State-owned electricity firm PLN plans to hold an auction for mine-mouth coal-fired power plants in Sumatra and Kalimantan with a total capacity of around 5,000 megawatts (MW) of electricity in the near future.

“For Sumatra, the total capacity is around 3,500 MW, while the capacity for the ones in Kalimantan might reach 1,500 MW. Those mine-mouth plants will be offered through auction this year,” PLN procurement director Supangkat Iwan Santoso said in Jakarta recently.

At present, the electricity reserve margin, which refers to the difference between capacity and peak demand, in Kalimantan and Sumatra are at a meager 7 percent and 8 percent, respectively, far lower than the International Energy Agency’s (IEA) guidelines of between 20 percent and 35 percent.

The government recently issued Ministerial Decree No. 19/2017, which stipulates rate caps for electricity produced by mine-mouth and regular coal-fired power plants, in a bid to help increase Indonesia’s competitiveness.

In the case of mine-mouth power plants, the decree dictates that if the cost to supply electricity (BPP) in a region is higher than the national average, the electricity rate should be capped at 75 percent of average national rates.

If the BPP in a region is lower or equal to the national average, then the electricity rate should be capped at 75 percent of the region’s average.

“We hope we can settle all deals related to mine-mouth power plants before the end of July,” PLN president director Sofyan Basir previously said in March.

source: thejakartapost