

DIRECTORATE GENERAL OF NEW, RENEWABLE ENERGY AND ENERGY CONSERVATION KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

INDONESIAN RENEWABLE ENERGY POLICY AND

INVESTMENT OPPORTUNITIES
Indonesia’s New Regulation and Its Impact of Renewable Development

Ezrom M. D. Tapparan
Section Head, Program Planning, Directorate of Various New and Renewable Energy
Asia Clean Energy Forum 2017, The Transformative Role of Renewables in Southeast Asia,
International Renewable Energy Agency and ASEAN Centre for Energy
Manila, 6th June 2017
2 AGENDA KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

NATIONAL NRE TARGET

ENERGY POLICY BY 2025

MARKET
INCENTIVES AND
OPPORTUNITIES
FACILITIES
AND TARIFFS
 NATIONAL ENERGY POLICY
3 (GOVERNMENT REGULATION NO 79/2014) KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

2025 1.
2.
Geothermal, 7,2 GW
Hydro, 17,9 GW
National Power Plant Capacity 135 GW NRE Electricity 3.
4.
Microhydro, 3 GW
Bioenergy, 5,5 GW
45 GW 5. Solar, 6,5 GW
NRE Power Plant Capacity 45 GW 6.
7.
Wind, 1,8 GW
Other NRE, 3 GW

69,2
Gas MTOE
NRE Gas 22% 23%
Coal NRE 92,2
MTOE
23,0
MTOE

Coal 30% 25%

13,69*)
Biofuel Million kilo liter
8,4
Oil Biomass
2015 Oil Million ton

2025 Biogas 489,8

Million m3
46,0
CBM mmscfd

*) exclude biofuel for power plant:: 0,7 million

kL at 2025
4
NRE TARGET BY 2025
KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

45,04
2025
Geothermal 7.2 GW
41,01
Hydro 21 GW
35,74 Bioenergy 5.5 GW

29,28
Solar 6.4 GW
Wind 1.8 GW
24,66 Other NRE 3.1 GW
18,48
15,81 Totall 45 GW
12,94
11,73
10,80
8,66

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
PLTP PLT Bioenergi PLTA Mini Hidro PLTS PLT Bayu PLT Laut Total

2015 2025

Total Installed Capacity 55 GW 135 GW

NRE Power Plant Capacity

8.7 GW 45 GW
(15.7%) (33%)
 NATIONAL ELECTRIFICATION RATIO
ELECTRIFICATION RATIO IN ASEAN COUNTRIES
• National electrification ratio was 91.16% in 2016. KEMENTERIAN ENERGI

• There are 2 provinces (NTT and Papua) having & SUMBER DAYA MINERAL

electrification ratio lower than 70%.

• Indonesia’s electrification ratio is still low (91.16%)

Persen (%)
compared to other ASEAN countries.
• Target of electrification ratio: 97.35% by 2019 (RPJM)
and 100% by 2024 (RUKN)
NATIONAL ELECTRIFICATION RATIO IN 2016 (%)
THE MINISTER OF ENERGY AND MINERAL RESOURCES’S REGULATION
NUMBER
6 12 YEAR 2017
“UTILIZATION OF RENEWABLE ENERGY SOURCE FOR ELECTRICITY SUPPLY” KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

RENEWABLES POWER GENERATION:

• Solar PV;
• Wind
• Hydro;
• Biomass;
• Biogass;
• Municipal Waste; and
• Geothermal.

