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Oil & Gas

KASADO NA: Phoenix Philippines partners with CNOOC for LNG facility development

4 March 2019

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Philippines

Department of Energy Secretary Alfonso Cusi acted as a witness between the signing of Phoenix Petroleum President and Chief Executive Officer Dennis Uy CNOOC G&P Chief Finance Officer and Vice President Wu Zhengxing, and PNOC President and CEO Reuben Lista, stated in a disclosure.

Under the MoU, the three firms are allowed to explore and discuss potential business ventures, as well as cooperate with the equity investment in Tanglawan Philippines LNG Inc. and other firms involved in the project.

“We warmly welcome the potential addition of PNOC in the LNG hub project we have been planning to venture on with CNOOC G&P,” Phoenix Petroleum Chief Operating Officer Henry Albert Fadullon was quoted in a Manila Times report.

“The LNG hub is a crucial project that will provide long-term solutions for our country’s energy needs, and the strategic alliance among our companies will further secure the continuous development of this venture,” he added.

Joint venture of Phoenix Petroleum and CNOOC G&P, as well as a subsidiary of the China National Offshore Oil Corp. (CNOOC) Tanglawan is seen to start the first stage of break ground this year, with a receiving terminal that can hold 2.2 million tons yearly.

The two firms will also develop a 2,000 MW gas-fired power plant.

Tanglawan is starting to start its LNG hub’s commercial operations by 2023, Phoenix Petroleum said.

The facility is said to provide a clean, competitive, and environment-friendly energy source in Luzon, while providing an energy security for the country.

Renewables

Renewable Energy Day bodes well for greener energy future in PH

4 March 2019

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Philippines

With the intensifying global pivot toward renewable energy to address climate change, the shift in developing countries such as the Philippines is starting in the grassroots and community levels. These communities of practice, while small in scale, serve as proof that renewable energy is feasible and genuinely beneficial — and serve as encouraging examples for other communities as well as the entire nation.

Recently, Negros Oriental is the first province in the Philippines to institutionalize unequivocal support and commitment to renewable energy sources through an annual commemorative local government event.

Governor Roel Ragay Degamo recently signed Executive Order No. 22-18 declaring Renewable Energy Day in Negros Oriental every 5th of March. This follows a similarly groundbreaking executive order signed last March 2018 declaring Negros Oriental as an environment-friendly and clean energy province.

Negros Oriental is host to several renewable energy power plants that generate clean, reliable power through geothermal, solar, hydro and wind sources, contributing substantially to the electricity needs of the Visayas region.

“Consistent with these directives and ideals, the Province of Negros Oriental shall prioritize the utilization of clean, renewable energy, which is abundant in the province; to continuously protect and develop such renewable energy sources and, at the same time, shun operations and activities including sourcing and use of energy sources that are destructive to the environment and harmful to its citizens’ health and livelihood,” the declaration stated.

“Such detrimental operations and activities are primarily caused by the operation of power plants run by the burning of fossil fuels such as coal,” it cited. The observance of the first Renewable Energy Day in 2019 is seen as a culmination of a week-long celebration in the province focused on increasing awareness and information about renewable energy sources, engaging the public especially the youth in pro-environment initiatives and causes, and showcasing the positive effects and benefits of “greener” and reliable energy.

“Making my province, Negros Oriental, as an environment-friendly and clean-energy province is one of the toughest decisions I have made as governor,” Degamo previously stated in a message at the 2018 State of Nature Assessment (SONA) organized by non-profit environmental group Green Convergence in partnership with the Forest Foundation of the Philippines and Energy Development Corporation (EDC) held in Baguio City.

“I want to share our experience so that it can serve not just as an example but an inspiration on how we can achieve a cleaner energy future not just for individual communities but for the entire country,” he stated.

