Indonesia Rooftop Solar – Issuance of New Regional Capacity Quotas and Opening of 2024 Capacity Applications
03 July 2024
Introduction
Following the issuance of Minister of Energy and Mineral Resources (MEMR) Regulation No. 2 of 2024 (MEMR 2/2024) earlier this year as the new regulatory framework for captive rooftop solar photovoltaic (PV) systems (Rooftop Solar Systems) in Indonesia, the right to develop new Rooftop Solar Systems will have to comply with the quota system introduced by MEMR 2/2024.
MEMR 2/2024 mandates every electricity supply company that holds an Electricity Supply Business License for Public Interests (Izin Usaha Penyediaan Tenaga Listrik untuk Kepentingan Umum – IUPTLU) and a designated Business Area (Wilayah Usaha) (IUPTLU Holder) to prepare a quota for the development of new Rooftop Solar Systems for each electrical grid within their Business Area, to be submitted to and evaluated by MEMR's Directorate General of Electricity (DGE). The quotas are to be prepared for a 5-year period with an annual (January-December) split.1
The implementation of the new quota system comes with the removal of the cap on the maximum installed capacity of the Rooftop Solar Systems (which was set at 100% of the connected power of the relevant customers). MEMR 2/2024 now stipulates that the installed capacity of Rooftop Solar Systems shall be determined based on the required capacity of prospective users (so no more cap) but the approval of such required capacity will depend on the available quota within the relevant grid system.2
The requirement to prepare a quota for new Rooftop Solar Systems also applies to PT PLN (Persero) (PLN – the national electricity company) within its national Business Area. To this effect, DGE has recently issued3 Decree No. 279.K/TL.03/DJL.2/2024 (PLN Quota Decree) which stipulates the quota for development of new Rooftop Solar Systems by PLN customers for the period 2024-2028. The PLN Quota Decree stipulates that PLN shall prepare and publish more detailed quotas based on the clustering of their customer service units (e.g. on a regional basis). On 25 June 2024, PLN and MEMR held a virtual socialization event (25 June Socialization) to launch the online-based systems for the implementation of the new Rooftop Solar Systems and PLN issued the available quotas for clustering.
Please refer to our previous article for a more detailed overview of the key new requirements introduced by MEMR 2/2024.
Quota for New Rooftop Solar System Development by PLN Customers
MEMR 2/2024 mandates that the first quota for the period 2024-2028 shall be submitted within 3 months from the promulgation of the regulation, i.e., by 30 April 2024.4 Pursuant to the DGE Decree, PLN submitted its proposed quota per electrical grid to DGE on 25 April 2024.
Based on DGE's evaluation of PLN's submission, the following quotas for 2024-2028 have been set by DGE:
Electrical Grid System/Province | Quota for Rooftop Solar Systems (MW) | ||||
2023 | 2025 | 2026 | 2027 | 2028 | |
| Sumatra | 35.0 | 45.0 | 60.0 | 70.0 | 80.0 |
| West Kalimantan | 7.1 | 9.8 | 16.4 | 17.2 | 18.5 |
| Kalseltengtim (South, Southeast and East Kalimantan) | 22.1 | 34.0 | 58.7 | 62.8 | 68.3 |
| North Kalimantan | 0.8 | 1.1 | 1.9 | 2.0 | 2.2 |
| Java-Madura-Bali | 825.0 | 900.0 | 910.0 | 1,010.0 | 1,400.0 |
| Sulutgo (North Sulawesi and Gorontalo) | 0.2 | 0.4 | 0.6 | 0.8 | 1.0 |
| Sulbagsel (Southern Sulawesi Region) | 8.0 | 10.0 | 12.0 | 14.0 | 16.0 |
| Maluku and North Maluku | 0.7 | 1.0 | 1.2 | 1.4 | 1.7 |
| Papua and West Papua | 0.8 | 1.1 | 1.3 | 1.6 | 1.9 |
| West Nusa Tenggara | 0.9 | 1.2 | 1.5 | 1.8 | 2.2 |
| East Nusa Tenggara | 0.6 | 0.7 | 0.9 | 1.1 | 1.3 |
| TOTAL | 901 | 1,004 | 1,065 | 1,183 | 1,593 |
It should be noted that the stipulated quota appears to be increasing each year, with the highest allocation going to the Java-Madura-Bali region, followed by Sumatra. This gradual increase aligns with statements made by MEMR and PLN that the quota approach is implemented due to the intermittent nature of grid-tied Rooftop Solar Systems, which necessitates a gradual ramp-up of rooftop solar installed capacity through grid quotas to ensure grid stability and reliability until flexible smart-grid infrastructure is developed by PLN.
