Being the world’s 4th largest population with abundant development projects underway, Indonesia needs very high power capacity to fuel virtually all daily life activities. While a substantial part of the electricity demand still comes from big cities and industrial areas, which are the centers of economic activities, the government’s aggressive efforts to upgrade the country and its connectivity in addition to achieve economic equality throughout the country have created a significantly higher demand for electricity.
On the supply side, more than 60% of total installed capacity belongs to Java-Bali electricity system, while the rest is distributed within other electricity systems, such as in Sumatra, Sulawesi, Kalimantan, Nusa Tenggara, and Papua. Based on 2019 Electricity Supply Business Plan (RUPTL), PT Perusahaan Listrik Negara (Persero) (PLN) – Indonesia’s state electricity company - intends to add 56GW supply of electricity, which is now focused more on cleaner energy such as gas and renewables, as part of Indonesia’s commitment to the COP21 Paris Agreement, and in a small scale to reach remote areas all over Indonesia.
Adaro Power (AP) sees this as an opportunity to contribute to the advancement of its beloved home nation and to further develop its business. While the partnership opportunities to develop power plants outside Indonesia still open, AP also aspires to be the government’s chosen partner in its electrification program and deliver positive contributions to the people of Indonesia through electricity. AP’s power plants will not be constrained to coal-fired only, but together with potential partners, AP will also explore power generation options using various energy sources, including gas and renewables.
AP plays a significant role for the Adaro Group by securing a stable revenue stream and favorable returns and minimizing the impact of volatility from the cyclical nature of the coal sector.
PT Makmur Sejahtera Wisesa
MSW marked Adaro Group’s first downstream step into the power sector. It built, owns, and operates AE’s first power project, a 2x30 MW power plant in Tabalong, South Kalimantan, which powers Adaro Group’s operations in the area and provides excess power to PLN’s South and Central Kalimantan grid. MSW uses circulating fluidized bed (CFB) technology highly suitable for the combustion of higher moisture coals like E4000 as it reduces nitrous oxide emissions due to the low combustion temperature and uses electrostatic precipitators to eliminate ash emissions. In 2019, MSW consumed approximately 0.38 Mt of E4000 coal from AI’s Wara mine and showed a good operation performance with 92.4% of the average Availability Factors (AF).
PT Bhimasena Power Indonesia
PT Adaro Power, together with Electric Power Development Co. Ltd. (J-Power) and Itochu Corporation, established PT Bhimasena Power Indonesia in 2011 to develop a 2x1,000 MW coal-fired power plant in the Batang regency of Central Java. Upon completion, this power plant will be one of the first and largest in Southeast Asia to use ultra-supercritical (USC) boiler technology. In the combustion process, USC boiler needs less energy to produce saturated steam, thus reducing the consumption of coal to generate one unit of electricity. This boiler also has a flue-gas desulfurization unit that captures sulfur dioxide (SO2) before being released to the environment and uses a filter bag that captures fly ashes. Therefore, this power plant is one of the most efficient and cleanest steam power plants available due to the lower consumption of coal and lower emission rate, which always falls below the effluent standard imposed by the government.
BPI reached financial close for this project in June 2016 with the total project cost estimated to be US$4.2 billion, and received a commitment for project funding of approximately US$3.4 billion from the Japan Bank for International Cooperation and several commercial financial institutions. BPI will provide electricity to PLN for 25 years based on a Power Purchase Agreement (PPA), the first actualized public-private partnership project in Indonesia under the guarantee of the Government of the Republic of Indonesia together with the Indonesia Infrastructure Guarantee Fund (IIGF), and part of the Masterplan for Acceleration and Expansion of Indonesian Economic Development.
As at the end of 2019, construction progress at PT Bhimasena Power Indonesia’s 2x1,000 MW power plant in Batang, Central Java has reached 91.8%.
PT Tanjung Power Indonesia
PT Tanjung Power Indonesia is a consortium company owned by AP (65%) and PT East-West Power Indonesia (35%), a subsidiary of Korea East-West Power Co Ltd., to build and operate a 2x100 MW coal-fired power plant in the Tabalong regency, South Kalimantan, and to sell electricity to PLN under a PPA for a period of 25 years from the Commercial Operation Date (COD). Like MSW’s plant, this power plant also uses CFB technology to benefit from the reduced nitrous oxide emissions due to its low combustion temperature, in addition to using bag filters to eliminate ash emissions. The EPC contractors for the project are Hyundai Engineering Co Ltd. and PT Hein Global Utama. Operation and maintenance of the power plant is performed by TPI.
The cost for TPI’s 2x100 MW coal-fired power plant is estimated to be US$545 million and TPI reached financial close in January 2017 with US$422 million (including a contingency facility of US$13 million) commitments received. The project is financed under a project financing scheme with comprehensive cover of Korea Trade Insurance Corporation (K-SURE) of approximately US$400 million.
Started construction in June 2016, TPI successfully commenced commercial operation of its second unit (100 MW) in December 2019, following the commercial operation of its first 100 MW unit in September 2019. This achievement underscores Adaro Power’s commitment in supporting the government’s program to improve electrification ratio, especially in Kalimantan grid. TPI’s annual coal consumption is approximately 1 Mt, all of which will be supplied by the Adaro Group from its nearby concessions. Since achieving Unit 1 COD in September 2019, TPI continued its promising operations performance and reached 99.6% of actual Availability Factors (AF) on average, up to the end of December 2019.
AP is actively looking for power projects from renewable energy sources to have a balanced energy mix in its portfolio. It has installed its first renewable project, the 130 kWp rooftop-mounted solar PV panels at AI’s coal processing and barge loading facility in Kelanis, Central Kalimantan, which is expected to generate 125,000 kWh per year. AP has also signed an MOU with Electricite de France (EDF) Group from France to kick-off a joint feasibility study of solar and biomass power plants in Sulawesi, Indonesia. These projects are in line with AP’s strategy to diversify energy sources and expand portfolio of projects and will mark an important milestone in the history of the Adaro Power business pillar.