Search for:

The Indonesian government has announced plans to install rooftop solar panels on at least 800 public buildings across the country this year, according to news sources. This is a positive step in its efforts to reduce Indonesia’s reliance on fossil fuels. Sources suggest that in order to achieve this target, the Ministry of Energy and Mineral Resources (MEMR) has allocated just under USD 13 million to install panels on boarding schools, clinics, orphanages, government offices and police stations in some 17 provinces.

More could be done with the support of private investment and there are (or should be) more opportunities to innovate and integrate renewables into smarter infrastructure assets. Anticipation continues to grow in relation to new draft electricity regulations in Indonesia, which were due to be finalized and issued in late 2019 / early 2020. In this context, whether these regulations will solve the issues facing developers and investors seeking to participate in the country’s renewable energy plan — and whether the regulations will also benefit the rooftop solar space — have been matters of speculation.

To summarize the current status of rooftop solar regulations, the MEMR issued Regulation No. 49/2018 on Utilization of Rooftop Solar Power Plants System in 2018 in an attempt to attract investors into the rooftop solar space. This briefly attracted significant interest from corporate buyers and solar developers. However, little real progress was made due to commercial challenges under existing regulations that, in effect, required PLN’s industrial customers to pay excessively high monthly capacity charges (comparable to those paid for power generated from base load sources). Fortunately, new regulations enacted in 2019 addressed this issue by amending the relevant capacity charge calculations to reflect the reality of rooftop solar power generation, making investment (slightly) more attractive.

There is room to grow, but investors can be cautiously optimistic about future opportunities in this space, especially if the as-yet-unseen new electricity generation regulations address investors’ past concerns.

DOWNLOAD FULL ALERT

Author

Norman S. Bissett routinely handles project and finance matters. He currently serves as a foreign legal consultant in the Finance and Projects Group of HHP, working specifically in the Energy and Resources practice. Mr. Bissett is admitted to practice in England and Wales and Scotland, and is a member of the Law Society of England and Wales as well as the Scottish Law Society.

Author

Luke Devine is a foreign legal consultant in Baker & McKenzie's Finance & Projects Practice Group. He has many years of experience acting for developers, lenders, governments and contractors involved in energy and infrastructure development and financing across a wide range of energy, natural resources and infrastructure sectors, such as power, oil and gas, mining, water and transportation. He also has significant experience in relation to climate change projects.

Author

Nadia Soraya is a partner in the Finance & Projects Practice Group with many years of experience handling a wide range of finance and corporate transactions including project finance, general banking and finance, and mergers and acquisitions.

Author

Fanny Kurniawan is an Associate Partner in Baker McKenzie's Jakarta office.

Author

Anita Sungkono is an associate at Hadiputranto, Hadinoto & Partners which a member firm of Baker Mckenzie's Indonesia office. She is an associate in the Finance & Projects practice group. Involved in drafting agreements and providing legal advice in relation to power/electricity, construction (EPC contracts), infrastructure, public-private partnership, oil & gas and mining.

Author

Martin David is a principal in the Finance and Projects Practice Group at Baker McKenzie Wong & Leow and heads the Projects practice in Asia and Singapore.

Author

Kim Hock Ang is a principal in Baker McKenzie Wong & Leow's Finance & Projects Team, where he focuses on major infrastructure project development and energy projects development (including LNG), from the inception stage where the consortium is formed and investment structure is designed, to the project documentation, financing and sale of such brownfield asset post commercial operation date. Kim Hock has acted in several award-winning projects such as the Sarulla Geothermal Power Project. It is the largest single-contract geothermal power project in the world, and it won Finance Deal of the Year (Project) at the 2015 American Lawyer Asia Legal Awards, among other accolades.

Author

Stephen Clugston is Counsel in the Firm'’s Tokyo office. He has worked in the area of international projects and project finance, advising sponsors, borrowers, government agencies, ECAs, multilateral finance institutions and commercial lenders across a number of sectors globally, and particularly in emerging markets.