After years of anticipation, Indonesia and Singapore have officially signed a memorandum of understanding (MoU) for renewable electricity exports. Energy and Mineral Resources Minister Bahlil Lahadalia and Singapore's Minister for Trade and Industry Tan See Leng on June 13 finalized the agreement, which will see Indonesia supplying up to 3.5 gigawatts of renewable energy to Singapore through 2035. However, in a notable twist, Bahlil announced that state electricity company PLN would not be involved in the deal.

The announcement comes just weeks after the release of PLN's 2025–2034 electricity procurement business plan (RUPTL), which outlines the company's target of adding 69 GW of power generation capacity over the next decade. Minister Bahlil cited this domestic commitment as a constraint, saying it would be difficult for PLN to participate in the export project given its national obligations.

The deal has faced delays, reportedly due in part to PLN's prior involvement. In September 2024, Singapore's Energy Market Authority (EMA) issued conditional approvals for several Indonesian-led projects to export renewable electricity. These projects, led by Pacific Medco Solar Energy, Adaro Solar International, EDP Renewables APAC, Vanda RE and Keppel Energy, awaited a framework for cross-border transmission.

However, transmission remained a bottleneck as PLN holds operational control over Indonesia's cross-border grid infrastructure. Using PLN's transmission network would have subjected exported electricity to PLN's pricing, which is constitutionally regulated and lower than Singapore's market rate, undermining the commercial viability of the projects. Behind-the-scenes negotiations have reportedly focused on decoupling export pricing from PLN's structure to enable viable energy trading.

The agreement's signing is seen as a landmark moment for Indonesia's renewable energy sector, which has long struggled to expand due to regulatory inflexibilities. Under existing rules, after a business is granted an Electricity Supply Business License (IUPTL), it can only do business in a specified business area that is designated together with the IUPTL.

This creates a significant hurdle for renewable energy production, which is limited to a select number of regions and is commonly far away from industrial and urban regions. Theoretically, electricity could be sold across regions, but this scheme would require the use of PLN's transmission grids, which would then become subject to PLN's rigid rules.

These restrictions are exempt in the case of exported electricity. This is because exported electricity is not directly regulated under Law No. 30/2009, which treats electricity as a public good. Rather, exported electricity uses Government Regulation (PP) No. 42/2012 on the cross-border electricity trade. Under the PP, any owner of an IUPTL can apply for an export license, regardless of business area, and the price of the electricity is determined by an agreement between the producer and the importing party. With PLN no longer involved in exporting renewable energy, the export market is seen as a new frontier for Indonesia's renewable energy producers.

PLN's exclusion from the export framework is also linked to broader regional policy shifts. Singapore has recently reinstated a moratorium on the construction of new data centers for the purpose of limiting the country's electricity consumption. This move has prompted Indonesia to position itself as an alternative host for data center investment. According to the RUPTL 2025–2034, PLN will prioritize domestic electricity expansion to serve these upcoming high-energy-use facilities, aligning national utility focus with emerging digital infrastructure trends.

Electricity sector players told us that the MoU between Energy and Mineral Resources Minister Bahlil Lahadalia and Singapore's Minister for Energy and Science and Technology at the Trade and Industry Ministry, Tan See Leng, strengthens Singapore's position to obtain electricity from Indonesia on several levels.

According to an executive at a renewable energy company, since 2022, the Singaporean government had been seeking to formalize electricity export cooperation through a government-to-government (G-to-G) scheme with Indonesia. The Singaporean government wanted, however, some form of commitment guarantee, which the Indonesian government did not provide.

One of the root issues was the lack of a unified stance among Indonesian institutions, ministries and state-owned enterprises (SOEs) in responding to the electricity purchase cooperation offer, especially concerning the technical mechanisms of the export process.

Several years ago, when the deal was still being initially negotiated, the energy ministry was supportive of electricity exports. However, Bahlil, who was then investment minister, was against the electricity export plan. He eventually agreed, under the condition that investors also commit to investing in the manufacturing of solar panels in Indonesia. This is why, during the MoU signing, Bahlil insisted that Singapore invest in the upstream sector, namely solar panel assembly and manufacturing.

On the other hand, PLN wanted all electricity exports to go through it. Companies that have received conditional approval from Singapore's EMA would sell electricity to PLN, and PLN would then sell it to Singapore. The export point would be from PLN Batam. Transmission of electricity to Singapore would also have to use PLN's infrastructure or have PLN's approval.

Several investors who had received conditional approval from the EMA were not agreeable to this scheme.

For this reason, some investors, such as EDP Renewables APAC, Keppel Energy Pte Ltd and Vanda RE, sought to develop submarine cables to export electricity directly. The same applies to Adaro and Medco Power. In this project, Medco is working with Pacific Light Power Pte Ltd (PLP) and Gallant Venture Ltd to form the Pacific Medco Solar consortium. Each joint venture would build submarine cables to transmit cross-border electricity to Singapore.

Even though there is now an MoU between Indonesia and Singapore, the option to build submarine cables remains open. PLN is also considering joining as a joint venture partner with one of the investors to construct a submarine cable.

According to another source, this new MoU is expected to bring about a new alignment among the players planning to export electricity to Singapore. Five companies that previously received conditional approval have now been granted conditional licenses. They have also signed an MoU with PLN regarding the option of PLN taking equity stakes in the generation side. PLN has the option to hold up to 20 percent equity in each of the five consortia. This option also applies to the development of submarine electricity transmission cables. PLN is currently studying which options to take, whether to invest in all consortia or only a few. However, these options are still under discussion.