Indonesia cuts solar local content requirement to 20%

By Aya El Sayed On Aug 12, 2024

Indonesia announced on Monday that it had reduced the minimum local content requirement for solar power plants to 20 per cent from around 40 per cent, aiming to unlock investments in projects which get at least half of finances from 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, told reporters at a press conference.

The new regulation, announced on Monday, allows the use of imported solar panels until June 2025, provided certain conditions are met, including ministerial approval and a power purchase agreement by the end of 2024.

The rule also adjusts local content requirements for hydro and wind power plants to 23–45 per cent and 15 per cent, respectively.

The move is part of Indonesia’s strategy to increase the share of renewables in its energy mix, which stood at 13.1 per cent last year, falling short of its 17.87 per cent target.

The changes aim to unlock investment by addressing previous constraints linked to local content rules, with foreign lenders ready to fund projects.

Attribution: Reuters