Policy of Power Plant Project in Indonesia 2015-2024

The development of power generation capacity is geared to meet load growth, and in some areas prioritized to meet the electricity shortages. Development of generating capacity is also intended to improve the reliability of supply, with emphasis on the utilization of local energy sources, especially renewable energy.

The development of power generation capacity as far as possible be optimally lowest supply cost (least cost), while still has a reasonable level of reliability in the electric power industry. The cost of providing the lowest cost is achieved by minimizing the net present value of all supply costs consist of investment costs, fuel costs, operation and maintenance costs, and the cost of energy

The level of generation system reliability is measured by the criteria of Loss of Load Probability (LOLP) and the power reserve (reserve margin). Generator rental and excess power is not taken into account in making long-term capacity development plan, but in the short term is calculated to describe the efforts of  Indonesian electicity state-owned company (PLN) to overcome electricity crisis.

However, in line with the Government's policy to develop and utilize more renewable energy, the development of geothermal and hydropower does not follow the criteria of least cost, so that the planning process they are treated as fixed plant. However, development of geothermal and hydropower regard to the balance of supply-demand and reserves are not excessive, and the readiness status of development.

Policy in terms of the magnitude of the power reserve is taken with respect to the adequacy of the fulfillment of power according to criteria of planning. Power backup needs reasonable views of the ability of plants supplying power continuously appropriate planning criteria. With the value of a certain power reserve, plants in a system capable of supplying power continuously.

PLN's policy is to allow a high margin reserve plan exceeds the reasonable needs with the following considerations:

In some areas which are the main source of primary energy nationally and which has significant mineral potential but has long electricity shortages, namely Sumatra, Sulawesi and Kalimantan. This policy was made with consideration of the implementation of generation projects in Kalimantan, Sulawesi and Sumatra is often delayed, existing plants have experienced derating large enough and a belief that the availability of electrical power that many in Sumatra, Sulawesi and Kalimantan will trigger the growth of electricity demand far faster If there is an assignment of the Government to speed up construction. To anticipate the possibility of delay in the completion of construction.

In connection with this policy, the company will monitor the progress of implementation of projects from year to year. If the physical progress of projects going well or can be completed earlier, then PLN will compensate with certain mitigation. The mitigation of such aggressive marketing to balance supply and ensure the sale of the interconnection with other electrical systems that can do the power exchange.

Plant site selection is done by considering the availability of local primary energy source or ease of primary energy supply, proximity to load centers, regional principle balance desired transmission network topology, constraints on transmisi10 systems, and technical constraints, environmental and sosial11. Location plants listed in RUPTL an indication of the location of which is still subject to change in accordance with the progress in the preparation of projects in the field.

Meeting the needs of a large system peak load with fuel-fired plants are not planned again. To further PLN only planned peak load plants that operate with gas (LNG, mini LNG, CNG). If there is potential for hydro, hydro PLN prefer, such as pumped storage, hydropower peaking with the reservoir. Fuel is only planned as a buffer to accelerate the availability of power before the availability of primary energy more economical.

Gas-fired Combined Cycle Power Plant Project field (gas pipeline) is planned only when there is certainty of gas supply. In case the field of gas supply is not available, then PLTGU as generating medium (medium load bearing) can be planned. Consequently the majority of base load plants, namely in coal, can be operated as a loadbearing medium with relatively low capacity factor, although for these functions need to be assisted by a coal power plant other types that have high rate12 slim like a power plant and a hydropower dam.

Completion of short-term power shortage is done through the development of mobile power plant (MPP) that can be built in a relatively quick and mobile nature. MPP type that could be developed include barge mounted, truck mounted and container. Development MPP also functioned to reduce dependence on rental machines. For flexibility in terms of fuel, MPP planned using gas fuel with a dual fuel power plant technology.

