The Ministry of Energy and Mineral Resources (ESDM) has issued Ministerial Regulation (Permen) No. 5/2025, which provides guidelines on Power Purchase Agreements (PPA) for electricity generated from renewable energy sources aimed at enhancing national clean energy goals more effectively and sustainably.

ESDM Secretary-General Dadan Kusdiana emphasized that this regulation, enacted on March 4, 2025, aligns with the government’s vision of strengthening national energy security.

“The President has repeatedly stressed the importance of Asta Cita, which includes energy security. The [ESDM] Minister has translated this vision into policies ensuring that energy sources originate domestically. Energy security fundamentally relies on economic viability,” Dadan said during an event to disseminate the ministerial regulation at the ESDM office on Tuesday, March 11, 2025.

The new regulation serves as a reference for State power utility company PT PLN and independent power producers (IPPs) in drafting PPAs. It provides legal certainty in electricity sales mechanisms, clarifying the rights and obligations of both parties, payment schemes, risk allocation, and other contractual provisions.

In the same event, Director General of New, Renewable Energy, and Energy Conservation (EBTKE) Eniya Listiani Dewi reaffirmed the government’s commitment to expanding renewable energy utilization to support national energy security.

“We are striving to bring more renewable energy into our energy mix, in line with the Minister’s directives and Presidential Decree No. 1/2025 on the Task Force for Downstream Energy and Energy Security,” Eniya said.

She cited that the issuance of Permen ESDM No. 5/2025 addresses the absence of standardized PPA contracts, which had previously led to inconsistent interpretations, prolonged negotiations, and increased transaction costs. These issues have delayed project implementation and created uncertainties regarding payment schemes, force majeure clauses, and risk distribution, posing financial stability risks for developers.

“A clear and fair regulation is expected to drive investment in the renewable energy sector, accelerating the achievement of green energy targets. Overall, this policy marks a significant step in ensuring Indonesia’s energy security remains environmentally friendly, sustainable, and highly competitive,” Eniya concluded.

Permen ESDM No. 5 of 2025 provides detailed provisions on PPA terms and extensions, performance guarantees, geothermal power plant pricing adjustments, commercial operation dates (COD) for geothermal plants, local content requirements (TKDN), environmental attribute rights or carbon economic value from renewable energy, special transactions for energy storage-equipped renewable power plants, and refinancing mechanisms for renewable energy projects.