 PT PLN (Persero) is obligated to purchase

 MARKET OPPORTUNITIES ON RENEWABLE ENERGY
7
IN INDONESIA BASED ON NEW REGULATION KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

Minister of EMR Regulation No. 12 Year 2017 concerning the

Utilization of Renewable Energy for Electricity Provisioning.
1) Renewable-based electricity price is set;
2) Especially to meet the needs of electricity in certain areas (the
eastern part of Indonesia, rural and outter islands);
3) Incentives to boost the economy of renewable-based power
generation development;
4) To ensure renewable-based power generations (with capacity
up to 10 MW) must run - not to apply least cost policy;
5) Open the opportunity for B2B co-operation;
6) Simplified process;
7) Market size for renewable investment is considered big.
8 RENEWABLE ENERGY TARIFFS
KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

Renewable Tariff
No. Energy Method of Appointment Regional Grid BPP > National Regional Grid BPP ≤ National
Sources BPP BPP
Maximum 85% x Regional
1. Solar PV Auction in capacity quota with minimum 15 MW 100% x Regional Grid BPP
Grid BPP
Maximum 85% x Regional
2. Wind Auction in capacity quota with minimum 15 MW 100% x Regional Grid BPP
Grid BPP
Maximum 85% x Regional
Reference Price 100% x Regional Grid BPP
Grid BPP

3. Hydro Direct Selection Price determined by direct selection process

a. Capacity ≤ 10 MW: Capacity Factor minimum 65%

b. Capacity > 10 MW: Capacity Factor depends on Regional Grid system requirements
Maximum 85% x Regional
Reference Price (for 10 MW or less) 100% x Regional Grid BPP
4. Biomass Grid BPP
Direct Selection (for more than 10 MW) Price determined by direct selection process
Maximum 85% x Regional
Reference Price (for 10 MW or less) 100% x Regional Grid BPP
Grid BPP
5. Biogass
Direct Selection (for more than 10 MW) Price determined by direct selection process

Municipal Maximum 100% of Local Mutual agreement between

6. Reference Price
Waste Generation BPP PLN and IPP
Maximum 100% x Regional Mutual agreement between
7. Geothermal Reference Price
Grid BPP PLN and IPP
BPP = Production Cost of Electricity
Regional Grid BPP and National BPP will be determined by the Minister based on the proposal of PT PLN (Persero)
9 OTHER FEATURES
KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

(1) Hydro (for capacity more than 10 MW), Biomass, and Geothermal projects to be awarded on a Build, Own,
Operate, and Transfer/BOOT basis.
(2) Construction of the transmission interconnection between the IPP and the PLN grid may be done through
business-to-business basis.
(3) PLN will conduct the Due Diligence on technical and financial aspects of the IPP.
(4) PLN may appoint a procurement agent to conduct the Due Diligence.
(5) The IPP’s proposal should be attached with Interconnection Study Document.
(6) The IPP must meet local content requirements (Minister of Industry Regulation No. 5/2017).
(7) The local content must meet national standards, international standards, or other standards as long as not on the
contrary with the ISO or IEC.
(8) The construction must meet national standards, international standards, or standard applicable in PLN as long as
not on the contrary with the ISO or IEC.
(9) PLN is obligated to:
a. publish the conditions of regional grid systems which are ready to be integrated with renewable power
b. publish the regional grid system’s production cost to the IPPs who are interested in developing renewables
(10) PLN is obligated to set and publish:
a. Standard Bidding Document; and
b. Standard of Power Purchase Agreement/PPA (refer to MEMR No. 10/2017).
(11) a. In case of delayed construction, the IPP will get sanctions and/or penalties.
b. Rewards, if the construction is finished earlier than the schedule or on PLN request.
c. The sanctions and/or penalties and rewards will be stated in PPA.
REGIONAL PLN GRID SYSTEM’S PRODUCTION COST
2016
10
KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

According to Ministerial Decree Number 1404 K/20/MEM/2017

17.32 17.52

13.54 13,66 13.68

12.75
12.17 12.43
¢USD/kWh
10.14 10.20 10.39
National
9.04 9.28
BPP
7.77 7.86 8.07 8.10 ¢ USD
7,39/kWh
6.51 6.51 6.51 6.52 6.54 6.62

* Exchange rate assumption = IDR 13,307/USD

 ACCELERATION PROGRAM TO ELECTRIFY RURAL, BORDERLINES
11 AND SMALL ISLANDS BASED ON MEMR REGULATION NO. 38/2016 KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