Electricity/Power Grid

Meralco eyes short-term power deals for Malampaya shutdown

4 March 2019

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Philippines

MANILA, Philippines — Manila Electric Co. (Meralco) is planning to sit down with the Energy Regulatory Commission (ERC) to secure short-term power supply deals in time for the Malampaya shutdown and clarify rate increase due to the deployment of smart meters.

The power distributor said it needs to close interim power supply agreements (IPSAs) ahead of the shutdown of the Malampaya gas facility.

However, securing IPSAs is now challenging with the competitive selection process (CSP) policy, Meralco senior vice president Alfredo Panlilio said.

“We engage sometimes in short term IPSAs. But with the CSP, there’s a bit of complication. Unlike before, we can contract for short period of time. I think we might have to go through the process of CSP,” he said.

Earlier, Energy Secretary Alfonso Cusi said the Malampaya consortium would conduct maintenance shutdown on its facility this October.

With the CSP policy, Meralco will seek guidance from the ERC on how to secure IPSAs.

“That needs a process. Before, we have to show we negotiated and seek their approval for emergency purposes… The process now is you go through CSP, you have to give it a bit more time in terms of negotiating,” Panlilio said.

Operating since 2001, the Malampaya gas project supplies fuel to around 40 percent of gas-fired plants in Luzon namely the Ilijan, Sta. Rita plant, San Lorenzo, San Gabriel and Avion plants – which supply 3,211 megawatts (MW) to the Luzon grid.

In the past, power rates in Luzon increase when the Malampaya project undergoes shutdown since power plants use more expensive liquid fuel – diesel and condensate.

Meanwhile, Meralco will also clarify issues about the rollout of smart meters within its franchise.

The ERC earlier said it sees an increase of at least P0.23 per kilowatt-hour (kwh) in Meralco electricity bills when its Advanced Metering Infrastructure (AMI) project is approved that’s why it merits a thorough cost evaluation.

Panlilio said they would set a meeting with ERC chief Agnes Devanadera to clarify the potential rate increase with the smart meter rollout.

“What we plan to do…is to sit down with her again, show her the business case we showed in the past,” he said, noting what the power distributor presented was only a four to five centavo per kwh increase during filing.

Since then, the cost of smart meters have gone down.

“We’re redesigning the network as meter agnostic and we can hopefully bring down further meter prices,” the Meralco official said.

AMI is an integrated system of smart meters, communications networks and data management systems that enables two-way communication between utilities and customers.

The system will enable Meralco to determine what is happening in its electric grid, quickly respond to events, and restore power swiftly, thereby improve overall operational efficiency.

It will also allow customers to efficiently manage their energy usage and budget through consumption information, alerts and notifications.

Oil & Gas

LNG: Powering growth in Southeast Asia

4 March 2019

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Indonesia

Indonesia has many of the characteristics associated with an immature LNG import market, despite being an established exporter of LNG. As a country it is nominally self-sufficient in natural gas, but with a booming population and 17,000 islands across which to transport LNG, it has had to develop import facilities to compensate for the energy it cannot supply itself.

Indonesia commenced LNG exports in 1977 and by 1984 had overtaken Algeria to become the world’s leading supplier of the product. In 1988, shipments from Bontang and Arun, the nation’s two liquefaction plants at the time, accounted for almost 40% of the global trade in LNG.

Indonesian LNG exports peaked in 1999, at 28.5 mta, although the country remained the world’s leading LNG supplier until 2006 when Qatar took on that mantle. Since then, declining production at Bontang and Arun has been compensated for by output from the new 7.6 mta Tangguh and 2 mta Donggi Senoro terminals.

Indonesia’s LNG production in 2017 was 18.7 mta (19.9 mta in 2017), of which 2.64M tonnes shipped to domestic terminals. The country’s LNG output is expected to remain stable until at least the early 2020s, and probably for considerably longer. The commissioning of a third 3.8 mta Tangguh train in 2020 will help maintain the nation’s production levels.

However, Indonesia is an emerging economy and is hungry for energy in any form, but especially LNG. Pertamina only made its first LNG shipment to the east of the country in 2017 and has been busy forming alliances with independent suppliers to plug the LNG gap under a mandate from the government. This includes development deals with Woodside, ENI and BP.

