Indonesia: Tax incentives for renewable energy


The government will be providing incentives, such as import-tax reductions, in order to attract more investors to develop renewable energy projects in Indonesia. The announcement was made by Energy and Mineral Resources Minister, Said Sudirman, according to "The Jakarta Post."

Despite the fact the reduction of import taxes will bring in a smaller income, Said sees the longer-term benefits. He commented, "In the long term, we will see added value in the sector." Since 2004, Indonesia has become a net oil importer due to rising production costs and consumption, among others, spurring the transition towards renewable energy.

Said has outlined that Indonesia needs IDR402 trillion (US$28.6bn) in investment over a five-year period, to tap renewable energy potential and generate 8,750 MW of electricity. This will be 25% of the current total electricity generation.

In May this year, pv magazine reported that U.K. investors were preparing to support more than 10 GW of solar in Indonesia.

According to Climate Investment Funds’ portfolio on Indonesia, the country is one of Asia’s largest emitters of greenhouse gases. Despite Indonesia having laid out a sustainable energy plan with targets, the development of renewable energy projects has been rather slow. As of end of 2014, Indonesia had only installed 43 MW of PV capacity, despite being very suited for solar PV development in terms of irradiation.