PROJECT NOTES ANDRE SUSANTO (andreosae@gmail.

com)
Project Indonesia Ministry of Energy and Mineral Resources
Topic Renewable Energy Regulation
Date January 27th, 2017
Audience Intended Recipient Only Insan boy

TO DO LIST: Due Date PIC

NOTES: This document was written for information purposes only and does not
constitute legal advice. The writer is not a lawyer or qualified as a legal
professional. Legal advice from a professional should be obtained prior to making
any decisions based on the contents of this document.
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EXECUTIVE SUMMARY
1. Current negotiations with PLN for renewable energy projects are largely
affected on the pricing
2. Negotiation process may continue but the pricing must follow this
regulation
3. For all renewable energy technologies referenced to in this regulation, the
PPA tariff is indexed to the local generation cost

Basic - Definition of PLNs generation cost is determined to be without

Definitio distribution costs (Article 6 Paragraph 1)
ns - Applicable to the following renewable energy technologies (Article 3
Paragraph 3):
o Solar PV
o Wind
o Hydro
o Biomass
o Biogas
o Municipal waste
o Geothermal
- Wind and solar PV will be tendered by PLN based on capacity quota
(Article 4 Paragraph 1)
- Except for wind and solar, other technologies can sell electricity to
PLN by using either the reference tariff or direct selection
mechanism (Article 4 Paragraph 2)
- PLN is required to operate the renewable energy power plants up to
10MW as a must-run power source (Article 4 Paragraph 3)

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Solar PV - PLN may purchase electricity from wind power plants under the
following conditions (Article 5 Paragraph 1)
o Local electricity grid system can accept solar PV power
o Reduces local generation cost of the connected system
AND/OR
o No other primary energy sources are available to meet the
local electricity grid systems needs
- Electricity purchase for solar PV is done through tenders based on
the capacity quota listed in PLNs annual electricity power supply
power plan business plan (RUPTL document) with a MINIMUM total
tender amount of 15MW and may be spread to several locations
(Article 5 Paragraph 2)
- If local generation cost is higher than the national generation cost,
the reference ceiling price for solar PV electricity purchase is 85%
from the local generation cost (Article 5 Paragraph 3)
- If the local generation cost is the same or below the national
generation cost, then the purchase price for solar PV electricity is
equal to the local generation cost (Article 5 Paragraph 4)
- The local and national generation cost mentioned in the above
paragraphs refer to the previous years values as published by the
Ministry of Energy and Mineral Resources based on PLNs
suggestion (Article 5 Paragraph 5).
INTERPRETATION: The published cost here could refer to the annual
Electricity Power Plant Business Plan that is a PLN document but
issued annually as a Ministerial Decree by the Ministry of Energy
and Mineral Resources
-
Wind - PLN may purchase electricity from wind power plants under the
following conditions (Article 6 Paragraph 1)
o Local electricity grid system can accept wind power
o Reduces local generation cost of the connected system
AND/OR
o No other primary energy sources are available to meet the
local electricity grid systems needs
