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Terminating the Electrical Steam Power Plant Under Presidential Regulation No. 112 of 2022 in Indonesia

The promulgation of the law in Indonesia by Presidential Regulation No. 112 of 2022 concerning the Acceleration of Renewable Energy Development for Electricity Supply ("PR 112/2022") is a sign that Indonesia will start implementing low-emission electricity projects to protect the environment. PR 112/2022 stipulates the Electric Supply Business Plan (Rencana Usaha Penyediaan Tenaga Listrik/"RUPTL"), forming the roadmap for accelerating the termination of thermal power operations, the purchasing of electricity and government support to accelerate the development of renewable energy. PR 112/2022 stated that the implementation of an electrical steam power plant (Pembangkit Listrik Tenaga Uap/"PLTU") must stop as PLTU produces energy from coal and generates high emissions. As such, the Government aims to halt the construction of the new PLTU.

The Indonesian Government, through regulation in Indonesia, is decreasing the price of renewable energy resources (Energi Baru Terbarukan/"EBT") intending to replace the PLTU. The government strives to reduce the construction of PLTU by implementing a gas-based power plant or EBT usage. By supporting this claim, the Indonesian Government has pushed the price deflation of EBT and is predicted to continue decreasing it. In contrast to this, construction of a newly established PLTU is still allowed if the pre-requisites stated in Article 3 Paragraph (4) of PR 112/2022 are fulfilled, which are:

  1. The PLTU was established in the RUPTL before the enactment of PR 112/2022.
  2. The PLTU are:
    • Integrated with industries that are oriented towards increasing the added value of natural resources or are included in National Strategic Projects that have a significant contribution to job creation and/or national economic growth;
    • Committed to reducing greenhouse gas emissions by at least 35 percent in a period of 10 years since the operating of the PLTU began compared to the average PLTU emissions in Indonesia in 2021 through technological development, carbon offsets and/or renewable energy mix;
    • Operating at most until the year 2050.

The enactment of PR 112/2022 was done with the intention that foreign investment will increase and create a positive impact on the Indonesian economy as supported under Article 23 Paragraph (11) of PR 112/2022, which states that the Ministers/heads of institutions that carry out government affairs in the field of investment/investment provide support in the form of certainty in the ease of business licensing and investment facility implementation in the development of EBT, both at the central and regional levels.

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 a lot of 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

Schinder Consultant London Ltd.


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