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Indonesia's new Rooftop Solar PV Regulation: a difficult balancing act

construction of solar farm


    In recent years, the installation of captive rooftop solar photovoltaic (PV) systems (Rooftop Solar Systems) by commercial and industrial (C&I) market participants and the general public has witnessed remarkable growth around large parts of the world including Indonesia. The surge in the rolling out of Rooftop Solar Systems follows trends observed in other markets and reflects a growing desire amongst C&I and residential customers to procure electricity from renewable sources to reduce their carbon footprint, and in some cases also, achieve a certain degree of self-reliance from the local grid.

    Indonesia has attempted to regulate the development and operation of Rooftop Solar Systems since 2018 to provide a framework to balance the interests of consumers and investors as well as manage potential impact on the grid and allow for some level of control and oversight of the national utility, PLN. Over the past 6 years, not less than 5 regulations have been issued indicating repeated efforts at creating a balance between the aspirations of users and PLN. Since August 2021, the installation of Rooftop Solar Systems connected to the grid was regulated under Minister of Energy and Mineral Resources (MEMR) Regulation No. 26 of 2021 on Rooftop Solar Power Plants Connected to Electrical Power Networks of Holders of Business Licenses for the Provision of Electrical Power for Public Interests (MEMR 26/2021 – for more detail, refer to our previous article). Some of the key features of MEMR 26/2021 included the stipulation of a "1 for 1" or 100% net metering multiplier for the export of excess power from Rooftop Solar Systems to the grid and the related import credit given to rooftop solar customers of "integrated IUPTLU holders" such as PLN. 

    While MEMR 26/2021 was initially perceived as an improvement to the then applicable regulatory regime to ease investments in Rooftop Solar Systems and the sector and supply chain generally, its implementation in the field was hampered by delays in the issuance of the approvals required for the installation and operation of Rooftop Solar Systems.

    After several years of intensive engagement between MEMR, PLN, market participants and relevant sector and consumer interests groups, MEMR now makes another attempt at balancing the interests of all parties involved through the issuance of MEMR Regulation No. 2 of 2024 (MEMR 2/2024), which was promulgated on 31 January 2024 but only made publicly available late February. MEMR 2/2024 revokes MEMR 26/2021 and introduces new policies for the installation of grid-tied Rooftop Solar Systems in Indonesia. 

    In this article, we provide an overview of the key new requirements introduced by MEMR 2/2024 for grid-tied Rooftop Solar Systems highlighting the main changes to the previous regime. For each requirement we also share a flavour of the initial reactions from the market and additional practical guidance on the new rules which were shared by MEMR in its "socialization" of the new regulation which took place on 5 March 2024 which was accessible to the public through livestream (MEMR 2/2024 Socialization).

    Scope of the Regulation

    The scope of MEMR 2/2024 includes Rooftop Solar Systems connected to the grid of an 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)1 (IUPTLU Holder), regardless of whether the system distributes electricity to the grid.2 Rooftop Solar Systems include solar modules, inverters, electrical connections and safety systems, and must be equipped with an "Advanced Meter" to be provided and installed by the relevant IUPTLU holder.3 

    Accordingly, similar to the scope of MEMR 26/2021, MEMR 2/2024 applies to Rooftop Solar Systems installed not only by PLN's customers, but also the customers of any other IUPTLU Holders who have a Business Area (such as certain integrated industrial estates). Furthermore, the regulation specifically pertains to grid-tied Rooftop Solar Systems and does not extend to behind-the-meter or fully off-grid systems. It is worth noting however that the number of privately owned business areas remains very limited, and that the relevance of the regulatory framework overwhelmingly applies to customers of PLN (whether C&I or residential) given PLN's national Wilayah Usaha.

    Key Changes Introduced by MEMR 2/2024

    MEMR 2/2024 introduces a number of significant changes to the regulatory framework governing Rooftop Solar Systems, departing from the provisions established by MEMR 26/2021:

    1. Implementation of Quota for the Development of Rooftop Solar Systems

    Summary of new requirement:

    MEMR 2/2024 requires IUPTLU Holders to prepare a quota for the development of new Rooftop Solar Systems for each electrical grid within their Business Area. The quota shall take into account (i) the priorities of the national energy policy, (ii) the realization of the IUPLTU holder's electricity supply business plan, and (iii) the reliability of the electrical grid in accordance with the grid code of the IUPTLU Holder.4

    Quotas are to be prepared for a 5-year period with an annual (January-December) split. The proposed quota along with the underlying technical analysis are to be submitted to the Directorate General of Electricity (DGE) with a copy to the Directorate General of New, Renewable Energy and Energy Conservation (DGNRE).

