Micro Hydropower Interconnection - Where is it now?

PSK Tersebar!!!! Do not get me wrong. It does not stand for Pekerja Sex Komersial (PSK) or sex worker, but Pembangkit Skala Kecil (PSK – Small Scale Generation). Tersebar means distributed. PSK Tersebar is Distributed Small Scale Generation. It is an important ministerial decree about interconnection of small-scale renewable energy generation to utility i.e. PLN (Perusahaan Listrik Negara). This decree was enacted in 2002. Therefore, this year he is already 6 years old.

How many small-scale renewable energy generators have been interconnected based on this decree? As far as I know: less than 10. In fact I can mention it: Micro Hydro Power (MHP) Seloliman I, MHP Seloliman II, MHP Wangan Aji (contract given – realization still o), MHP Melong, MHP Cinta Mekar, MHP Salido Kecil, and there is one in Sulawesi. How many? Seven MHPs. On average 1 MHP each year. I would say – it is not good.

Why this has been so difficult? Out of 7 only 2 are purely private initiation. The other 5 are semi-private because they involve high rank lobby (e.g. high profile NGO activist, ex director general, director of one important directorate in the government etc.) and not purely private financed (government project, ADB, GEF, UNESCAP etc.). Important message here is the 5 MHPs won the interconnection contract due to “high profile lobby”. Private can also do but you’ve got very low buying price. It is then very difficult for private sector because private sector sees an investment from its profitability. Buying price usually show the profitability of interconnected MHP project. If the price is low, better put the money in the bank.

So the buying price is low. Why is it low? PLN as buyer argues that they sell electricity at a certain price so PLN only buy electric power with price lower than PLN’s selling price. It is very logic. PLN wants some profit margin of it. But PLN has some memory problems. Big Independent Power Producers (IPP) wie Paiton in Ost Java got a big price for selling power to PLN. The price is in US$. The selling price is way higher than PLN’s tariff to customer. This is very contradictive. But, that was because of power abuse during Suharto Era. Now who’s abusing the power? It is PLN…

When PLN deals with small business like those under PSK Tersebar regulation, PLN positions itself as a pure business entity. PLN forgets that it gets subsidies from government for its fossil fuel generation. PLN get subsidies therefore the electricity tariff for customer is also subsidized. The tariff is already distorted. It is not a pure tariff. Small private companies cannot compete in distorted market. PLN gives pressure the business so that business can accept the terms of PLN...that's abusive

There should be market deregulation. PLN should not monopolize the market or the sector. It does not have to be direct 100% privatization in one night. More transparency is enough and everybody will appreciate that. It is too bad that Law No.20 of 2002 was cancelled by Constitution Court (Mahkamah Konstitusi). The law is actually brings a fresh wind to the sector.

What about the regulation itself? Does it need to be improved? I say yes…for example: let’s give longer contract term not annual; let’s give clearer and simpler procedure without negotiation. For small-scale generation (below 1 MW), one cannot talk pure business. It should be straight forward without complex negotiation.

Finally, what’s the idea to improve private sector involvement in small scale renewable generation? Let’s see the work of IMIDAP (Integrated Microhydro Development and Application Program). Let’s hope that they do their best or else…