In a continuous effort to encourage and promote the use of rooftop solar power generation by businesses, the Government of Indonesia (“GOI“) through the Minister of Energy and Mineral Resources (MEMR) recently issued Regulation No. 2 of 2024 on Rooftop Solar Power Plants Connected to the Electricity Grid of Holders of Electricity Supply Business License for Public Interests (IUPTLU) (“MEMR Regulation 2/2024“), replacing the former MEMR Regulation No. 26 of 2021.
MEMR Regulation 2/2024 introduces several new rules aimed at accommodating and striking a balance between the interests of PLN, IUPTLU holders, and businesses, making the rooftop solar power generation sector more attractive, as well as achieving the national target of 3.6 gigawatts of rooftop solar power generation by 2025.
Some new provisions in MEMR Regulation 2/2024 appear to spark businesses’ interest in installing rooftop solar systems, especially those concerning the newly introduced rooftop solar development quota and the removal of the individual threshold requirement. However, other provisions, such as the omission of the excess electricity net-metering policy, may seem counterproductive to the GOI’s intention. These aspects are further discussed in the comparison table below:
| No. | Matters | Former Regulation (MEMR Regulation No. 26 of 2021) | New Regulation (MEMR Regulation 2/2024) |
| 1. | Rooftop Solar Development Quota (the maximum annual capacity of new rooftop solar power generation that can be developed by the customers of IUPTLU holders). | The maximum capacity that could be approved for each customer was limited to only up to 100% of their existing connected electricity capacity supplied by the IUPTLU holder (“Individual Threshold”); however, there was no aggregate annual development capacity threshold. | IUPTLU holders (including PLN) will determine the annual rooftop solar development quota that their customers can apply for over the next 5-year period, subject to the MEMR’s approval.
This new mechanism should lead to a more transparent approval process. The approved rooftop solar development quota will serve as the reference basis for IUPTLU holders, including PLN, to decide whether or not to approve customers’ applications for rooftop solar power generation. From the customers’ perspective, with MEMR Regulation 2/2024 no longer setting the Individual Threshold, it is widely expected that customers will have more flexibility to apply for rooftop solar power generation capacity on an ‘as needed’ basis, which may. exceed their existing connected electricity capacity supplied by the IUPTLU holder, as long as the IUPTLU holder’s approved quota balance is sufficient. MEMR Regulation 2/2024 has not yet addressed the specific procedures for submitting and approving customers’ applications for rooftop solar power generation. However, it is widely anticipated that these applications will be processed on a ‘first come, first served’ basis. |
| 2. | Net-metering Policy on Excess Electricity | Customers were entitled to receive a 100% credit for excess electricity they exported to the IUPTLU holder’s (or PLN’s) grid, resulting in a significant reduction in their electricity bills. | Any excess electricity generated by rooftop solar power generation will not result in reduced electricity bills.
Many stakeholders see this provision as a step back because the excess electricity generated and supplied to the IUPTLU holder’s grid will not reduce their electricity bills, thus providing no additional economic incentive for them. |
| 3. | Parallel operation costs (capacity charge for interconnectivity with IUPTLU holders’ power generation installation systems, which serve as reserve and additional power sources for customers’ rooftop solar panel installations) |
Industrial category customers were subject to parallel operation costs. |
Customers will not incur parallel operation costs.
The omission of parallel operation costs is aimed at maintaining business interest in utilizing rooftop solar power generation, considering that customers can no longer export excess power to reduce their electricity bills. We anticipate that this new policy will provide more incentives for industrial customers, as it directly addresses businesses’ concerns about the additional costs associated with developing and utilizing rooftop solar power systems. |
| 4. | Carbon Trading |
Recognized and allowed. |
The same principle applies, but it is now further clarified that the implementation is subject to specific implementing regulations. Until these specific implementing regulations are issued, the carbon economic value should be owned by the GOI. This provision may discourage businesses from developing and utilizing rooftop solar power generation until the specific implementing regulations provide certainty that businesses are entitled to the carbon credits generated from their rooftop solar power generation. |
Business professionals are keen to see how the new provisions will be implemented, particularly considering the heavy criticisms levelled at the former regulation for inconsistencies between its provisions and actual implementation. Our team will continue to closely monitor the developments and keep you updated on any progress.
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