Hybrid Power Plants Now Regulated: Key Takeaways from MEMR Regulation Number 19 of 2025 for Business Actors

Issued in December 2025, Minister of Energy and Mineral Resources Regulation Number 19 of 2025 on Hybrid Power Plants (“MEMR Regulation 19/2025”) introduces a comprehensive regulatory framework for the development of Hybrid Power Plants or Pembangkit Listrik Tenaga Hibrida “PLTH” in Indonesia, particularly for small islands and remote areas. This regulation reflects the government’s policy objectives of ensuring a reliable electric supply, improving operating hours, accelerating the national de-dieselization program, and increasing the share of renewable energy. It formalizes permitted hybrid system configurations, sets reliability requirements, and regulates procurement and pricing mechanisms through a direct selection scheme involving PT PLN (Persero).

Efforts to expand access to reliable electricity in small islands and remote areas have once again become a key focus of national energy policy. The government recognizes that limited infrastructure, high reliance on diesel-based power plants, and limited operating hours have created structural challenges in achieving equitable access to electricity services. These conditions underscore the need for a more reliable, sustainable, and cost‑efficient approach to electricity supply.

Against this backdrop, the Minister of Energy and Mineral Resources issued MEMR Regulation 19/2025. This regulation is designed to ensure the continuity of electricity supply and improve service hours, particularly for communities living on small islands and remote areas, while accelerating the de-dieselization agenda and expanding the share of renewable energy in the energy mix.

Through regulating Hybrid Power Plants, MEMR Regulation 19/2025 introduces a new development framework that integrates multiple generation technologies and energy storage systems into a single operational unit. This approach is intended not only to enhance the reliability of small-scale electricity systems but also to establish a more efficient and sustainable electricity supply structure.

Concept and Scope of PLTH

MEMR Regulation 19/2025 formally introduces and regulates PLTH as a new framework for electricity supply, particularly for small-scale grid systems. PLTH is defined as power plants that combine more than one generation technology and/or a Battery Energy Storage System (“BESS”), which are operated simultaneously at a single grid interconnection point.¹

As a core principle, MEMR Regulation 19/2025 emphasizes that renewable energy technologies must serve as the primary component of every PLTH. These include: (i) Photovoltaic Solar Power Plants (PLTS); (ii) Wind Power Plants (PLTB); (iii) Hydropower Plants (PLTA); and (iv) Biomass Power Plants (PLTBm). Such renewable energy may then be combined with other technologies, including combinations of:²

renewable energy with renewable energy;
renewable energy with BESS;
renewable energy with renewable energy and BESS;
renewable energy with new energy and BESS;
renewable energy with non-renewable energy; or
renewable energy and BESS with non-renewable energy.

Importantly, MEMR Regulation 19/2025 underscores that a PLTH must be configured and operated as a single, unified system.³ This means that a PLTH is viewed and treated as an integrated system, assessed based on its overall ability to meet reliability requirements. In this context, each component, whether renewable generation, supporting generation, or BESS, plays a complementary role in anticipating fluctuations in energy supply and maintaining continuity of electricity delivery.

Developers and Operators of PLTH

The development of PLTHs is positioned as an electricity business activity carried out by Business Entities, with regulatory obligations imposed directly on such entities during implementation. A Business Entity is an Indonesian legal entity that conducts business activities on a permanent and continuous basis, including state-owned enterprises, regional-owned enterprises, cooperatives, and private companies established under Indonesian law.⁴ MEMR Regulation 19/2025 further requires Business Entities developing PLTHs to ensure the safety and reliability of electricity grid operations and that PLTH installations comply with Indonesian National Standards and/or applicable international standards, in accordance with prevailing electricity regulations.⁵

Electricity Sales Mechanism for PLTH

MEMR Regulation 19/2025 provides that electricity generated by PLTHs be sold to PT PLN (Persero) as the single buyer through a direct selection mechanism.⁶ Under this scheme, a PLTH developed by a Business Entity does not automatically sell electricity to PLN; instead, it must first participate in a procurement process designed to ensure project readiness and reliability. In general terms, the PLTH business flow involves the Business Entity’s investment and development of the power plant, followed by the sale of electricity to PLN pursuant to a Power Purchase Agreement (“PPA”) after the Business Entity is selected through the direct selection process.

The direct selection is conducted by PT PLN (Persero) among Business Entities that have been included in PLN’s list of pre-qualified providers.⁷ In this process, Business Entities are required to submit bid documents, which are then evaluated by PLN. The evaluation covers three main aspects, administrative, technical, and financial, as stipulated under MEMR Regulation 19/2025.⁸

From the administrative perspective, the evaluation is intended to ensure that the Business Entity has been duly established and operates lawfully in accordance with applicable laws and regulations. From the technical standpoint, the evaluation focuses on the readiness and suitability of the proposed PLTH configuration. Meanwhile, the financial evaluation assesses the Business Entity’s capability to finance and sustainably operate the PLTH project. The entire direct selection process is conducted within a maximum period of 180 calendar days, calculated from the announcement of the direct selection until the signing of the PPA.⁹

Pricing Scheme and Key Considerations for Business Actors

The purchase of electricity from PLTHs is conducted within a pricing range determined by a ceiling benchmark price as the upper limit and a floor benchmark price as the lower limit, as stipulated by the Minister through a Ministerial Decree.¹⁰ Within this range, PLN purchases electricity through direct selection based on the lowest price offer.¹¹

The proposed price is subsequently subject to limited negotiation within the benchmark price corridor. Such price applies without escalation throughout the PPA term, constitutes the Minister’s price approval, and considers location factors.¹² The agreed price is used as the tariff under the PPA and becomes effective as of the Commercial Operation Date (“COD”)¹³ , with the possibility of periodic price evaluation every two years or at any time, based on PLN’s average contract prices and market assessments.¹⁴

MEMR Regulation 19/2025 further clarifies that the electricity purchase price applies at the interconnection point (power plant busbar) and excludes network facility costs.¹⁵ Network facility costs are determined based on the agreement of the parties, subject to a maximum of 5% of the electricity purchase price, and such agreement constitutes ministerial price approval.¹⁶ Payment for electricity transactions is made in Indonesian rupiah, referencing the Jakarta Interbank Spot Dollar Rate (“JISDOR”) as agreed in the PPA¹⁷ , which subsequently forms the contractual basis of the relationship between the Business Entity and PLN.¹⁸

MEMR Regulation 19/2025 represents a significant evolution in Indonesia’s hybrid power plant framework, providing clarity on system configuration, procurement procedures, and the sale of electricity to PLN. For business actors, readiness in regulatory compliance, technical configuration, and commercial structuring will be critical to successful participation.

Our Project Development Team at ADCO Law continues to monitor policy developments and the implementation of MEMR Regulation 19/2025 and remains available to support business actors in navigating the regulatory landscape applicable to PLTH projects.

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