ASIAN POWER UTILITY FORUM: JAKARTA
Need for more flexible units are driven by new renewable sources
sometimes those costs of flexibility are not captured. At present, the lifecycle costs of a solar or wind solution are not being assessed. He added that many new renewable resources are distinctly more variable and non-controllable, thus driving the need for more flexible units like gas turbines or batteries. However, batteries are a net load, not a generator, and thus result in the need for additional capacity. “When we think about new technologies, it is a high marginal cost proposition, intermittent, but designed to challenge some considerations to the penetration of how thermal energy behaves within those intermittencies. As more and more of this technology penetration occurs, it becomes harder and harder to operate or optimise the entry or penetration of all of these technologies,” Ooi added. However, the government must also have a national strategy in place, if any of these pockets of initiatives are to work out at all. Mates emphasised that demand is a function of many different things and the purpose of a national strategy is to enhance demand in most sectors and to create opportunity for suppliers to meet that demand, thereby generating economic activity and GDP growth. “It’s a numbers game, it’s short term and based on political cycles rather than long term strategic thinking. And it’s based on a number of assumptions, one of them is you have to keep costs or purchasing power parity across the archipelago for people. There is no issue with that. There are a number of other assumptions that come into this kind of planning for a 60m people. The government has a maturity of economy. If you measure it by electricity use, 1MW per year per person, in the OECD it is about 12, in Korea it is 11, Taiwan is 10. Do we have an aspiraton for improving the maturity of our economy? According to Wahono, the traditional nature of PLN allows them to explore alternative sources of energy that have not been deployed before. He added than PLN is risk averse when it comes to new ideas, so they typically ask private players where these ideas have been done before. Through their work on the ground, Wahono and his team learned that it is important to know how the local government and the locals are going to react. “We are somewhat getting the benefit of the political aspirations from the current government, they want to pursue more inclusive economics rather than focusing on Java and big cities. As a nation, we don’t have many success stories and working model for bringing electricity to rural communities,” Wahono said. It’s all about the money An attractive financing framework for the development of infrastructure may also help ease Indonesia’s power woes, and Han said innovative financing for developing nations such as Indonesia includes the flexibility of financing CCT from financing institutions (MDBs) by providing long term loan (at 24 ASIAN POWER
If OECD public financing on coal power plants come to reduce or halt due to stringent criteria or emission regulation, China will have a huge opportunity to fill the gap.
least 20 years) with low interest rate. “When financing large infrastructure such as CCT plant in developing countries, the financing framework is not favorable (high interest rate and short terms loan). Developing countries also seem to relax on the environmental regulation/standard, and its enforcement remains weak,” Han said. Financing risks may also be mitigated through possible blended financing using both commercial (bank institutions) and private financing. At present, financing normally takes up to a year after the PPA signature, one of the reasons why the 35GW due for 2019 will not be completed as planned. Asmir added that the 35GW is not very good growth. It is important for the sector to be mature enough to receive the capacity, and PLN infrastructure is not yet ready to receive the power. In fact, the present PLN infrastructure can only receive a maximum of 300MW, 700MW less than the expected 1000MW capacity in Java and western Indonesia. According to him, the government and the private stakeholders should discuss their specific roles, such as the delivery of the transmission business and the importance of expanding industrial areas. Dijakovic noted that multinational companies across the globe who are committed to reduce carbon emissions and to add renewable power generation to their facilities are starting to tender the projects. According to him, they are mostly interested in PPAs or operational leases, but are not interested in owning. They have also been asking developers to match PLN’s tariffs. In April, HSBC announced that it would end financing to coal power stations, except for Indonesia, Bangladesh, and Vietnam. The bank said that at present, there is no viable alternative to coal in these three countries and financing would go on for five years should the status quo remain. “If OECD public financing on coal power plants come to reduce or halt due to stringent criteria or emission regulation, China will have a huge opportunity to fill the gap of providing public financing to foreign coal power plants and to expand the export of Chinese manufactured boilers and steam turbines to developing countries,” Han added. Meanwhile, the International Finance Corporation (IFC) may extend a $320m loan to Bajradaya Sentranusa (BDSN) for long-term debt and sustainable capital structure. BDSN operates Asahan 1, a 180MW run-of-rive hydropower plant in North Sumatera. “If OECD public financing on coal power plants come to reduce or halt due to stringent criteria or emission regulation, China will have a huge opportunity to fill the gap of providing public financing to foreign coal power plants and to expand the export of Chinese manufactured boilers and steam turbines to developing countries.This is because emerging Asia will largely depend on coal to meet rapidly increasing demand and to keep robust economic growth, arguing that developed countries were not constrained by any limits at the time they were building their economic freedom,” Han said.
An attractive financing framework for infrastructure will be of help