PLN, Indonesia’s power company and Huawei accelerating the digital transformation

The spotlight is on Indonesia’s state-owned electricity company, Perusahaan Listrik Negara (PLN), whose digital transformation journey has been implemented and accelerated through a cross-sector partnership with Huawei, which has seen the utility file its best financial report in 77 years.

The earth is warming, and energy security and energy independence are more important than ever. The need for the power and energy utilities sector to accelerate the adoption of advanced technology to improve daily operations, plant performance, the transmission and distribution of power and enhanced customer usage and knowledge, needs to happen now.

The Indonesian government is acting as an enabler to create the framework necessary for the power and energy sector to pick up momentum and accelerate the energy transition. Frameworks and strategic direction are vital for greater electrification that is green and sustainable.

PLN manages Indonesia’s entire power industry chain from generation to consumption.

However, due to sluggish revenue growth and increasing O&M costs, PLN’s business pressure has become increasingly critical. Of the 75 million households, only 17% have broadband connections, and fibre connections only 10%.

According to Mr. Tedi Baharata, Deputy for Human Resources, Technology and Information at the Ministry of State-Owned-Enterprises (SOEs), despite the low connection rates, the purchasing power of Indonesians is increasing. The country needs reliable digital infrastructure and telecoms/connectivity infrastructures to support convenient access to goods and services for the people. As the sole provider of electricity in the country, PLN has to evolve from a traditional electricity company to a digital infrastructure company. “It’s a must for Indonesia, to grow to move forward.”

The start of a digital transformation journey

As a traditional electric power company, PLN lacks experience in operating new ICT services. In addition, the utility has needed to explore two revenue streams to rapidly increase its revenue: traditional electric power services, and power broadband. Because of the lack of experience in broadband network planning, construction, and operations, onboarding a knowledge partner, to support the strategy, network design, and implementation plan was critical. To support successful transformation, PLN also established a Transformation Office to plan and execute transformation breakthroughs.

Based on the wide coverage and high reusability of PLN’s existing infrastructure, leading global ICT infrastructure solutions provider, Huawei, was appointed to fulfil this role based on its experience in power broadband, helping PLN quickly launch services and complete the market plan of developing 20 million lines in four years, increasing revenues and improving the scalability of power services.

According to the President of Global Strategy & Marketing, Huawei Electric Power Digitalization Business Unit, Dr. Anthony Hu, from carbon neutrality vision to the energy security of supply and continuity issues, and the impact of energy prices on socio-economics, the utility needed to fully consider the game-theoretic relationship among green and low carbon, energy security and energy economy. It is destined to be a long-term, arduous, and complex systematic project.

“Currently our world is experiencing three major trends: energy transition, zero-carbon transformation, and digital transformation. With the rapid development of new energy such as wind, solar and distributed energy resources such as electric vehicles, digital and energy technologies are required to be deeply integrated to lay a digital path for future power systems,” Dr. Hu said.

In March 2022, Huawei established the Electric Power Digitalization Business unit, which combined Huawei’s strategy planning, R&D, product lines, marketing and sales resources and deeply collaborated with global partners to focus on the common requirements of security, efficiency and sustainability in smart power generation, smart grids, and comprehensive low-carbon energy services.

Dr. Hu added: “We are systematically building organisational capabilities and innovation systems for the electric power industry, from the strategic model, business scenarios, planning consultancy, and technical solutions based on the T3 ternary development system, and deeply integrated digital capabilities with challenges facing by the electric power industry, to create greater value for global electric power enterprises, such as PLN”.

Huawei is utilising advanced digital technologies to jointly innovate with partners in scenarios such as smart power plants, distributed photovoltaic control, transmission line inspection, digital substations, intelligent distribution, and net-zero carbon intelligent campus solution to achieve multiple targets of security and reliability, cost-saving, efficiency improvement, and sustainable development for the industry.

Indonesia’s future power grid

According to Mr. Darmawan Prasodjo, Chief Executive Officer, of PT PLN: “We must be nimble; we must be quick. Innovation is becoming embedded in our new day. And that’s the only way to move forward.”

Just over two and a half years ago, during the National Electricity planning phase, PLN removed 10GW of coal from its baseload production, mitigating 1.8 billion metric tons of CO2 emissions in 25 years. However, Mr. Prasodjo stressed that this is not enough. To substitute this ‘loss’ the utility implemented the most aggressive, and greenest National Electricity planning in the history of PLN, and Indonesia, which brought online 51.6% additional generation capacity from renewable energy, tapping into hydro, geothermal, wind and solar.

