Indonesia turns to floating power stations to meet short-term needs

Indonesia’s president launched the first of five new floating power stations on Tuesday, to serve as a stop gap for the country’s growing demand for power amid sluggish development of land-based plants.

Southeast Asia’s largest economy has set an ambitious goal of building more than 35 gigawatts of power stations by 2019, the bulk of which are expected to be coal-powered.

However, the $50 billion mega project has made slow progress since it was launched by President Joko Widodo in April, due to difficulties in acquiring land among other reasons.

The vessels will mainly serve eastern Indonesia, an area that includes many remote islands to the east of Bali, including Sulawesi, Halmaherah, Maluku and Papua, which has suffered from slow development of power capacity.

“Every time I go to (outer) regions it’s the same complaint: electricity crisis (and) blackouts,” Widodo said at the launch of the floating power station in Jakarta. The next four vessels will be delivered over the next six months, he said.

“Because we are an archipelago, I think power stations on top of ships that are mobile like this are best for Indonesia,” Widodo added, referring to the five vessels owned by a subsidiary of Turkey’s Karadeniz Holdings, that will add around 540 MW of capacity to the Indonesian grid.

Construction of a $4 billion, 2000-megawatt (MW) land-based Batang power station in Central Java has been held up by land acquisition problems since Japan’s Electric Power Development Co Ltd won the contract in 2011.

State electricity utility Perusahaan Listrik Negara (PLN) sees the heavy fuel oil (HFO) powered floating power stations as a quick solution to meet power needs that will save costs in the short term, as heavy fuel oil is cheaper than diesel and gas.

“The 35,000 megawatt programme still needs a long time to generate electricity that the community needs,” PLN CEO Sofyan Basir told reporters.

Power demand is growing at around 12 percent annually in eastern Indonesia, PLN director Machnizon Masri said, adding that the region would face further shortages over the next two years if nothing was done.

The largest of the five vessels on order, with a capacity to generate 240 MW, will be sent to North Sumatra, which has long faced power shortages due to slow progress completing projects, he said.

Under the deal, PLN will rent the vessels for five years and only pay for the electricity they generate, Masri said.

“This is cheaper than gas. We can save 350 billion rupiah ($25.23 million) a year if we use these in North Sulawesi and Gorontalo,” he said.