Arkora Hydro Accelerates NRE Development Through Hydropower Development

JAKARTA - Indonesia has great potential in the field of New and Renewable Energy (EBT) or renewable energy such as hydro, solar, geothermal and wind power. However, the utilization of the NRE potential is still very small. Until the end of 2021, based on data from the Ministry of Energy and Mineral Resources (ESDM), the total capacity of NRE power plants is still 11,152 MW, while the total power generation capacity in Indonesia reaches 73,736 MW.

The same data shows that the level of the new renewable energy mix until the end of 2021 will reach 13.5 percent. In the national energy plan, the government wants to achieve an energy mix level of 23 percent by 2025. Based on the 2021-2030 National Electricity Supply Business Plan (RUPTL), to reach this level, additional EBT generating capacity is required of 10,640 MW.

Hydroelectric power is the biggest supporter of NRE generation. By 2021, the combined hydropower generation will reach 6,601.9 MW. Based on the 2017 National Energy General Plan, the potential for hydropower is 94,476 MW. With the current capacity, only 6.99 percent of the hydropower potential has been utilized.

Although still small, the contribution of hydropower to the total capacity of NRE generation is quite large. Based on data from the Ministry of Energy and Mineral Resources, as of 2021, the contribution of hydropower in NRE reaches 59 percent. In the 2021-2030 RUPTL, it is also stated that PLN is targeting an additional 3,150 MW of hydropower capacity.

Hydropower plants can also be relied on as a base load power plant, which can replace the role of coal-fired power plants in the future. As an illustration, the government has set a net zero emission target by 2060. The energy sector, including electricity, is the main contributor to the reduction in carbon emissions.

In addition, the cost of generating electricity using NRE is getting lower and competitive, including the price of electricity from hydropower. PLN President Director Darmawan Prasodjo, on several occasions revealed, the selling price of hydropower electricity is currently in the range of Rp. 943-945 per kWh (below the Basic Cost of Provision of National Generation in 2020 of Rp. 1027 per kWh).

With a picture like the one above, PT Arkora Hydro focuses on developing and operating hydropower. Supported by a team of skilled and experienced engineers, Arkora is ready to accelerate the development of renewable energy in Indonesia through the construction of a run-of-river hydropower plant.

Currently, Arkora Hydro operates two hydropower plants of 17.4 megawatt (MW) in West Java and Central Sulawesi. Arkora is also building a power plant with a capacity of 10 MW in Central Sulawesi-2 with a commissioning date target in the first quarter of 2023 and a 5.4 MW power plant in Lampung, Sumatra, with a commissioning date target in the fourth quarter of 2024.

Last Thursday, March 24, in line with the priority issue of the G20 Presidency, namely the energy transition agenda, PLN has held the signing of strategic cooperation with a number of energy companies in relation to efforts towards Carbon Neutral 2060. Arkora Hydro subsidiary, PT Arkora Energi Baru is one of the companies that participated in the event by signing a Power Purchasing Agreement (PPA) for the PLTM Kukusan 2.

The purchase of electricity from the Kukusan 2 PLTM will be carried out by PT PLN Lampung's Main Distribution Unit (UID).

"The signing of this PPA is our long-term commitment to continue to build hydroelectric power plants which are an important part of new and renewable energy," said Aldo Artoko, President Director of Arkora Hydro, in a written statement, Wednesday, March 30.

In addition to a total of 32.8 MW of installed capacity and under construction, as well as the cooperation established with PLN, Arkora Hydro continues to actively develop hydropower potentials both organically and inorganically.

So far, the Arkora Hydro project has been supported by a well-known financial consortium and a globally recognized multilateral institution, namely Indonesia Infrastructure Finance (IIF). IIF is a subsidiary of PT Sarana Multi Infrastruktur (SMI), International Finance Corporation (IFC) and Asian Development Bank (ADB), KfW Development Bank, and Sumitomo Mitsui Banking Corporation (SMBC). Arkora hopes that the PLTA/M Kukusan 2 Lampung project can also be supported by the same funding consortium.

Through green financing and stakeholder support, Arkora Hydro believes that hydropower development in Indonesia can be increased in order to achieve the target of 23% NRE by 2025.