State-owned electricity firm PLN plans to hold tender and settle all power purchase agreements (PPAs) for 12 mine-mouth coal-fired power plants in Sumatra and Kalimantan this year to ensure electricity supply in those regions in the long run.

The mine-mouth power plants will have a combined capacity of 4,650 megawatts (MW) of electricity with a total investment value of US$7.2 billion.

They are slated for commercial operations within the 2020-2024 period. “Initially, we aimed to settle all of the PPAs in June. Some of them might face a delay, but it all will still be done 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 and 35 percent.

The government recently issued ministerial decree No. 19/2017, which stipulates tariff 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 tariff 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 tariffs should be capped at 75 percent of the region’s average.

source: thejakartapost