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Government gives flexibility to PLN in developing renewable projects

JAKARTA (RambuEnergy) – Indonesian Minister for Energy and Mineral Resources (MEMR) Ignasius Jonan said the current Electricity Supply Business Plan (RUPTL) for the period of 2019-2028 gives flexibility to the state utility company PLN in developing renewable energy projects.

Minister Jonan said during a gathering with business players on Monday (March 18) that the current RUPTL does not put in detail the renewable energy projects to be developed in particular year.

“If PLN finds it deemed necessary and the scheme is acceptable, PLN could discuss it with the developer ove the renewable project although it is yet to be included in the existing plan,” Minister Jonan said.

PLN, he said, may include the renewable energy project in the following year’s business plan.

He said the move is part of the government’s drive to attain the target of a minimum of 23% of renewable energy in the country’s energy mixed in 2025.

Last month, Minister Jonan revealed the much-anticipated Indonesian Electricity Supply Business Plan 2019, which to some extent surprising the market both with its early delivery and façade of support for more renewables.

Jonan proudly announced an increase of 1.8 GW of installed renewable power capacity in the ten-year plan, bringing new renewable capacity to 16.7 GW as compared to 14.9 GW in the previous RUPTL.

The Minister also emphasized that the 0.4 percentage point cut in the demand growth forecast to 6.4% for the 2019 to 2028 period answers critics’ concerns about the reliability of past RUPTL demand estimates.

The the Institute for Energy Economics and Financial Analysis (IEEFA) notes that this 6% cut in demand seems to have provided the impetus for much bigger cutbacks in planned grid expenditures for transmission and distribution (T&D) including additions for network and distribution substations.

In terms of planning for additional generation capacity, the RUPTL remains anchored in old technology and is overly reliant on fossil fuels. As reflected in the graph above, the generation mix is still dominated by coal, and there are only minimal differences in the generation mix.

What is more concerning, IEEFA said, is the fact that several mega coal power projects that were supposed to be suspended or cancelled by the government due to the depreciation of the rupiah and weakening demand in September 2018, seem to have re-appeared in the 2019 RUPTL. For example, PLTU Java-3, PLTU Java-9 and Java-10, are now back in the document, despite a claim the Minister made last year about not adding any new coal power plants on Java Island.

“Unsurprisingly, in terms of renewables, new RUPTL allocations are dominated by large-scale geothermal and hydro. However, it is worth noting that mini hydro is now forecast to grow more rapidly from a low base, with a sharp 90% increase compared to last year’s allotment,” IEEFA said in a report.

By contrast, solar which has proven to be cost-competitive in other Asian markets, is almost totally overlooked in the RUPTL and was cut back by 13% in the current plan. This translates into an expected increase of only 908 MW of solar within the next 10 years, it noted.

Given the trajectory of least-cost generating options in global markets, Indonesia appears to have embraced what can best be described as a contrarian understanding of power trends with the decision to add less than 1 GW of solar over the next decade.

This coal-heavy diet contrasts with Vietnam’s ambitious plan to add 3 GW of solar just for the 2019-2020 period, IEEFA said. (*)

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