Government Accelerates Energy Transition through Stricter Governance of Hybrid Power Plants under Minister of Energy and Mineral Resources Regulation Number 19 of 2025

Introduction

On December 29, 2025, the Ministry of Energy and Mineral Resources (“EMR”) issued Minister of Energy and Mineral Resources Regulation Number 19 of 2025 on Hybrid Power Plants (“MEMR Regulation 19/2025”). MEMR Regulation 19/2025 governs the operational procedures, procurement mechanisms, and commercial arrangements of Hybrid Power Plants, particularly within small-scale grid systems in small islands and isolated areas.

MEMR Regulation 19/2025 was introduced to support the acceleration of the national de-dieselization program. In the recitals, the government emphasizes the necessity to reduce dependency on fossil fuel-fired power plants in remote areas and to enhance electricity service hours. MEMR Regulation 19/2025 governs the integration of renewable energy technology with other power plant technologies or battery energy storage systems to maintain supply reliability and suppress operational costs.

Key Provisions

Definitions and Business Scope of Hybrid Power Plants

Articles 1 and 2 define Hybrid Power Plants as power generation facilities that combine renewable energy generation with other power plant technologies or Battery Energy Storage Systems (“BESS”), operated simultaneously at a single grid connection point.

Configuration

MEMR Regulation 19/2025 allows Business Entities to develop projects on independent grid systems connected to local distribution. Article 3 subsequently regulates the permissible technological configurations, including:

1. Combination of one type of Renewable Energy with another type of Renewable Energy;

2. Combination of Renewable Energy with BESS;

3. Combination of Renewable Energy with New Energy (such as Hydrogen);

4. Combination of Renewable Energy with previously operating or existing Non-Renewable Energy facilities (Diesel Power Plants or "PLTD").

Such Hybrid Power Plant configurations will be subject to government evaluation once every two years and at any time as deemed necessary.

Technical Reliability and Energy Management Obligations

The government establishes technical standards for businesses to maintain power supply quality. Article 4 requires each Hybrid Power Plant configuration to comply with system reliability standards, including flexibility in responding to supply and demand variations, as well as frequency and voltage stability. For power plants utilizing BESS, Article 4 paragraph (6) requires the implementation of an energy management system that regulates the plant operation pattern to maintain the production and demand balance, control operating costs, and maintain frequency and voltage quality. Furthermore, Article 5 requires all installations to comply with the Indonesian National Standard (SNI) or applicable international standards to ensure grid operation safety.

Procurement Mechanism through Direct Selection

Article 7 stipulates Direct Selection by PT PLN (Persero) as the applicable procurement mechanism, replacing general tender procedures. In its implementation, PT PLN (Persero) prioritizes the clustering of power plant locations on Small-Scale Systems. This Article also stipulates a procurement completion timeline of no later than 180 calendar days from the Direct Selection announcement to the signing of the Power Purchase Agreement (“PPA”). If only one Business Entity submits a bid during the Direct Selection process, the process shall be declared a failure and a re-selection shall be conducted. However, if there is only one bidder in the re-selection, the procurement process shall proceed.

Selected Provider List Qualification Requirements

Article 8 and Article 7 paragraph (3) establish market entry requirements by mandating Business Entities to be registered in the Selected Provider List before participating in direct selection. Provisions regarding the qualification and selection of these providers cover the following points:

1. PT PLN (Persero) issues updates to the Business Entity Selected Provider List once every 3 months and at any time as deemed necessary.

2. The issuance of such list is based on the initial selection results or pre-qualification of Business Entities in accordance with internal criteria established by PT PLN (Persero).

3. Evaluation of bid documents in the direct selection covers three main assessment aspects, namely administrative assessment, technical assessment, and financial assessment.

4. Business Entities must submit complete bid documents to PT PLN (Persero) to be evaluated in the direct selection process.

Pricing Scheme and Escalation Ban

Articles 9 and 10 regulate the commercial structure of electricity purchase. The electricity purchase price is determined based on a ceiling price (maximum benchmark price) and a floor price (minimum benchmark price), as stipulated in a Ministerial Decree. In Direct Selection, the winner is determined based on the lowest price bid within such price range. The applicable price regulations include:

1. The price is fixed and there is no price escalation during the Power Purchase Agreement contract period.

2. The bid price must account for the project location factor determined in the Ministerial Decree.

3. Evaluation of the benchmark price is conducted every 2 years by considering the average PLN contract price and market assessment.

