State-owned electricity company PLN expects to speed up the signing of development contracts for the remaining half of the projects in the government’s 35,000 megawatt (MW) electricity procurement plan in an effort to push for the on-time completion of the ambitious program.
Experts and government officials alike had previously criticized PLN for slow progress in the project, which is set to be completed by the end of 2019. Most of the criticism has stemmed from the fact that only 195 MW, or 1 percent of the project, had reached its commercial operating date or was already in operation.
However, the latest data from the company shows that it is gearing up to get things done. PLN’s data show that, as of Aug. 4, the company had wrapped up development contracts for power plants with a combined capacity of 16,515 MW.
PLN hopes to complete the signing of the contract for the remaining 18,485 MW power plants by year-end. Up to 11,730 MW comprises power purchase agreements (PPA) while the remainder are PLN’s engineering, procurement and construction (EPC) contracts. Furthermore, the same information shows that PLN is optimistic that financial closure will be reached for projects amounting to 8,705 MW.
PLN director for corporate planning Nicke Widyawati said that although reaching the government’s target was important, maintaining a daily peak demand reserve of 30 percent throughout the process was of equal importance.
Furthermore, PLN was concerned that the growth of electricity demand was not growing as fast as the supply despite the government’s commitment to developing special economic zones.
“We are actually optimistic that we can deliver the 35,000 MW project, but what is more important is how to maintain a 30 percent load balance at the same time,” she said during an event on Thursday evening.
The ambitious project is aimed at increasing the nation’s electricity supply, which remains lower than any of its Southeast Asian peers despite being the largest economy.
The current operating power plants under the 35,000 MW project mostly consist of mobile power plants, including one with a 25 MW capacity in Lombok, West Nusa Tenggara. In June, President Joko “Jokowi” Widodo inaugurated a 100-MW gas-fired power plant in Paguat, Gorontalo, the first realization of the mega electrification project.
Nicke noted that the largest obstacle PLN faced in the 35,000 MW project was still land acquisition despite the company managing to acquire approximately 50 percent of land needed for the program by August.
The mega power plant project in Batang, Central Java, finally reached financial closure in June this year after facing years of land-acquisition problems, and will start operating in 2020. The project is touted to be the largest in Southeast Asia.
Meanwhile, Cirebon Electric Power (CEP) director Heru Dewanto suggested the government solve the land-acquisition problem by renting out any government-owned land to electricity companies wanting to participate in the 35,000 MW project.
“If land acquisition is so crucial, maybe the government can try to create an inventory of land owned by the central government, local administrations, state-owned companies and even the military before lending it out for power plants through a cooperation scheme,” he said.
CEP constructed the country’s first steam powered plant utilizing super-critical technology with a capacity of 660 MW. The company plans to expand the power plant and will start operating in 2020.