To provide electricity in
certain area upto 50 MW;
 Undeveloped rural areas
 Remote areas
 Borderlines
 Small islands
Mechanism
 Propose Business Area to Non PLN
Business Entities
 Minimum Business Area is 1 (One) District
or Equivalent
 Subsidy can be allocated to Small Scale
Electricity Supply Business
 SMALL SCALE BUSINESS AREA APPOINTMENT MECHANISM
12
(MEMR REGULATION NO. 38/2016) KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

THE GOVERNOR
GOVERNOR SELECTION OF APPOINT
PROPOSE BUSINESS BUSINESS ENTITY
BUSINESS
BUSINESS AREA ENTITIES FOR TO MANAGE
TO MEMR
BKPM AREA
SMALL SCALE THE SMALL GOVERNOR
APPOINTMENT BUSINESS SCALE BUSINESS
THROUGH
BKPM 1 4 5 AREA (BY 6 AREA AND 7
GOVERNOR) ISSUE PERMIT

2 3
DGE CONDUCT VERIFICATION
ON GOVERNOR’S PROPOSAL
FROM BKPM REQUEST
8
GOVERNOR REQUEST THE
ASSIGMENT OF BUSINESS ENTITY TO
MEMR
DGE
DGE ON BEHALF OF MEMR ASSIGN
THE SELECTED BUSINESS ENTITY

Required documents to be completed for Business Area Proposal by the Governor:

9
a. Business Area, minimum area is 1 (one) district or equivalent;
b. Renewable Energy Resource(s) Analysis; MEMR : Minister of Energy and Mineral Resources
c. Electricity Demand and Supply Analysis; DGE : Director General of Electricity
d. Number of Household to be electrified; BKPM : Investment Coordinating Board
e. Ability to Pay and Willingness to Pay from the local consumer;
f. Cost estimation of material, services, and transportation

DITJEN GATRIK
KEMENTERIAN ESDM
12
 33.4

Indonesia RE Investment Opportunities remain attractive 33.4 33.4 26.9 PLTSa

A huge potential of RE is available in 13 priority areas 22.9
23.9 PLTBg
KEMENTERIAN ENERGI

