PLN president director Sofyan Basir said the forming of a power purchase agreement (PPA) was an anticipatory move as electricity demand was expected to increase in the future,  both for household and industrial needs.

“Indirectly, PLN is taking part in encouraging the development of industry and business in the country,” he said in a press statement.

PLTA Merangin, which has total investment of US$ 903 million, is a peaker power plant, meaning it will be used when the load of electricity is at its peak condition. The decision was made to lift up peak electricity capacity in Sumatra, which currently depends on gas and diesel.

The power plant is located in Kerinci regency, Jambi and will be operated by independent power producer (IPP) PT Kerinci Merangin Hidro, which is expected to produce 1,280 gigawatts per hour (GWh) per annum.

Deputy Energy and Mineral Resources Minister Arcandra Tahar said the agreement was evidence of the government’s commitment to developing renewable energy, which is set to contribute 23 percent to the national energy supply by 2025.

The deal was the fourth PLN renewable energy deal under a PPA scheme this year. PLN signed last year 70 PPAs with total capacity of 1,214.17 MW, however as of the end of the third quarter, 40 IPPs had failed to obtain funding. (bbn)

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