What you need to know about Indonesia's Electricity Supply Business Plan

PLN intends to satisfy peak demand from gas fired power plants.

The Minister of Energy and Mineral Resources has approved the 2017-2026 Electricity Supply Business Plan (RUPTL) of the national power utility, PT PLN (Persero), according to Baker McKenzie.

Why is the RUPTL important to IPP developers?

Baker McKenzie adds that the RUPTL in essence represents PLN's plan to procure electricity from private Independent Power Producers (IPPs). Over the last decade, the RUPTL has evolved from a loose guideline as to which locations PLN may wish to see IPPs developed in, to a rulebook essentially requiring PLN to contract with IPPs whose projects appear on the RUPTL.

"Further, in order for IPP projects to gain the benefits of the government guarantee program introduced under Presidential Regulation 4/2016 on Acceleration of Power Infrastructure Development, the relevant project must be listed on the RUPTL," it said.

Here's more from Baker McKenzie:

What are the key themes in the new RUPTL? Some of the key element of the new RUPTL are:

For areas rich in coal and natural gas resources, PLN is prioritizing the development of mine mouth and wellhead power projects respectively.

PLN intends to satisfy peak demand from gas fired power plants (LNG, mini LNG and CNG) as well as hydro peaking plants (including pumped storage).

Mobile power plants (MPP) are to be deployed to deal with short-term shortages of power in various locations, particularly Sulawesi and eastern Indonesia.

For the Java-Bali system, PLN will implement 1,000MW class ultra super critical (USC) coal fired technologies, and will promote gas fired power plants as mid and peak load solutions.

For the Sumatera, PLN intends to gradually implement 600MW class USC coal fired plants, depending on the readiness of the grid system.

The previous Sumsel 9 (1200MW) and Sumsel 10 (600MW) mine mouth power projects have been removed from the RUPTL.

A number of the coal fired power projects in Sumatera (e.g. Jambi) andmKalimantan (e.g Kaltim 3, Kaltim 6, Kalselteng 3) have been converted from "pass-through" coal fired IPPs (where the price of coal was a passthrough to PLN) to mine mouth IPPs (where the IPP is responsible for securing long term coal supply under mine mouth supply contracts).

Lastly, the total allocated renewable energy IPP capacity over the next 10 years totals approx. 12GW, largely comprised of 4.4GW of geothermal, 4.6GW of hydro and 1.65GW of mini hydro.

The issuance of the new RUPTL now empowers PLN to continue to push out its bid documents for the development of new projects, and accordingly we are hopeful of seeing a great deal of activity around new greenfield IPPs over the coming few months.