- Electricity purchase for wind power is done through tenders based
on the capacity quota listed in PLNs annual electricity power supply
power plan business plan (RUPTL document) with a MINIMUM total
tender amount of 15MW and may be spread to several locations
(Article 6 Paragraph 2)
- If local generation cost is higher than the national generation cost,
the reference ceiling price for wind power electricity purchase is
85% from the local generation cost (Article 6 Paragraph 3)
- If the local generation cost is the same or below the national
generation cost, then the purchase price for wind power electricity
is equal to the local generation cost (Article 6 Paragraph 4)
- The local and national generation cost mentioned in the above
paragraphs refer to the previous years values as published by the
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 Ministry of Energy and Mineral Resources based on PLNs
suggestion (Article 6 Paragraph 5)
INTERPRETATION: The published cost here could refer to the annual
Electricity Power Plant Business Plan that is a PLN document but
issued annually as a Ministerial Decree by the Ministry of Energy
and Mineral Resources
-
Hydro - PLN may purchase electricity from hydro power plants that utilize
the following (Article 7 Paragraph 1):
o River water flow or water fall OR
o Water from dams or irrigation channels that are multifunction
- May be using reference price or through a direct selection
mechanism (Article 7 Paragraph 2)
- Hydro power plants up to 10MW must be able to operate with a
capacity factor of a minimum 65% whereas power plants above
10MW must operate with a capacity factor based on the systems
needs (Article 7 Paragraph 3)
- If local generation cost is higher than the national generation cost,
the reference ceiling price for hydro power electricity purchase is
85% from the local generation cost (Article 7 Paragraph 5)
- If the local generation cost is the same or below the national
generation cost, then the purchase price for hydro power electricity
is equal to the local generation cost (Article 7 Paragraph 5)
- The local and national generation cost mentioned in the above
paragraphs refer to the previous years values as published by the
Ministry of Energy and Mineral Resources based on PLNs
suggestion (Article 7 Paragraph 6)
INTERPRETATION: The published cost here could refer to the annual
Electricity Power Plant Business Plan that is a PLN document but
issued annually as a Ministerial Decree by the Ministry of Energy
and Mineral Resources
- Hydro power electricity purchase agreement will be done under a
BOOT (Build Own Operate Transfer) mechanism (Article 7 Paragraph
7)
- Power plant operator may negotiate under a business to business
agreement the construction of power evacuation network lines
between the power plant and the interconnection point to PLN
(Article 7 Paragraph 8)
Biomass - Electricity power purchase from biomass power plants by PLN may
only be done with power plant operators that have secured
sufficient supply of feedstock to operate the power plant for the
duration of the PPA (Article 8 Paragraph 1)
INTERPRETATION: It isnt clear even in the Indonesian language
what the definition of sufficient supply of feedstock refers to
- For biomass power plants up to 10MW, the energy purchase tariff
will be using the reference tariff whereas biomass power plants
above 10MW will have to go through the direct selection mechanism

