A 2,000-megawatt coal-fired power plant tipped as the largest project of its kind in Southeast Asia is on track to kick off commercial operations next year

“Right now, the Batang power plant has been 83 percent completed. It is on track to begin commercial operations in 2020,” said Dharma Djojonegoro, vice president of Adaro Power, a subsidiary of Adaro Energy.

Coal producer Adaro Energy, which will supply the coal needs of the power plant, owns 34 percent of the plant through joint venture firm Bhimasena Power Indonesia (BPI).

The coal producer, which is Indonesia’s second-largest after Bumi Resources, is slated to supply up to 7.5 million tons of coal to the plant each year, which would equal to 13.8 percent of the 54 million tons of coal produced last year by Adaro Energy.

The Batang power plant, which BPI has been working on since 2011, was initially scheduled for completion by 2016, but land-related disputes between BPI and local residents delayed construction until the Supreme Court issued in 2016 a ruling in favor of BPI.

Construction has been on track ever since, reaching 30 percent completion in 2017 and 60 percent last year.

“Most of the plant is done. The machines are in place. Only the little bits are left, such as little pipe works,” said the Energy and Mineral Resources Ministry's electricity directorate general secretary, Munir Ahmad, on Sept. 26

The US$4.2 billion power plant, whose remaining shares are owned by Japanese utility firm J-Power (34 percent) and general trader Itochu Corporation (32 percent), is Indonesia’s largest public-private partnership project to date.

BPI injected 20 percent of the total investment while 48 percent came from the Japan Bank for International Cooperation (JBIC) and 32 percent from a syndicate of nine Japanese banks.

Meanwhile, PLN is slated to become the plant’s buyer until the existing power purchase agreement (PPA) expires in 2045.

However, according to a leaked Finance Ministry letter dated September 2017, PLN is facing liquidity problems because sales will be insufficient to purchase the electricity produced by independent power producers (IPPs).

PLN spokesman Dwi Suryo Abdullah said the company’s main strategy to improve sales was by incentivizing customers, particularly those on Java Island, to switch from fossil fuel-powered stoves, motorcycles and cars to those powered by electricity.

“To boost growth, the key is, of course, pushing PLN electricity sales,” he said. “We can see that Java's electricity consumption is growing at a high [rate], reaching 4 to 5 percent annually.”

PLN’s revenue in the first half rose 4.95 percent year-on-year to Rp 133.45 trillion ($9.38 billion), which aligns with a 4.41 percent increase in electricity consumption to 118.52 terawatt hour in the same period.

“In relation to electricity sales, under the take-or-pay scheme, BPI is committed to providing electricity as requested and needed by PLN,” Dharma said.

BPI’s publicly available environmental impact assessment, conducted in 2016 by American engineering consultancy POWER Engineers, says the air around the plant has a sulfur dioxide (SO2) concentration of 25 micrograms per cubic meter (µg/m3) and particulate concentration of 116 µg/m3.

Air quality around the plant complies with Central Java Gubernatorial Decision No. 8/2001 on ambient air quality.

The assessment also projected operational carbon dioxide emissions of 12.6 million metric tons each year but did not project operational SO2 and particulate emissions, which should be, respectively, below 200 milligrams per cubic meter (mg/m3) and 50 mg/m3, as mandated by Environment and Forestry Ministry Regulation No. 15/2019 on emission standards for thermal power plants.

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