Independent Power Producers (IPPs) are expressing optimism about the Comprehensive Investment and Policy Plan (CIPP) under the Just Energy Transition Partnership (JETP), which was officially launched on November 21, 2023.
The International Partners Group (IPG), led by the United States and Japan, has committed to investing, providing an initial funding source for new renewable energy facilities with comparatively competitive loan interest rates.
Zulfan Hilal, Chairman of the Hydroelectric Power Plant Association, noted that these interest rates are notably low compared to the current market.
Taking part in auctions
Currently, developers of hydroelectric power plants (PLTA) are actively participating in auctions initiated by PT Perusahaan Listrik Negara (Persero) or PLN for the year-end period.
The year-end auction allocates a quota of 250 megawatts (MW) for Sumatra, 400 MW for Sulawesi, 500 MW for Kalimantan, and 50 MW for Java.
Zulfan anticipates that the feasibility study (KKP) will make hydroelectric power plant tariffs appealing to potential investors, making the project a strong candidate for JETP financing after the auction concludes in February 2024.
Government commitment needed
Fabby Tumiwa, Chairman of the Indonesian Solar Energy Association (AESI), advises the government to ensure the feasibility of projects under auction to secure financing commitments from JETP.
While JETP has shown interest in funding several solar power plant (PLTS) projects currently up for auction by PLN, Fabby emphasizes the importance of project certainty and bankability for successful financing.
He underlined the need for an attractive electricity tariff for upcoming solar power plant projects, ensuring financial viability for developers. Fabby clarifies that interest rates depend on the project’s risk and financing structure, alleviating concerns about interest rates.
The Hijaunesia program
PLN’s Hijaunesia 2023 Program aims to attract strategic partners for various solar power plant projects, including the Banyuwangi, Pasuruan, Floating Gajah Mungkur, Floating Kedung Ombo, and Floating Jatigede Solar Power Plants, each with a 100 MW capacity.
Additionally, PLN is conducting auctions for the first phase of the dedieselization program, replacing diesel power plants with solar panels, potentially generating 200 MW. There is also investment potential in Battery Energy Storage Systems (BESS) totaling 350 MWh in the initial phase, with projections for further development reaching 800 MWp of solar panels in the second and third phases. Management rights are granted for 20 years from the commercial operation date (COD).