Government Policy on Electricity

To address the need for electricity continues to increase, the government opened the opportunity for all parties, including local governments and the private sector, to participate in the development of the electricity sector.

The policy is based on Law Number 30 Year 2009 on Electricity, and supported by Law Number 33 Year 2004 on Regional Government on Local Government and Law Number 34 Year 2004 on Fiscal Balance between Central and Regional Government. Given that electricity is integral part of national development, so effortlessly in harmony, harmony and unison with the stage of national development.

In conducting the business of electricity supply, both in the public interest or for its own use, the government issued some policies in order to provide clarity and certainty to investor to invest. These policies are,

A. Policy of Electricity Supply Business Implementation

Development in the electricity sector is still dependent on the government’s efforts through PT PLN (Persero) as the State-Owned Enterprises that are specifically tasked to conduct the business of power supply to the public.

Given the scale of the national electricity demand is greater, and the limited ability of the government and PT PLN (Persero) to provide development funds for the development of electricity infrastructure, the role of private investment and other business entities become indispensable, in order to satisfy national electricity needs.

B. Primary Energy Utilization Policy

Policy of primary energy utilization for power generation is intended for primary energy supply can be guaranteed. To maintain security of supply, the policy enacted Domestic Market Obligation (DMO), utilization of local primary energy sources, and utilization of new and renewable energy. Primary energy supply security policy for power generation is done through the two sides, namely on the primary energy provider business side and in the power generation business side.

Policy on the business side of the primary energy provider, such as business actors in the field of primary energy, especially coal and gas are given the widest possible opportunity to supply the needs of primary energy for power generation in accordance with the price of its economic value.

Policies of local primary energy utilization for power generation, can consist of fossil energy (lignite coal, marginal gas) and non-fossil energy (water, geothermal, biomass, etc.). Utilization of primary energy is to prioritize the utilization of local renewable energy by taking into account aspect of technical, economic, and environmental safety.

While the policies in the power generation businesses side include energy diversification policy not to rely on one source of energy, especially fossil energy and energy conservation. To ensure the good operation of power plants, the business actor in the power generation needs to provide sufficient reserves of energy resources with due regard to the supply constraints that may occur.

C. Basic Electricity Tariff Policy

Government policy on electricity tariff is that electricity tariffs gradually and planned directed to achieve the economic value so that the average electricity tariff to cover production costs of power supply that has been spent. Although tariffs will be done in accordance with its economic value, but specifically for customers who are less able, taking into account the customer’s ability to pay so the government still imposed a basic tariff subsidies for electricity.

Electricity tariff policy which is not uniform (nonuniform tariff) may be possible to apply in the future, with consideration of differences in the development of the construction of electricity from one region to other regions and people of different abilities to pay.

D. Environmental Protection Policy

Development undertaken in the electricity sector to support sustainable development and environmentally sound. For that, damage and degradation of ecosystems in the development of electricity infrastructure should be reduced by limiting the negative impact locally, regionally and globally related to electric power production.

In this regard, the business which conducts electricity with a potentially large and important impacts are required to conduct the EIA (ANDAL, RKL and RPL), while that does not have a significant impact required to make the Environmental Management Effort (UKL) and Environmental Monitoring Effort (UPL) accordance with the provisions of Law No. 23 of 1997 on Environmental Management and Government Regulation Number 27 Year 1999 regarding the Environmental Impact Assessment (EIA), as well as other related legal product.

E. Standardization Policies, Security and Safety, and Supervision

Noting that the electric power other than beneficial to people’s lives can also cause harm to humans if not properly managed, then the Government in order to maintain the safety of electricity set standardization, security equipment installation and utilization of electric power. Electricity safety goals include protecting the public from hazards caused by electricity, enhance electricity system reliability, increase efficiency in the operation and utilization of electricity.

Standardization policy in the standard include electrical power equipment (ie equipment or facilities on the installation of the generation, distribution, and utilization of electric power), utilizing a standard electrical power (ie all products or tools that the utilization of using electric power for the functioning of the product or device).

While the installation security policy include the feasibility of power plant installation operation, safety of equipment and utilization of electric power, and competence of technical personnel. Installation of electric power operation acceptance expressed by operation acceptance certificate. For electric power equipment and utilization who meet the Indonesia National Standards declared with Product Certificate to be able to annotate with SNI (SNI) on electric power equipment and issuance of Certificates of Safety Signs S on utilizing electric power and declared competent technical personnel with a Certificate of Competency.

F. Fiscal Policies on Import of Capital Goods

In an effort to support the business development of sustainable electricity supply, the government provides incentives in the form of import duty on imported capital goods for the construction of power plants for the public interest through the issuance of the Minister of Finance Regulation No. 154/PMK.011/2008 on Exemption of Import Duty On Imports Capital Goods in the Context of Development and Electric Power Industry Development for Public Interest, as amended through Regulation of the Minister of Finance Number 128/PMK.011/2009.