Next Steps: Application and Allocation
Pursuant to MEMR 2/2024, based on DGE's quota stipulation, each IUPTLU Holder (including PLN) shall prepare quotas based on the clustering of their customer service units. The clustering of quotas shall then be reported to DGE and published by the respective IUPTLU Holders on their website, app and/or social media platforms within 10 business days of the quota stipulation by DGE.5
In accordance with this requirement of MEMR 2/2024, the clustering of quotas for the year 2024 has been announced by PLN on 25 June 2024, as follows:
Electrical Grid System/Province | Cluster | Stipulated Quota (Watt) | Quota of the Existing Projects in 2024 (Watt) | Available Quota for 2024 (Watt) | |
| Operation | Construction | ||||
| Sumatra | Aceh | 2,405,330 | 21,000 | - | 2,384,330 |
| North Sumatra | 12,264,498 | 1,952,500 | 11,540,700 | (1,228,702)6 | |
| West Sumatra | 2,880,999 | - | - | 2,880,999 | |
| Bangka Belitung | 1,531,325 | 154,300 | - | 1,377,025 | |
| Riau and Riau Islands | 4,899,839 | - | 4,000 | 4,895,839 | |
| Lampung | 4,523,769 | 220,000 | 2,160,700 | 2,143,069 | |
| S2JB (South Sumatra, Jambi and Bengkulu) | 6,755,577 | 37,180 | 910,590 | 5,807,807 | |
| West Kalimantan | - | 7,083,789 | 50,700 | - | 7,033,089 |
| Kalseltengtim (South, Central and East Kalimantan) | South and Central Kalimantan | 12,215,917 | - | - | 12,215,917 |
| East Kalimantan | 10,700,293 | 7,000 | 529,700 | 10,163,593 | |
| Java-Madura-Bali | Banten | 148,986,993 | 1,793,660 | 32,805,390 | 114,387,943 |
| Greater Jakarta Area | 133,407,330 | 5,797,335 | 8,708,890 | 118,901,105 | |
| West Java | 224,305,904 | 24,124,755 | 112,283,050 | 87,898,099 | |
| Central Java and DIY | 109,883,066 | 7,625,920 | 25,419,670 | 76,837,476 | |
| East Java | 178,495,499 | 1,604,437 | 17,734,410 | 159,156,652 | |
| Bali | 29,921,210 | 589,340 | 2,739,680 | 26,592,190 | |
| Sulutgo (North Sulawesi and Gorontalo) | North Sulawesi, Central Sulawesi and Gorontalo | 199,999 | - | - | 199,999 |
| Sulbagsel (Southern Sulawesi Region) | South Sulawesi, Southeast Sulawesi and West Sulawesi | 8,000,000 | 55,000 | 5,010,100 | 2,934,900 |
| Maluku and North Maluku | - | 720,002 | 25,000 | - | 695,002 |
| Papua and West Papua | - | 809,999 | 82,500 | - | 727,499 |
| West Nusa Tenggara | - | 930,000 | 10,800 | 36,000 | 883,200 |
| East Nusa Tenggara | - | 550,000 | - | - | 550,000 |
Based on the clustering of quotas published by PLN, it appears that PLN has also accounted for the capacity quotas approved and granted to customers before the implementation of the new Rooftop Solar System mechanism. Therefore, the remaining quota per cluster available for the rest of the year has been reduced by the approved capacity quotas. This results in certain clusters having quite significantly reduced available quotas (e.g., West Java and Southern Sulawesi Region). In the case of the North Sumatra cluster, this even resulted in a negative figure for the available quota. It remains to be seen whether the negative figure means there will be no available quota, for the North Sumatra cluster for the remainder of 2024.
