Brighter days ahead as Indonesia’s Ministry of Energy and Mineral Resources revised rooftop solar system regulations
In August of this year, the government reviewed the regulations on rooftop solar systems and released the Department of Energy and Mineral Resources (“MEMR”) Regulation No. 26 of 2021 (“New regulation“). This new regulation entered into force on August 20, 2021 and regulates the rooftop solar system connected to the power supply grid held by holders of a commercial license to supply electricity for the public interest (Izin Usaha Penyediaan Tenaga Listrik untuk Kepentingan Umum) or commonly known as IUPTLU.
Despite their growing worldwide popularity, buildings or properties with rooftop solar systems are still relatively rare in Indonesia. Previously, the government had already published two regulations on rooftop solar systems, namely MEMR Regulation No. 1 of 2017 and MEMR Regulation No. 49 of 2018, as amended several times and finally by MEMR Regulation No. 16 of 2019. The old regulations, among others, the parallel operation of a rooftop solar system and power grid owned by PLN – Indonesia’s national electricity company, while the latter regulated the use of a rooftop solar system by PLN consumers. While the new regulation repealed the 2018 regulation in its entirety, only the parallel operation related to the use of the roof solar system provisions in the 2017 regulation is repealed.
The new regulation contains several crucial elements, which we will discuss in detail below.
The new regulation regulates any rooftop solar system placed on the roof, wall or other parts of the property owned by rooftop solar customers connected to the power grid owned by IUPTLU holders. A rooftop solar client is a person or entity that installs the solar system on the rooftop. Meanwhile, IUPTLU holders are entities that have an area of electrical activity and are authorized to supply electricity to the public. Currently there is only a small pool of IUPTLU incumbents in Indonesia, including PLN, the largest holder of IUPTLU with a field of activity covering almost all of Indonesia and several private entities.
Like the previous regime, the new regulation limits the capacity of the solar system on the roof installed by the customer of such a system in the activity zone of a public entity holding an IUPTLU to 100% of its connected power. However, rooftop solar customers whose systems are connected to other IUPTLU holders in addition to a public entity may be subject to a different limitation as determined by the relevant IUPTLU holders. These holders must declare their respective limitation on an annual basis via an electronic application that the Directorate General of New, Renewable Energies and Energy Savings of the MEMR (Direktur Jenderal Energi Baru, Terbarukan, dan Konservasi Energi) (“General Directorate of Renewable Energies”) Will establish. It should be noted that the new regulation requires the creation of this electronic application within six months from the date of entry into force of the new regulation (i.e. August 13, 2021).
In addition to the above, the new regulation also regulates:
- The construction and installation of solar systems on the roof, but not other companies that often support this construction and installation;
- Authorization granted to the rooftop solar customer and IUPTLU holder to perform carbon trading, which will be further regulated in a separate regulation;
- The use of equipment for solar roof systems, which includes solar modules, inverters, electrical connection, security system, export and import of kWh meters and additional features such as batteries or other storage media, all of which must comply with the content requirements (tingkat komponen dalam negeri or TKDN); and
- License requirements, i.e. an approval from the IUPTLU holder, an IUPTLS or the commercial self-interest feed license (Izin Usaha Penyediaan Tenaga Listrik untuk Kepentingan Sendiri), and an SLO or a certificate of operational value (Sertifikat Laik Operasi).
Construction and installation of solar systems companies on the roof
Construction and installation of rooftop solar systems can only be carried out by commercial entities with a commercial license for electricity support services (Perizinan Berusaha Jasa Penunjang Tenaga Listrik), commonly known as IUJPTL. These entities must also provide an application to monitor the power produced by their solar rooftop system. This application must be integrated into the electronic application of the Directorate General of Renewable Energies. In addition, the entities must also be registered in the electronic application of the Directorate.
Typically, customers who install or use a rooftop solar system must obtain the following licenses:
- Approval of the holder of the IUPTLU to use a solar system on the roof
To use a rooftop solar system, a rooftop solar customer must first seek approval from the desired IUPTLU holder by copying the Directorate General of Renewable Energy and the Directorate General of Electricity of MEMR. The holder of the IUPTLU must approve or reject the request within five days of receiving the request. In addition, if the customer still uses the prepaid mechanism to pay their electricity tariff, their request must also include a request to change the payment method to the postpaid mechanism.