PLTSa PLTSa
& SUMBER DAYA MINERAL
26.9 26.9
33.4 33.433.4
19.2
33.4
PLTBm
23.9 23.9 PLTBg PLTBg 18.9
22.9 22.9
17.6 17.9 Regional grid RE Potential PLTP
PLTBm26.9 PLTBm 33.4
PLTSa 26.926.9 PLTSa
PLTSa 26.9 Giga Watt PLTSa
(GW)
18.9 19.2 18.9 19.2 BPP cent$/kWh
17.9
PLTP
23.9 PLTP
13.1 PLTBg
23.9
23.9 PLTBg22.9
PLTBg 23.9 PLTMH
PLTBg
22.9 22.922.9
100% Regional grid
10.9
PLTMH PLTMH PLTBm PLTBm BPP26.9
PLTBm PLTSa
Municipal
PLTA
PLTBmLarge Hydro
18.9 19.2 18.918.9 19.219.2 18.9 19.2 Waste
18.9 19.
17.6 17.9 17.617.6 17.917.9 PLTA PLTA 17.6 17.9 17.6 17.9
PLTP 22.9
PLTP 23.9
PLTP 85% Regional grid
33.4
PLTBg
Biogas PLTPPLTB
Wind
4.9 PLTB PLTB PLTMH PLTMH BPP
PLTMH PLTMH
3.1 13.113.1 13.1
19.2
13.1 PLTBm
Biomass PLTS
Solar PV
10.910.9 PLTS 10.9 PLTS 18.9 10.9
17.6 17.9 PLTA PLTA
PLTA 26.9 PLTSa PLTA
PLTP
Geothermal Total
Total
Total Total PLTB PLTB 23.9
PLTB PLTBg PLTB
4.9 4.9 4.9
13.1
22.9 4.9 PLTMH
Micro Hydro
Babel
Kalbar Maluku NTB Riau PLTS Aceh PLTS Sumut
PLTS PLTBm PLTS
Aceh NTTSulutenggo
tenggo Sumut NTTKaltim Sumut
Kalbar Kaltim
Papua
10.9
Papua
PLTSa 18.9 Sulutenggo
19.2
NTT
PLTSa Kaltim Kalbar Papua
PLTA
14,18 12,41 17.6 Total
17.9 Total
Total PLTP Total
PLTP PLTP
12,05 10,55
13.1
PLTB
PLTMH
TB Babel Maluku
Riau
Babel MalukuSulutenggo
Aceh NTBNTB NTTRiau
Riau
4.9 AcehSulutenggo
Sumut
Aceh Sulutenggo
Babel
Kaltim
10.9
NTT
Maluku
Kalbar
NTT Sumut Kaltim
NTB
Papua
Sumut
Total
Kaltim Kalbar
Riau Kalbar Sulutenggo
Aceh Papua
Papua NTT
Total
Sumut
Babel Kaltim
Maluku Kalbar
NTB Papua
Riau Aceh Sulutenggo NTT
9,01 14,45 10 11,67 PLTS
PLTA
12,28 8,50
7,66 9,92 16,62 PLTB
Total
33.4 33.4 33.4
4.9
14,13 PLTS
1.36 1.36
Babel Maluku NTB Riau 0.08 Aceh Sulutenggo NTT 0.08
Sumut Kaltim Kalbar Papua
26.9 Total
26.9 26.9PLTSa PLTSa
22.9
23.9
22.9
23.9
22.9
23.9 PLTBg PLTBg
Babel Sulselrabar
Maluku NTBKalselteng
Riau Aceh Sulselrabar Kalselteng
Sulutenggo NTT Sumut Kaltim Kalbar Papua
14,72 8,76 8,03 19.2 19.2 19.2
PLTBm PLTBm
18.9 18.9 18.9
17.6 17.9
17.6 17.9
17.6 17.9
12,51 7,45 6,83 PLTP PLTP
13.1 13.1 13.1 PLTMH PLTMH
10.9 10.9 10.9
PLTA PLTA
PLTB PLTB
4.9 4.9 4.9
PLTS PLTS
“There are around 210 GW of RE Total Total
potential in 13 priority areas Babel Babel
Maluku Babel
Maluku
NTB Maluku
NTB
Riau NTB
Riau
Aceh Riau
Aceh
Sulutenggo Aceh
NTT Sulutenggo
Sulutenggo NTT
Sumut NTT
Sumut
Kaltim Sumut
Kaltim
Kalbar Kaltim
Kalbar
Papua Kalbar
Papua Papua
which remain attractive (regional 13,54 16,94 13,67
grid BPP > national BPP)” 11,51 14,40 11,62
14 INCENTIVES TO SUPPORT RENEWABLES
KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

• Provide loan interest at below-market rates

FINANCIAL
INCENTIVES

• Tax Holiday
• Tax Allowance
FISCAL • Import Duty and VAT Exemption
INCENTIVES
kk Incentive and Facilities kkkkkk
k
kk IMPORT DUTY FACILITY KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

TAX ALLOWANCE TAX HOLIDAY

MoF Regulation
No.176/PMK.011/2009 jo. MoF
Regulation No. MoF Regulation No.159/PMK.010/2015
Gov’t Regulation No.9/2016 76/PMK.011/2012 jo. MoF
years Tax relief facility, starting from the

30 % of investmentvalue Regulation 188/PMK.010/2015 5-15 commencement of commercial

production. Can be extended for Max. 20
Reduction of corporate years under certain consideration.
net income tax for 6 years,
5% each year.
Import duty on Machineries and
Equipments, goods, and raw materials for
production
IDR
1
trillion
Minimum investment plan
(USD 80 million). Or Minimum IDR 500
• Exemption of import duty on machineries and Billion if introduce new technology

