President director Mohammad Effendi shares how the company has linked with Japan and Korea to give 2.26GW of power to remote areas.
Amidst Indonesia’s push for an additional capacity of 50-55GW in the next 10 years, many power players are looking for ways to install and innovate power plants and reach more consumers, especially in the untapped areas and cities distant from the country’s capital. One of these firms is Adaro Power, the subsidiary of mining giant Adaro Energy, which was built in 2010 to help the parent firm diversify into the development of power plants.
Asian Power caught up with the president director of Adaro Power, Mohammad Effendi as he discusses the progress of their work. The company has a 2,260MW portfolio of coal plants in South Kalimantan and other areas built with the support of utilities giants in Japan and South Korea.
Can you tell us what you’re doing for Adaro Power and how it came to be? What kinds of projects are your company working on currently?
I’m the president director of Adaro Power, a subsidiary of Adaro Energy, which is mainly one of the largest coal-mining companies in Indonesia. Starting from 2010, Adaro Energy started its diversification into power generation, that’s why Adaro Power was established at that time.
So far, the capacity of our power operation is at 2,260MW, which is mainly coming from coal. About 2,000MW comes from a project that was built in cooperation with three of our current business partners.
This first project is being built with J-POWER, AP, and Itochu Corporation from Japan. It has currently hit 55% in terms of the progress of completion. Second, we have the 2x100MW powerplant in South Kalimantan. For that one, we have a partner named East West Power, from South Korea.
Currently, it has hit more than 95% of completion. It will be operational in the first quarter next year. From the start (of PT Adaro Power), we have a 2x30MW minemouth power plant in Tanjung, South Kalimantan. The operation and generation are 100% owned by us. The plant is already in operation for more or less five years.
Does the company have a plan to include renewables in its current energy mix?
We are now developing a 100kW solar power cell, which is still very small because there is no demand from PLN. Currently, it is being utilised for our own use. This is only to prove that we have the readiness to move into renewables whenever there is a requirement for it.
Can you tell us your current observations on the Indonesian power industry?
First, when we hear the explanation from the Minister, in 2018, Indonesia has a capacity of more or less 66GW from PLN. The intention is that for the next 10 years, there will be an additional 50-55GW. This means that there is an opportunity to have another additional capacity.
We know that from the 55GW capacity, some of it is going to come from private independent power producers (IPP). The only thing is that, currently, it looks like that the demand for electricity is not as big as expected in Indonesia.
What happened and why is demand not as large as the industry had expected? What challenges and opportunities are there for power players?
Apparently, Indonesia’s transmission lines are not yet connected. For the time being, there is a little bit of rescheduling on the creation of additional capacity. However, I can see that in the future, there is a demand for additional power in Indonesia.
In your opinion, which power sources are currently good for investments in Indonesia?
The biggest energy source for fuel-driven power plants is coal. But there is also the intention of the government that in the next 10 years, we should be able to add renewables to 23% of the national mix of energy. Looking at that, then there is a probability that there will be an expansion of the additional renewables-driven power plants.
What are your current goals for renewable energy? How do you view geothermal energy, which is widely used in Indonesia?
If I look at it now, then the biggest possibility (for us) is either to get power from geothermal, or from solar cells, or some other sources like biomass. It is also applicable.
The only thing is that at the moment, the solar cell, because it should be scattered, then there is a technical issue that has to be handled first. Meaning, before the process of the scattering of small solar cells and connecting to the grid, there are technical issues that have to be overcome first. That is one of the big opportunities for renewables.
Geothermal energy is also good, but it involves exploration. The challenge during exploration is knowing whether we will get enough capacity or not.
Can you share your current goals for PT Adaro Power? Do you have plans to expand?
At the moment, we have collaborations with foreign partners for the operations of our 2,260MW capacity. But again, we would always like to grow further into both local and international regions, especially some other Asian countries.
Whenever that is a possibility, we will also participate outside Indonesia. But again, we have to wait for the instruction or from the government or from PLN, of course.
Do you have anything else you want to add?
As already mentioned by the vice president, electricity is really required for the country to grow. At this moment, there is a doubt.
Some are saying that the demand is not as much we expect, meaning that if there is an additional capacity, there is a concern whether it will be taken out or not. But again, if the PLN is able to make good transmission lines, this means the power can be made available and can be spread out.
That will be the driver for the electricity industry to grow and generate demand again. I hope by having that, then the demand for electricity will increase again.
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