Two liquefaction plants are under construction that will require the services of LNG carriers: Senkang LNG, with a contracted capacity of 0.5 mta, due to start production in early 2020; and the aforementioned Tangguh third train.

In addition, Djakarta-headquartered JSK is developing a mini-FSRU which will initially be stationed in Bali. The Karunia Dewata has 26,000 m³ capacity and will regasify around 50M standard cubic feet a day (scf/d). The LR-classed vessel is the first mini-FSRU to be built in PaxOcean’s Zhoushan shipyard and is the largest ship of its type to be built in China. The non-propelled vessel was designed for the installation of four independent type C tanks, each with a capacity of 6,500 m³ and a minimum operating temperature of minus 163C.

“Indonesia is an emerging economy and is hungry for energy in any form, but especially LNG”

“The design is focused on simple and reliable operations in Indonesian waters,” said PaxOcean engineering director Lixin Bian at the launch. The vessel will be put to service in the small-scale supply of LNG within Indonesia’s network of archipelagos, with their often shallow depths.

Gas-to-power

Remote locations and stranded gas in Indonesia are the norm rather than the exception, and this was a key factor in the deal offered to a Japanese consortium to construct and operate Indonesia’s – and Asia’s – first gas-to-power project by deploying an FSRU.

An essential element of the Jawa 1 project, the Mitsui OSK Lines (MOL)-managed FSRU will operate in West Java, distributing gas under pressure to a local power plant from its anchorage 14 km offshore in the Cilamaya Sea east of Jakarta. The gas will be sent through a 21-km long pipeline.

The power plant is jointly owned by Pertamina and trading houses Marubeni and Sojitz. At 293-m long and 43-m wide, the vessel, which will be built by Samsung Heavy Industries, will have an LNG storage capacity of 170,000 m³ and a regasification capacity of 300M cubic feet per day.

According to a statement by the consortium partners, the FSRU will feature “the optimal tank and regasification capacity tailored to the plant’s power generation ability.” Co-financiers for Jawa 1 include seven banks. MOL has a central role in the project, which is due to start up in December 2021 and run for a contract period of 25 years.

The Jawa 1 project will be watched closely in a region that most analysts consider to be ripe for FSRUs usually deployed to ‘stranded’ – or smaller – fields, where the cost of a fixed platform is not justified or is at least marginal. “As regions worldwide have comparatively unexpected and smaller gas requirements, FSRUs are projected to meet their demands,” noted energy consultant TMR in early 2019. “The low cost of construction required for FSRUs is another [attraction] that is likely to contribute to the development of the global market in coming years,” it added.

The difficulties involved with remote access can sometimes kill or stall a project. Pertamina recently decided not to construct the Bojonegara LNG receiving terminal, proposed for a site to the west of Jakarta. The US$800M project would have provided Indonesia with its second land-based receiving facility.

However, the proposed location is about halfway between country’s two existing large-scale FSRU receiving terminals – PGN FSRU Lampung at the southern tip of the island of Sumatra and Nusantara Regas Satu in Jakarta Bay where it serves Jakarta.

However, doubts began to emerge as regards the immediate need for another LNG receiving facility in the area, as the distance between the two FSRUs is only 250 km. In October 2016 the project participants agreed to push back the start date to 2020.

Project delays in Indonesia are not unusual. Indonesia was on the cusp of a world first with Jayanti Baruna, a 2,200 m³ Compressed Natural Gas carrier (CNG) which was contracted by Pelayaran Bahtera Adhiguna, the Indonesian subsidiary of state power company Perusahaan Listrik Negara (PLN) in 2014. The pioneering vessel is designed to hold natural gas at 250-bar pressure to be transported in 832 vertically-arranged, 12-m high cylinders designed and fabricated by CIMC Enric. The vessel was completed in China in 2016, but has yet to be delivered due to a lack of gas receiving facilities in Indonesia.

