Indonesia’s Ministry of Energy and Mineral Resources predicted that the country’s electricity needs will grow by 7% every year until 2027, driven by domestic household consumption and in line with population and economic growth. To that end, despite hurdles from the COVID-19 pandemic during the year, the government is still keeping the 35 GW electrification program a top priority. However, PT PLN (Persero) (PLN) – Indonesia’s state electricity company, has projected that some of 35 GW power plant construction projects would be hampered by the impact of the COVID-19 crisis as PLN will prioritize only high-value projects to continue in the midst of the pandemic.
In recent years, Adaro Energy, through Adaro Power (AP) had the opportunity to contribute to the advancement of electricity development in Indonesia, in addition to having a business that can provide a captive market for its coal, so as to secure a stable revenue stream and favorable returns and minimizing the impact of volatility from the cyclical nature of the coal sector. AP, through its subsidiary MSW, has installed a 2x30 MW coal-fired power plant and, through the joint venture company PT Tanjung Power Indonesia (TPI), installed a 2x100 MW coal-fired power plant, both located in Tabalong regency, South Kalimantan, and is progressing in the construction of a 2x1,000 MW coal-fired power plant in Batang regency, Central Java through the joint venture company PT Bhimasena Power Indonesia (BPI) to achieve Commercial Operation Date (COD).
Mindful of the government’s intention to increase other sources of power generation, AP has been active in exploring potential opportunities from the government’s plans to boost Indonesia’s electricity-generating capacity. However, these are not confined to only coal-fired power generation, as AP has been exploring power generation options from other energy sources, including gas and renewables.
As with most business activities, AP’s operations are affected by the COVID-19 pandemic. The pandemic affected the system and work methods of all AP employees, both at the site location and also the Jakarta office. Now, the company applies the health protocols as set by the government and by Adaro Energy.
PT Makmur Sejahtera Wisesa
MSW is the Adaro Group’s first step into the power generation sector. MSW operates a coal fired steam power plant with a capacity of 2x30MW in Tabalong regency, South Kalimantan. The company powers the Adaro Group’s operation in the area and up to the end of 2020, provides excess power to PLN’s grids. The coal used by the power plant is the E4000 coal from AI’s Wara mine. During 2020, MSW continued the electrification program of Adaro Indonesia mine, by increasing the number of electric pumps by 18 pumps.
In the midst of the difficult situation due to the COVID-19 pandemic and the increasingly tighter market competition in the electricity supply sector, in 2020 the company still contributed to the country by supporting electricity supply, especially for the regions of South Kalimantan, Central Kalimantan and East Kalimantan. In 2020, MSW produced 148,428 MWH of electricity and reached actual availability factor of 89.8%.
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.
BPI reached the financial close for this project in June 2016 with the total project cost of approximately 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 Indonesia Infrastructure Guarantee Fund (IIGF), and part of the Masterplan for Acceleration and Expansion of Indonesian Economic Development.
As of December 2020, the actual overall construction progress of the project has reached to 94.7%, against the revised target plan of 99.9%.
PT Tanjung Power Indonesia
PT Tanjung Power Indonesia is a consortium company owned by AP (65%) and PT EWP 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 power purchase agreement (PPA) for a period of 25 years from the COD. 2020 was the first year that PT Tanjung Power Indonesia fully operated for the whole year.
In the first year of operation, TPI succeed in achieving an average actual availability factor of 94%, which exceeded the availability target of 78% required under the PPA for the first year of operation. Throughout the PPA, the company provides electricity to PLN for the South Kalimantan, Central Kalimantan and East Kalimantan regions.
In line with the government’s efforts to increase renewables sources of power generation, AP is also actively looking for renewables power projects in order to have a balanced energy mix in its portfolio. Therefore, AP continues to study renewable power projects such as biomass, wind power, and solar PV, to diversify its energy mix and to support PLN through unsolicited proposal and tenders. AP is also developing captive use power generation projects for the Adaro Group’s other business units. At the moment, AP is finalizing contract for capacity expansion of its solar PV in Kelanis Dedicated Coal Terminal, which it plans to increase from 130 kWp to 597 kWp, as well as to provide diesel power to Indonesia Bulk Terminal (IBT) which is potentially to be combined with solar PV on hybrid basis in the near future.