Indonesian Developer Invests $100m in Java Wind Farm

Jakarta Globe, Dion Bisara, April 22, 2012

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Wind farm developer UPC Renewables Indonesia plans to invest up to $100 million for a wind farm on the south Java coast to tap into Indonesia’s growing demand for cheaper energy.

The privately held company signed an agreement on Friday with the Ministry of Energy and Mineral Resources to build 33 wind turbines off the coast of Samas in Yogyakarta, a special region on the southern side of Java that faces the Indian Ocean. The total capacity of the wind farm will be 50 megawatts.

“This will be a milestone for a wind farm on a commercial scale,” said Kardaya Warnika, director general of renewable energy at the ministry.

UPC Renewables will partner with a local company, Binatek Reka Energi, which has been studying and collecting wind-pattern data on the south Java coast for the past four years.

The agreement for the power purchase has yet to be signed, Kardaya said. UPC Renewables has offered a purchasing period of 30 years at a price of Rp 1,200 (13 cents) per kilowatt hour for the first 20 years and Rp 700 per kWh beyond that.

That compares to an average production cost of Rp 1,100 per kWh last year and an average selling price of Rp 729 per kWh at the state power company, PLN.

Kardaya said UPC Renewables would start erecting the wind turbines once the power purchase agreement had been signed, and planned to use local materials as much as possible in the construction. It plans to complete the project in 15 months.

Steven Zwaan, director of  UPC Renewables, said he hoped the process could be done swiftly so the wind farm could start producing next year. He hopes that success with this project will generate interest to build more facilities across Indonesia.

In PLN’s 2011-20 electricity supply plan, the utility forecast states that Indonesia will needs to provide an additional 55,346 megawatts of power capacity over the next decade, assuming yearly economic growth of 7 percent, at a total investment estimated at $96.2 billion.

The plan outlines an aggressive decline in using oil fuel for the country’s power, shifting to cheaper gas and coal. Renewable energy would comprise 18 percent of total power production by the end of this decade, from just 10 percent currently. Wind energy, however, has yet to be included in the plan.