Floating LNG

As mentioned above, SHI is constructing a floating LNG vessel for Eni’s Coral FLNG initiative in Mozambique. The 3.4 mta floating production vessel will go on station off the country’s northern coast for 25 years. BP has agreed to purchase the entire output of the Coral FLNG vessel.

Floating LNG production obviates the need for undersea gas pipelines to a shore liquefaction plant when the commercialisation of remote gas fields is being considered. Because FLNG vessels are constructed at specialised facilities, the local labour costs and permitting issues associated with the construction of shore terminals can be avoided.

“Remote locations and stranded gas in Indonesia are the norm rather than the exception”

Despite the use of innovative technologies and the detailed preparation work associated with these inaugural floater projects, the FLNG approach usually translates into shorter lead times and less capital expenditure than is required for traditional shore-based liquefaction plants. The US$7Bn Coral LNG will be 439-m long, 65-m wide and weigh about 210,000 tonnes. It is designed to produce 3 mta of LNG and 480,000 tpa of condensate. The first cargo is scheduled for 2022. It could be that Coral LNG beats Mozambique’s onshore LNG to market.

The onshore project is far larger, consisting of two LNG trains with total nameplate capacity of 12.88 mtpa to support the development of the Golfinho/Atum fields located entirely within Offshore Area 1.

This foundational project paves the way for significant future expansion of up to 50 mtpa from Offshore Area 1. The Golfinho/Atum Project will also supply initial volumes of approximately 100 million cubic feet of natural gas per day (MMcf/d) (50 MMcf/d per train) for domestic use in Mozambique. Anadarko Petroleum Corporation has signed a number of sales and purchase agreements for Mozambique LNG1.

We now see that a former major exporter of LNG is turning to the newest supplier in the field to provide energy to meet its future demands: Anadarko and Mozambique LNG1 has announced it is to supply 1 mta for 20 years to Pertamina.

“Indonesia is expected to be one of the fastest growing natural gas markets in Asia and Pertamina, the national energy company of Indonesia, will play a key role in meeting Indonesia’s long-term energy needs,” said Anadarko executive vice president international, deep-water & exploration, Mitch Ingram. “The Anadarko-led Mozambique LNG project is well positioned to make a sanctioning decision in the first half of this year, as we remain on track to complete the project financing process, secure the necessary approvals, and have executed a sufficient volume of long-term SPAs, which now total more than 9.5 MTPA. We are extremely pleased and grateful to Pertamina for selecting Mozambique LNG to be part of its long-term energy portfolio.”

Oil & Gas

Indonesia discovers 10 areas with potential oil, gas reserves

4 March 2019

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Indonesia

According to data of SKK Migas, those 10 areas are in North Sumatra, the Centre of Sumatra, South Sumatra, Tarakan, NE Java-Makassar strait, Kutai offshore, Buton offshore, Northern Papua, Bird Body Papua, and Warim Papua.

Indonesian Deputy Minister of Energy and Mineral Resources Arcandra Tahar confirmed that Indonesia has giant oil and gas fields in some regions.

The task force has found natural gas reserves of two trillion cubic feet in South Sumatra’s Sakakemang working area in Musi Banyuasin district. Energy company Repsol held the cooperation contract.

The Indonesian official voiced his hope that it would encourage the spirit of exploration in the country, as there are many basins and plays that have yet to be explored.

The potential of the existing gas basin can be optimised by the application of hard work and new technology, with adjustment in the oil and gas fiscal system policy of Indonesia, he added.

The Indonesian government will also ease the process of offering oil and gas working area to investors. Data on registered basins will be opened for analysis.

Bioenergy ,
Energy Cooperation

British company to invest $200m in West Java waste-to-fuel plants

4 March 2019

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Indonesia

British recycling company Plastic Energy Ltd. is set to invest US$200 million to build waste-to-fuel plants in several cities across the province, according to West Java Governor Ridwan Kamil.

