After predicting the demand for electricity would require 77.9 gigawatts (GW) of additional power capacity by 2026, state electricity firm PLN has found itself caught in a dilemma as the real demand has grown at a rate far below expectations, raising doubts about the government’s 35 GW target by 2019.

PLN, in its latest electricity procurement business plan (RUPTL), factored in the construction of the new power plants based on the assumption the electricity sales volume would record a compounded annual growth rate of 8.3 percent.

However, PLN’s electricity sales only climbed by 1.17 percent to 108.4 terawatt hours (TWh) in the first half of 2017, far below the growth rate of 7.85 percent recorded in the same period last year. Excess capacity would choke PLN with multi-billion dollar costs.

“We’re trying to increase electricity consumption by offering discounts to our customers, especially those living in regions with surplus power supplies,” PLN spokesperson I Made Suprateka said recently.

Since 2016, PLN has given 30 percent discounts to mediumto-large-scale industries that use more than 200 kilovolt amperes (kVA) of electricity from 11 p.m. to 8 a.m. as part of the government’s third economic policy package. It has also offered discounts to household customers during festivities such as Idul Fitri and Independence Day.

For PLN, increasing demand through pricing mechanisms is not easy as lower electricity tariffs can only be implemented if the electricity supply costs (BPP) can be slashed. From March to July, the firm’s BPP climbed by 5.7 percent to Rp 1,283 (10 US cents) following a hike in global coal prices.

“That’s why we hope there will be policies that pave the way for us to buy coal under the domestic market obligation based on the calculation of mining costs plus profit margin only, instead of following the global prices,” PLN president director Sofyan Basir said.

Popular

To my horror, it’s just a movie!

RI, Australia strengthen partnership on taxing crypto assets

Pentagon chief congratulates Prabowo on being elected President