Jakarta downtown skyline with high-rise buildings at sunset

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.

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