Indonesia has Cut the Minimum Local Content Requirement for Solar Power Plants to 20 per cent, official says
Indonesia announced that it has eased local content requirement for solar power plants to 20%, from about 40 per cent previously, as it looks to unlock investment in projects that get at least half of their funding from foreign multilateral or bilateral lenders.
“We evaluated the rules, so that the renewable energy power plants, especially hydro, wind and solar could immediately be installed in our system ... and further lower our emissions,” Jisman Hutajulu, the energy ministry’s director general, said.
Indonesia has pledged to boost the proportion of renewable in its energy mix and foreign lenders have promised to provide funding. However, investment has remained limited, which analysts blamed partly due to the local content rules.
The new rule permits solar power plant projects to use imported panels until 2025 of June, provided the project operator obtains ministerial approval, signs a power purchase agreement before the end of 2024 and the plant is operating by the first half of 2026.
For wind power plants, the new rule sets the requirement at 15 per cent, also set the local content requirement for hydro power plants in a range of 23 to 45 per cent, depending on its installed capacity, versus a previous range at 47.6 to 70.76 per cent.
The majority of the country’s energy needs met by coal and oil earlier and renewables such as solar and geothermal power accounted for about 13.1 per cent of Indonesia’s energy mix last year, falling to a 17.87 per cent target.