Indonesia’s PT PLN Cancels 22 GW of Planned Capacity, Citing Lax Demand

Slack power demand in 2017 has prompted Indonesia’s state-owned utility PT PLN to cancel 22 GW it planned to procure from independent power producers (IPPs) through 2026, the bulk of which are combined cycle gas turbine and renewable projects.

Energy and Mineral Resources Minister Ignasius Jonan on March 13 told reporters he endorsed changes to the utility’s 2017-2026 Electricity Supply Business Plan (RUPTL), which PT PLN proposed earlier this month. The ministry and PT PLN have been discussing the revision since October 2017, a ministry document reveals.

As consulting firm Baker McKenzie explained, the RUPTL has evolved from a “loose guideline as to which locations PLN may wish to see IPPs developed in, to a rulebook essentially requiring PLN to contract with IPPs whose projects appear on the RUPTL.” Listing in the RUPTL is also necessary to reap government guarantees, it said.

The revised RUPTL, which will cover the next 10 years (2018 to 2027), anticipates cutting PLN’s allocation of new power projects to 56,024 MW—well beyond the 77,900 MW envisioned in the 2017–2026 RUPTL, which the government approved in April 2017. Scrapped capacity includes 10,000 MW of natural gas combined cycle projects, 6,600 MW of renewables, and 5,000 MW of coal projects.

The changes are necessary because PT PLN’s demand growth in 2017 stagnated at 7%, lower than the 8.3% anticipated in targets of the previous RUPTL, Jonan said. The new RUPTL assumes power demand will grow at 6.86% annually over the next decade.

“The slashed allocation [of around 22,000 MW] is put in a potential list and can only be developed if we already have the demand,” Jonan said. PLN said separately that it could possibly revise the plan again if demand kicks up later.

The new business plan, however, will still help Indonesia achieve goals to accelerate rural electrification, covering 2,510 villages that still remain disconnected, Jonan said. Under the revised RUPTL, by 2025, PT PLN’s power mix will be 54.4% coal-fired, 22% gas-fired, and 23% will come from renewables.

Along with adding new capacity, the revised plan foresees the development of 63,866 kilometers (km) of new transmission lines, 151,424 MVA of related substations, new distribution lines spanning 526,390 km, and related infrastructure, he added.

 

—Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)