Jakarta, February 21, 2018 – The Provincial Government of East Nusa Tenggara (NTT) officially provided the consortium of Engie Asia Pacific Co. Ltd (ENGIE) and Arya Watala Capital (Watala) access to a pre-feasibility study report today at Hotel JS Luwansa, Jakarta.
The study, which was conducted by the Global Green Growth Institute (GGGI) at the request of the Provincial Government, focused on a hybrid model combining existing traditional diesel-based power grid with solar PV. The key result indicates that the hybrid generation facilities with energy storage systems could reduce diesel consumption by 236 million liters, equivalent to a total reduction of up to 549,300 CO2 emissions over 20 years. This could translate into potential savings for PLN of up to USD 125 million in 20 years.
Indonesia has set an ambitious emission reduction target of up to 29% by its own effort and up to 41% with international support by 2030. The target proportion of emission reduction from energy sector is 11%, the second highest after forestry (17.2%), prompting a recent issuance of an aspired energy mix target with at least 23% coming from renewable energy (RE) by 2025. With a lot of RE resources, Indonesia has a great opportunity to accomplish this target.
The NTT Government realizes that the province has little or no electrical grid infrastructure. NTT has an electrification rate of 59%, which is extremely low compared to the national average of 93% as per June 2017. Furthermore, their current energy mix is dominated by diesel power providing about 86% of the region’s energy demand, while in fact, NTT can unlock the potential of high solar energy availability from regular irradiation to reach their RE goals.
“NTT’s low electrification rate drives us to find a solution to meet the region’s demands. We can no longer rely on traditional means of power. There is an opportunity to fill these gaps with RE from a reliable source, like solar,” said Assistant II of NTT Regional Secretariat, Alexander Sena. Alexander added, “A pre-feasibility study conducted by GGGI demonstrates that a hybrid solar PV project is financially feasible. Private sector investment is critical for implementation of the projects.”
GGGI Indonesia Country Representative, Marcel Silvius also added, “I am happy that with this project we have been able to fulfil the aim of GGGI Indonesia to bring the project to a bankable phase and ensure that it is taken up by investors for further development beyond the pre-feasibility study and business case stage.”
Engie Asia Pacific Co. Ltd (ENGIE) and Arya Watala Capital (Watala) formed a consortium that offered to further develop the 8 sites as identified in the feasibility study.
“ENGIE’s vision to decarbonize, digitalize and decentralize is aligned with the objective of the solar PV project in NTT. We are delighted to collaborate with Watala to provide clean energy for the people of NTT,” said ENGIE Chief Representative for Indonesia, Johan De Saeger.
CEO of Watala, Aria Witoelar, also underlined the importance of harvesting the sun’s energy and said, “We should stop burning diesel fuel for electricity during daytime when the sun shining.”
The handover signifies the beginning of a promising renewable energy hybrid model to reduce diesel consumption, which could possibly be replicated and scaled up in the future. Following the handover, Engie and Watala plan to conduct a full feasibility study and join the bid by PLN to execute the actual development of the hybrid solar PV project in NTT.