Policy of fiscal incentives within the PMK Number 154/PMK.011/2008 only granted to holders IUKU power generation business whose a contract with PT PLN (Persero), but by looking at the existing development in the field, the incentive is extended to the PT PLN ( Persero) and Integrated IUKU Holders who have the business area as well as generating business IUKU Holders who have sales contract with PT PLN (Persero) and the Integrated IUKU Holders of which have areas of business.

Regulation of the Minister of Finance gives authority to the Directorate General of Electricity and Energy Utilization to give approval and validity stamp for Capital goods imports Plan as a requirement to obtain import duty exemption facility of the Department of Finance.

With regard to the granting of authorization, then it has issued Regulation of the Director General of Electricity and Energy Utilization Number 57-12/20/600.3/2009 on Procedures of Application for Approval and Validity Stamp of Plan for Capital Goods Imports for Development and the Development of Electric Power Industry for Public Interest.


Current Electricity Infrastructure

Power Plants
In meeting the needs of national electric power, the supply of electricity in Indonesia is not solely carried out by PT PLN (Persero), but also by other parties such as private, cooperative and Regional Government Owned enterprises.
Electricity supply business that has been done by private, cooperative or Regional Government Owned enterprises that include building and operating its own power plant whom electrical power sold to PT PLN (Persero) or better known as the private generators or the Independent Power Producer (IPP) or build and operates its own generation, transmission and distribution of electricity in an integrated way that electrical power is sold directly to consumers in a particular business area known as the integrated power utility or Private Power Utility (PPU).
As of the end of 2008, total installed capacity of power generation amounted to 30,527 MW nationwide consisting of plants belonging to PT PLN (Persero) totaling to 25,451 MW (83%), IPP totaling to 4159 MW (14%) and PPU of 916 MW (3 %). Installed capacity of the plant had an addition of 5480 MW since 2004 or an increase of 22% over a period of 5 years.

Transmission of Electricity
Existing electrical system in the Indonesian archipelago have not fully integrated in electric power transmission network. Currently the electrical system that has integrated well only in Java-Madura-Bali, where the electrical system of Java-Madura-Bali has 2 interconnected system, namely the Air Line Extra High Voltage (SUTET) 500 kV as the main backbone network and the Air Line High Voltage (SUTT) 150 kV as a support network. On the island of Sumatra, North Sumatra electricity system (Sumbagut) that links the Province of Nanggroe Aceh Darussalam (NAD) and North Sumatra have been interconnected to SUTET 275 KV, but this electric power transmission network is not fully connected to the electrical system of Sumatra. System that connects the systems of West Sumatra and Riau (Sumatra-Riau) was well integrated. In November 2004, the electricity system in South Sumatra province has been integrating the Province of South Sumatra, Jambi, Bengkulu and Lampung, became Southern Sumatra System (Sumbagsel), and subsequently in August 2006, Sumbagut-Sumbagsel electrical system has been integrated with SUTT 150 kV .
On the island of Borneo, a small electrical system with the Province of Central Kalimantan South Kalimantan are connected via 150 KV SUTT. While on the island of Sulawesi, the electrical system which includes the province of Sulawesi, South Sulawesi, Central Sulawesi, Southeast Sulawesi, North Sulawesi and Gorontalo many scattered supplied with the system, but some areas have been connected with 150 KV SUTT. The electrical system Nusa Tenggara, Maluku and Papua have not had SUTET and SUTT due to electrical systems in general are still isolated and scattered, and class power generation capacity owned is still relatively small.
As of the end of 2008, the total length of electricity transmission networks that have been built by PT PLN (Persero) is a long 34.184 kms comprising SUTET along the 5.092 kms 500 kV, 275 kV SUTET along 782 kms, 150 kV SUTT along 23,679 kms, SUTT 70 kV over 4.619 kms, and SUTT 25-30 kV along the 12 kms. Total length of electric power transmission network is experiencing an addition of 3390 kms since 2004 or an increase of 11% over a period of 5 years.

Distribution of Electric Power
As of the end of 2008, the total length of electric power distribution network that has been built by PT PLN (Persero) is along 614 925 kms consisting of Medium Voltage Networks (JTM) 261 163 kms long and Low Voltage Network (JTR) along 353 762kms. Total length of electrical power distribution network is experiencing an addition of 55,836 kms since 2004 or an increase of 10% over a period of 5 years.

Electrification Ratio
Electrification ratio is defined as the number of households that have been divided by the number of electrified households. The development of a national electrification ratio from year to year has increased, from 61.04% in 2004 to 65.10% in 2008 (of total households across Indonesia for 55,376,392 families as many as 36,078,726 families already enjoy access electricity).

