PLN signs two PPAs, 37 MoUs for renewable projects

State-owned electricity firm PT PLN signed on Friday two power purchase agreements (PPAs) with independent power producers for renewable power plant projects in Sumatra region.

PLN also signed 37 MoUs with independent power producers which have expressed interest to develop renewable power plants in the region.

PLN said in a statement that total capacity of the planned renewable power plant projects is 283 MW comprising of mini hydro power plants (150 MW), biomass power plants (55 MW), biogas (71 MW), and solar (7 MW).

PLN Business Director for Sumatra Region, Amir Rosidin said in a statement that the planned renewable power plant projects are targeted to be completed within the next 18-24 months.

He said that the signing of PPAs and MoUs for the new projects forms part of efforts to expedite the electrification of villages, and to help meet the government renewables target, which is projected to account for about 23 percent by 2025.

He added that the signing of 37 MoUs and two PPAs on renewable projects proves that the recent Minister of Energy and Mineral Resources Regulation No 12/2017 on renewables tariff is welcome by power plant developers. ?The ministerial regulation No 12 has been well responded by developers as can be seen from the number of developers signing the MoUs today,? he said.

The new regulation limits price of electricity from renewables sold to PLN at 85 percent of PLN?s regional electricity supply cost (or BPP), except for geothermal and city waste. Some industry players have previous opposed the new ruling saying that limiting the power tariff at 85 percent of BPP will make many renewable projects to be commercially not feasible except in regions in the eastern part of the country where the local BPPs are still relatively high.

Renewable power plants capacity in the Sumatra region currently totals 1,506 MW, or 18 percent of total installed power plant capacity in the region.

Editing by Reiner Simanjuntak