Hydropower Investment - Where to?

Hydropower is always related to rainfall. Area that is dry (low rainfall) suppose to be not very attactive for hydropower investment. Let's take a look only on the rainfall information. According to the latest document of Bappenas, the Indonesia Climate Change Sectoral Roadmap (ICCSR), rainfall in all areas in Indonesia will change. The changes are either an increase or a decrease. The simulation reported that Sumatera and Papua will have mostly increases of rainfall. Download ICCSR report here.

In Sumatera, central to south Sumatera might have significant increase of rainfall intensity. Siginificant increase means bigger than 25 mm and lower than 50 mm. Central to North Sumatera might have significant increase and very significant increase (higher than 50 mm). In Papua, all areas will have significant increase of rainfall with some months might have very significant increases of rainfall intensity.

There are at least two conclusions. The first is, provided that the forest in Sumatera and Papua is well preserved, the increase of rainfall will not create flooding. This means this is good for hydropower investment. Although using water power, hydropower is actually do not very much like flood. Flood will bring sediments and debris that can ruin the scheme and lowering the service. The opposite will happen if the forest is destroyed.

The second conclusion is that increase of rainfall will certainly increase the risk of distribution network failure. This means low grid availability. For hydropower businessmen, low grid availability means market is closed. No income at all. In this case, higher rainfall intensity will just make hydropower investment attractiveness falls down to lower point.

Anyway, hydropower investment is certainly depending on hydro available hydro potential. Higher rainfall means bigger availability of hydro potential. However one has to consider: who will consume the electricity? how is the catchment area condition? what about grid availability? is there any supporting infrastructures in the area? etc.

With those things in mind I would say investing hydropower in Sumatra area might be more profitable than in Papua. But, still it depends on the government. If the government says go to Papua then PLN will do it, not private sector.

Cheers.