Indonesia has relaxed its local content requirements for solar power projects financed by foreign investors in a bid to accelerate the development of renewable energy and support the domestic solar panel industry. The policy shift, implemented through Energy and Mineral Resources Ministerial Regulation No. 11/2024, took effect on July 30.
Rachmat Kaimuddin, undersecretary for transportation and infrastructure at the Office of the Coordinating Maritime Affairs and Investment Minister, explained that this move is designed to attract international funding and speed up the renewable energy transition. “We cannot wait until the domestic industry is ready,” he said.
Under the new rules, solar power projects can now bypass local content requirements if at least 50% of their funding comes from foreign multilateral or bilateral sources. Additionally, solar power plant projects are allowed to use imported panels, provided they receive approval and sign a power purchasing agreement by the end of 2024. However, the imported panels must come from companies committed to setting up production facilities in Indonesia. The import window will close on June 30, 2025.
Previously, the regulations required 60% of solar power plant components to be sourced locally. The new regulations also revoke a 2012 rule mandating the use of domestic products for electricity infrastructure, except in cases where domestic products are unavailable or unsuitable.
The Indonesian government aims to increase the share of renewables in its energy mix and has secured over US$20 billion in funding from international partners through the Just Energy Transition Partnership. However, local content rules had previously hindered funding, affecting numerous renewable projects.
Industry experts, including Indonesian Solar Energy Association (AESI) chairwoman Mada Ayu Habsari, have welcomed the new regulations, believing they will ease development challenges. Meanwhile, Fabby Tumiwa of the Institute for Essential Services and Reform emphasized the need for growth in the domestic solar panel industry and the attraction of tier-1 solar module manufacturers.