- IUPTLS to build and install a rooftop solar system with a total capacity of over 500 kW
A rooftop solar customer who builds and installs a rooftop solar system with a total capacity of more than 500 kW connected in an electrical installation system must obtain an IUPTLS from the MEMR or the governor (if applicable).
Meanwhile, a rooftop solar customer who builds and installs a rooftop solar system with a total capacity of up to 500kW connected in an electrical installation system must submit a single report to the MEMR or the governor (where applicable applicable) before building and installing the solar system on the roof. The IUPTLS and the report will be issued and must be submitted, if applicable, through the electronic application of the Directorate General of Renewable Energies.
- SLO, depending on the total capacity of the solar roof system
A customer using the following types of solar roof systems must obtain an SLO issued by a technical inspection body:
- A rooftop solar system with a total capacity of over 500 kW connected in an electrical installation system; and
- A rooftop solar system with a total capacity of up to 500 kW with a separate control panel.
No SLO is required for a customer using a rooftop solar system with a total capacity of up to 500 kW with an inseparable control panel. However, such a customer must hold a letter of statement of responsibility for electrical safety from the owner of the electrical installation and the business entity holding the IUJPTL. In addition, the customer must also submit to MEMR the product certificate, a valid manufacturer’s warranty, a result of the commissioning test and documents regarding the maintenance of the plant installation.
For the SLO and the letter of representation, including additional documents, the customer can request assistance from the business entity holding the IUJPTL.
KWh meter and calculation of exported and imported power
A rooftop solar system must be equipped with an export and import kWh meter, which must be supplied and installed by the holder of the IUPTLU. This requirement must be fulfilled within 15 days of receipt of the SLO or letter of representation (including additional documents) by the IUPTLU holder from the client. The customer will bear the cost of supplying and installing the meter.
A key improvement under the new regulation is the 100% recognition by the IUPTLU holder of the power exported by the customer from the rooftop solar system (exported power = kWh value recorded in the kWh meter x 100 %). This is a significant departure from the previous regime, which only allowed an IUPTLU holder to recognize 65% of the electricity exported by the customer from the rooftop solar system. This means that the amount that can reduce a customer’s electricity bill is considerably more.
In addition, the new regulation also makes it possible to accumulate and calculate the difference between the quantity of power exported and the quantity of power imported during a current month in order to reduce the customer’s electricity bill for the following month. This credit will be valid for six months (from January-June and July-December), which is still an improvement compared to the previous scheme which only allowed three months to credit.
Tariff class customers for industrial purposes
A rooftop solar system built and installed by a customer in this rate class is subject to a monthly capacity charge of the total inverter capacity (kW) x 5 hours x electricity rate. However, they are not subject to the emergency energy charge.
In addition, this type of customer must regularly report the operating plan of his roof solar system to the holder of the IUPTLU. Suppose the system has a capacity of more than 3 MW. In this case, the customer must also provide a meteorological forecast database parameter integrated into the Supervisory Control and Data Acquisition (SCADA) system or the intelligent distribution system of the IUPTLU holder.
Several key changes in the New Regulations such as increasing the recognition of exported power from 65% to 100%, the new electronic application system as well as the customer service center, are intended to attract new customers, which they are commercial and industrial or domestic, to install their own solar system on the roof. The new definition of rooftop solar system ‘customers’, which replaced the previous definition of ‘PLN customer’, is also likely to attract new customers, as the new regulation expands access for non-IUPTLU holders. PLN to enter the rooftop solar energy market. as long as they meet the definition of holder of the IUPTLU, which includes having their own field of activity.
Overall, the enactment of the new regulations is good news. While it may take some time for Indonesia to catch up with its Southeast Asian neighbors on the digital rooftop solar system, we expect the new regulations to rekindle interest in the industry.
Temmy Tandri Kurniawan and Suci Fitria A. also contributed to this alert.