The CEO notes that an estimated 280 million metric tons of greenhouse gases (GHG) globally is coming from the electricity sector and is only increasing as we move closer to 2060. Business as usual is going to increase this to 1 billion metric tons. Historically, GHG emissions have been attributed largely to the demand side; however, with the current energy transition needing a heavy injection of renewables, the fluctuations are now also on the supply side.

While in the short-term some countries must rely on coal-fired power plants, the medium-to-long-term is critical to include renewables to achieve energy independence, which they will need to do through innovation, the advancement of technology, and knowledge sharing with global communities.

Indonesia’s electrical network includes 2,300 High Voltage substations, each connected with fibre optics with the primary purpose to control the assets optimally and maintain reliability. For the past three years, the utility has been doing a lot of transformation, digitising the power plants, transmission, distribution, finance systems, customer service delivery, and procurement.

PLN brought together the two independently operated generation companies to become the largest generation company in Southeast Asia. The procurement of primary energy is consolidated into one, supporting the transaction of their primary energy which is estimated at a recurring $13 billion annually.

Additionally, assets that were once only used for electricity services, are now being used ‘beyond kilowatt hour’, including services for smart homes, the ecosystem for electric vehicles, to rooftop solar and battery storage.

Overcoming digital transformation hurdles

While momentum on the generation and transmission sides of the business is underway, the smart meter on the customer side is also being addressed. Mr. Prasodjo added: “We are modernising our grid to become a smart grid; we modernise our generation capacity, we modernise the dispatch centre because we have to transform to a system that is dynamic, progressive, and forward-looking.”

“With the available fibre optics in the substations, more than half a million distribution transformers scattered across the country, and neighbourhoods installed with fibre optics, we are transforming the utilisation of these assets, previously only used for the electricity service for the ‘beyond kilowatt hour’ is becoming a way to move forward, with Huawei’s Power Broadband Operations Solution.”

Cross-sector integration

President of Marketing & Solutions Sales, Huawei Electric Power Digitalization Business Unit, Mr. Jason Li, stresses that when two sectors need to come together, leveraging partnerships with industry experience and knowledge is critical to see the effective rollout of a strategy.

With a deep knowledge of the ICT/telecoms sector and an active drive to support the utility sector, Huawei needed an ambitious partner like PLN. Through this collaboration, Huawei was able to launch a pilot and trial digital solutions in different scenarios. “We work together with ecosystem partners and then go to market together,” he said.

He also introduced the Power Distribution IoT Solution, which was jointly built by Huawei and its partners, “reliable and efficient power distribution is critical to smart energy services, especially with the explosive growth of new energy and electric vehicles.” Adding that this soaring growth of distributed power sources, and the loads, leads to difficult measurement of power distribution. A key solution to this problem is IoT technology.

In addition, he added that the abandonment of wind and solar power is common when the energy cannot be managed well; while net zero translates to new energy, if it is not handled well, it will be a disaster. By using the Huawei distribution IoT solution to support data synergy, applications synergy, and operation and maintenance synergy, a utility can reduce development and deployment from months to days, with the realised default prediction in hours.

This smart solution uses a data centre and communication network to provide remote intelligent operation and maintenance, increasing inspection frequency while shortening the fault detection time and recovering power supply within minutes. This edge-cloud synergy enables unified management, therefore, wavering manual site visits.

Collaboration is key

“This is an era of innovation; this is also the era of competition,” said Mr. Prasodjo. He added: “As a business, we are always exploring the best collaborations, and the most innovative partner is going to win. The most reliable partner is going to be the most potential partner that can provide the best solution and is going to be the simple foundation of collaborations. And so far, Huawei has been providing a unified solution.”

Through the support of governmental frameworks, coupled with the need and drive that PLN has shown to achieve a reliable, affordable, and green power system for its customers; Huawei is committed to supporting PLN to centralise its resources to expand its power broadband operation services, continuously increase the penetration of broadband Internet, and improve service quality, to provide the ultimate network experience for millions of households in Indonesia.

He concluded: “We cannot bear the burden alone. We need to move from being fragmented to unified. […] This is only the beginning. The beginning of a long and gruelling battle.”