The power of water: State-owned PT Indonesia Power uses the Saguling dam in West Bandung regency of West Java to operate a hydropower plant that contributes 2.5 percent to the Java-Bali power grid. - Jakarta Post/ANN
JAKARTA, June 1 (Jakarta Post/ANN): The Trade Ministry has called for progress to be made on the Asean Power Grid (APG) initiative, which could help Indonesia deal with its current electricity oversupply, including by exporting excess power to neighboring countries.
At the Asean Economic Ministers' (AEM) Special Meeting earlier this month, the ministry expressed its wish for member states to jumpstart long-time initiatives like the APG to dampen the impact of high energy prices.
Prices of many commodities have risen sharply in recent months as economic activity picked up worldwide because coronavirus-related restrictions were lifted, while sanctions imposed on Russia in response to the war in Ukraine exacerbated energy inflation.
The APG is a plan to interconnect power grids in the region by progressing from bilateral cross-border agreements to subregional agreements and, finally, full regional integration.
The plan’s implementation relies on the development of harmonized transmission infrastructure and trading regulations.
Representing Indonesia at the event, Trade Minister Muhammad Lutfi said deeper Asean economic cooperation was imperative as the current multilateral trading system faced multiple challenges that could render the World Trade Organisation ineffective.
"We had some initiatives in the 1980s [and 1990s] on the business we manage together in order to supply ourselves together, [and] this is something we are going to revisit [...]. Part of that is, you know, the ASEAN [power] grid," Lutfi said in a press conference at the AEM Special Meeting on May 18.
Elaborating on the issue, the Trade Ministry's ASEAN negotiations director, Dina Kurniasari, said the APG would complement regional value chains to increase the region's comparative advantage and at the same time meet the region's energy security needs.
"The Asean power grid [initiative] has been active in sharing resources since signing the memorandum of understanding (MoU) in 2007. This initiative is expected to solve the problem of electricity oversupply in Indonesia," Dina said in a written message to The Jakarta Post on May 23.
On Feb. 23, state-owned electricity firm PLN president director Darmawan Prasodjo reaffirmed that Indonesia had a tremendous oversupply of electricity, particularly on the island of Java.
"PLN is currently experiencing great oversupply,” Darmawan told reporters at the Green Industry cluster MoU signing ceremony, as quoted by Detik Finance, explaining that supply on Java Island had increased by an estimated 6 gigawatts in 2021, while demand had only increased by around 800 megawatts. “So there seems to be an extra 5 GW."
As a result, PLN welcomes the electricity export plan while remaining mindful of the operational and financial feasibility of upcoming projects.
"PLN is ready to support ASEAN economic integration and create a highly competitive regional economic area, especially in the energy sector," said PLN corporate and CSR communication vice president Diah Ayu Permatasari in a written message to the Post.
Under the Asean Plan of Action for Energy Cooperation (APAEC) 2016-2025, member states have agreed to initiate multilateral electricity trading within the given timeframe. Indonesia currently has one interconnection with Malaysia in operation, called P6 Sarawak-West Kalimantan.
Indonesia plans to build two more interconnections with Malaysia, P4 Peninsular Malaysia-Sumatera and P15 East Sabah-East Kalimantan.
The government also plans to create two interconnections with Singapore, P5 Batam-Singapore and P16 Singapore-Sumatera.
Institute for Essential Services Reform (IESR) director Fabby Tumiwa said the export approach was not a solution to the oversupply problem, as Indonesia’s electricity comes largely from nonrenewable energy sources, such as coal, whereas countries like Malaysia and Singapore were not willing to import fossil-fuel-generated electricity.
"In 2021, countries such as Malaysia and Indonesia have issued targets for net-zero emissions, and one of the efforts is to cut coal power plants in stages.
"Thus, this target changes countries' preferences toward no longer [using] fossil electricity and replacing it with renewable energy. If, in the previous MoU, Malaysia agreed to import from steam power plants, maybe now they don't want to anymore," Fabby said in a telephone call with the Post.
Therefore, instead of pushing export policies, Fabby recommended that the government retire old fossil electricity power stations and renegotiate contracts with private power plants to reduce electricity supply.
"There needs to be a renegotiation with independent power producers (IPP) to, at least, reduce the capacity factor of generators.
Currently, PLN contracts with IPPs on a generator's capacity factor is [still] above 80 percent. I, and most other analysts, believe that is too high. Ideally, it should be 55-60 percent," Fabby added, referring to the capacity utilization of power plants.
Given Indonesia’s geography as an archipelagic country, the most important task for the government to tackle oversupply was to create inter-island electricity connections, such as from Java to Sumatra or from Java to Kalimantan, so that excess supply in Java could be moved to other islands, Fabby continued. - Jakarta Post/ANN
