YOG INFRA Q4 2023 insight series
INDONESIA is taking notable steps to promote clean energy as part of overall generation mix, a key development being notification of a USD 20Bn RE investment plan. Some of the other technologies being explored include green hydrogen, nuclear power as well as early retirement of coal power plants. Transport sector is also very active with projects being developed both by government agencies as well as via PPP route.
Read more about key developments in Infrastructure and PPPs in Indonesia in our latest insight.
October 2023
INDONESIA’S PLN SIGNS SMART GRID AGREEMENTS WITH CHINESE COMPANIES
Perusahaan Listrik Negara (PLN) has signed memoranda of understanding with State Grid Corporation of China (SGCC) and Trina Solar China to develop a smart grid in Indonesia. The Indonesian state utility, which is looking to facilitate the development of renewable energy in the Southeast Asian nation, has entered into collaboration agreements worth more than USD 54 Bn with Chinese entities.
Apart from the MoUs with SGCC and Trina Solar, PLN has also signed pacts with the Export-Import Bank of China, Sinosure, Bank of China, Industrial and Commercial Bank of China, State Development & Investment Corp, Huawei Tech Investment, and China Energy International Group, among others. The scope of its MoU with SGCC includes conducting joint studies on using renewables, power network integration, energy storage, and smart network management.
SAMSUNG PLANS SMART CITY PROJECTS IN INDONESIA
Samsung C&T Engineering & Construction Group is planning to develop smart city projects in Indonesia. The South Korean engineering major has signed an agreement with the country's largest property developer by assets, Sinar Mas Land Group, to collaborate on projects including in the areas of smart home solutions, renewables, urban information technology infrastructure and information management.
In Indonesia, there is a boom in terms of smart city projects, in the new national capital development and in the construction of other new cities. The two companies will work on projects in the new capital city Nusantara, as well as in the Jakarta metropolitan area, Batam island, and in the cities of Surabaya and Balikpapan.
PLANS ANNOUNCED FOR NUCLEAR POWER PLANTS IN INDONESIA
United States-based NuScale Power and ThorCon Power are planning to construct new nuclear power plants (PLTNs) in Indonesia. NuScale Power plans to build Small Modular Reactors (SMRs), which will generate up to 300 MW(e) per unit. SMRs will connect to the existing power grids. They are expected to commence operations by 2032-2039. Meanwhile, ThorCon Power expects to begin the operations of thorium based PLTNs by 2030. The power generated by SMRs is equivalent to one-third of the power generated by conventional nuclear power plants while leaving less of a carbon footprint.
GDS AND INDONESIAN SWF SIGN DATA CENTRE PLATFORM
GDS has signed an agreement with Indonesia’s sovereign wealth fund (SWF) on the co-development of data centres. The Chinese data centre operator will team up with Indonesia Investment Authority (INA) to form a data centre joint venture. The pair will jointly build national-level data centre projects in Indonesia, with the first of them to be located in the Nongsa Digital Park on Batam island.
The project in the Nongsa Digital Park will be a hyperscale data centre campus that will be powered by local renewable resources. GDS will leverage its expertise in data centre development, while INA will serve as a strategic investor.
November 2023
S.KOREA TO DEVELOP BATAM AIRPORT AS INDONESIA'S AIR HUB
State-run Incheon International Airport Corp. (IIAC) is accelerating the growth of Hang Nadim International Airport in Batam, Indonesia’s No. 3 tourist destination, in an effort to diversify the South Korean airport operator’s business portfolio.
IIAC expects Batam will become one of the top golf tourism destinations in Southeast Asia and attract budget travelers in the region. The city, only 27 kilometers away from Singapore, is one of the most-visited destinations in the country following Jakarta and Bali. The airport in Batam now operates only two routes, one to Malaysia and one to Saudi Arabia. IIAC is planning to increase the routes to five or more by next year, setting up flights to South Korea, China, Thailand and others.
INDONESIA LAUNCHES USD 20 BN RENEWABLE ENERGY INVESTMENT PLAN
Indonesia launched its investment plan to mobilise USD 20 Bn in financing pledged by global lenders led by the United States and Japan to accelerate its power sector decarbonisation and called for immediate fund disbursement. Under Indonesia's Just Energy Transition Partnership (JETP) the country seeks to cut carbon dioxide emissions to 250 Mn metric tons for its on-grid power sector by 2030, versus estimated business-as-usual emissions of over 350 Mn.
The investment proposal, known as Comprehensive Investment and Policy Plan (CIPP), was officially announced following a public consultation period after the draft was made public. Indonesia, one of the world's biggest greenhouse gas emitters, plans to increase the portion of renewable energy in its power generation to 44% by 2030 from around 12% in 2022. The CIPP indicated investments worth USD 97.3 Bn were needed to achieve the targets, including USD 66.9 Bn for 400 projects which need to start by 2030 at the latest.
GOVT REVIVES POWER WHEELING PROPOSAL IN RENEWABLE ENERGY BILL
The Energy and Mineral Resources Ministry has revived a proposal that would allow private companies to sell electricity directly to the consumer through transmission network owned by state-run utility firm PLN, which it hopes to include in the latest draft of the renewable energy bill. The scheme, called power wheeling, had previously been omitted from the draft law following opposition from other ministries.
