METI urges renewable energy bill to clarify TKDN rules, coal phase-out roadmap
Tuesday, January 6 2026 - 08:06 AM WIB
The Indonesian Renewable Energy Society (METI) has called on lawmakers to strengthen the Renewable Energy Bill (RUU EBT) by clearly regulating both local content requirements and the early retirement of coal-fired power plants, warning that legal uncertainty in these areas could hinder investment and slow Indonesia’s energy transition.
In a recent report, METI outlined several provisions it considers critical for inclusion in the bill, ranging from clearer rules on Tingkat Komponen Dalam Negeri (TKDN) to a comprehensive roadmap for the early phase-out of coal-fired power plants (PLTU).
On local content, METI urged the government to include clearer and more realistic TKDN provisions, supported by a roadmap aligned with the actual readiness of domestic industry, as well as firm monitoring and sanction mechanisms. METI Chairman Zulfan Zahar said TKDN regulations should be designed to strengthen Indonesia’s manufacturing base without undermining investment or delaying renewable energy deployment.
“We need clear provisions on how these components are treated, how we assess industry readiness, and how we develop domestic manufacturing capacity,” Zulfan said, as reported by Katadata.co.id. “Otherwise, we risk becoming merely a market for foreign products.”
Zulfan noted that TKDN targets in recent years have often been set without a realistic assessment of production capacity. In some cases, industry players claimed they could meet local content levels of up to 60%, despite domestic industrial readiness falling well short of that threshold.
According to METI, overly rigid TKDN requirements have frequently become a major obstacle for renewable energy projects to reach financial close. To address this, the group proposed limited flexibility in TKDN rules that would not create regulatory loopholes, alongside a TKDN roadmap aligned with Ministry of Industry regulations on local content in renewable power generation. METI also called for incentive or reward mechanisms for companies that comply with TKDN requirements, coupled with stricter and more consistent enforcement.
Read also: METI urges removal of price cap for renewable energy in EBET Bill
At the same time, METI said existing sanction mechanisms still leave room for negotiation at the implementation level, resulting in uneven application of the rules. The group recommended that the Renewable Energy Bill establish more targeted and effective sanctions to ensure stronger compliance.
Beyond local content issues, METI also pressed for the bill to explicitly regulate mechanisms for the early retirement of coal-fired power plants, including a requirement for the government to develop a clear roadmap, implementation framework, and measurable monitoring system.
The proposed roadmap, METI said, should cover governance structures, progress indicators, policy rationales, targeted sustainability outcomes, financing models, and timelines to ensure that early coal plant retirement is carried out in a planned and transparent manner.
“A clear legal framework is essential so that the early phase-out of coal plants runs in line with national energy transition targets,” Zulfan said. “The bill should regulate the government’s obligation to formulate a roadmap, as well as implementation updates and a monitoring system.”
METI also highlighted the need for a clear legal definition of a “just energy transition,” noting that the concept is often interpreted differently by stakeholders in the fossil fuel sector and the renewable energy industry.
“We still do not share a common understanding of what constitutes a just energy transition,” Zulfan said. “There needs to be clarity in the law on what is truly meant by a just energy transition.”
In addition, METI emphasized the importance of aligning early coal plant retirement provisions in the Renewable Energy Bill with the planned amendment to Presidential Regulation No. 112/2022, including updates to Indonesia’s net-zero emissions targets. Such alignment, the group said, is crucial to provide regulatory certainty for businesses, financing schemes, and the long-term reliability of the national power system.
“There needs to be alignment with the upcoming amendment to Presidential Regulation 112,” Zulfan said. “This is important to clarify what qualifies as early retirement, what actions are required, how financing will be structured, and how system reliability will be maintained.”
Editing by Reiner Simanjuntak