The Energy Regulation and Markets Review - Stikeman Elliott

Indonesia
of critical infrastructure. In practice, coordination and cooperation between the
infrastructure manager and the police is still considered weak. Some vital systems of
infrastructure have not yet met the standard requirement for protection and the police
force deployment cannot meet the required level of personnel. Utilisation of modern
infrastructure protection devices is also minimal.
IV
ENERGY MARKETS
The National Energy Policy and the 2009 Electricity Law, the 2001 Oil and Gas Law and
the 2009 Mining Law provide for the tendering of energy business opportunities by the
MEMR. The bidding process is generally on a competitive basis through a transparent
process. After a preferred bidder is selected, PT PLN and the preferred bidder follow a
process involving, inter alia, negotiations of electricity tariffs and other terms, approval
of tariffs by the MEMR, issuance of business licences by the MEMR, completion of
financing, and EPC awarding followed by commercial operation commencement.
Direct appointment is permitted for certain expansion projects, in crisis situations and
for marginal gas and renewable energy projects.
Prices of electricity to end users are regulated based on the category of end user. Gas
sales prices are approved by the MEMR. There is no organised market for energy or gas.
V
RENEWABLE ENERGY AND CONSERVATION
i Development of renewable energy
Currently, the development of renewable energy is regulated by Presidential Decree No. 5
of 2006 regarding the National Energy Policy. This decree states that the contribution
of new and renewable energy in the 2025 national primary energy mix is estimated at
17 per cent, consisting of 5 per cent biofuel, 5 per cent geothermal power, biomass,
nuclear, hydro, and wind, and also liquefied coal at 2 per cent. The government will take
measures to add the capacity of micro-hydropower plants to 2.8GW by 2025, biomass
to 180MW by 2020, wind power to 0.97GW by 2025, solar to 0.87GW by 2024, and
nuclear power to 4.2GW by 2024. The total investment needed for this development
of new and renewable energy sources up to the year 2025 is projected at $13.1 billion. 4
Indonesia’s geothermal reserves contain approximately 40 per cent of the world’s
total geothermal reserve (29.2GW), spreading across 250 locations all over the Indonesian
Archipelago.
Of the potential reserves, about 15.9GW are estimated reserves and about 2.3GW
are proven, 12.8GW are probable and 823MW are possible reserves. 5 The sector remains
underdeveloped with only around 1.2GW capacity installed. 6
4 The National Energy Policy.
5 http://prokum.esdm.go.id/Publikasi/Statistik/Statistik%20Energi%20Baru%20Terbarukan.
pdf.
6 Id.
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