Export of PLTU electricity will not be effective

The government through the Ministry of Energy and Mineral Resources is reviewing the possibility to export electricity to Singapore. This is based on the electricity supply surplus experienced by PLN. With the penetration of power plants from the 35 GW project, and a decrease in domestic demand for electricity. Indonesia will experience a power supply surplus of around 40%. This numerous surplus of electricity supply occurred because of the mismatch of assumptions during project planning and preparation.

“The 35 GW project is made with an economic growth assumption of 7%. With this economic growth, it is projected that electricity demand will increase by around 8%. We know that over the past 5 years, our economic growth averagely only 5% every year, and electricity demand growth is only around 4%, plus in 2020 there is the Covid-19 pandemic which has a direct impact on the economic contraction,” explained Fabby Tumiwa, Executive Director Institute for Essential Services Reform (IESR) in the Market Review segment by IDX Channel.

On the same occasion, Fabby responded to the government’s electricity export plan.

“What needs to be understood is that the export-import scheme for electricity is not impossible, but it needs to be reviewed again for its effectiveness in the current context,” said Fabby.

In the ASEAN context, discussions on the export-import of electricity among ASEAN countries began 15 years ago. Indonesia itself has signed an MoU (Memorandum of Understanding) on ​​the export of electricity with Tenaga Nasional Berhad (TNB) Malaysia to export electricity from the Sumatra system to Peninsula Malaysia. This cooperation takes into account the peak load period between Sumatra and Peninsula Malaysia. It is noted that the Sumatra system experiences a peak load period of electric power at 17.00 – 22.00 while the peak load of Peninsula Malaysia occurs at 8.00 – 16.00. Seeing the difference in the peak load period of electricity, the process of exporting electricity from the Sumatra system to Peninsula Malaysia is possible. This project is planned to start rolling in 2028.

Potential for Foreign Market Revenue

Regarding the potential for the electricity export market, within Southeast Asia, ASEAN countries have talked a lot about clean electricity. This is because several ASEAN countries already have targets for reducing greenhouse gas (GHG) emissions and even zero emissions. Last year, Singapore said it would buy 100 MW of electricity from Malaysia, which comes from renewable energy.

“It needs to be realized and understood that the current global trend is a movement towards renewable energy,” added Fabby.

According to him, based on this fact, electricity from renewable energy will be more attractive to the global market because it is related to the GHG emission reduction agenda of each country. Indonesia needs to think about this, if we want to seriously enter the global market, especially for the issue of electricity exports. Another thing that is no less important to think about is the carbon border tax that will begin to be calculated for each commodity in global trade, including electricity.

“It would not be nice if we built a lot of PLTUs (coal-based power plant), then we exported the electricity, so Indonesia must bear the emissions. When our GHG is high, our reputation (Indonesia-ed) in the global arena will be less good, “said Fabby.

Furthermore, Fabby stated that if the aim is to absorb surplus electricity, electricity exports will not solve the problem in the short term and this solution is not a sustainable solution. The alternatives offered by Fabby in addition to electricity exports to overcome the problem of electricity surplus, i.e reconsider and renegotiate.

Reconsider means that the Government must have the courage to reconsider and even stop the construction of a new coal-power plant (PLTU) and divert it for renewable energy generation. This strategy will avoid oversupply in the next 2-3 years as well as to meet the renewable energy mix target of 23% by 2025. Currently, there are around 7.5 GW of PLTU power plants from the 35 GW project that are still in the planning process (permits, contracts, and others). By diverting the coal-power plant project into renewable energy generation, PLN will have low-carbon power plants, and automatically reduce greenhouse gas emissions from the energy system sector.

Meanwhile, renegotiation means the government’s effort to negotiate with PLTU entrepreneurs to reduce the production capacity of old PLTUs, in order to provide room for renewable energy generation in the energy system. To encourage the penetration of renewable energy in Indonesia’s energy system, it is necessary to reduce the capacity of the current PLTU.

Post-Covid-19 economic growth is projected not to turn positive quickly. Likewise, the growth in demand for electricity. So reconsidering, and stopping the construction of a new PLTU will avoid an oversupply of electricity in the next 2-3 years. Because when there is an oversupply of electricity, the costs (government subsidies) are expensive.