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Jakarta Post

PLN to buy waste-based power from 7 cities

  • Viriya P. Singgih

    The Jakarta Post

Jakarta   /   Tue, December 6, 2016   /  07:58 am
PLN to buy waste-based power from 7 cities

State-owned electricity firm Perusahaan Listrik Negara (PLN) has committed to purchasing 100 megawatt (MW) electricity from waste-based power plants (PLTSa) in seven cities in a move that will help boost Indonesia’s renewable energy usage.

Under the build, own, operate, transfer (BOOT) scheme, the firm will buy the power at Rp 2,496 (18.77 cents) per kilowatt hour (kWh) within a 20-year period, according to an agreement signed Monday.

Six cities, namely Bandung, Makassar, Semarang, Surabaya, Surakarta and Tangerang, will supply 10 MW electricity each to PLN, while Jakarta will distribute 4x10 MW.

“The MoU [memorandum of understanding] will ensure that PLN will purchase electricity from waste-based power plants built in those seven regions, so that investors can have certainty before putting their money on the projects,” said PLN corporate planning director Nicke Widyawati.

In February, a presidential regulation was passed to expedite the development of PLTSa between 2016 and 2018 as part of the attempt to resolve acute garbage problems in those aforementioned cities.

Jakarta, for instance, produces about 7,000 tons of garbage each day, while Bandung generates 1,500 tons.

With such high waste output, the city administrations are expected to team up with power plant developers, either local government-owned enterprises (BUMD) or local and global private companies.

To support this plan, PLN is required to source electricity at a certain price in accordance to the Energy and Mineral Resources Ministry’s regulation No. 44/2015.

As a result, the firm expects the government to provide subsidies to cover the price gap in its operation.

“However, such a scheme first needs approval from the House of Representatives. We may be able to implement this later in 2018 or 2019,” PLN president director Sofyan Basir said.

The government initially proposed Rp 1.2 trillion in subsidies for next year to overcome the price difference. This was later rejected by the House’s budget committee, arguing that such subsidies could not be given to a corporation.

Many foreign investors have shown their interest to invest in waste-based power plants in the country.

“Currently, we have received 250 proposals from companies around the world that want to become developers under build, own, operate [BOO] scheme,” Jakarta Sanitation Agency head Isnawa Adji said, adding that the names of the assigned developers are set to be announced in March next year.

The companies are bidding to develop four Intermediate Treatment Facilities (ITF) to convert waste into electricity with a daily capacity to process about 1,200 tons of garbage each.

The facilities, slated for completion in 2019, will require an estimated investment of Rp 1.5 trillion each.

Meanwhile, Jakarta-owned developer PT Jakarta Propertindo (Jakpro), which will participate in a separate energy project, plans to build one ITF with a capacity of 2,000 tons of garbage per day under a build, operate, transfer (BOT) arrangement. In total, those five ITFs are set to produce about 100 MW of electricity, 60 MW higher than purchase commitment by PLN.

The development of waste-based power plants is part of the government’s plan to supply 23 percent of the nation’s energy from renewable sources by 2025 in order to cut down carbon emissions and wean the country off fossil fuels.

To reach the target, the General Plan for National Energy (RUEN) stipulates that renewable energy must make up at least 11 percent of the energy mix by 2017, equal to 25.5 million tons of oil.

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