However, it is not clear how local content will be precisely measured and to what extent it will prevent developers from using imported solar modules and inverters. To qualify for the FiT, developers will also need to have 43.85% of their solar project content sourced from domestic manufacturers and service providers based on the current Industry Ministry regulation.
However some project developers believe they will not be able to achieve such returns due to the quality of infrastructure in Indonesia at present.ĭevelopers will need to complete 10MW plants within 24 months to avoid triggering penalties of between 3-8% in the first year of delay. Java has been allocated the highest capacity of 150MW but the lowest tariff, with individual project sizes capped at 20MW.Īt a wider level, Kuang said that if the developers in the far eastern part of Indonesia can keep project capex at around US$1.3 million/MW, they will be able to generate returns of more than 10%.
Under the new decree, projects will have 20-year power purchase agreements (PPAs) and the tariff rates will range between US$0.145-0.25/kWh depending on project location. The criteria for the auctions also lacked clarity and were ineffective in attracting good project developers, adds Kuang. The Indonesian Solar Module Manufacturer Association (APAMSI) filed a lawsuit against auctions arguing that solar developers were not using enough local content therefore violating Industry Ministry regulations. The original auctions were stopped in 2014 after being declared unconstitutional by the Supreme Court, Maggie Kuang, analyst at BNEF, told PV Tech. However, the Ministry of Energy and Mineral Resources (MEMR) introduced the country’s first ever FiT for solar in July this year to help kick-start the development 250MW of PV. As of 2015 Indonesia had just 84MW of utility-scale solar capacity deployed. Indonesia has seen very few support mechanisms for solar except for a half-baked solar auction process for 140MW in 2013, which only saw 14MW awarded. Other regions regions may struggle to obtain such attractive rates. Indonesia’s first ever feed-in tariff (FiT) for solar PV projects should generate attractive project returns in Java-Bali and Sumatra, according to a Bloomberg New Energy Finance (BNEF) research note.īNEF expects rates of returns in these two regions, which both have better grid infrastructure and potential project sites than other regions, of around 14-18.8%, said BNEF.
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