Indonesian’s government signs new laws governing renewables

Renewable energy aims to change the energy sector by milestone. Additionally, renewables minimize environmental pollution by eradicating carbon emission. Several environmental firms have merged to enhance and invest in renewables. Also, diverse countries have united to strengthen global mitigation processes to reduce climatic change. Indonesia is among the countries that have initiated projects to produce renewables as a source of energy.

However, Indonesian’s previous laws paralyzed numerous renewable energy companies under the regulation of the Build Own Operate Transfer (BOOT) program. Furthermore, a BOOT scheme undermined the investors’ financial interest hence crippled the projects. Nevertheless, the government has outlawed the old regulation and instigated a new rule to attract investors and compensate the time lost in developing the projects. Consequently, the new management developed by the Ministry of Energy and Mineral Resources outlaws the BOOT; hence more stakeholders seek to invest in renewables.

Harris, the ministry director, stated that the project aims at initiating the stalled renewable projects before the president plans other state projects. Therefore, the ministry works against time to ensure enough capital for renewable projects. Over the years, PLN, a diesel plant, has supplied the country with power. However, the investors bid that PLN should agree to their terms and conditions of entirely purchasing power without placing other regulations to undermine the renewable sector.

On the other hand, the government aims to achieve a 23% renewable power supply by 2025, although regulations stated by the company stagnate the achievement of the goal. The state’s target was to attain 17.5% renewable power production by 2019, yet only 12.36% power-mix was achieved last year. Additionally, before the introduction of the BOOT program, Permen 50 scheme was a regulation in use that incorporated a key-in-tariff rating regulation measured as a valid regulation that enhanced clean energy. However, the BOOT scheme officiated the fall of renewable projects in Indonesia by eradicating the Perman 50 scheme that caused the closure of many projects.

Between 2017 and 2018, the government had commenced 75 renewable projects. But the BOOT scheme foresaw the closure of the projects, and only 27 projects remained operational at the end of the financial year. Also, the state failed to sign any deals with the renewable sector in 2019; hence the company encountered losses that year. Moreover, the new policies are yet to shift the game to renewable since PLN has received a direction to purchase electricity from the renewable sectors, hydropower government-owned plants, and waste-to-energy power firms. The new regulation currently favors the renewable industry in Indonesia.