State electricity utility PT Perusahaan Listrik Negara will next week sign its first power purchase agreement to bolster the second phase of the fast-track program to power the national grid.
PLN will on Thursday finalize a deal with independent power producer PT Pertamina Geothermal Energi, a unit of the state oil and gas company, Dahlan Iskan, PLN’s president director, told the Jakarta Globe on Friday.
PLN will pay 4.2 cents per kilowatt hour to buy electricity from PGE’s 110 megawatt Ulubelu geothermal plant in Lampung, Sumatra from 2013.
“We hope there will soon be another 16 PPAs signed,” Dahlan added.
PLN also plans to sign PPAs this year for PGE’s 40 MW geothermal plant in Lahendong, North Sulawesi, and its 220 MW plant in Lumut Balai, South Sumatra. Both plants are included in the second phase of the fast track program.
PGE has budgeted $1.5 billion for geothermal exploration and generation to supply the program, with Rp 2.5 trillion ($268 million) allocated for this year, said Abadi Purnomo, the power producer’s president director. It aims to generate an additional 1,070 MW by 2014 by building new plants and expanding capacity at existing facilities in Sumatra, Sulawesi and East Java.
Indonesia has been blighted with power outages as infrastructure has failed to keep pace with growth. The existing generating capacity is 30,500 MW, a power deficit of 4,555 MW, according to PLN data in January. Analysts say the shortages have hurt industry and deterred investment.
The government launched the first phase of the fast-track program to add an extra 10,000 MW of capacity by 2012, mostly through coal power. The second phase, which is meant to be completed by 2014, will add 10,150 MW, with the focus on cleaner energies such as gas and geothermal.
In the second phase, PLN will build 21 plants with total generating capacity of 5,118 MW at a cost of $5.9 billion. Independent producers are expected to provide the rest of the power by building 72 plants with total capacity of 5,035 MW at a cost of $10.05 billion.
PLN has secured loans from the Japan International Cooperation Agency to build three plants worth $1.91 billion, with three plants backed by Chinese financing worth $950 million, five plants funded by the Asian Development Bank at $486 million and the remainder funded by PLN’s internal funds and the state budget.