Indonesia: Villages may soon see the light

Indonesia: Villages may soon see the light

The government will soon issue a new rule to electrify 2,500 remote villages
with the help of the private sector that may need billions of dollars for
the cause.

These affected villages are part of the total 12,659 villages across the
country that it aims to electrify with renewable energy sources under the
Indonesia Terang (Bright Indonesia) program, the umbrella program of the
development plan involving the private sector.

The rule will allow private companies, provincial administration-owned
companies and cooperatives to set up off-grid power plant projects in remote
villages, 2,376 of which are located in Papua and West Papua.

The Energy and Mineral Resources Ministry's electricity development program
director, Alihuddin Sitompul, said the regulation had been signed by
Minister Ignasius Jonan and was being processed at the Law and Human Rights
Ministry.

"The government hopes to encourage the private sector and
provincial-administration owned companies to enter the small-scale
electricity business. With a maximum capacity of 50 megawatts [MW],
investors can act as mini versions of [state-owned electricity firm] PLN,"
Alihuddin said during a seminar held on Tuesday.

PLN is currently the sole electricity off-taker in the country. However,
with the impending regulation, private investors will be able to sell their
electricity directly to residents without having to go through PLN.

Private investors will also be requested to focus on procuring electricity
through a hybrid power system, supported by both renewable energy sources
and conventional fossil fuel sources.

A hybrid power system combines two or more modes of electricity production,
usually involving at least one renewable energy source to ensure the village
can maintain power 24 hours a day.

Alihuddin was upbeat that the private sector and provincial
administration-owned companies would be interested in the projects as the
government would offer subsidies as an incentive. However, he declined to
disclose any details.

Even though Indonesia recorded an electrification rate of 88 percent last
December, it was attributed to heavy concentration on Java, while eastern
regions have remained in the dark.

Lack of electricity in the regions has been mostly blamed on poor
infrastructure, which also contributes to high transportation costs.

The ministry previously said the development of electricity infrastructure
in Papua and West Papua would require Rp 156.02 billion (US$11.64 million)
and annual operating fees of Rp 191.9 billion.

Previously, PLN corporate planning director Nicke Widyawati said the company
had expressed its interest to the government in leading projects that could
be interconnected into its existing network and was already assessing
locations in Papua.

The ministry has remained quiet about whether the impending ministerial
regulation would also involve PLN.

The private sector, meanwhile, has expressed its readiness to take part in
the remote village electrification program.

Indonesian Chamber of Commerce and Industry (Kadin) deputy head for
bioenergy and water power Jaya Wahono said that the business group was
trying to submit funding proposals worth $8 billion to various international
groups, including World Bank financing arm International Finance Corporation
(IFC) and the Green Climate Fund (GCF), to meet the electricity procurement
plan.

The massive fund could help provide 300 kilowatts of electricity to one
village, where each house could get at least 450 watts of electricity.

"That way, the government can boost the economic growth in remote areas.
People in coastal villages, for instance, can use the electricity to build
cold storages for their fishery products," Jaya said.

Kadin has formed a partnership with the European Chamber of Commerce to
explore business opportunities available to European companies, which are
expected to invest in and transfer their technological knowledge to
Indonesia.

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Link to Original Article:
http://www.thejakartapost.com/news/2016/11/30/villages-may-soon-see-the-ligh
t.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com