For the development of electricity in the isolated electrical system and in small islands still needed oil-fired plants. In the long-term need to study the use of technology that memung it possible to replace fossil fuels become more fuel efficient eg LNG, biomass and coal. Potential technology to replace the above include thermal generation modular diesel substitute (PTMPD) to burn biomass fuels and coal, PLTMG, diesel dual fuel and renewable energy generation in the diesel-hybrid and alternative fuel use biofuel for diesel.

For the electrical system of Java - Bali, PLN had planned coal power plant of 1,000 MW class with ultra super critical13 technology to gain better efficiency and lower CO2 emissions. The use of unit size is motivated by the benefits of economies of scale and driven by the increasing difficulty of obtaining land to build a large-scale plant in Java. Another consideration is the size of the Java - Bali has a big enough with which to monitor komodasi 1,000 MW generating unit class.

In general, plant site selection strived to fulfill the principle of regional balance. Regional balance is a situation in which a region's electricity needs are met largely by the plants that are in the region and not much depend on the transfer of power from other regions through the transmission line interconnection. With this principle, the transmission interconnection between regions needs to be minimal.

However, this policy does not restrict the regional balance of PLN in developing plant in a location and send energy to the load center through the transmission, as long as it is technically and economically feasible. This is reflected in the plan to develop a large-scale mine mouth power plant in South Sumatra and distribute most of its electrical energy to Java via high voltage direct current transmission (high voltage direct current transmission, or HVDC) . The same situation also occurred in Sumatra system, where energy resources (coal, geothermal and gas) more widely available in Southern Sumatera, so that in this region many planned coal power plant and geothermal power plants are part of the energy will be transferred to Northern Sumatera through extra high voltage transmission system .

Ownership generation projects are planned in accordance with the capability of funding PLN's RUPTL. Given the investment needs of the electricity sector is very large, PLN alone can not build a whole new generation requirements. Thus most projects will be carried out by private sector as an independent power producer (IPP) as well as third-party non-IPP with a certain business models such as power wheeling, cooperation excess power, zoning own business and so on.

To meet the electricity needs for the smelter and the new industrial area where the electricity will not be able to meet its electricity needs, smelters or industrial estate developer can build its own plant or utilizing plants owned by the holder of Electricity Supply Business License (IUPTL) and utilize other transmission lines or PLN's distribution or other IUPTL holders through wheeling power schemes, with regard to the ability of the transmission or distribution.

The following policies in allocating ownership PLN electricity projects:

1. Projects planned as PLN project if it has received funding from PLN budget indications and lenders, has had an EPC contract / appointment EPC auction winner, or assigned by the Government to implement a power project.
2. Projects planned as IPP if PLN has signed a PPA / Letter of Intent, PLN has submitted a proposal to the Government that a project is undertaken by IPP, or a private developer has obtained Licenced of Government.
3. The new project plan that has not been determined prospective developers and funding sources, can be built by PLN and IPP or in the form of specific cooperation which PLN not be fully off-taker, included in the project group "unallocated".
4. Under Law No. 30/2009 on Electricity states that state-owned companies are given first priority conduct electricity supply business for the public interest, however, is an opportunity for enterprises, private enterprises or cooperatives. In the PLN plan, the opportunity is open to projects unallocated. In the absence of enterprises, private enterprises or cooperatives that can develop the unallocated project, then The government shall assign SOEs to implement. Considering the above, the allocation of ownership of projects is still an early indication that can be changed during the process of implementation.
5. Geothermal: In accordance with the rules and regulations in the geothermal sector, the development of geothermal power plants are generally encouraged to be developed by the private sector with the award of the tender as a total WKP through project While the geothermal potential of its WKP-based regulation is owned by Pertamina earlier, Pertamina and PLN can work together to develop PLTP. Some WKP PLTP in Eastern Indonesia owned by PLN will be developed fully as PLN project. In addition, the development of new geothermal power plants either by PLN and IPPs should not sacrifice the steam supply to existing geothermal power plants are already running.

Source: 2015-2024 PLN RUPTL