INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Serafina Muryanti, Adya Sepasthika and Kenny Poltak, ABNR Counsellors at Law
• the right to environmental attributes; • the economic value of renewable energy power plants in relation to carbon; • language requirements; and • risk allocation for exchange rate fluctuations and deemed dispatch events. These guidelines will only apply to PPAs starting from the date of the enactment of MEMR 5/2025, which is 4 March 2025. Projects already in the procurement process will follow the new regulation if they are still in the bidding stage, while ongoing projects will remain under the previous regulation. However, any exten- sions or amendments to ongoing PPAs will be subject to the new regulation. Another significant development over the past 12 months was the issuance of Presidential Regulation No 109 of 2025 on Urban Waste Management through Waste-to-Renewable Energy Processing Based on Environmentally Friendly Technology (“PR 109/2025”), which revoked PR 35/2018 on waste-to-energy devel- opment. PR 109/2025 broadens the regulatory frame- work for waste-to-energy projects by allowing urban waste to be processed into electricity, bioenergy, renewable fuels and other derivative products using environmentally friendly technology. Under PR 35/2018, regional governments could appoint regional-owned enterprises (ROEs) or con- duct open tenders to select waste-to-energy project developers. If no private developer was interested or qualified, and no ROE was able to undertake the pro- ject, SOEs could be assigned to develop and oper- ate the relevant waste-to-energy plants. PR 109/2025 introduces a more centralised procurement model, under which project development is led through BPI Danantara, acting via its investment holding company, SOEs and their subsidiaries. It also appears to char- acterise waste-to-energy electricity projects primarily as independent power producer (IPP) projects, rather than as waste treatment projects. In addition, the MEMR recently issued MEMR Regula- tion No 19 of 2025 on Hybrid Power Plants (“MEMR Reg 19/2025”), which establishes the regulatory framework for hybrid renewable energy projects, par- ticularly to support the government’s de-dieselisation
programme and the integration of renewable energy generation with battery energy storage systems, the use of microgrids and other supporting technologies. 1.7 Announcements Regarding New Policies In response to PR 112/2022, the MEMR issued Regu- lation No 10 of 2025 on the Road Map for Energy Tran- sition in the Electricity Sector (MEMR 10/2025), which lays out Indonesia’s roadmap to reduce dependence on fossil fuels and achieve sustainable development goals through the utilisation of new and renewable energy sources, ultimately reducing greenhouse gas emissions. The strategy for managing existing power plants and developing new ones is designed to optimise elec- tricity generation capacity up to 2060. To meet grow- ing electricity demand and replace retiring plants, an additional capacity of approximately 9.6 gigawatts per year is required. By 2060, the total capacity is expect- ed to reach 443 gigawatts, comprising (i) 41.5% varia- ble renewable energy with storage capacity of around 34 gigawatts and (ii) 58.5% dispatchable renewable energy. The roadmap includes projections for capacity and emissions reductions, with peak CO₂ emissions expected in 2037 at 599 million tons, decreasing to nearly zero by 2058. Additionally, on the legislative front, a proposed third amendment to the Electricity Law is currently under- going formal deliberation in the Indonesian House of Representatives. A version of the draft bill dated 12 June 2025 was circulated to the public. The draft bill contains a number of policy reforms, including among others: • improvements of the regulatory frameworks for cross-border electricity sales; • governmental assignment to SOEs on utilisation of new and renewable energy, aligning with PR 112/2022; and • tariff simplification and introduction of formal evaluation mechanism for entities providing public electricity supply.
154 CHAMBERS.COM
Powered by FlippingBook