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 (Article 8 Paragraph 2)
- If local generation cost is higher than the national generation cost,
the reference ceiling price for biomass power electricity purchase is
85% from the local generation cost (Article 8 Paragraph 3)
- If the local generation cost is the same or below the national
generation cost, then the purchase price for biomass power
electricity is equal to the local generation cost (Article 8 Paragraph
4)
- The local and national generation cost mentioned in the above
paragraphs refer to the previous years values as published by the
Ministry of Energy and Mineral Resources based on PLNs
suggestion (Article 8 Paragraph 5)
INTERPRETATION: The published cost here could refer to the annual
Electricity Power Plant Business Plan that is a PLN document but
issued annually as a Ministerial Decree by the Ministry of Energy
and Mineral Resources
- Power plant operator may negotiate under a business to business
agreement the construction of power evacuation network lines
between the power plant and the interconnection point to PLN
(Article 8 Paragraph 6)
Biogas - Electricity power purchase from biogas power plants by PLN may
only be done with power plant operators that have secured
sufficient supply of feedstock to operate the power plant for the
duration of the PPA (Article 9 Paragraph 1)
INTERPRETATION: It isnt clear even in the Indonesian language
what the definition of sufficient supply of feedstock refers to
- For biogas power plants up to 10MW, the energy purchase tariff will
be using the reference tariff whereas biogas power plants above
10MW will have to go through the direct selection mechanism
(Article 9 Paragraph 2)
- If local generation cost is higher than the national generation cost,
the reference ceiling price for biogas power electricity purchase is
85% from the local generation cost (Article 9 Paragraph 3)
- If the local generation cost is the same or below the national
generation cost, then the purchase price for biogas power electricity
is equal to the local generation cost (Article 9 Paragraph 4)
- The local and national generation cost mentioned in the above
paragraphs refer to the previous years values as published by the
Ministry of Energy and Mineral Resources based on PLNs
suggestion (Article 9 Paragraph 5)
INTERPRETATION: The published cost here could refer to the annual
Electricity Power Plant Business Plan that is a PLN document but
issued annually as a Ministerial Decree by the Ministry of Energy
and Mineral Resources
- Power plant operator may negotiate under a business to business
agreement the construction of power evacuation network lines
between the power plant and the interconnection point to PLN
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 (Article 9 Paragraph 6)
Municipa - Electricity power purchase from municipal waste power plants by
l Waste PLN is required to assist the government AND/OR local
municipalities to handle municipal waste issues (Article 10
Paragraph 1)
- Municipal waste power plants may be using methane collection and
utilization technologies through sanitary landfill, anaerobic digestion
or similar methods of waste collection or by using the heat/thermal
by using thermochemical technologies (Article 10 Paragraph 2)
- Electricity power purchase from municipal waste power plants by
PLN will use the reference tariff (Article 10 Paragraph 3)
- If local generation cost is higher than the national generation cost,
the reference ceiling tariff for municipal waste power electricity
purchase is the local generation cost (Article 10 Paragraph 4)
- When the local generation cost in Sumatra, Java and Bali or other
local electricity system is the same or below the national generation
cost, then the purchase price for municipal waste power electricity
is determined based on a mutual agreement between all parties
(Article 10 Paragraph 5)
INTERPRETATION: The question about this paragraph is whether the
intent was for municipal waste power plants in Sumatra, Java and
Bali to be allowed to negotiate their PPA tariff in any case
- The local and national generation cost mentioned in the above
paragraphs refer to the previous years values as published by the
Ministry of Energy and Mineral Resources based on PLNs
suggestion (Article 10 Paragraph 6)
INTERPRETATION: The published cost here could refer to the annual
Electricity Power Plant Business Plan that is a PLN document but
issued annually as a Ministerial Decree by the Ministry of Energy
and Mineral Resources
- Municipal waste power plant developers can be given other
incentives according to the rules and regulations that apply (Article
10 Paragraph 7)
Geother - Electricity power purchase from geothermal power plants by PLN
mal can only be done with developers who possess the geothermal
working area permit and based on proven reserves after exploration
(Article 11 Paragraph 1)
- Electricity power purchase from geothermal power plants by PLN
will use the reference tariff (Article 11 Paragraph 2)
- If local generation cost is higher than the national generation cost,
the reference ceiling tariff for geothermal power electricity purchase
is the local generation cost (Article 11 Paragraph 3)
- For the local generation cost in Sumatra, Java and Bali or other local
electricity system the purchase price for geothermal power
electricity is determined based on a mutual agreement between all
parties (Article 11 Paragraph 4)
- The local and national generation cost mentioned in the above