IIF ESTABLISHES MOU WITH BINA KARYA TO SUPPORT INFRASTRUCTURE GROWTH IN IKN
PT Indonesia Infrastructure Finance (IIF) has officially established a cooperative agreement with PT Bina Karya (Persero) through a memorandum of understanding (MoU) signed by both parties. The MoU is to support the development and expansion of the new capital city, Nusantara.
The Nusantara Capital City (IKN) Authority, through Bina Karya, will grant access to IIF to provide financing for infrastructure projects in the new capital and also allow IIF to become the preferred consultant for Bina Karya, in providing support of advisory services.
December 2023
PLANS ANNOUNCED TO DEVELOP A USD 1 BN GREEN HYDROGEN FACILITY IN INDONESIA
Saudi Arabia-based ACWA Power has partnered with PT Perusahaan Listrik Negara (PLN) and PT Pupuk Indonesia to develop the largest green hydrogen facility in Indonesia called the Garuda Hidrogen Hijau (GH2) Project. The USD 1 Bn project will run on 600 MW of solar and wind power and will produce 150,000 tons of green ammonia annually and is expected to start commercial operations by 2026.
The bidding process for engineering, procurement and construction (EPC) for the project is expected to begin in Q1 2024 and financial closing is planned for the end of 2025. Moreover, ACWA Power was awarded the contracts to develop 2 floating offshore solar photovoltaic (PV) plants in Indonesia in October 2022. The projects will have a combined capacity of 100 MWac and will be developed at USD 105 Mn and are expected to achieve the target of RE share of 23 per cent by 2025.
INDONESIAN COAL PLANT LIKELY TO RETIRE 7 YEARS EARLY
The 660 MW coal-fired power plant Cirebon-1 in Indonesia will likely be retired almost 7 years earlier than scheduled. A non-binding framework agreement has been reached by the Asian Development Bank, Indonesian state-owned power utility company PLN, independent power producer Cirebon Electric Power and the Indonesia Investment Authority. The parties have conditionally agreed to shorten the offtake contract for Cirebon-1 to December 2035 from July 2042. The transaction is to be finalized in the first half of 2024.
MASDAR AND PLN TO EXPLORE HYDROGEN GENERATION
United Arab Emirates-based renewables developer Abu Dhabi Future Energy Company (Masdar) will partner with Indonesian state-owned utility PLN to explore renewables project opportunities worldwide, including the production of green hydrogen. The development at the UN's Climate Change Conference COP28 in the UAE builds on years of successful collaboration between Masdar and PLN. The partnership has already resulted in the launch of Southeast Asia's largest floating solar power plant, the innovative 145 megawatt (MWac) (192MW peak) Cirata project.
In September 2023, Masdar and PLN signed an agreement to develop Phase II of the Cirata plant to triple capacity by up to 500MW. This came after a recent regulatory change from the Ministry of Public Works and Housing in Indonesia, which now allows up to 20% of water coverage for renewable energy uses. Built on water, the Cirata plant reduces land use, a key consideration for countries such as Indonesia where land is limited but water abundant. The water's cooling effect can also improve efficiency and the panels reduce evaporation, saving water for drinking and irrigation.
SHARP AND ICON PLUS TO DEVELOP ROOFTOP SOLAR PROJECT IN INDONESIA
Sharp Solar Solution Asia Company Limited (SSSA) has partnered with PT Indonesia Comnets Plus (PLN Icon Plus), a subsidiary of PLN, to develop a rooftop solar project in Indonesia. A memorandum of understanding (MoU) has been signed by the companies to promote the development of solar projects on factory roofs and other locations. The collaboration will focus on Japan-based companies operating in Indonesia.
Sharp will be in charge of delivering energy solutions based on customer needs, designing the projects and procuring the equipment. Meanwhile, PLN Icon Plus will take care of the installation licensing and recruit construction companies.
GOVERNMENT BACKS IKN PROJECT WITH FUNDING GUARANTEE
The government will guarantee projects in the National Capital City of Nusantara (IKN Nusantara) through a Public-Private Partnership (PPP) scheme. The Finance Ministry will mandate PT Penjaminan Infrastruktur Indonesia (PII) to guarantee IKN projects. The guarantee scheme for the IKN Nusantara project is still under discussion. Not all infrastructure projects will involve PII but will be tailored to government needs. The stages for the PPP scheme will proceed in the next phase after the implementation of basic infrastructure development.
ABOUT YOG INFRA
Our objective is to drive economic growth and make positive social impact through sustainable infrastructure development.
YOG INFRA is an infrastructure focused financial advisory firm. We work with Developers and Development Finance Institutions (DFIs) and help them make informed investment decisions across infrastructure development lifecycle.
With our offices in Singapore, India and UAE, we work on projects globally, and the team brings strong experience in supporting development of infrastructure projects.
For more information about us, our service offerings and team, please visit www.yoginfra.com Contact us at info@yoginfra.com
©2024 YOG INFRA. All rights reserved.