    The proposed quota is to be submitted by each IUPTLU Holder (including PLN) no later than October of the preceding year. Specifically for the first quota for the period 2024-2028, MEMR 2/2024 mandates the proposals to be submitted within 3 months from the promulgation of the regulation, i.e., by 30 April 2024.5

    The quota stipulation process can be summarized as follows:6

    Summary of quota stipulation process for the development of rooftop solar systems

    IUPTLU Holders may subsequently propose amendments to the stipulated quota through the same process.7 In the event unused quota for Rooftop Solar Systems development remains at the end of the current year, such excess shall be carried over as additional quota for the following year.8

    Previously, MEMR 26/2021 capped the maximum installed capacity to 100% of the connected power of customers as calculated based on the total capacity of the inverters.9 The new regime no longer imposes a cap on the maximum installed capacity of Rooftop Solar Systems. Instead, MEMR 2/2024 now stipulates that the installed capacity shall be adjusted based on the required capacity of prospective Rooftop Solar System customers as per the quota for development. Practically, this would seem to mean that prospective customers may request the installed capacity they require but this being contingent on the available quota for the relevant period. If the quota has not been stipulated, the installed capacity shall be adjusted based on the IUPTLU Holder's grid condition.10

    Initial market feedback:

    The market perception of the quota requirement is largely negative due to the 5-year term of the quotas (which locks-in development projections for a long period of time) and the discretion given to IUPTLU Holders (including PLN) to propose the quota without any clear oversight or possibilities to challenge the same. 

    Further, MEMR 2/2024 does not elucidate on the approach and principles applicable to the determination of quotas that will be set for specific grid systems, and whether quotas will simply be allocated on a first-come-first-serve basis or any other criteria. Additionally, consumers call for transparency in relation to the remaining quota for the current period and any waiting list which may apply for the subsequent period. Given the lack of requirements or guidance to this effect in MEMR 2/2024, such transparency and disclosure would ultimately be at the discretion of the relevant IUPTLU Holder.

    MEMR 2/2024 socialization:

    During the MEMR 2/2024 Socialization, both MEMR and PLN clarified that the quota approach is implemented due to the intermittent nature of grid-tied Rooftop Solar Systems. These systems require quick adjustments in the grid's ramp-up capacity to compensate for fluctuations in the amount and of electricity generated and injected on the grid. PLN highlighted that this could impact grid stability and reliability, thus requiring a gradual ramp up of rooftop solar installed capacity through grid quotas until flexible smart-grid infrastructure is developed to accommodate grid-tied Rooftop Solar Systems.

    Furthermore, MEMR confirmed that the allocation of quotas shall indeed be on a first-come-first-serve basis. MEMR also emphasized the importance of transparency in the implementation of such quotas by relevant IUPTLU Holders. To this effect, MEMR has introduced an application system called SIMANTAP for the administration of Rooftop Solar Systems connected to the grid of non-PLN IUPTLU Holders, whilst PLN indicated that the existing PLN Mobile application would provide information on the remaining grid quotas for the relevant period.

    2. Elimination of Net Metering and Capacity Charges

    Summary of new requirement:

    Under the previous regime of MEMR 26/2021, a 100% net metering multiplier was stipulated to calculate credits Rooftop Solar System customers could apply to offset their consumption from the grid.11

    MEMR 2/2024 completely removes net metering incentives and expressly provides that any excess electricity from Rooftop Solar Systems which is distributed to the grid will not be factored into the calculation of the relevant customer's electricity bill.12

    Conversely, MEMR 2/2024 also removes parallel operation charges for Rooftop Solar Customers, including capacity charges which applied under the previous regime.13

    The decision to eliminate net metering incentives under MEMR 2/2024 was driven by concerns regarding PLN's capacity to absorb excess electricity from Rooftop Solar Systems and provide credits for it. 

    Initial market feedback:

    The market perception of this change is that for C&I customers net metering is not the primary driver of investing in Rooftop Solar Systems but rather a means to reduce overall electricity costs through direct consumption of the entire production of such systems and to seek to decarbonize their operations. On the other hand, for residential customers the removal of net metering will affect the attractiveness of investing in domestic Rooftop Solar Systems as the primary driver there is generally to lower their monthly electricity bills.

    3. New Mechanism for IUPTLU Holder Approval

    Summary of new requirement:

    Previously, MEMR 26/2021 required Rooftop Solar System customers to obtain approval from the relevant IUPTLU Holder for the construction and installation of the Rooftop Solar Systems by submitting an application form setting out certain details of the planned system. The IUPTLU Holder (PLN in most cases) was required to grant an approval or issue a rejection to the applicant within 5 business days from the receipt of the application. However, despite the prescribed timeframe for approval, the processing of such applications by PLN over the past years since the issuance of MEMR 26/2021 was often marred by delays.

