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The Creation of Bappebti Regulation 11/2024
On 20 November 2024, the Future Exchange Supervisory Board (“Bappebti”) has just issued Bappebti Regulation Number 11 of 2024 on Procedures for the Implementation of the Physical Market Trading of Renewable Electricity Through the Futures Exchange (“Bappebti Regulation No. 11/2024”). This regulation builds upon and serves as a specific implementing regulation for Bappebti Regulation Number 2 of 2019 on Implementation of Commodity Physical Markets on the Futures Exchange (“Bappebti Regulation No. 2/2019”). One of the main objectives of Bappebti Regulation No. 11/2024 is to further regulate the physical market trading activity of electricity sourced from renewable energy on the Future Exchange.
The concept physical market trading of electricity on the futures exchange (“RE Physical Market”) is basically a transaction of electricity power that carried out on the futures exchange. Future exchange is a platform that organizes and provides a system and/or facilities for buying and selling commodities based on futures contract, sharia derivative contracts, and/or other derivative contracts. Trading activities through futures contract transactions have several advantages such as protecting sellers from the risk of price declines and protecting buyers from the risk of price increases.
Previously, Bappebti Regulation No. 2/2019 regulates that the types of commodities that can be traded through futures exchanges are commodities limited to what is contained in Bappebti Regulation Number 3 Year 2019 on Commodities That Can Be Subjected to Futures Contracts, Sharia Derivative Contracts, and/or Other Derivative Contracts Traded on the Futures Exchange (“Bappebti Regulation No. 3/2019”). Bappebti Regulation No. 11/2024 adds provisions regarding the type of commodity that can be traded through futures exchanges is electric power in the form of Renewable Energy Certificate (“REC”).
Primary Parties Involved in the RE Physical Market
The parties involved in the implementation of RE Physical Market, including Renewable Energy Power Exchange, Futures Clearing Agency, REC Registry, Participants, and Bappebti. The definitions are as follows:
| Parties | Definition | Authority |
| Renewable Energy Power Exchange | Renewable Energy Power Exchange is a Future Exchange that has obtained the approval from the Head of Bappebti. Future Exchange means business entity that organizes and provides a system and / or facilities for commodity trading activities based on futures contracts, sharia derivative contracts, and / or other derivative contracts.[1] In the context of RE Physical Market, the commodity that is being traded is electricity from the renewable energy in the form of REC. | Duties and authorities of Renewable Energy Power Exchange stipulated under Article 12 of Bappebti Regulation No. 11/2024. |
| Futures Clearing Agency | Business entity that organizes and provide system and/or facilities to conduct implementation of clearing and guaranteeing settlement of futures trading. | Duties and authorities of Future Clearing Agency stipulated under Article 16 of Bappebti Regulation No. 11/2024. |
| REC Registry | An agency that provides information technology-based system that performs the registration process of up to issuing REC over production of electricity from EBT power plant as well as perform REC administration. | According to the Article 17 of Bappebti Regulation No. 11/2024, REC Registry has authorities to conduct the process of registration of renewable power plants, issuance of REC, and recording ownership and production period of each REC on the RE Physical Market. |
| Participants | The party that transacts REC physical contracts that meet requirements that have been determined by the Renewable Energy Power Exchange whose status as Renewable Energy Power Exchange Participants and Future Clearing Agency Participants. | Participant consist of Seller and Buyer in Renewable Energy Power Exchange who conduct electric power transactions in RE Physical Market. |
| Bappebti | Bappebti is a governmental body which has authority to conduct guidance, regulation, development, and supervision of Futures Trading. | Regarding the RE Physical Market, Bappebti's authorities include the approval process and the conduct of supervision. Supervision authority of Bappebti are stipulated under Article 26 of Bappebti Regulation No. 11/2024. |
Conceptualizing the Implementation of Renewable Energy Certificates (RECs)
Electrical Power is the only Commodity that can be traded in the RE Physical Market. The electricity traded is in the form of RECs.[1] The RECs that can be traded are based on REC Physical Contracts that have received approval from Bappebti.[2] To obtain RECs, it must be ensured that the electricity actually comes from renewable energy such as geothermal, wind, bioenergy, solar power, water, and waves.[3] It should be noted that electricity derived from new energy such as hydrogen, ammonia, and nuclear power plants that may appear in the future cannot be converted into RECs.
