The government has agreed to lower its expectations for additional electricity supply in 2019 based on more modest forecasts of economic growth and domestic demand.

Energy and Mineral Resources Minister Ignasius Jonan confirmed on Thursday that he had signed off on state-owned electricity firm PLN’s electricity procurement business plan (RUPTL) for 2017 to 2026.

Although the official RUPTL is only expected to be issued within the next few weeks, the minister has confirmed that the national electricity capacity target for 2019 has been lowered to 79.2 gigawatts (GW), down from the 90.5 GW target stipulated in last year’s RUPTL.

“I have already signed the RUPTL,” Jonan told reporters following a hearing at the House of Representatives’ Commission VII overseeing energy.

Electricity is a large priority for President Joko “Jokowi” Widodo’s administration, which launched an ambitious program to procure an additional 35,000 megawatts (MW) at the beginning of his tenure.

The goal is to establish a 30 percent surplus in the national electricity reserve margin through more cost-efficient operations. There is currently a national power supply capacity of about 56 GW.

The program started off slow and the government has acknowledged that it is unlikely to reach its initial target by 2019. Official data shows that only an additional 639 MW, 1.8 percent of the program, is not being produced.

Contracts or power purchase agreements (PPA) for projects that would supply 19,877 MW, 56.8 percent, have been signed.

Agreements for the rest, about 14,000 MW, have not been signed and the projects are only in the planning and procurement stages.

Jonan claimed that the change in electricity supply target for 2019 was based on the government’s calculations that Indonesia’s economic growth would expand by a maximum of 6 percent annually, lower than the initial growth estimate of 7 to 8 percent.

The new lower target is also aimed at preventing an oversupply of electricity that may not be used domestically, which would cost PLN. PLN corporate planning director Nicke Widyawati confirmed that the latest RUPTL contained an economic growth assumption of 5.2 percent to 5.4 percent until 2019.

“The 35,000 MW program will continue to be implemented. However, [generating capacity for] only about 26,000 MW will be completed by 2019, with 7,000 MW in the pipeline. We have adjusted it based on demand,” she said.

The newest RUPTL has lowered the expectations for electricity supply targets in 2026 as well, which has been set to 125.7 GW, down from last year’s target of 128.3 GW.

A whopping 39.1 GW will be added onto the Java-Bali electricity system, followed closely by 21 GW in the Sumatra system. The Maluku-Papua system will have the smallest addition of only 2.1 GW from new power plants by 2026.

On the other hand, the government has set a higher target for the amount of electricity to be procured from renewable sources by 2026. Jonan confirmed that the RUPTL’s projected target for electricity from renewable sources has been set at 22.6 percent, up from the 19.7 percent in the previous plan.

The Energy and Mineral Resources Ministry is optimistic it can reach the higher target following its decision to issue Ministerial Decree No. 12/2017, which caps electricity feed-in tariffs from renewable sources at lower or equal levels with national electricity costs.

As the renewable energy target rises, the portions of gas- and oil-powered electricity generation fall to 26.6 percent and 0.4 percent, respectively, down from 29.4 percent and 0.6 percent.

“The gas portion has decreased slightly, but we are hopeful it can increase again to gradually replace coal,” Jonan said, referring to coal’s 50.4 percent portion.

Meanwhile, Institute for Essential Services Reform (IESR) executive director Fabby Tumiwa said that it was not a surprise that the 2019 electricity supply target was changed as PLN would have calculated it based on the country’s projected demand.

Fabby warned that the government and PLN should not pat themselves on the back just yet for increasing its projection for electricity produced from renewable sources.

“The portion is smaller than the target written in the National Energy Plan [RUEN], which stipulates that 23 percent of all electricity must be procured from renewable energy by 2025. This is equal to around 45 GW,” he told The Jakarta Post. (ecn)

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