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Local content rules holding back 9 renewable energy projects, PLN says
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Officials clean the surface of a solar panel installed on top of Gedhe Market in Klaten regency, Central Java, on Dec. 6, 2023. (Antara/Aloysius Jarot Nugroho)
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ine new renewable energy projects worth a combined Rp 51 trillion have seen their financing dry up as a result of international lenders' unwillingness to meet government local content requirements, state-owned electricity company PLN said on Tuesday.
Zainal Arifin, executive vice president of renewable energy at PLN, said the financing issues had led to delays in the development of the renewable energy capacity called for in the government’s electricity procurement plan, alongside other factors such as an ongoing oversupply of electricity, as quoted by Kontan.
“We are obtaining funding from the Asian Development Bank (ADB), World Bank and the Japan International Cooperation Agency (JICA), [but this] is currently hindered as local content is not part of their procurement process,” he said.
He added that the company was seeking to auction off the Cisokan Hydroelectric Power Plant in West Java, the Matenggeng Hydroelectric Power Plant in Central Java and the Hulu Lais Geothermal Power Plant in Bengkulu but had so far been unsuccessful.
“[This is] because the local content couldn’t be accepted in the procurement process for the ADB, World Bank and JICA,” he said.
Read also: Prabowo vows to hike local content requirement
Indonesia has implemented local content requirements in many sectors, including renewable energy and electric vehicles. The regulations are set by the Industry Ministry to favor Indonesian industry.
