Updated rooftop solar panels rulings eliminates net metering
President Joko "Jokowi" Widodo has recently approved the long-awaited revision of a ministerial regulation on rooftop solar power (PLTS) that has not been implemented fully by state electricity company PT PLN. The regulation addresses such hiccups in its implementation by eliminating exports of excess electricity to PLN and introducing a quota system, but it would likely discourage private investment into rooftop PLTS.
Approved by Jokowi in early January, the revision of Energy and Mineral Resources Ministerial Regulation No. 26/2021 on rooftop PLTS and energy distribution businesses went through a lengthy process that began in September 2022, according to Energy and Mineral Resources Ministry secretary-general Dadan Kusdiana.
The core of the problem of the ministerial regulation No. 26/2021 is its provision on net metering, which allows residential users of rooftop solar panels to export 100 percent of excess solar energy to PLN for a deduction in their electricity bill. Under this scheme, rooftop solar panel users would be able to speed up their return on investment (ROI).
As PLN suffers from electricity oversupply, especially in its Java and Bali network, it has refused to pay for the excess electricity coming from rooftop solar panels. PLN argues that if it has to pay 100 percent electricity coming from rooftop solar panels in times of electricity oversupply, it will increase PLN's generation production cost (BPP), which eventually would burden its finances or be charged to the government in the form of a subsidy.
When revising the ministerial regulation, Dadan said the government had mulled over a couple of issues, such as the state budget's burden and the current oversupply of electricity borne by state-owned electricity company PLN. Subsequently, these concerns would go on to be addressed under the revised ruling.
As expected, the revised regulation sees the elimination of the net metering. Furthermore, it introduces a quota system, which will limit the amount of electricity capacity that rooftop solar panel users can install. Previously, users could install solar panels with a generation capacity of up to 100 percent of the total electricity that they consume. Under the updated ruling, the electricity capacity that users can install will be based on the remaining quota for rooftop solar panels in the PLN grid of a given region.1
Concerning the elimination of net metering and the introduction of a quota system, Indonesian Solar Energy Association (AESI) chairman Fabby Tumiwa explained that the revised ruling would instead increase the investment and operational costs of rooftop solar panels. Consequently, this would make investments in rooftop solar panels less attractive to the market and stifle the potential it has for consumers. Fabby suggested that the new ministerial regulation needs to be revised after one or two years of implementation to encourage more investment into rooftop solar energy.2
Sources within the government indicate that the revision of Ministerial Regulation ESDM 26/2021 regarding rooftop solar power policy is mutually beneficial for PLN and the Ministry of Energy and Mineral Resources (ESDM). However, the revision leans more towards accommodating PLN's interests. Since the onset, PLN has been hesitant about policies developing rooftop solar panels. Regulations regarding photovoltaic energy generation erode their revenue.
Another source adds that the issue of rooftop solar panels would not need to drag on if the government was willing to compensate for PLN's revenue loss due to the commercial use of rooftop solar panels, especially for the residential market.
Moreover, the value to compensate for the lost revenue of PLN is insignificant compared to the increase in social assistance funds in the 2024 State Budget. As an example, the target increase of total of rooftop solar panel capacity reaching 3 GW, an overly ambitious target by business players, erodes PLN's revenue by around Rp 7-8 trillion.
One source from the business community adds that the revision of Ministerial Regulation ESDM 21/2021 is evidence that the government is not particularly committed to the development of new and renewable energy. "The core of the problem is indeed within the government," he said. "Especially concerning President Jokowi's political will regarding RE policy."
The evidence is that in every cabinet meeting discussing rooftop solar power policy, the ESDM tends to stand alone against the State-Owned Enterprises (SOEs) Ministry and the Finance Ministry. Additionally, President Joko Widodo tends to side with the Finance and SOEs Ministries as well. Moreover, the coal oligarchs share the same interests as PLN, which are oppositional to the development of renewables as an alternative energy source. Finance Minister Sri Mulyani also has an interest in ensuring that PLN's cash flow does not collapse.
The revision of Ministerial Regulation ESDM 21/2021 also acts as evidence that SOEs in the electricity sector are reluctant to provide any kind of pathway for rooftop solar panels to develop in Indonesia, especially amidst the ongoing surplus of PLN's electricity.
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