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Legal Updates | PLN Issues 10-Year Electricity Supply Business Plan (RUPTL) for 2016-2025

The Electricity Supply Business Plan for 2016-2025 of the Indonesian state-owned power utility firm, PT PLN (Persero), has been issued and approved by the Minister of Energy and Mineral Resources through Decree No. 5899K/20/MEM/2016. The RUPTL can be accessed here.

The purpose of the RUPTL is to serve as guidance for the future development of power infrastructure in the country to meet increasing demand. Over the years, the RUPTL has transitioned from a generation build-out plan that bore no real resemblance to the projects that were actually being promoted and developed across the country, to now a document which very much guides PLN’s decision making on which projects to proceed with. A number of the recent regulations issued, including Presidential Regulation No. 4/2016 on Acceleration of Power Infrastructure Development, require that a particular project be listed on the RUPTL in order to qualify for various incentives and facilities, including, in the case of that Presidential Regulation, the provision of government guarantees.

The 2016-2025 RUPTL – in line with Presidential Regulation No. 4/2016 –sets out a number of key principles which are driving PLN’s procurement of power from private sector Independent Power Producers, taking into account the significant financing requirements, high construction risk and fuel supply risk for the projects. In addition to PLN relying on traditional IPP schemes to involve the private sector in power generation projects, PLN plans to boost the involvement of the private sector through power wheeling, excess power purchases and captive power plant schemes.

One of the key aims of the new RUPTL is for PLN to achieve a healthy reserve margin. PLN is in fact aiming to have a very significant reserve margin in the early years of the plan to anticipate potential delays in power plant construction. This quick addition of capacity is intended to be achieved through, among other things, upsizing projects considering the low success rate that PLN has experienced in having private developers implement smaller scale steam power plant IPPs (50MW or less) in the last five years. For short term power deficit needs, PLN will develop mobile power plants with gas fuel and dual fuel technology in order to reduce dependency on diesel power plant rentals.

For the Java-Bali system, PLN will be focusing on large (1,000MW) ultra-super critical coal fired projects (clean coal technology) to meet Java’s significant base load requirements. PLN also plans to develop coal fired projects with same ultra-super critical technology but with a lower capacity class in the Sumatra system (class 600MW), and in the Kalimantan and Sulawesi systems (class 200MW).

The RUPTL sets out a target of adding 80.5GW of new capacity over the next 10 years. Out of that total, PLN intends to build 18GW, IPPs have been allocated 45.5GW, and there remains approximately 20GW yet to be allocated.

Thermal power generation continues to represent the largest share of the future planned generation, with 25GW of coal fired projects being allocated to IPPs, and 6GW being allocated to gas fired projects.

On the renewables front, the RUPTL sets out some aggressive plans which are designed to meet the Government’s revised renewable energy target of 23% by 2025. For solar energy, the RUPTL states that there is a plan to develop 5,000MW by 2025. However, little of that capacity has actually been expressly allocated as of yet. 100MW has been slated for the Java-Bali grid, 70MW in Sulawesi, 70MW in East Nusa Tenggara, 25MW in Maluku and 40MW in Papua. A similar story applies for wind projects – with 330MW planned for the Java-Bali grid, 70MW in Sulawesi, 70MW in East Nusa Tenggara, 25MW in the Maluku and 40MW in Papua.

For geothermal projects, there is approximately 5GW of new capacity allocated to IPPs, with a further 6.1GW yet to be allocated.

Hydro represents the largest renewable opportunity, with 5.5GW allocated, and a further 9.1GW yet to be allocated.

It is hoped that the issuance of this RUPTL will further expedite the development of much-needed new power generation projects throughout the country.

Hadiputranto, Hadinoto & Partners, Member of Baker & McKenzie International - 21st june 2016

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Indonesia Snapshot

Capital: Jakarta
Population: 259 million (2016)
Currency: Indonesian Rupiah
Nominal GDP: $936 billion USD (IMF, 2016)
GDP Per Capita: $3,620 USD at Current Prices (IMF, 2016)
GDP Growth: 5.0% (2016)
External Debt: 36.80% of GDP (BI, Q2 2016)
Ease of Doing Business: 91/190 (WB, 2017)
Corruption Index: 90/176 (TI, 2016)