The Ministry of Energy and Mineral Resources (ESDM) has recorded a significant decrease in electricity oversupply in Java-Bali region, to 4 gigawatts (GW) by the end of 2023, a substantial reduction from the 7 GW recorded at end of 2022.
Jisman P. Hutajulu, Director General of Electricity at the Ministry of Energy and Mineral Resources, said the ministry is delaying the commercial operation dates (COD) of several power plants to alleviate the take or pay (ToP) burden on State electricity company PT PLN.
“We are endeavoring to postpone the COD of some power plants for two to three years to avoid the accumulation of their take or pay obligations,” said Jisman during a press conference in Jakarta on Thursday. January 18, 2024). Jisman attributed the oversupply to the macroeconomic growth assumptions that deviated from the 35,000 MW megaproject.
When the 35 GW program was initiated, he stated, the macroeconomic growth assumptions ranged from 7 percent to 8 percent. However, the national economic growth over the past decade has consistently remained below 6 percent, significantly deviating from the assumptions used in the 35 GW program.
“Currently, electricity growth is around 5 percent to 6 percent, so this overcapacity issue can be resolved in the next 2 to 3 years,” Jisman said. Additionally, the ministry is encouraging PLN to execute power purchase agreements (PPAs) with private developers that have yet to materialize.
“We encourage the construction of power plants to cover new growth and demand, especially with large-scale smelters in Sulawesi and Java,” he added.
Earlier, the Supreme Audit Agency (BPK) had warned of an alert and deficit status in the national electricity system due to the low realization of power plant construction in PLN’s electricity supply business plan (RUPTL). The report highlighted that the Java-Bali electricity system is predicted to enter an alert condition starting in 2028.
These projections were outlined in the BPK Examination Report on the Performance of Coal, Natural Gas, and Renewable Energy Management in Developing the Electricity Sector to Ensure the Availability, Affordability, and Sustainability of Energy Fiscal Year 2020 Through Semester I 2022 at the ESDM No. 9/LHP/XVII/05/2023 dated May 9, 2023.
