PLN's long-awaited 2016-2025 10-year electricity supply business plan (RUPTL) finally issued
By: Hadiputranto, Hadinoto & Partners (www.hhp.co.id)
Friday, July 15 2016 - 04:07 AM WIB
The purpose of the RUPTL is to serve as guidance for the future development of power infrastructure in the country to meet increasing demand. Over the years, the RUPTL has transitioned from a generation build-out plan that bore no real resemblance to the projects that were actually being promoted and developed across the country, to now a document which very much guides PLN?s decision making on which projects to proceed with. A number of the recent regulations issued, including Presidential Regulation No. 4/2016 on Acceleration of Power Infrastructure Development, require that a particular project be listed on the RUPTL in order to qualify for various incentives and facilities, including, in the case of that Presidential Regulation, the provision of government guarantees.
The 2016-2025 RUPTL ? in line with Presidential Regulation No. 4/2016 ? sets out a number of key principles which are driving PLN?s procurement of power from private sector Independent Power Producers, taking into account the significant financing requirements, high construction risk and fuel supply risk for the Projects. In addition to PLN relying on traditional IPP schemes to involve the private sector in power generation projects, PLN plans to boost the involvement of the private sector through power wheeling, excess power purchases and captive power plant schemes.
One of the key aims of the new RUPTL is for PLN to achieve a healthy reserve margin. PLN is in fact aiming to have a very significant reserve margin in the early years of the plan to anticipate potential delay in power plant construction. This quick addition of capacity is intended to be achieved through, among other things, upsizing projects considering the low success rate that PLN has experienced in having private developers implement smaller scale steam power plant IPPs (50MW or less) in the last five years. For short term power deficit needs, PLN will develop mobile power plants with gas fuel and dual fuel technology in order to reduce dependency on diesel power plant rentals.
For the Jawa-Bali system, PLN will be focusing on large (1000MW) ultrasuper critical coal fired projects (clean coal technology) to meet Java?s significant base load requirements. PLN also plans to develop coal fired projects with same ultra-super critical technology but with a lower capacity class in the Sumatera system (class 600MW), and in the Kalimantan and Sulawesi systems (class 200MW).
The RUPTL sets out a target of adding 80.5GW of new capacity over the next 10 years. Out of that total, PLN intends to build 18GW, IPPs have been allocated 45.5GW, and there remains approximately 20GW yet to be allocated.
Thermal power generation continues to represent the largest share of the future planned generation, with 25GW of coal fired projects being allocated to IPPs, and 6GW being allocated togas fired projects.
On the renewables front, the RUPTL sets out some aggressive plans which are designed to meet the Government?s revised renewable energy target of 23% by 2025. For solar, the RUPTL states that there is a plan to develop 5000MW by 2025. However, little of that capacity has actually been expressly allocated as yet. 100MW has been slated for the Java Bali grid, 70MW in Sulawesi, 70MW in East Nusa Tenggara, 25MW in Maluku and 40MW in Papua. A similar story applies for wind projects ? with 330MW planned for Java Bali grid, 70MW in Sulawesi, 70MW in East Nusa Tenggara, 25MW in the Maluku and 40MW in Papua.
For geothermal projects, there is approximately 5GW of new capacity allocated to IPPs, with a further 6.1GW yet to be allocated.
Hydro represents the largest renewable opportunity, with 5.5GW allocated, and a further 9.1GW yet to be allocated.
It is hoped that the issuance of this RUPTL will further expedite the development of much-needed new power generation projects throughout the country.
For further information please contact
Luke Devine
Foreign Legal Consultant
+62 21 2960 8600
luke.devine@bakernet.com
Kirana Sastrawijaya
Associate Partner
+62 21 2960 8541
kirana.d.sastrawijaya@bakernet.com
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