INDONESIA Trends and Developments Contributed by: Emir Nurmansyah, Serafina Muryanti, Adya Sepasthika and Kenny Poltak, ABNR Counsellors at Law
ABNR Counsellors at Law 24th Floor, Graha CIMB Niaga Jl Jenderal Sudirman Kav 58 Jakarta 12190 Indonesia Tel: +62 21 250 5125; +62 21 250 5136 Fax: +62 21 250 5001
Email: info@abnrlaw.com Web: www.abnrlaw.com
Indonesia’s power sector is at a turning point. Long dominated by coal-fired generation, the sector is now undergoing regulatory reform to support the energy transition, attract private and foreign investment, and enable greater integration of renewable energy through battery storage, hybrid systems, microgrids and carbon markets. The key developments and con- siderations are highlighted below. Roadmap to 2060 In 2025, the Minister of Energy and Mineral Resourc- es (MEMR) issued Regulation No 10 of 2025 on the Roadmap for Energy Transition in the Electricity Sec- tor (MEMR 10/2025), which outlines the government’s commitment to reduce reliance on fossil fuels and increase the use of new and renewable energy sourc- es. MEMR 10/2025 sets outs, among other things: • the criteria and procedure for selecting coal-fired power stations (CFPPs) for early or accelerated retirement; and • energy transition programmes in the electricity sector, such as retrofitting fossil fuel power plants, limiting new CFPPs, accelerating the decommis- sioning of existing CFPPs and the development of new and renewable energy power plants, as well as smart grid systems. The roadmap envisages total installed capacity of approximately 443 gigawatts by 2060, with around 41.5% coming from variable renewable energy sup- ported by roughly 34 gigawatts of storage, and 58.5% from dispatchable renewable sources. Annual addi- tions of approximately 9.6 gigawatts will be needed to
meet demand growth and replace retiring plants, and peak CO₂ emissions are projected for 2037 at around 599 million tonnes, falling to near zero by 2058. New Regulatory Framework for Renewable Power- Purchase Agreements (PPAs) In support of the development of renewable energy power plants, the MEMR also issued Regulation No 5 of 2025 on the Guidelines for PPA from Power Plants Utilizing Renewable Energy Sources (MEMR 5/2025). MEMR 5/2025 generally fosters a more favourable environment for renewable energy development by incorporating provisions such as: • a maximum performance security of 10% of the cost of the power plant; • rights concerning environmental attributes; and • the ability for the parties to agree on the prevailing language, including English, if the PPA is in English and Bahasa Indonesia. A particularly important commercial shift is the move away from the build-own-operate-transfer (BOOT) model that has historically characterised independent power producer (IPP) transactions in Indonesia. Under MEMR 5/2025, the default development scheme for renewable projects is build-own-operate (BOO), with BOOT or other arrangements available only where the parties so agree and the project so requires. This change has substantive implications. It removes the mandatory end-of-term transfer of project assets to PT Perusahaan Listrik Negara (PLN), which has
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