West Java is home to over 50 million people or 20 percent of Indonesia’s population.

In an exclusive interview in Jakarta on Thursday, Ridwan told The Jakarta Post that the facilities, which will convert low-grade plastic waste into diesel fuel, were part of West Java’s broader efforts to address its waste problem.

“The investor […] will fully fund the plants, so it will be the administration’s job to provide around 1 hectare of land for each plant,” Ridwan said in the interview, which was held on the sidelines of a discussion forum.

“We plan to set up the first one in Bogor as it is the most prepared city to do this.”

In the forum, Bogor Mayor Bima Arya said the city, located approximately 60 kilometers from Jakarta, was preparing to house one of Indonesia’s first waste-to-fuel plants.

“Our city produces 600 tons of waste each day and 13 percent of it is plastic waste,” Bima said. “The number has reduced by 40 tons a day since we launched the single-use plastic ban, but we want to not only reduce but also repurpose the waste.”

The city administration, he said, has been in talks with Plastic Energy for some time about the partnership, and both sides shared the expectation of starting construction on a plant this year.

In addition to waste-to-fuel plants, West Java has implemented other programs to manage its waste, such as building a refuse-derived fuel (RDF) facility in Bogor and employing housewives to sort waste in return for gold savings in a scheme called waste-to-gold, Ridwan added.

“In the meantime, Bogor has also issued a ban on single-use plastics […] I will issue a circular letter to other cities in West Java to follow Bogor’s example by issuing the same ban,” he said.

On the same occasion, Kirk Evans, Plastic Energy’s government relations in Indonesia, said the company was planning to build five waste-to-fuel plants costing $40 million each across West Java.

Each plant is expected to process 70 tons of low-grade plastic waste per day, such as plastic bags and wrappers, and convert it to fuel. For every ton of plastic waste, he said, the plant could make 860 liters of fuel, comprising 80 percent diesel and 20 percent naphtha.

Prior to the announcement, Plastic Energy had spent 18 months researching cities across Indonesia as candidates for its first plant. The West Java administration recently approved the project.

“Currently, we are putting together a kind of study to identify the correct cities [to establish the plants in],” he said. “We are also looking out for some private, local partners, so we will hopefully be able to start the plant’s construction within this year.”

He said the study would take another three months to complete before the company could start building a plant, which would be completed approximately within 18 months.

Evans said it was important for the company to partner with the local government as the latter was the only party capable of providing the waste needed by the company to operate.

Indonesia, he added, would be the first country in Southeast Asia the company has partnered with. Before that, it had built similar plants in Spain.

“We are very much open to the opportunity to expand these plants to other provinces […] probably in some of the second-tier cities that have open dumps and lots of plastic waste,” he said.

Renewables

Storage preferred to net metering in Indonesia as new rules prove ineffective

4 March 2019

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Indonesia

Months after coming into force, Indonesian legislation for rooftop solar has prompted a lukewarm response.

As predicted by Fabby Tumiwa – director of Indonesia’s Institute for Essential Services Reform – when decree 49/2018 was issued by the Ministry of Energy and Mineral Resources in November, the net metering rules have not proven attractive enough to spur growth and encourage businesses and homeowners to install solar rooftops. Solar stakeholders say the tariff offered by the scheme in return for excess energy exported back to the grid is too low.

The Indonesia Rooftop Photovoltaic Users Association (PPLSA) told pv magazine the low tariff is being exacerbated by a series of other hurdles to the adoption of rooftop PV.

The solar group cited capacity and emergency energy utilization charges for industrial customers; a mandatory requirement only registered companies can install rooftop solar; the fact rooftop systems are treated similarly to diesel gensets which can operate around the clock; size limitations based on inverter nameplates; and a requirement permits be secured from utilities before installation. A further deterrent is the requirement for rooftop systems to either use locally made or certified modules and inverters, or for consumers to pay to have imports re-certified, according to the PPLSA.

