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The long-awaited draft for the Bill on New and Renewable Energy ("NRE") ("NRE Bill") has once again resurfaced as a point of discussion in Indonesia's legislative agenda. First introduced by the Indonesian House of Representatives in 2018, NRE Bill has consistently attracted wide public attention, particularly from stakeholders in the renewable energy sector aiming to produce and sell energy in Indonesia. Expectations remain high that its enactment will accelerate the development of green energy across the archipelago, providing the much-needed legal certainty to support Indonesia's ambitious transition goals.
For years, stakeholders and the Government have recognized the urgency of establishing a comprehensive and integrated legal framework for renewable energy. At present, Indonesia's legal regime only provides a general framework under Law No. 30 of 2007 on Energy ("Law 30/2007"), which does not specifically address NRE. In the absence of a more tailored regime, efforts to achieve Indonesia's Nationally Determined Contributions and its commitment to Net Zero Emissions by 2060 face structural limitations, as originally planned and stipulated in 2022 via the Presidential Regulation No. 112 of 2022 on the Acceleration of Renewable Energy Development for Electricity Supply as well as Presidential Regulation No. 98 of 2021 on Implementation of Carbon Economic Value for Achieving Nationally Determined Contribution Targets and Controlling Greenhouse Gas Emissions in National Development.
The July 2025 version of NRE Bill has now been released to the public, introducing detailed provisions that will potentially shape the governance, regulation, and advancement of NRE in Indonesia for years to come. This legal insight provides a summary on the latest NRE Bill, the analysis focuses on six principal areas: (i) NRE Scope; (ii) Eligibility for Conducting Business in NRE Sector; (iii) NRE Commercial Activities; (iv) NRE Portfolio Standard; (v) Nuclear Energy; and (vi) Government Incentives.
NRE Scope
The bill introduces a more targeted definition of New Energy. New Energy is defined as energy sources that may be produced through new technologies and/or that comply with low-carbon emission standards or other standards set by the Government (Article 1 paragraph (4) of NRE Bill), and further specifies that New Energy comprises of:
- nuclear;
- hydrogen;
- ammonia; and
- other forms of New Energy as determined by future regulations.
(Article 11 of NRE Bill)
This approach represents a significant shift from the broader formulation under Law 30/2007. Article 1 paragraph (4) of Law 30/2007 defined New Energy as energy sources that may be produced by new technologies derived from renewable and non-renewable resources. The scope included nuclear, hydrogen, coal bed methane, liquefied coal, and gasified coal as the sources of energy. In this regard, NRE Bill deliberately excludes fossil-based sources, such as coal bed methane, liquefied coal, and gasified coal from being identified as "New Energy", signalling a policy shift toward identifying, separating, and prioritizing low-carbon energy alternatives as New Energy sources.
NRE Bill defines Renewable Energy as energy produced from renewable and sustainable energy resources (Article 1 paragraph (6) of NRE Bill), and further specifies that Renewable Energy consist of :
- geothermal;
- wind;
- bioenergy;
- solar;
- water flow and waterfalls;
- ocean; and
- other forms of Renewable Energy as determined by the future regulations.
(Article 34 of NRE Bill)
Compared to the existing definition under Law 30/2007, NRE Bill adopts a slightly refined approach. Article 1 paragraph (6) of Law 30/2007 defined Renewable Energy as energy derived from sustainable resources if managed properly, expressly listing geothermal, wind, bioenergy, solar, water flow and waterfalls, and ocean movement and thermal gradients.
The NRE Bill streamlines the definition and recasts "ocean movement and thermal gradients" into the broader category of "ocean energy," thereby providing flexibility for the inclusion of diverse marine-based technologies in the future.
Eligibility for Conducting Business in NRE Sector
For business entities interested in working in the New Energy or Renewable Energy sectors, they must obtain a Business License from the Central Government, granted on the basis of either the designation of the business area or capacity. Specifically for Renewable Energy, the Business License may also be issued by the Regional Government (Articles 17 and 36 of NRE Bill).
The bill recognizes a uniform set of eligible business entities across both New Energy and Renewable Energy sectors, which consist of:
- state-owned enterprises;
- regionally owned enterprises;
- private enterprises;
- public service agencies;
- village-owned enterprises;
- cooperatives; and
- other entities recognized by the prevailing laws and regulations
(Article 17 paragraph (3) and Article 36 paragraph (3) of NRE Bill).
NRE Commercial Activities
NRE commercial activities are now identified to consist of industries such as electricity generation, transportation, commercial and household activities, as well as other businesses under the prevailing laws and regulations. (Articles 22 and 40 of NRE Bill).
Moreover, NRE Bill elaborates the forms of commercial activities permitted in the field of NRE. For New Energy and Renewable Energy, such activities may include:
- construction of NRE facilities;
- development of supporting facilities for NRE;
- operation and maintenance of NRE;
- construction of storage facilities for NRE;
- development of distribution facilities NRE; and/or
- waste management facilities for NRE byproducts.
