THE government has just updated two regulations regarding the domestic component content level (TKDN). The Ministry of Energy and Mineral Resources (KESDM) has issued ESDM Regulation No. 11/2024 concerning the Use of Domestic Products for the Development of Electricity Infrastructure. This regulation contains relaxation of the application of the domestic component content level (TKDN) for renewable energy power plants.
Specifically, solar power plants (PLTS) receive temporary relaxation. The condition is that the project signs a Power Purchase Agreement (PJBL) no later than December 31, 2024 and operates commercially no later than June 30, 2026, according to the electricity supply business plan.
In addition, the Ministry of Industry released Permenperin No. 34/2024 concerning Procedures for Calculating the Domestic Component Level (TKDN) Value of Solar Module Products used as components for the manufacture of Solar Power Plants (PLTS).
The regulation does not include a minimum TKDN limit for solar modules that must be met by the solar module manufacturing industry. In addition to materials, local components calculated in the regulation of Permenperin No. 34/2024 include labor and domestic production costs.
Executive Director of the Institute for Essential Services Reform (IESR) Fabby Tumiwa stated that Permenperin No. 34/2024 and Permen ESDM No. 11/2024 are intended to accelerate the implementation of PLTS projects in Indonesia which have been hampered in their implementation for the past three years. The regulation is also expected to attract investment in PTLS projects.
“In the TKDN solar module regulations issued by the Ministry of Industry, PLTS developers are only advised to use domestic components to obtain a higher TKDN value. Meanwhile, in ESDM Regulation No. 11 of 2024, it not only regulates the use of domestic products for PLTS but also regulates the development of renewable energy electricity infrastructure as a whole,” said Fabby in his statement, Thursday (22/8).
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So far, he continued, the PLTS project has experienced implementation constraints because the TKDN regulations do not comply with the development of the domestic solar module industry and the needs and provisions of financial institutions that provide funding for the PLTS project.
IESR analysis shows that there are several steps that can be taken to improve the competitiveness of the local solar power manufacturing industry. First, encourage fiscal and non-fiscal incentives to reduce production costs. Second, cooperation with global manufacturers for technology transfer. Third, regulatory certainty and domestic market.
The existence of the domestic PLTS manufacturing industry in the future can be a mainstay in supplying PLTS needs in Indonesia.
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Based on the draft of the National Electricity General Plan (RUKN) 2024, the contribution of solar energy in the national energy mix is projected to reach 13% in 2060. Meanwhile, renewable energy capacity is 14 GW in 2030 and will increase to 134 GW in 2060.
This indicates the need to install solar power plants of approximately 2 GW per year.
Fabby reminded that strengthening the local industry does not only depend on TKDN regulations. But it also depends on the government’s efforts to create stable and significant demand for local products.
“Consistent policies and support for research and development of renewable energy technology are needed to ensure that domestic industries can compete in the global market,” he said.
“In addition, the government needs to monitor the implementation of this regulation carefully, ensuring that TKDN relaxation is not only a tool to pursue short-term targets, but also a strategic step to encourage the growth of sustainable renewable energy industry in Indonesia,” he concluded. (S-1)
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