Officials in Indonesia have reduced the local content requirement of solar power plants from 50% to 20%.

Indonesia announced on Monday that it had reduced the local content requirement of solar power plants from 40% to around 20%. The country is looking to attract investment into projects which receive at least 50% of their funding through foreign multilateral and bilateral lenders.

Jisman Hutajulu said at a press briefing that "we evaluated the rules so that renewable energy power stations, particularly hydro, wind, and solar, could be immediately installed in our system... and further reduce our emissions."

The new rule allows solar plant projects to import panels up until June 2025. However, the operator must obtain ministerial approval and sign a power purchase contract before the end 2024.

Indonesia has committed to increasing the share of renewable energy in its mix, and foreign lenders have pledged funding. Analysts blamed the local content rule for limiting investment.

In addition, the new rule sets the local content requirements for hydropower plants between 23% and 45% depending on their installed capacity. This is a change from a previously set range of 47.6% to 70.76%. The requirement for wind power plants is 15%.

Solar and geothermal energy accounted for 13.1% of Indonesia’s energy mix in the past year. This is below the 17.87% target. The majority of Indonesia’s energy needs are met by oil and coal.

(source: Reuters)