Power Purchase Agreement — PPA

The contract tenor for C&I PLTS PPAs in the Indonesian market is generally in the typical range of 10-25 years, with 15-20-year tenors most commonly seen on onsite C&I PLTS projects [IRENA, Renewable Power Purchase Agreements, 2018; Indonesian market observation 2020-2024]. There is no upfront capital expenditure (CAPEX) on the off-taker's side.

Under a PPA structure, the developer bears the entire upfront investment: procurement of panels, inverters, and system components, along with permitting, installation, and operation and maintenance (O&M) costs throughout the contract period. The off-taker — usually an industrial or commercial customer — pays only a fixed or limitedly indexed tariff per kWh consumed from that system. The PPA tariff can be below the prevailing PLN industrial tariff, but the margin depends on the outcome of negotiations, the project location, the off-taker's consumption profile, and the developer's cost structure — it is not an automatic guarantee [IESR, Indonesia Clean Energy Outlook 2023].

In the context of rooftop solar (PLTS Atap) or rooftop systems in Indonesia, a PPA is generally structured behind-the-meter — an industry term describing a system installed on the end customer's side: the system is installed at the off-taker's facility, electricity is consumed directly at that point, and only the surplus may flow to the PLN grid in line with Permen ESDM No. 2 Tahun 2024, which governs on-grid rooftop solar (note: Permen ESDM 2/2024 does not use the term behind-the-meter explicitly; the term is technical-industry usage, not regulatory terminology). This differs from a front-of-meter scheme, in which an IPP developer sells electricity to the PLN transmission or distribution grid through a separate electricity sale-and-purchase agreement (PJBL) governed by the framework of Law No. 30 of 2009 on Electricity and its implementing regulations.

The developer bears production risk; the off-taker bears minimum-consumption risk per the contract clause. The minimum offtake obligation and tariff escalation mechanism are the main negotiation points that must be verified per specific contract.

Indonesian PLTS Application Example

A manufacturing factory in tariff class I-3 Medium Voltage (PLN tariff Rp 1,114.74/kWh [PLN tariff adjustment Q1 2026]) can sign a behind-the-meter PPA with a PLTS developer for a 500 kWp system over 15 years at a tariff of, for example, Rp 900-1,050/kWh. The factory incurs no CapEx; the developer installs, owns, and operates the system entirely — electricity bill savings during daytime hours begin from the moment the system goes live.