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Tariff regime for renewable energy technologies in Indonesia – a legal overview

View over Jakarta, Indonesia (source: flickr/ Nick Gray, creative commons)
Alexander Richter 21 Jul 2018

A legal overview on the tariff regime for renewable energies, including geothermal provides some insights into changes and challenges for investors.

An article shared in early July 2018, reports on a new tariff regime for renewable energies by the Indonesian government in the country.

With the new regime the Indonesian state power company, PT Perusahaan Listrik Negara (“PLN”), gets greater control over tariffs in the sector through business-to-business negotiations and benchmarking against the applicable Electricity Generation Basic Cost (Biaya Pokok Penyediaan Pembangkitan or “BPP”).

The new tariff regime is elaborated in Minister of Energy and Mineral Resources (“MEMR”) Regulation No. 50 of 2017 regarding Utilization of Renewable Energy for Power Supply (“MEMR Reg. 50/2017”). This regulation came into force on August 8, 2017, and revokes MEMR Regulation No. 12 of 2017, as amended by MEMR Regulation No. 43 of 2017.

MEMR Reg. 50/2017 provides a new mechanism to determine the tariff for electricity generated by renewable energy power plants and purchased by PLN from Independent Power Producers (“IPPs”). The tariff is now determined by benchmarking against the applicable BPP in the area where the power is generated or through negotiations between PLN and the IPP.

The renewables covered by MEMR Reg. 50/2017 are solar, wind, hydro, biomass, biogas, waste, geothermal and ocean energy.

For further details see link below.

Source: SSEK Indonesian Legal Consultants via Lexology