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PLN to settle tender for US$7.2b mine-mouth plants in 2017
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Two employees of state-owned electricity firm PLN walk at a power plant complex. (Kontan/Cheppy A. Muchlis)
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tate-owned electricity firm PLN plans to hold tender and settle all power purchase agreements (PPAs) for 12 mine-mouth coal-fired power plants in Sumatra and Kalimantan this year to ensure electricity supply in those regions in the long run.
The mine-mouth power plants will have a combined capacity of 4,650 megawatts (MW) of electricity with a total investment value of US$7.2 billion.
They are slated for commercial operations within the 2020-2024 period. “Initially, we aimed to settle all of the PPAs in June. Some of them might face a delay, but it all will still be done this year,” PLN procurement director Supangkat Iwan Santoso said in Jakarta recently.
(Read also: 5,000 MW mine-mouth plants to be offered at auction)
At present, the electricity reserve margin, which refers to the difference between capacity and peak demand, in Kalimantan and Sumatra are at a meager 7 percent and 8 percent, respectively, far lower than the International Energy Agency’s (IEA) guidelines of between 20 and 35 percent.
The government recently issued ministerial decree No. 19/2017, which stipulates tariff caps for electricity produced by mine-mouth and regular coal-fired power plants, in a bid to help increase Indonesia's competitiveness.
In the case of mine-mouth power plants, the decree dictates that if the cost to supply electricity (BPP) in a region is higher than the national average, the electricity tariff should be capped at 75 percent of average national rates.
If the BPP in a region is lower or equal to the national average, then the electricity tariffs should be capped at 75 percent of the region's average. (bbn)
