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PLN to scale back plan to expand in Sumatra
State electricity company PLN has planned to revise down its electricity sales growth projection for Sumatra over the next decade due to sluggish consumption, a move that would force the company to postpone the development of several coal-fired power plants on the island
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tate electricity company PLN has planned to revise down its electricity sales growth projection for Sumatra over the next decade due to sluggish consumption, a move that would force the company to postpone the development of several coal-fired power plants on the island.
In its electricity procurement business plan (RUPTL) for the 2017-2026 period, PLN envisions the development of new power plants with a combined capacity of 21 gigawatts (GW) in Sumatra, 7.9 GW of which will come from coal-fired facilities.
This is based on the assumption that national electricity sales will grow 8.3 percent annually from 2017 to 2026, while growth in Sumatra alone is projected to average at 11.79 percent per year.
However, PLN’s national electricity sales grew 3.1 percent year-on-year to 163.6 terawatt hours (TWh) within the first nine months of 2017, a rate below its annual growth of 5.94 percent in the same period last year. As a result, its business plan is effectively outdated.
Subsequently, PLN plans to revise its sales growth projection for Sumatra to around 8 percent per year in its upcoming 2018-2027 RUPTL.
“We’ve changed the plan, including by rearranging the development timeline for several power plants. So the completion date for some coal-fired plants may have to be postponed a few years,” PLN Sumatra region development head Budi Pangestu said late on Thursday, without disclosing the names of the projects that would be affected.
As a result, PLN will also revise the projection of the electricity reserve margin — the gap between capacity and peak demand — for Sumatra.
In the current RUTPL, PLN expects to see the electricity reserve margin in its Sumatra system increase from 16 percent this year to as high as 78 percent in 2025, before stabilizing to 70 percent in 2026.
In the upcoming business plan, the margin is projected to reach its peak of 56.1 percent in 2023, before stabilizing to 50.3 percent in 2027.
“Now, we have work to do to find more customers for our electricity. Otherwise, the installed electricity capacity in Sumatra will be superfluous,” Budi said.
It is feared that excess capacity would choke PLN with billions of dollars in costs, especially considering the take-or-pay clause stated in its power purchase agreements (PPAs) with various independent power producers (IPPs).
Therefore, PLN has been trying to increase its electricity sales, including by offering discounts and simplifying its customers’ grouping, while undertaking several measures to lower its electricity supply costs (BPP).
For its Sumatra system, PLN is in the process of developing a 150-kilovolt alternating-current (AC) submarine cable spanning 36 circuit kilometers to transmit electricity from its Tanjung Api-api power substation in South Sumatra to Muntok substation in Bangka Belitung.
PLN will need an investment of around Rp 1.54 trillion (US$108.24 million) to build this submarine cable, slated for commercial operation in 2020.
"Bangka Belitung has an isolated system that is not connected to PLN’s Sumatra system. So many small islands in the province still rely on costly diesel-fueled power plants, resulting in a bloated BPP of around Rp 4,000 to Rp 5,000 per kilowatt hour [kWh] on such islands,” said Susiana Mutia, PLN’s general manager for Bangka Belitung.
“This 150-kilovolt submarine cable is expected to significantly reduce Bangka Belitung’s BPP as it will transmit electricity from South Sumatra, which has far lower BPP due to its mounting coal resources.”
PLN calculated that, after the completion of the submarine cable, Bangka Belitung’s BPP will fall to Rp 1,895 per kWh in 2021 from Rp 2,848 per kWh in 2018. Furthermore, the province’s electricity reserves will also soar to 365 megawatts (MW) in 2020 from 88.4 MW this year.
Meanwhile, PLN is also constructing a 275-kilovolt AC submarine cable that will transmit electricity from Lahat regency in South Sumatra to Aceh. This facility, slated for full completion in 2019, is expected to reduce BPP in the northern part of Sumatra.