(Articles 23 and 41 of NRE Bill)
In addition to commercialization, NRE Bill provides a framework for the export and import of NRE. For New Energy, licensed business entities may engage in export and/or import activities, provided that the domestic availability, affordability, and energy needs are prioritized. Such exports may only be conducted by entities with a valid Business License as issued by the Central Government (Article 24 of NRE Bill).
A similar regime applies to Renewable Energy. Business entities may export and/or import bioenergy, electricity generated from renewable sources, and renewable-based fuels. Imports of bioenergy, however, must prioritize the utilization of domestic resources. As with New Energy, only licensed entities may conduct such activities, with licenses issued either by the Central or Regional Government in line with their authority (Article 42 of NRE Bill).
NRE Portfolio Standard and Environmental CSR Obligations
NRE Bill also introduces a NRE Portfolio Standard ("Portfolio"), defined as the minimum obligation imposed on business entities that generate electricity from non-renewable sources to supply electricity from NRE (Article 1 paragraph (11) of NRE Bill).
Holders of electricity business areas and license holders for self-supply electricity generation sourced from non-renewable energy are required to comply with the Portfolio. The proportion of the utilized NRE will be aligned with Indonesia's targets of national energy policy. In this regard, business entities must periodically submit their NRE supply plans to the Minister of Energy and Mineral Resources. (Article 52 of NRE Bill).
Additionally, entities engaging in NRE business must ensure quality standards in environmental management, occupational safety and health, as well as the application of sound and proper engineering principles (herein, referred to as "Industrial Standards"). Environmental management specifically includes obligations to prevent and control pollution, as well as restoring any damage to the environment. (Article 55 of NRE Bill)
On top of environmental management, business entities will be required to engage in other forms of CSR including developing the environment and local communities and undertaking conservation efforts in prioritizing the use of efficient technology. (Article 55 of the NRE Bill)
Failure to meet the Portfolio, purchase the NRE certificates to meet the Portfolio requirements, or meet the Industrial Standards may trigger administrative sanctions. These sanctions range from written warnings and fines up to suspension of business activities, suspension of business licenses, and ultimately revocation of such licenses (Articles 53 and 56 of NRE Bill).
Nuclear Energy
NRE Bill provides a dedicated framework for the utilization of nuclear energy, limiting its application to electricity generation (Article 12 paragraph (1) of NRE Bill). The construction, operation, and decommission of nuclear power plants may be carried out only by state-owned enterprises, cooperatives, or private enterprises that have been proven competent in nuclear power generation (Article 12 paragraph (2) of NRE Bill). Importantly, the development of any nuclear power plant requires prior approval of the House of Representatives (Article 12 paragraph (3) of NRE Bill).
To oversee and accelerate nuclear energy development, the Government is mandated to establish a Nuclear Energy Advisory Council ("Nuclear Council") reporting directly to the President (Article 13 paragraph (1) of NRE Bill). The Nuclear Council is tasked with providing advice and recommendations to the President regarding nuclear power development, including policy reviews, monitoring and evaluation of implementation, and drafting policy recommendations (Article 13 paragraph (3) of NRE Bill).
All nuclear-related activities, including the construction, operation, and decommission of nuclear power plants and other nuclear installations, are subject to the licensing requirements of the Central Government (Article 14 paragraphs (1) and (2) of NRE Bill). The scope and procedures for such licensing will be further elaborated under a Government Regulation (Article 14 paragraph (3) of NRE Bill).
Government Incentives
The Government, within the scope of its respective authority, may provide various forms of support to business activities involving the utilization and development of NRE. Such support primarily takes the form of fiscal and non-fiscal incentives. The support is not limited to financial measures but also include the provision of land and infrastructure for the business entities (Article 62 paragraphs (2), (4), (5), and (6) of NRE Bill).
The Government may also provide affordable financing schemes for NRE projects. This includes the provision of direct financing or guarantees to state-owned enterprises and other business entities, thereby reducing the financial burden and risks associated with large-scale energy investments (Article 62 paragraph (6) of NRE Bill).
Concluding Remarks
NRE Bill reflects Indonesia's growing commitment to advancing a sustainable energy future through a more structured and investment-friendly legal regime. By clarifying the scope of NRE, broadening eligibility for participation, and introducing mechanisms such as the NRE Portfolio Standard and government-backed incentives, NRE Bill offers a long-awaited framework that balances policy ambition with regulatory certainty.
For stakeholders, particularly investors, developers, and financiers, NRE Bill presents both opportunities and challenges. On one hand, the explicit recognition of incentives, land and infrastructure support, and affordable financing mechanisms can significantly support investments in NRE projects. On the other, the compliance requirements under the Portfolio Standard, the nuclear energy oversight regime, and the licensing obligations will demand careful legal and strategic planning.
Ultimately, the enactment of NRE Bill has potentially become a turning point in Indonesia's energy transition journey, providing the legal foundation for scaling up renewable energy deployment and reducing reliance on fossil fuels. Until then, close monitoring of the legislative process, proactive engagement with policymakers, and comprehensive legal due diligence will be crucial for stakeholders seeking to position themselves effectively in Indonesia's evolving energy landscape.
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