Jakarta—The local manufacturing industry is seen as a strategic solution to meet Indonesia’s renewable energy needs, which are estimated to reach 2 gigawatts (GW) per year, according to the Institute for Essential Services Reform (IESR) on Monday, August 19.
IESR Executive Director Fabby Tumiwa, in an Energy Corner event themed “Measuring the Effect of TKDN (local content rate) Relaxation on the Local PLTS (solar power generation) Industry,” explained that two new rules issued by the government, Ministerial Regulation (Permen) of ESDM (Energy and Mineral Resources) No. 11/2024 and Minister of Industry Regulation (Permenperin) No. 34/2024, aim to accelerate the implementation of PLTS projects that have been hampered in recent years and attract investment in this sector.
“These regulations are expected to provide impetus for the development of PLTS in Indonesia, especially in terms of the utilization of local components,” Fabby said.
Permen ESDM No. 11/2024 regulates the use of domestic products for developing renewable energy electricity infrastructure, including PLTS, by temporarily relaxing the application of the domestic content rate (TKDN). Meanwhile, Minister of Industry Regulation No. 34/2024 regulates the procedure for calculating the TKDN value for solar modules, the main component in the manufacture of PLTS, without setting a minimum TKDN limit.
“In Permenperin No. 34/2024, PLTS developers are only encouraged to use local components to get a higher TKDN value. This aims to increase the competitiveness of local industries in supplying solar energy needs,” Fabby added.
IESR believes that by strengthening the local solar manufacturing industry, Indonesia can rely on domestic production to meet its renewable energy needs. Based on the draft 2024 National Electricity General Plan (RUKN), solar energy’s contribution to the national energy mix is projected to reach 13 percent by 2060. This indicates the need to install 2 GW of solar power plants annually to achieve the renewable energy capacity target of 134 GW by 2060.
To support the growth of the local PLTS manufacturing industry, Fabby proposes several steps, including the provision of fiscal and non-fiscal incentives to reduce production costs, cooperation with global manufacturers for technology transfer, regulatory certainty, and domestic markets.
Fabby also reminded us that the success of strengthening the local industry depends not only on the TKDN regulation but also on the government’s commitment to creating a stable and significant demand for local products.
“Consistent policies and support for research and development of renewable energy technology are needed to ensure domestic industries can compete in the global market,” he said.
In addition, Fabby emphasized the importance of supervision in the implementation of TKDN relaxation rules so that it not only pursues short-term targets but also serves as a long-term strategy for the sustainable growth of the renewable energy industry in Indonesia. (Hartatik)