Independent Power Producer — IPP

In Indonesia, an IPP operates under the framework of the Business License for the Provision of Electricity for Public Use (IUPTLU) as regulated by Law No. 30 of 2009 on Electricity, particularly Articles 10-11.

An IPP differs from an EPC contractor or an ordinary rooftop solar (PLTS Atap) owner: an IPP is a business entity whose primary revenue comes from selling kilowatt-hours of electricity, not from installation services. To operate, an IPP must hold an IUPTLU issued by the Minister of Energy and Mineral Resources or by a governor according to jurisdiction, as regulated by Law 30/2009 and its implementing regulations.

In Indonesia's electricity market structure, PLN generally acts as the off-taker through a Power Purchase Agreement (PPA) — in domestic practice often called a PJBL (Electricity Sale and Purchase Agreement). The PPA tenor for utility-scale PLTS is generally in the range of 20-25 years, referencing PLN IPP procurement practice within the RUPTL framework [PLN RUPTL 2021-2030]. IPP PLTS projects are generally utility-scale — by market convention above 1 MWp — although Law 30/2009 and the ESDM ministerial regulations set no formal capacity threshold distinguishing an IPP from a non-IPP. In smaller segments, similar entities may operate under different licensing frameworks such as a mini-grid or an electricity cooperative.

The BOO (Build-Own-Operate) model common in the C&I segment is IPP practice at a smaller scale [Permen ESDM No. 2 Tahun 2024, IUPTLU framework].

Indonesian PLTS Application Example

A solar developer that wins a PLN tender for a 50 MWp project in South Sulawesi operates as an IPP: it holds the IUPTLU, signs a 25-year PJBL with PLN as the off-taker, and bears the entire investment (~Rp 450-500 billion) for the asset, permitting, and O&M over the contract period.