    In an attempt to provide a practical solution to address such delays, MEMR 2/2024 now provides that the application to develop and install Rooftop Solar System shall be submitted to the relevant IUPTLU Holder with a copy to the DGE and DGNRE,14 and that the IUPTLU Holder shall assess the application and issue its approval or rejection within 30 calendar days. If this period elapses without the IUPTLU Holder providing approval or rejection, the application to develop and install Rooftop Solar System will be deemed approved and MEMR through DGNRE will send a notification to the relevant IUPTLU Holder confirming the deemed approval.15

    Importantly for customers and developers, the window to submit applications to procure and install Rooftop Solar Systems is now limited to twice a year, in January and July.16 Specifically for the first application after the issuance of MEMR 2/2024, these are to be submitted within one month from the publication of the initial quota by the relevant IUTPLU Holder.

    The overall application mechanism can be summarized as follows:17

    Summary of overall application mechanism for IUPTLU holder approval

    The development and installation of Rooftop Solar Systems is only permitted upon obtaining approval from the IUPTLU Holder or a deemed approval. If a Rooftop Solar System is installed and connected to the grid without prior approval from the IUPTLU Holder, the IUPTLU Holder may issue a warning letter to the customer, requiring the customer to (i) disconnect their system from the grid and (ii) pay a penalty calculated based on the total inverter capacity x 240 hours x the electricity tariff. Should the customer fail to comply with the warning letter within one month of its delivery, the IUPTLU Holder shall have the right to temporarily suspend its services to the customer until compliance is achieved.18

    Initial market feedback:

    Despite MEMR 2/2024 allowing for "deemed approval" for development and installation of the Rooftop Solar Systems, the market remains sceptical whether this actually represents a real improvement in practice. Firstly, while the deemed approval covers development and installation, it remains uncertain if a further approval from the IUPTLU holder will be necessary for grid connection. Secondly, the IUPTLU Holders (including PLN) retain the discretion to reject submissions for any reason they deem appropriate, and applicants would then only have a limited window to resubmit the application given the limited time windows available to submit applications (i.e., January and July). Additionally, the timing of deemed approvals within the new quota mechanism presents challenges. If a project is deemed approved but the quota has been reached, it's unclear whether the customer will be able to connect to the grid immediately or be placed on a waiting list to use up the quota for the next period. The limited windows to submit applications also raises concerns among investors and developers as it would create limitations to the flow of projects and investment decisions, as well as a potential backlog in processing the applications.

    4. Carbon Economic Value

    Summary of new requirement:

    MEMR 26/2021 provides that Rooftop Solar System customers and IUPTLU Holders may conduct carbon trading in relation to the reduction in greenhouse gas emissions deriving from the relevant Rooftop Solar Systems.19 MEMR 2/2024 goes on to provide that the carbon economic value from the use of Rooftop Solar Systems shall be "in accordance with applicable regulations" and that if there is no such regulation, it shall belong to the Government.20

    Initial market feedback:

    The references to the allocation of potential environmental attributes form Rooftop Solar Systems in MEMR 2/204 raises several concerns in the market. Firstly, it is unclear whether a regulation on carbon economic value from captive Rooftop Solar Systems will be issued by the Government anytime soon.

    Secondly, Rooftop Solar Systems typically aim to reduce customers (especially C&I customers) carbon footprint by them being able to claim green attributes from their Rooftop Solar Systems (such as I-RECs). If the Government were now to claim ownership over the carbon economic value associated with these captive Rooftop Solar Systems, this would raise uncertainties as to whether Rooftop Solar Systems customers/owners could then also legitimately claim emission reductions from their Rooftop Solar Systems. If this new principle results in customers losing their rights to claim environmental attributes from their Rooftop Solar Systems, including the ability to claim carbon emissions reductions from their business activities, this would clearly affect the attractiveness for most in investing in Rooftop Solar Systems. Further clarification from the Government on this issue seems therefore necessary to address this concern.

    MEMR 2/2024 socialization:

    During the MEMR 2/2024 Socialization, questions abounded from the public regarding the implementation of the new provision on the ownership of carbon economic value. MEMR clarified that the regulation mentioned in Article 40 of MEMR 2/2024 would be issued by the Ministry of Environment and Forestry, which supervises the administration and regulatory framework in relation to carbon emission reduction in Indonesia. However, MEMR did not provide any details on the timeline for issuing such regulation nor if, in the interim, the Government would seek to assert its rights over the carbon economic value derived from the use of Rooftop Solar Systems.

