The Indonesian government, through the Ministry of Energy and Mineral Resources (MEMR), continues to strive to accelerate the energy transition to achieve its Net Zero Emission target by 2060. One of the latest steps is the issuance of MEMR Regulation No. 5 of 2025 on the Guidelines for Power Purchase Agreements (PPA) from Power Plants Using Renewable Energy Sources. This regulation serves as a comprehensive guide aimed at providing legal certainty for renewable energy project developers to encourage the acceleration of renewable energy development in electricity supply, including waste-based power plants, as well as expediting the implementation of power purchase agreements. The issuance of this Ministerial Regulation also implements the provisions of Article 21 paragraph (4) of Presidential Regulation No. 112 of 2022 on the Acceleration of Renewable Energy Development for Electricity Supply.
In its implementation, this regulation addresses several important aspects, including the key provisions in the Renewable Energy Power Purchase Agreement (PPA), starting from the agreement duration of up to 30 (thirty) years from the Commercial Operation Date (COD), which can be extended without considering initial investment costs. It also covers the rights and obligations of Power Plant Developers (PPL) and PT PLN (Persero), risk allocation, project implementation guarantees, as well as provisions related to commissioning and the Commercial Operation Date (COD). Additionally, it regulates electricity transactions, which covers pricing, payments, and the purchase of excess electricity, the force majeure scheme, and Deemed Dispatch conditions. This regulation also covers power plant performance standards, PPA termination, rights transfer, pricing adjustments, dispute resolution, the use of domestic products, and environmental attributes or carbon economic value.
Furthermore, the regulation also details the utilization of excess energy from geothermal power plants (PLTP) and Nuclear Power Plants (PLTN). With the new regulation, excess capacity can now be sold and utilized by PLN, thus improving the efficiency of the national electricity system. Moreover, this regulation also governs the mechanism for ownership of environmental attributes and carbon economic values, providing greater certainty for developers in their investment calculations.
Additionally, the regulation introduces mechanisms for managing intermittent renewable energy sources, requiring developers to submit production estimates and integrate battery storage solutions where necessary. These measures ensure grid stability while supporting the national renewable energy mix target and long-term energy security.
With the introduction of these PPA guidelines, Indonesia aims to create a more favourable investment environment for renewable energy projects. The regulation provides a structured framework for PPL and PLN in negotiating and executing power purchase agreements. By addressing key concerns such as pricing mechanisms, legal certainty, and energy sales arrangements, the government seeks to boost investor confidence and accelerate renewable energy adoption.
If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of many corporate law firms in Indonesia that has handled numerous similar matters, with many experienced and professional corporate and civil lawyers in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.
Author:
Dewi Susanti