Image Credit : Star Energy

JAKARTA (TheInsiderStories) – The Joko Widodo government’s ambitious program to develop 35 gigawatt (GW) of power plants within five years is most likely falling behind target (as widely anticipated), judging from current progress. In fact, only 20 GW are projected to commence commercial operation by 2020.

Meanwhile, the development of renewable energy is also sluggish, raising doubts that the government’s target to achieve a target of 23 per cent renewables in the country’s energy mix by 2023 is attainable. The government apparently needs ‘breakthrough’ policies to expedite development of renewable energy plants.

Based on data from the Energy and Mineral Resources Ministry, as of Jan. 15, 2018, from the 35 GW or 35,000 MW plan, 1,358 MW has commenced operation; of this, 466 MW capacity was developed by state electricity company PT Perusahaan Listrik Negara (PLN), with the remaining 892 MW developed by independent power producers.

These power plants are spread across the country – 538 MW in Sulawesi, 455 MW in Sumatra, 135 MW on Maluku and Papua, 126 MW on Kalimantan and 104 MW on Bali, West and East Nusa Tenggara region.

Out of the 35 GW, 17,096 MW or 48 per cent is now under construction, 12,724 MW has signed power purchase contracts, but are yet to start construction and 4,682 MW have yet to sign any power purchase agreement with the state electricity company.

Looking at this progress, the Energy and Mineral Resources Ministry (MEMR) estimates that as much as 20,000 MW of installed capacity power plants will start operating by the end of 2019, representing 57 per cent of the government’s overall target of 35 GW.

Of the 17,096 MW installed capacity currently under construction, as much as 5,657 MW was developed by PLN and 11,439 MW by independent power producers, showing that the private sector indeed plays a significant role in achieving the government’s target.

As for renewable energy, based on Energy and Mineral Resources data, while it does continue to increase its contribution to the national energy mix, progress has been slower than expected.

One of the biggest problems in expediting development of renewable energy in the country is the steep costs involved. While producers naturally want to sell electricity to PLN for a high tariff, the state electricity company rebels, offering a considerably lower price.

The Energy and Mineral Resources Ministry reports that the renewable energy sector recorded an average of 10 per cent per annum growth since 2011. Renewable energy-based power plant installed capacity stood at 8.8 GW in 2016, compared to 8.4 GW in 2015, 7.5 GW in 2014 and 6.6 GW in 2013, 5.48 GW in 2012 and 5.16 GW in 2011.

As of end-2017, a total of 9.1 GW of renewable energy-based power plants contributed 9.1 GW to the national electricity grid. This represents 14.9 per cent of total national installed power plant capacity of 60,491 MW for the year.

Currently, the majority of renewable energy power plants are hydro-power types, with installed capacity of 5,124 MW (56 per cent), followed by geothermal at 1,808 MW (19.9 per cent) and the remainder contributed by micro hydro-power plants (272 MW), bio-energy (1,812 MW), and wind-power 1.12 MW.

Although the development of renewable energy has been moving at a snail’s pace in past years, Energy and Mineral Resources Minister Ignasius Jonan has expressed his confidence that its contribution will accelerate in coming years, as signaled by an uptrend in power purchase contracts.

In 2017, PLN signed 70 renewable energy power purchase agreements, with a combined capacity of 1,214.16 MW. Of this, 754 MW or 62 per cent are hydro power plants and the remainder biogas 9.8 per cent, biomass 32.5 MW, solar 4 per cent, geothermal 7 per cent and mini-hydro power plants 23 per cent.

The government hopes that the 35 GW program will raise the country’s electricity coverage ratio to 99 per cent by the end of 2019, from 95.35 per cent in 2017. The ratio has increased from 84.4 per cent in 2014, when Joko Widodo came to power.

As mentioned earlier, as much as 12,724 MW of power purchase contracts have been signed, but are yet to start construction. Therefore, the government needs to ensure that power plant project developers – both PLN and independent power producers – expedite preparatory work, including financial conclusion, so that these projects can start construction as soon as possible.