4. The purchase price applies from the Commercial Operation Date.

5. If the purchase price causes an increase in PLN's Cost of Supply [Biaya Pokok Penyediaan (“BPP”)], PLN is entitled to compensation from the government subject to state financial capability.

Grid Cost Components and Currency

Articles 11 and 12 clarify the limitation of investment cost liability. The agreed electricity purchase price applies only at the power plant busbar connection point and excludes grid facility prices. Grid facility costs are determined separately based on mutual agreement, subject to a maximum cap of 5 (five) percent of the electricity purchase price. If grid costs exceed the 5 (five) percent threshold, the Business Entity must apply for special price approval to the Minister. Article 13 also affirms that all transaction payments use the Rupiah currency referring to the Jakarta Interbank Spot Dollar Rate or JISDOR exchange rate at the agreed time.

Contract Legality and Government Guidance

Article 14 mandates that all electricity purchase transactions must be set forth in a Power Purchase Agreement (PPA) between the Business Entity and PT PLN (Persero). In addition, Articles 18, 19, and 20 regulate the government's role in conducting direct guidance and supervision of Business Entities. The government conducts guidance through:

1. Consultation regarding regulation implementation.

2. Information dissemination.

3. Facilitation of problem resolution faced by Business Entities in the field.

4. Direct supervision by the Minister on the compliance of power plant configuration and electricity purchase processes.

Carbon Economic Value Incentives, Reporting, and Local Content ("TKDN")

Article 15 grants businesses the right to obtain benefits from Carbon Economic Value implementation in accordance with statutory provisions. Articles 16 and 17 subsequently establish PT PLN (Persero)'s reporting obligations to the Minister. Such reporting obligations cover:

1. Report on electricity purchase implementation no later than 5 working days after contract signing, equipped with the cost structure and financial model of each Hybrid Power Plant.

2. Report on the progress of Hybrid Power Plant construction implementation once every 6 months until the commercial operation date.

3. Report on Local Content achievement of the Hybrid Power Plant once every 6 months.

Non-PLN Business Area Expansion

Article 21 regulates the application of electricity purchase provisions from Hybrid Power Plants outside the working area of PT PLN (Persero). Such provisions may serve as a reference by Business Entities holding business areas other than PT PLN (Persero) in conducting electricity purchases. This regulation enables the application of the same purchase scheme in private business areas or industrial estates possessing their own electricity supply business licenses.

Transitional Provisions

Article 22 governs the legal treatment of ongoing projects upon the entry into force of MEMR Regulation 19/2025, on 19 December 2025, which may result in the cancellation of certain business agreements. For procurement processes that have been completed and prices agreed upon by the Business Entity and PT PLN (Persero) but have not yet received Minister approval, the following provisions apply:

1. Electricity purchase shall proceed using the agreed price if such price is below the local Diesel Power Plant (PLTD) Cost of Supply used as reference during the procurement process.

2. Electricity purchase for such location shall be cancelled if the agreed price is above the local Diesel Power Plant (PLTD) Cost of Supply (BPP) used as reference during the procurement process.
   

Closing

MEMR Regulation 19/2025 establishes a framework for Hybrid Power Plant development covering technological configuration arrangements, system reliability standards, procurement mechanisms through Direct Selection by PT PLN (Persero), as well as electricity purchase price schemes with ceiling and floor limits without escalation. These provisions also regulate qualification requirements through the Selected Provider List, grid facility cost limitations, use of Rupiah currency, and transaction binding through Power Purchase Agreements. In addition to commercial arrangements, MEMR Regulation 19/2025 contains technical obligations, reporting, and Local Content fulfillment, and grants rights to Carbon Economic Value benefits. For areas outside the scope of PT PLN (Persero), provisions on electricity purchase from Hybrid Power Plants may serve as a reference by Business Entities holding other business areas. Meanwhile, transitional provisions limit the continuity of ongoing projects by basing electricity purchases on price comparison against the local PLTD Cost of Supply.