Going off grid

Although the new regime established the legal right of homeowners to install rooftop systems – previously, utilities had to give permission – PPLSA president Yohanes Sumaryo said the net metering factor of 0.65 set by the government had hobbled the system. “This means that for every kilowatt-hour that a PV system [sends] to [the] grid, our grid consumption will be reduced by 0.65 kWh,” he said.

Sumaryo revealed 300 members of the association have already gone off grid by disconnecting from the network of utility Perusahaan Listrik Negara and are planning to deploy storage to manage excess power. Although buying and installing a storage system may increase project costs by around 50%, disgruntled users have decided to abandon net metering without notifying the utility.

Newspaper The Jakarta Post reported the Ministry of Energy and Mineral Resources is defending the net metering provisions and will make an assessment of the results after a year of the regime.

What is certain, is Indonesia must do more if it wants to keep its promise to increase its share of renewable energy from around 14% to 23% by 2025. The country is supporting large-scale PV through a law issued in April 2017, with several large solar projects announced in the past two years.

Renewables

Is Indonesia losing favorable clean energy policies?

4 March 2019

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Indonesia

Indonesia once had policies that supported the development of clean energy, but regulatory changes in the last 10 years seem to be the root of the problem of why abundant sources of renewable power in the country have been left mostly untouched after more than seven decades after the country’s independence.

Based on an interview with an industry insider, The Jakarta Post discovered that Indonesia had met the expectations of all stakeholders at least once in clean energy development — or reached a win-win situation.

However, at least in the last five years, the growth of renewable energy in Indonesia has fallen behind that of other Southeast Asian countries. Indonesia’s own regulator, the Energy and Mineral Resources Ministry, was even pessimistic about reaching the development target.

Reminiscing on the ‘good old days’

Nanang Hamdani Basnawi, director of local hydro-based power plant developer Bumiloka and a member of the Indonesian Renewable Energy Society (METI), told the Post that it was a “mystery” to clean energy players that renewable energy policies had turned unfavorable — and even vanished — in just several years.

He added that 10 years ago, the sector had Energy and Mineral Resources Ministerial Regulation No. 31/2009 on new and renewable energy development.

The regulation was like a dream come true for clean energy developers as it accommodated their wishes, such as stipulations on a feed-in tariff scheme and assurance that state-owned electricity company PLN would buy the electricity they produced in a long-term contract.

In the feed-in tariff scheme, the price of electricity for renewable energy developers remains unchanged until the end of a contract.

A solar panel is seen in this picture. Renewable energy progress in Indonesia to date has been underwhelming and related policy and regulations remain uncertain. (Shutterstock/File)

The regulation also stipulated a direct appointment scheme, which omits the auction phase to jump-start the development of renewable energy projects.

“The scheme means that anyone who has the potential [to develop a renewable energy plant] can be appointed directly [by PLN] to start the project,” Nanang said.

He recalled that a renewable energy power plant in Java at the time received a flat tariff of Rp 656 (4 US cents) per kilowatt hours, especially for hydro-based power plants.

About three years later, the government adjusted the electricity tariff generated from renewable energy plants to Rp 850 per kwh (6 US cents) to make it more economically feasible for some developers.

“That’s why you can see a lot of PLTAs [hydro-based power plants] in remote regions that are untouched by PLN’s power system,” he said.

Then came Energy and Mineral Resources Ministerial Regulation No. 19/2015, which increased the tariff to 12 US cents per kwh.

The revised regulation, Nanang said, was comprehensive for all types of renewable energy and set out a clear procedure for electricity sales and purchase agreements.

However, he said, the tariff was too expensive for PLN, which then adjusted the rate to 7 US cents per kwh by itself. The new rate, nevertheless, was still favorable for the developers, he said.

The downturn of renewable energy development

The good times in renewable energy development then came to an end when the ministry issued Energy and Mineral Resources Ministerial Regulation No. 50/2017 on renewable energy for electricity, which was criticized as a “disincentive” policy.