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 paragraphs refer to the previous years values as published by the
Ministry of Energy and Mineral Resources based on PLNs
suggestion (Article 11 Paragraph 5)
INTERPRETATION: The published cost here could refer to the annual
Electricity Power Plant Business Plan that is a PLN document but
issued annually as a Ministerial Decree by the Ministry of Energy
and Mineral Resources
- Power plant operator may negotiate under a business to business
agreement the construction of power evacuation network lines
between the power plant and the interconnection point to PLN
(Article 11 Paragraph 6)
- Geothermal power electricity purchase agreement will be done
under a BOOT (Build Own Operate Transfer) mechanism (Article 11
Paragraph 7)
-
Due - For the electricity power purchase mentioned in articles 5 through
Diligenc 11, PLN is required to perform due diligence on the developers
e technical and financial capabilities (Article 12 Paragraph 1)
- Due diligence may be performed by a procurement agent appointed
by PLN (Article 12 Paragraph 2)
Local - For tenders, selection, or appointment of power plant operators,
Content PLN prioritizes power plant operators that meet the prevailing
Require regulations for local content requirements (Article 13 Paragraph 1)
ments - Local components used in the power plant systems utilizing
renewable energy must meet the following:
o Indonesian national standards
o International standards OR
o Other countrys national standards that are meet the criteria
of various ISO or IEC standards
- The construction of the power plants utilizing renewable energy
must meet:
o Indonesian national standards
o International standards
o Other countrys national standards that are meet the criteria
of various ISO or IEC standards OR
o PLN prevailing standards
-
Accepta - To create transparency for the electricity power purchase from
nce and renewable energy based power plants, PLN is required to (Article 14
Operatio Paragraph 1):
ns o Inform openly the electricity system conditions that are ready
to connect to renewable energy based power plants
o Inform on a limited basis the average cost of generation for
the local electricity system to the power plant operators who
are interested to develop renewable energy based electrical
power plants
- PLN is required to report every 3 month or as required the above
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 information to the Ministry of Energy and Mineral Resources (Article
14 Paragraph 2)
- Proposals for renewable energy based electricity power plants are
required to include the appropriate interconnection feasibility study
(Article 14 Paragraph 1)
Power - PLN is required to publish (Article 15 Paragraph 1):
Purchas o Standard procurement document for renewable energy based
e electricity power plants
Agreem o Standardized PPA for each renewable energy based electricity
ent power plants
- PPA terms will refer to prevailing regulations (Article 15 Paragraph
2)
-
Sanction - Power plant operators that have been appointed as the renewable
s for energy developer to supply electricity is required to complete the
Delays construction of the power plant under their responsibilities
in according to the Commercial Operation Date that have been agreed
Construc upon in the PPA (Article 16 Paragraph 1)
tion - There will be sanctions and/or penalties when the COD deadline is
passed (Article 16 Paragraph 2)
- Sanctions and penalties are included in the PPA (Article 16
Paragraph 3)
Transitio - At the time this regulation is enacted, for the companies who have:
nal o Been appointed as the winner for the capacity quota of solar
Conditio PV, appointed as an electric hydro power developer,
ns appointed as developers of biomass, biogas or municipal
waste power plants or tender winner of geothermal working
areas AND
o Have signed PPAs with PLN
Will be able to follow the process as outlined in the existing and
prevailing signed PPAs (Article 17)
- At the time this regulation is enacted, for the companies who have:
o Been appointed as an electric hydro power developer,
appointed as developers of biomass, biogas or municipal
waste power plants AND
o Have NOT signed PPAs with PLN
Will be able to follow the process based on the previous regulation
as long as they are in line with this regulation and the tariff for the
power purchase will follow the ones outlined in this regulation
(Article 18)
- At the time this regulation is enacted, for the companies who have:
o Been appointed as the tender winner of the geothermal
working area and have NOT signed PPAS with PLN AND
o State Owned Enterprises appointed for geothermal work
Will be able to follow the process based on the previous regulations
(Article 19)
- At the time this Ministerial Decree is enacted, for the Geothermal
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 developer that have signed the agreement for the sale of the steam
and/or PPAs that are still in the process of financial and construction
verification, the process and the price can be based on previous
regulations (Article 20)
- Exceptions can be made for the developers if they have agreed with
PLN to follow the processes and prices based on this Ministerial
Decree (Article 21)
- At the time this Ministerial decree is enacted, power purchase
agreements and the processes currently in place for the accelerated
municipal waste programs may be based on the previous
regulations (Article 22)
Closing - The following regulations are deemed to still be valid as long as
Clauses they are still in line with the clauses outlined in this ministerial
decree (Article 23 Paragraph 1):
o Ministerial Decree of Ministry of Energy and Mineral Resources
number 17/2014 (Geothermal Energy Regulation), number
19/2015 (Hydro Power Up to 10MW Regulation), number
44/2015 (Municipal Waste Power Regulation), number 19/2016
(Solar PV Power regulation), number 21/2016 (Biomas and
Biogas Power regulation)
- At the moment this Ministerial Decree is enacted, the ceiling price
for the hydro power plant included in the following Ministerial
Decree is no longer valid (Article 23, Paragraph 2):
o Ministerial Decree of Ministry of Energy and Mineral Resources
number 3/2015 (Procedure to purchase electricity and
reference price from Mine mouth steam power plant, coal
power plant, gas power plant and hydro power plant by direct
appointment and direct selection)
Referenc 85% from BPP new regulation
es http://listrikindonesia.com/den_pemerintah_akan_mengeluarkan_perme
n_untuk_harga_baru_ebt_2323.htm

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