PLN to Source More Coal for Additional Fast-track Capacity

State-owned power utility Perusahaan Listrik Negara is seeking an additional 28 million metric tons of coal per year, after the government ordered it to build additional coal-powered plants with a combined capacity of 7,000 MW.

“Every 1,000 MW of power capacity consumes 4 million tons of coal a year,” PLN coal director Helmi Najamuddin said on Friday. The government initially planned for an additional capacity of 10,000 MW under its second fast-track program, with around 60% initially intended to be sourced from renewables such as geothermal and hydropower, while coal was to account for a smaller portion.

However, last month the government revealed that it would increase the capacity to 15,000 MW, with coal making up the additional 5,000 MW. Should everything go according to plan, coal-fired power plants will generate a total of 7,000 MW per year. The government has asked PLN to rely less on diesel for power-generation and to make more use of cheaper energy sources such as coal.

Helmi said PLN will prepare a tender to seek coal supplies, should the Government Issue the relevant regulation. According to him, electricity generated from coal only costs around Rp 350 (4 cents) per kilowatt hour, which is significantly lower than the cost of power generated from diesel fuel, which is Rp 2,080 per kilowatt hour.

At the moment, around 60% of Indonesia’s electricity is coal-generated. The first coal delivery under the program is expected in 2018, Helmi said. “Normally, it takes five years [to build a coal-fired power plant],” he added.

He said the Jakarta-based company should have little difficulty in finding coal supplies, as it uses the benchmark price, tied to the international market. The company will also benefit from the government-imposed domestic market obligation, which will ban exports of raw minerals. PLN estimates that Indonesia will use around 66.2 million tons of coal for electricity generation this year, an increase from last year’s 57.2 million tons.

“Next year, consumption will increase to 76 million tons as several coal-fired power plants will come on stream,” Helmi said. PLN typically uses coal with an energy density of between 4,000 and 5,000 kilocalories, most commonly found in Indonesia.

At the same occasion, PLN president director Nur Pamudji revealed that the company had entered into a power-purchasing agreement with Malaysian utility Serawak Energy. Under the agreement, PLN will receive electricity from a hydropower plant in Sarawak, Malaysia with a price of $0.09 per kilowatt hour.

“We will start to receive 50 MW of electricity in 2015, which will gradually increase to 230 MW,” Nur said.