Indonesia's New Thermal and Renewable PPA Models
(Room Garuda 8, 1st Floor)
19 Sep 18
9:30 AM
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11:00 AM
Tracks:
TRACK A - Trends, Projects and Strategies
After a slow start, progress on Indonesian renewable projects has started to pick up speed. With the first wind and grid-connected solar PPAs now signed, there is a lot of hope that PLN will continue to roll out new renewable energy opportunities, along with the ever-present opportunities in geothermal and hydro. However the headwinds that are being faced by the private sector in the Indonesian IPP sector are now coming on two fronts: (i) recent government regulations which have put pressure on tariffs generally but also fundamental bankability principles in the Indonesian template PPAs, and (ii) PLN's practice of awarding a large number of projects to its subsidiary (PJB and Indonesia Power), and then having those subsidiaries seek out private sector partners for a 49% stake in the relevant projects. The paper will cover the following topics: (i) current status of the tariff regulations for renewables and thermal IPP projects; (ii) the pressure being put on PPA bankability by the recent regulated minimum requirements for PPA terms and conditions; (iii) the PLN subsidiary joint venture model, and some of the challenges that it throws up for private sector developers and lenders looking at these opportunities (such as conflict of interest concerns, World Bank negative pledge restrictions on State owned companies giving security to lenders and the like); and (iv) where the new opportunities remain, particularly around hybrid and distributed renewable projects.