Following the publication of the quotas per cluster, prospective customers will then be able to submit applications to procure and install Rooftop Solar Systems. Pursuant again to MEMR Regulation 2/2024, the first applications following the issuance of the relevant quota decree must be submitted within 1 month from the publication of the initial quota by the relevant IUPTLU Holder (such as PLN). Subsequent applications should also be submitted strictly during the bi-annual application windows, i.e. in January and July.7 In this respect, PLN has confirmed during the 25 June Socialization that the applications for the 2024 quotas will be opened on 1 July 2024 and to be submitted through PLN's mobile app, "PLN Mobile".
In terms of allocation of the quota, although MEMR Regulation 2/2024 does not detail the principles governing quota determination, MEMR and PLN clarified during the 25 June Socialization that:
- quotas will be allocated on a first-come-first-served basis;
- if a customer's submitted quota is rejected, the quota will become available again; and
- if an application is rejected due to the unavailability of a remaining quota, the prospective customer will be placed on a waiting list to be processed in the next period when the quota for the relevant cluster becomes available.8
It is also worth noting that once a customer is allocated a quota, they must obtain the operational worthiness certificate (SLO, required for COD) for the Rooftop Solar System within 6 months from the approval date, otherwise the quota approval will be revoked.9 Furthermore, if there are any remaining quotas for the development of Rooftop Solar Systems in any given cluster at the end of the current year, these remaining quotas will be added to the development quotas of that cluster for the following year.10
Based on the information conveyed during the June 25 Socialization, the following process applies to submit an application for quota allocation through the PLN Mobile app:
- applicants must first create an ID directly on the app;
- applicants should then access the "PV Rooftop" menu to submit their application for Rooftop Solar Systems approval by entering the proposed quota and upload the required administrative and technical documents;
- if the quota is unavailable, the application cannot be submitted;
- once successfully submitted, PLN will notify the applicant within 7 calendar days if the application can proceed based on the initially submitted documentation;
- if the application is rejected, the quota becomes available again and, if the application can be processed for verification, PLN will issue a final decision on approval or rejection within 30 calendar days from the initial submission date.
Given the finite nature of the proposed quota approach, PLN grid-connected customers (both commercial & industrial as well as residential) who desire to procure all or part of their electricity needs from Rooftop Solar Systems as well as the rooftop solar market developers and other business participants, will be closely monitoring the clustering quotas and how these get allocated by PLN in practice. Interested parties will be holding their breath hoping that the desired capacity for their projects remains available when submitting their application as they would otherwise have to wait for the opening of the next application window (i.e. 5 months later).
It will have to be seen if the app-based system is sufficiently reliable and secure, and that the required transparency over the allocation of new capacity per grid system on a first-come first-served basis (which is of paramount importance to instill market confidence) is ensured in practice throughout PLN's vast service area.
Authors: Frédéric Draps, Partner / Foreign Legal Consultant; and Khairunissa Yuliandhini, Associate.
1. Articles 7 and 8 of MEMR 2/2024.
2. Article 12 of MEMR 2/2024.
3. On 27 May 2024.
4. Article 8(3) and (4) of MEMR 2/2024.
5. Article 9 of MEMR 2/2024.
6. The total capacity quota granted to projects that are in operation and in construction in 2024 within the North Sumatra cluster has already exceeded the stipulated quota.
7. Article 14 of MEMR 2/2024.
8. Article 15(8) of MEMR 2/2024.
9. Article 26 of MEMR 2/2024.
10. Article 11 of MEMR 2/2024.