    5. Transitional Provisions

    Upon the promulgation of MEMR 2/2024, the following provisions shall apply to existing Rooftop Solar Systems:21

    a) Rooftop Solar Systems currently operational and connected to the grid, but not yet reported to the IUPTLU Holder (such as PLN), must be reported by customers to the relevant IUPTLU Holder within three months of the promulgation of MEMR 2/2024 and he provisions under MEMR 2/2024 will then apply to the relevant Rooftop Solar System.

    b) For:

    • Rooftop Solar Systems that have been approved by the relevant IUPTLU Holder and are already in operation and connected to the grid before the promulgation of MEMR 2/2024; and
    • Rooftop Solar Systems that have been approved by the IUPTLU Holder but are not yet in operation,

    the existing net metering mechanism and capacity charges applicable to them will remain valid for a period of 10 years from the promulgation of MEMR 2/2024.

    c) For prospective Rooftop Solar System customers who have submitted an application to the IUPTLU Holder before the promulgation of MEMR 2/2024 but not yet approval from the IUPTLU Holder, the provisions under MEMR 2/2024 will apply.


    The issuance of MEMR 2/2024 was long in the making and the market (especially investors, C&I participants and households) had high expectations for the renewed framework to provide more clarity and certainty in the requirements and process involved in being able to install and operate Rooftop Solar System across the Indonesian archipelago. 

    While it is acknowledged by all that balancing PLN's financial sustainability and grid stability with the need to incentivize renewable energy adoption requires careful consideration and strategic planning, it is fair to say that the introduction of the new principles and requirements under MEMR 2/2024 have not been particularly well received by most private market participants.

    The implementation of a quota system, coupled with the elimination of net metering incentives and uncertainties surrounding the allocation and ownership of green attributes, raises concerns of private market participants and individual consumers alike about the potential for rapid scaling up of installed rooftop solar capacity in Indonesia. 

    As always, time and the practice in the field will tell whether these initial concerns were justified or whether instead the new framework will provide improved market confidence and support the same organic growth of rooftop solar self-generation witnessed in other large markets in South-East Asia and other parts of the world, whilst at the same time allowing PLN to continue to invest in the grid infrastructure required for the gradual electrification of society.

    Authors: Frédéric Draps, Partner / Foreign Legal Consultant and Khairunissa Yuliandhini, Associate.


    1. Business Area of Wilayah Usaha refers to a specific area designated by MEMR where an electricity supply company is authorized to distribute and/or sale electricity to its customers.
    2. Article 2 of MEMR 2/2024.
    3. Article 3(1) and 2) of MEMR 2/2024.
    4. Article 7(1) and (2) of MEMR 2/2024.
    5. Article 8(3) and (4) of MEMR 2/2024.
    6. Articles 8-9 of MEMR 2/2024.
    7. Article 10(1) and (2) of MEMR 2/2024.
    8. Article 11 of MEMR 2/2024.
    9. Article 5(1) of MEMR 26/2021.
    10. Article 12 of MEMR 2/2024.
    11. Article 6 of MEMR 26/2021.
    12. Article 13 of MEMR 2/2024.
    13. Article 29 of MEMR 2/2024.
    14. Article 14(1) of MEMR 2/2024.
    15. Article 15 of MEMR 2/2024
    16. Article 14(2) and (3) of MEMR 2/2024.
    17. Article 14 of MEMR 2/2024.
    18. Article 23 of MEMR 2/2024.
    19. Article 28 of MEMR 26/2021.
    20. Article 40 of MEMR 2/2024.
    21. Articles 46-48 of MEMR 2/2024.

    Oentoeng Suria & Partners (OSP) is an Indonesian firm affiliated with Ashurst, a global law firm.  The Ashurst Group comprises Ashurst LLP, Ashurst Australia and their respective affiliates (including independent local partnerships, companies or other entities) which are authorised to use the name "Ashurst" or describe themselves as being affiliated with Ashurst, such as OSP.  Some members of the Ashurst Group are limited liability entities. Information about OSP can be found in, and further information on which Ashurst Group entity operates in any country can be found on our website at

    This material is current as at 19 March 2024 but does not take into account any developments to the law after that date. It is not intended to be a comprehensive review of all developments in the law and in practice, or to cover all aspects of those referred to, and does not constitute legal advice. The information provided is general in nature, and does not take into account and is not intended to apply to any specific issues or circumstances. Readers should take independent legal advice. No part of this publication may be reproduced by any process without prior written permission from Ashurst. While we use reasonable skill and care in the preparation of this material, we accept no liability for use of and reliance upon it by any person.

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


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