REC traded on the RE Physical Market must have minimum requirements in it such as registered in the REC Registry, published by REC Registry, and the REC Registry has cooperated with Futures Clearing Agency.[4]
There is also a provision that state if the REC have been in a retirement condition are not able to be transferred and/or traded back to RE Physical Market. However, Bappebti Regulation No. 11/2024 does not explicitly define what constitutes a retired REC, nor does it explain when or how a REC qualifies as retired. In general, REC retirement can be interpreted as the point at which the certificate has been used by its owner to make an environmental claim, typically when the electricity associated with the REC has been consumed. The absence of a clear definition and mechanism for REC retirement in the regulation may lead to uncertainty in determining the status of RECs and their eligibility for trading.
Related to that matter, in order for REC to be traded, it must be carried out based on a REC Physical Contract that has been approved by Bappebti. REC Physical Contract must meet at least the following specifications such as serial numbers, name of the Registry and EBT Powerplants, energy sources, volumes and production period.[5]
Guaranteeing Transactions in the RE Physical Market
In carrying out trading in the RE Physical Market, there is a Renewable Electricity Transaction Guarantee that must be placed and/or submitted by Buyers and/or Sellers in the RE Physical Market at the Renewable Energy Power Exchange (“Guarantee”). In the implementation of physical market trading of RE, objects that can be used as Guarantee are:
The Guarantee will be submitted to the Futures Clearing Agency.[6] According to the Article 6 (2) Bappebti Regulation No. 11/2024, the Guarantee in form of REC are mandatory to submitted by Seller for the interest of the Seller. The Guarantee in form of funds and/or securities can be submitted by both Seller and Buyer in order to safeguard the interests of the Buyer. In line with this provision, the Renewable Energy Power Exchange alongside with Futures Clearing Agency is responsible for verifying the accuracy and propriety of the Guarantee based on the value and specifications of the REC Physical Contract.[7]
Establishing a Renewable Energy Power Exchange: Key Principles and Processes
Bappebti Regulation No. 11/2024 outlines a series of institutional and operational requirements that must be fulfilled by any entity intending to operate as a Renewable Energy Power Exchange. These requirements build upon the general obligations under Bappebti Regulation No. 2/2019, while also introducing additional obligations specific to the renewable electricity areas.
First, the prospective exchange must obtain a business license as a futures exchange, in accordance with the prevailing regulatory framework for commodity futures trading. Beyond licensing, the exchange is also required to establish and maintain an integrated trading, monitoring, and reporting system. This system must be capable of facilitating and overseeing all transactions within the physical market for renewable electricity, ensuring transparency, data accuracy, and regulatory compliance.
The exchange must also establish a formal mechanism for dispute resolution. This includes internal procedures to address transactional disagreements before escalation to arbitration or litigation.[8] The exchange must also adopt a comprehensive set of rules and operating procedures governing transaction conduct, participant obligations, and operational standards, which also require Bappebti’s approval.
The formation of a Renewable Energy Power Exchange Committee is also required. This committee oversees market implementation and management in line with regulatory and policy objectives. The regulation further mandates a market feasibility study to assess the conditions, potential, and sustainability of the proposed trading platform. The study must be submitted to Bappebti for approval.
The exchange must enter into a cooperation agreement with a registered Futures Clearing Agency. This agreement covers clearing, settlement, and the management of trading guarantees in accordance with regulated procedures and financial safeguards. These requirements ensure that the establishment of a Renewable Energy Power Exchange is technically and legally sound, while supporting market integrity, transparency, and the national energy transition agenda.[9]
Trade Mechanisms and Regulatory Requirements for Compliance in the RE Physical Market
Article 19 of Bappebti Regulation No. 11/2024 explains that transactions in the RE Physical Market are carried out through a system held by the Renewable Energy Power Exchange. In addition, Participants place a Guarantee to the Future Clearing Agency through its system. Considering that the implementation of RE Physical Market is carried out under an electronic system, the Renewable Power Exchange and Future Clearing Agency must comply with the provisions as stipulated in the Regulation of The Minister of Communication and Informatics of The Republic of Indonesia Number 5 of 2020 on Electronic System Provider in The Private Sector.