145 business segments

Eligible for tax
allowance, expanded
equipments
• 2 years exemption of import duty on raw Max.100%
materials 10-100% Reduction of corporate income
from 129 segments in • Additional 2 years import duty exemption for tax for Pioneer Industry. Max. 50% for
the previous industry that implement high technology
regulation. raw materials if company using locally- with investment plan
produced machineries and equipments (min IDR 500 M – less than 1 Trillion.
30%)
Under certain requirements Pioneer Industry:
1. Upstream metal;
among others: investment value or export MoF Regulation No. 2. Oil refinery;
66/PMK.010/2015 3. Basic organic-chemical from oil and gas;
orientation, manpower absorption, local 4. Machinery industry that manufacture industrial machine;
content. 5. Processing industry based on commodity from agriculture,
Import duty on Capital Goods forestry and fishery;
for Development and 6. Telecommunication, information and communication;
7. Sea transport;
Expansion of Power 8. Processing industry as main industry located in Special
Generation Industries for Economic Zone (SEZ); and or
Public Purpose. 9. Infrastructure (economical, non-PPP scheme)

The Investment Coordinating Board of the Republic of Indonesia

15
 kkkkkkkk
kkk
Investment Incentives For Electricity Sector k
k KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

Based on Government Regulation No. 9/2016, MoF Regulation No. 89/PMK.010/2015 and Chairman of BKPM
Regulation No. 18/2015, investment in new and renewable energy as Power Producer (KBLI 35101), with the
product coverage: the conversion of new energy (hydrogen, CBM, liquefied coal or gasified coal) and
renewable energy (hydro, solar, wind, or marine energy) into power, is eligible for income tax facilities of:
a. A reduction in net income of up to 30% of the amount invested, pro-rated at 5% for six years of the
commercial production, provided that the assets invested are not transferred out within six years.
TAX ALOWANCE b. Acceleration of depreciation & amortization for building and non-building.
c. A reduction of income tax on dividends paid to non-residents to 10% or lower rate according to double
taxation avoidance agreement.
d. Extension of tax losses carry forwards for 5 years and up to 10 years (if it meets certain criteria).for 5 years
and up to 10 years (if meet certain criteria).
* Tax Allowance application is submitted to OSS-BKPM and will be processed in 25 days.

Based on Government Regulation No. 94/2010, MoF Regulation No. 159/PMK.011/2015, and Chairman of
BKPM Regulation No. 18/2015, corporate income tax exemption for the period of 5 to 15 years from the start
of commercial production is granted for company with minimum investment project value of IDR 1 Trillion
TAX HOLIDAY (approx. USD 69 Million) in 9 priority “pioneer industries” including infrastructure not under PPP scheme, for
example renewable energy power plant.
* Tax Holiday application is submitted to OSS-BKPM and will be processed in 45 days.

Based on Minister of Finance (MoF) Regulation No. 66/PMK.010/2015, all green-field or expansion investment
of power plant for public usage (not including transmission, distribution and supporting services) are granted
IMPORT DUTY import duty exemption on imported machineries and equipment (for 2 years) for the company usage
EXEMPTION during construction period, provided that they are not or inadequately produced in Indonesia.
* Import Duty Exemption application is submitted to OSS-BKPM and will be processed in 5 days.

The Investment Coordinating Board of the Republic of Indonesia

16
16
Closing
Electricity supply should be efficient in
order not burden electricity subsidy
and the consumers gain a better
electricity tariff
RE investment remains attractive,
partially in the 13 priority areas
(regional grid BPP > national BPP)
KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL
Electricity subsidy in national
budget is gradually reduced, to
get more fair and equitable
development
There are around 210 GW of RE
potential in the 13 priority areas
Attractive RE investment are
indicated by the interest of
investors, on going technical
studies and signed PPAs
 KEMENTERIAN ENERGI
& SUMBER DAYA MINERAL

MINISTRY OF ENERGY AND MINERAL RESOURCES OF THE REPUBLIC OF INDONESIA

DIRECTORATE GENERAL OF NEW, RENEWABLE ENERGY AND ENERGY CONSERVATION

Jalan Pegangsaan Timur No. 1 Menteng, Jakarta Pusat 10320; Telp/Faks : 021-31924540

www.ebtke.esdm.go.id