Conditions of Electricity Demand and Supply
Demand for power from year to year is constantly increasing with an average growth of around 7% per year. Meanwhile, the development of facilities and infrastructures in particular the addition of generation capacity over the last five years (2004-2008) only grew by an average of 4.4% per year. The imbalance between the demand with the supply of electricity, resulting in a shortage of electricity supply in some areas, especially outside of the electrical system of Java-Madura-Bali can not be avoided. Growth conditions of low power supply is also a result of the economic crisis that hit Indonesia in the period 1998/1999, at which time the growth of installed capacity only grew by 1.13%.
Indonesia’s current economic growth requires the support of a reliable supply of energy including electricity. Electricity demand will increase in line with economic development and population growth. Growing economy in the region resulted in electricity consumption will increase as well. This condition would be anticipated as early as possible so that the electricity supply could be available in sufficient quantities and at reasonable prices. Taking into account the assumption of national economic growth on average grew by 6.1% per year and the growth of the national population grew by 1.3% per year, the national electricity demand forecasts according to the National Electricity General Plan 2008-2027 is expected to reach an average of 9 , 2% per year. The high estimate of average growth in national electricity demand of 9.2% is also concerned with the number of potential customers waiting list of PT PLN (Persero) that the amount of capacity has reached more than about 6,000 MW due to the implementation of restrictions on the sale of electricity (suppressed demand) at previous years.

Priorities on Future Development of Electricity Infrastructure

Power Plants

Development of electricity supply capacity is directed at a realistic growth and preferred to resolve the crisis of power supply that occurred in some areas, increase reserves and the fulfillment of reserve margin (System of Java-Madura-Bali 30% and System Outside Java-Madura, Bali 40%) with prioritizes the utilization of local energy sources or new renewable energy and eliminating power development plan of oil fuel. Development of oil fuel plant, exempt from overcoming local electricity supply crisis of short-term (one to two years ahead) awaiting the completion of construction of non-oil fuel plants that have been planned, by doing a lease generators that use MFO fuel. If the non-oil fuel plant that has been planned has been operating, the oil fuel plant is in the non-operated.
Considering the high growth of electricity, providing electricity access to the entire community and encourage the use of new renewable energy, then the acceleration program for  construction of 10,000 MW phase II of the composition of a variety of primary energy (not just coal) offered to be developed by PT PLN (Persero) as well as private by providing facilities as it has been implemented in the acceleration program for construction of 10,000 MW phase I.
Development of small-scale coal power plant can be considered as an alternative to replace power plants that use oil fuel on a small scale system to reduce the cost of operating of the electrical system. In addition, the development of small-scale coal power plant can also be used to replace existing diesel partial role in the electricity system in Outer Java-Madura-Bali that dominance is still quite high. As a developer of small-scale coal power plant is PT PLN (Persero), or private.
Taking into account the difficulty of obtaining land to build large-scale power plants in Java and to consider increasing the peak load from year to year, then the development of coal-fired power plant with a capacity of 1,000 MW Supercritical boiler technology to gain efficiency and better emission levels, can be developed by PT PLN (Persero) and private.

Transmission of Electricity

The basic principle of the development of electric power transmission system is directed to system growth, increase system reliability and reduce constraints on the delivery system and the construction of new plants. Given that the Government is currently implementing the acceleration program for construction of 10,000 MW of Phase I and future plans implement the acceleration program for construction of 10,000 MW Phase II, so the development of future electric power transmission system, the construction is more  prioritized  to deliver electricity from that new power plants.
At this time, a large system that is already well integrated is the system of Java-Madura-Bali and Sumatra System. While the electrical system on the other islands like Sulawesi has a better system in the northern and southern regions. Whereas the electrical system on the other islands such as Kalimantan, Nusa Tenggara, Maluku and Papua have to get more attention in the development of its distribution system, especially in efforts to increase reliability.
In the medium term, it is expected that Sumatra System is completely integrated using extra high voltage network of 275 kV as the current system has been interconnected in a network of high voltage 150 kV. With the entry of some large-scale power plants, within long-term the system in Kalimantan and Sulawesi is also expected to already well connected.
Development of delivery systems directed at the development of the system 500 kV voltage and 150 kV for the Java-Madura-Bali System and 275 kV, 150 kV and 70 kV for the outside Java-Madura-Bali system. Channeling development efforts in interconnection between System Java-Madura-Bali to Sumatra System can be performed after the study in depth with attention to several aspects, including technical, economical and social aspects. While the development plan 500 kV cross-link from Java to Bali Island is one option that can be done in anticipation of load growth in Bali.
In the development of substation, the selected voltage system  is directed on the suitability of the development of transmission systems. The addition of the transformer prioritized when loading transformer mounted on the substation had reached 70% of its capacity. While the construction of a new substation can be considered to be in an area where supply is unable to be met from the existing substation surrounding the transformer loading which is indicated by the substation has been more than 70% and capacity already has an optimum capacity.

Distribution of Electric Power

The development of power distribution facilities directed to anticipate the growth of electricity, maintaining the desired level of reliability and efficiency and improve service quality.
When considering the fulfillment of electric power which is integrated with other electrical system is considered in less value / inefficient, then the isolated network can be applied. Understanding of the isolated network is a network of power distribution of an independent and not connected directly with National interconnection Network with limited service areas.


Posted April 18, 2011 by repit

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