Legal hurdles threaten Indonesia's solar PV ambitions, report says

By Romel S. Gurky

Procurement delays, land acquisition challenges and local content requirements remain the biggest legal and regulatory obstacles to the expansion of Indonesia's solar photovoltaic (PV) sector, according to a report by Lestari Advisors.

In its June 2026 report, Procurement, Land Acquisition, and Local Content Risks in Indonesia's Solar PV Deployment, the advisory firm said Indonesia's ambitious solar targets will depend on creating stable demand, credible project pipelines and predictable investment conditions.

The report noted that Indonesia aims to install 17.1 gigawatts (GW) of solar PV capacity under PLN's 2025 to 2034 Electricity Supply Business Plan (RUPTL), while also planning to export 3.4 GW of solar generated electricity to Singapore. The government has also indicated a longer term ambition to develop up to 100 GW of installed solar capacity through utility scale and decentralized projects.

However, Lestari Advisors said regulatory certainty remains essential to attract long term investment, support project bankability and encourage technology transfer.

The report identified procurement as the first major bottleneck. Although Presidential Regulation No. 112 of 2022 requires direct appointments to be completed within 90 days and direct selection processes within 180 days, actual project timelines are frequently extended by delays in RUPTL planning, tender preparation, permitting and power purchase agreement execution.

According to the report, around 66.7% of utility scale solar projects included in PLN's RUPTL have experienced commercial operation date delays of between one and three years. Delays in permitting, including electricity business licenses, environmental approvals and spatial planning, further extend project development schedules.

Land acquisition represents another key challenge. The report said public interest land acquisition procedures can take up to 330 working days and often face overlapping land ownership claims, social disputes and lengthy compensation processes. Developers also face difficulties securing land close to transmission infrastructure and grid connection points, particularly in eastern Indonesia where renewable energy resources are abundant but infrastructure remains limited.

Lestari Advisors also highlighted risks associated with Indonesia's local content requirement, or TKDN, policy. While the revised framework under MEMR Regulation No. 11 of 2024 lowered the minimum local content requirement for solar power plants to 20% and introduced exemptions for projects receiving at least 50% of financing from international development institutions, the report said domestic manufacturing capacity remains limited.

Domestic solar modules are estimated to cost 30% to 40% more than imported alternatives, while the availability of internationally bankable Tier 1 modules remains constrained. As a result, stringent local content rules could increase project costs and slow deployment unless supported by stronger domestic manufacturing capabilities and sustained market demand.

The report concluded that stronger alignment between procurement planning, land readiness, industrial policy and regulatory implementation will be needed to improve investor confidence and accelerate solar deployment. Without greater policy consistency, Indonesia risks falling short of both its renewable energy deployment targets and its ambition to become a regional solar manufacturing hub.

Editing by Alexander Ginting