Renewable energy players raised three key concerns regarding the regulation: uncertainty in the cost of electricity purchases, use of the Build, Own, Operate and Transfer (BOOT) scheme and shifting the process of determining a project develop from direct appointment to auctions.

An offshore wind farm is seen in this picture. (Shutterstock/File)

Since last year, industry players have been pushing the government to revise an article that causes uncertainty in the cost of electricity purchases. The article stipulates that a maximum price ceiling is set at only 85 percent of the area’s electricity supply cost (BPP), which would make it difficult for renewable energy projects to apply for bank loans.

The 85-percent ceiling was also recently criticized by the European Business Chamber of Commerce in Indonesia (EuroCham), who pointed out it was “too ambiguous” and too risky for investment.

“The word ‘maximum’ means that we don’t know exactly how much [electricity price] we could get from PLN. It is crucial for us to calculate our investment in the project,” Thomas Wagner, EuroCham head for energy working group, told the Post.

Meanwhile, the BOOT scheme, which requires investors to transfer their renewable projects to PLN at the end of their power purchase agreements (PPAs), had made banks reluctant to accept projects as collateral for loans, according to Association of Micro-Hydro Power Plants (APLTMH) chairman Riza Husni.

Lastly, it is widely considered that the change in how qualified renewable energy developers are determined has brought a number of projects to a halt in the past two years.

According to recent government data, 30 of all 75 renewable energy PPAs with a total capacity of 1,581 megawatts, most of which were signed in 2017, still failed to obtain funding.

“Just go back to regulation 19/2015, which all stakeholders agree on, and we can determine a win-win electricity price,” said Nanang of METI. “Because look at what’s happening now: I have yet to see an auction for renewable energy projects after PLN issued the DPT [list of selected providers].”

Environmentally friendly — The Dieng geothermal power plant (pictured) in Central Java is one of the main sources of renewable energy in Indonesia. (Tempo/Aris Andrianto)

Regulation No. 50/2017 stipulates that independent power producers (IPP) should be shortlisted in the DPT before proposing to operate renewable energy projects.

Nanang said that since its issuance, eight out of 12 hydro-based power plant projects under the management of his association with a total capacity of 48 MW had been put on hold since 2017.

“I’ve secured all the land permits and even the financing, but they had to be terminated due to the regulation,” he said. “So, now we have to survive amid regulatory uncertainty.”

The government’s stance

Andy N. Sommeng, then-director general of electricity at the Energy and Mineral Resources Ministry, neither agreed nor disagreed on the criticism, saying that concerns over Regulation No. 50/2017 hampered renewable energy development were merely a matter of difference of opinion.

“My view is that our current electricity system is not ready to handle the technical aspects [of renewable energy],” said Andy, who has now retired from his position.

“One example is the photovoltaic power plant, which needs to be complemented by other energy sources when the sun goes down.”

As for the stipulation that the direct appointment scheme could be replaced with auctions in determining renewable energy developers, Andy said that this was merely a mitigation effort to minimize the chances of graft, including bribery.

“Other than issues on technicalities, why do we have to hurry [to develop renewable energy power plants]? The demand isn’t there yet. PLN has to invest more to realize [the program] and we have an abundance of coal [as a major source of energy],” he said.

While acknowledging that future energy demand would be for renewable sources, Andy believed that shifting directly to clean energy power plants would only widen Indonesia’s current account deficit due to higher imports of renewable energy facilities or machinery.

“We are not lagging in [renewable energy development]. We have to consider the supply and demand [of electricity]. Renewable energy is good, but what’s the point if it does not bring added value to our country and instead forces our country to consume more [imported goods]?” he said.

Zulfikar Manggau, head of PLN’s new and renewable energy division, recently told the Post that the electricity firm would only start auctioning renewable energy projects after the Energy and Mineral Resources Minister approved its new electricity procurement business plan (RUPTL) for the 2019-2028 period.

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