Further Investments Planned in Indonesia’s Mini Hydro Portfolio

Previously Armstrong also announced a partnership with Mandiri Investment Management to work together to invest in renewable energy projects, starting from mini-hydro sector in Indonesia. There’s more to come, with plans to commit to fund the development and operation of a portfolio of mini-hydro plants in Indonesia.  With the largest renewable energy resources in Southeast Asia, Indonesia offers sustained long term growth in power demand and mini-hydro has now become one of the most attractive renewable energy sectors in Southeast Asia.

Indonesia

Indonesia has the largest renewable energy resources in Southeast Asia with sustained long term growth in power demand. After the revision of feed-in-tariff system announced recently, the Indonesian mini-hydro has now become one of the most attractive renewable energy sector in Southeast Asia.

Last month (May), Indonesia announced that a new higher tariff for electricity purchased from mini-hydropower plants had been set by the Energy and Mineral Resources Ministry to make the sector more attractive for industry players.

In April this year, Armstrong also announced a partnership with Mandiri Investment Management to work together to invest in renewable energy projects, starting from mini-hydro sector in Indonesia.

In advance of more investment commitments by Armstrong Clean Energy Fund for Southeast Asia, Andrew Affleck said: We expect to deploy our capital rapidly to deliver high-quality mini-hydro assets  to support sustainable development of Indonesia.”

Armstrong closed its Clean Energy Fund when it reached US164 million last November. Prior to the latest deal, it has made three investments from the fund: a capital commitment of up to US$30 million to Annex Power for solar and biogas projects in Thailand, Indonesia and the Philippines, an equity stake in Symbior Elements to develop a portfolio of solar generation in Central and Northeast Thailand and a capital commitment of up to US$ 40 million to The Blue Circle for wind and solar projects in Mekong Region.

Source: www.armstrongam.com

At the Green Growth and Business Forum, Mr Pak Artissa Panjaitan from Indonesia’s Climate Change Centre pointed out that with 13,000 inhabited islands, Indonesia had a challenge to reach all with electricity.  But the aim was to energise the majority of the population with an electrification rate target set at 97.7% of the population by 2022.

Based on 2013 – 2022 RUPTL (Power Generation Business Plan), signed on 31 Dec. 2013, Indonesia plans to provide electricity to 77.2 million customers by 2022, compared to 49.7 million  in 2012).

He pointed out that the total investment needed was US$ 125.2 billion. PLN (Perusahaan Listrik Negara, the Indonesian government-owned corporation responsible for electricity distribution, has the financial capacity to fund US$ 71.1 billion, so there is a need for an additional  US$ 54.1 billion in funding.

Indonesia is looking towards public private partnership to secure the necessary funding to get electricity to all parts of Indonesia.

Pak Panjaitan heads the Low Emission Development Strategies (LEDS) Cluster of the Indonesia Climate Change Centre

The LEDS Cluster is expected to produce scientific analyses in support of policy and action for mainstreaming low emission development strategies into development plans at the national and sub-national levels.

Activities under LEDS Cluster involve:

1. Working with research institutions of line ministries and other science-based collaborative groups, and coordinates with regional and national technical agencies.
2. Convening consultation series and inter-institutional dialogues, involving Indonesian and international experts from universities and technical agencies, stakeholders, local governments, professional communities, engaged activists and scientists to coordinate scientific findings.
3. Continually developing policy briefing papers, elaborating DNPI’s research on low carbon growth strategies (LCGS) developed at the national and provincial levels, as a basis for an integrated LEDS framework
4. The Cluster aims at developing longer-term work programs on LEDS to address critical information gaps identified during their work.

Source: www.iccc-network.net/en/about-us/clusters/leds

There is considerable hydro power potential in Indonesia. However, most potential capacity is at sites which are hard to access and quite distant from any sizeable markets.

One report says there is believed to be hydro power potential of over 22,000 MW in Papua and perhaps another 16,000 MW in South Kalimantan and Central Kalimantan. Total Indonesian hydro power potential has been put at over 75,000 MW, with only 5,705 MW being utilized. Ninety six  locations across the country with a total capacity of 12,800 MW would be developed 60 percent by PLN, while the rest would be offered to independent power producers.

One problem, especially in the Outer Islands off Java, is that relatively small hydro plants often experience operational problems such as shortages of water flow. In Lampung in September 2012 for example, towards the end of the dry season, two small hydropower stations operated by PLN (total capacity around 120 MS) ceased operation, causing blackouts in the region. Localised problems of this sort are common across much of the Outer Islands.

Source: www.thejakartapost.com/news/2012/01/25/pln-identifies-96-potential-locations-hydro-power-plants.html