In addition, Renewable Energy Power Exchange and Clearing Future Agency must implement the provisions of the anti-money laundering program and terrorism funding prevention as stipulated on the Bappebti Regulation No. 9/2017 on Procedures for Implementing Compliance Monitoring and Monitoring Follow-Up of Compliance Monitoring Results on the Implementation of Anti-Money Laundering Program and Terrorism Funding Prevention at Futures Brokers.
Potential Issues: Complexity of Futures Exchange Mechanism for Electricity
Bappebti Regulation No. 11/2024 appears to be a major step forward, reflecting significant policy shift in the Indonesian energy market by aiming to institutionalize renewable energy trading within the existing commodity exchange infrastructure. It also presents an ambitious attempt to adapt the futures exchange model to support real, measurable renewable energy transactions. However, the characteristics of RECs differ significantly from most commodities typically traded on futures markets. RECs are intrinsically linked to real-time electricity generation from renewable energy sources. Each certificate represents one megawatt-hour of electricity generated from sources such as solar, wind, or geothermal. As such, RECs function not merely as tradable instruments but as verification tools that require detailed tracking and a clear audit trail from generation to retirement. This distinguishes them from abstract, speculative commodities more commonly associated with futures contracts.
The use of a futures exchange model, while structured and regulated, may introduce certain practical challenges. First, the operational and compliance requirements involved in participating in the RE Physical Market, such as registration with clearing agencies, submission of transaction guarantees, and adherence to specific contractual standards, may be burdensome for smaller or mid-sized renewable energy producers. These participants may lack prior experience with commodity trading procedures, potentially limiting broader market participation. In addition, the issue of market liquidity should be considered. Futures markets generally depend on high trading volumes to ensure efficient price formation and contract settlement. Given that Indonesia's REC market is still in an early stage of development, it remains uncertain whether sufficient numbers of market participants exist to support a dynamic and active REC trading environment through the futures exchange.
There is also a need to clarify the relationship between this new REC trading framework and the existing REC registry operated by PT PLN (Persero).[10] Fundamentally, the key distinction lies in the nature of the trading mechanism: RECs traded on the futures exchange can only be facilitated by an exchange that has obtained approval from Bappebti. As a result, the trading process is expected to be transparent, providing incentives for renewable energy producers to increase their output and for buyers to demonstrate their commitment to renewable energy sustainability. This differs from the RECs sold directly by PLN, which are primarily intended to give PLN customers the opportunity to fulfil renewable energy obligations and support the energy transition.[11] However, The regulation does not specify how integration or coordination will occur between the two systems, raising concerns about possible duplication, inefficiencies, or inconsistencies in REC issuance, ownership recording, and retirement procedures.
Finally, while Bappebti Regulation No. 11/2024 outlines the basic structure of the RE Physical Market, certain regulatory aspects, such as dispute resolution mechanisms, safeguards against price manipulation, and ongoing monitoring requirements, are addressed only in broad terms. Further regulatory guidance may be needed to ensure effective governance of the REC trading process and to build market confidence.
Should you have any inquiries related to this regulation or wish to ascertain its impact on your business or personal interests, please feel free to contact us.
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[1]Art. 4 (2) Bappebti Regulation No. 11/2024.
[2]Art. 5 (1) Bappebti Regulation No. 11/2024.
[3]Art. 1 (5) Bappebti Regulation No. 11/2024.
[4]Art. 4 (3) Bappebti Regulation No. 11/2024.
[5]Art. 5 (2) Bappebti Regulation No. 11/2024.
[6]Art. 6 (2) and (3) of Bappebti Regulation No. 11/2024.
[7]Art. 7 (1) of Bappebti Regulation No. 11/2024.
[8] Art. 29 of Bappebti Regulation No. 11/2024
[9] Art. 8 and 9 Bappebti Regulation 11/2024.
[10] PLN, <https://layanan.pln.co.id/renewable-energy-certificate>
[11] PLN, “Perjanjian Jual Beli Sertifikat Energi Terbarukan” , https://layanan.pln.co.id/renewable-energy-certificate/term-condition>
[1]Art. 1(2) Bappebti Regulation No. 11/2024.
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