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Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
 On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Although the report showed a net profit increase of IDR22 trillion (tn), a 53% rise from 2022, the Institute for Energy Economics and Financial Analysis (IEEFA) calculates that PLN would have recorded a substantial loss of IDR120tn without subsidies and compensations from the Government of Indonesia (GOI).
At first glance, PLN’s cash reserves increased by 9% for the fiscal year 2023, and its electricity sales rose around 7%. This increase in sales contributed the most to PLN’s income growth, amounting to IDR22.2tn. However, despite the improved performance and positive figures, there are underlying red flags.
Despite increased cash reserves, PLN’s liquidity ratio (0.92), quick ratio (0.79), and cash ratio (0.39) were all below 1.00. These figures indicate that the utility is struggling to meet its urgent payment obligations with cash or current assets.
PLN’s financial performance heavily depends on GOI’s subsidies and compensations, which have risen by 16.4% from IDR123tn in 2022 to IDR143tn in 2023. However, these incremental increases could halt in 2025. Discussions at the Ministry of Finance are underway to reduce PLN’s subsidies and compensations under the new administration's programs and policies.
An imminent solution for PLN's financial independence is required. PLN's fiscal potential can be unlocked with minimal GOI assistance by improving efficiency, particularly by reducing operating costs through the adoption of renewables.
Reducing cost and volatility via renewables
The Basic Cost of Providing Electricity (BPP) is arguably the main factor determining electricity costs, which are then translated into tariffs paid by customers. Any increase in BPP adds to the GOI’s financial burden.
Since 2020, coal and gas purchase costs have increased significantly. In 2023, purchased electricity from coal and gas contributed to a 14% increase in operational expenses and accounted for 63% of total operating costs. On average, PLN spent around US$4-5 cents per kilowatt hour (¢/kWh) for coal purchases, almost 40% higher than in 2020.
Additionally, PLN’s exposure to US$-denominated coal prices requires reconsideration. Despite the GOI's coal price cap, PLN has struggled with coal price fluctuations due to exchange rate changes. While purchases are denominated in US$, PLN’s tariff collections are in Indonesian rupiahs.
Apart from the base fuel purchasing costs, PLN also had to factor in shipping and plant maintenance costs. As coal-fired power plants age, they lose efficiency and require more coal to produce each kilowatt hour (kWh) of electricity.
Considering the difficulty in reducing purchased electricity costs and renegotiating power purchase agreements with independent power producers, PLN should accelerate the transition from fossil fuel-based energy to avoid price volatility.
Renewable energy sources are low-cost to operate compared to fossil fuel power plants. Furthermore, IEEFA’s recent report has shown that the levelized cost of electricity is around US$4.78¢/kWh for solar and US$4.77¢/kWh for wind. In comparison, coal costs around US$6.5¢/kWh, which is at least US$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Monday, 24 August 20
A COMBINATION OF DEVELOPMENTS DROVE THE FALLOFF COAL PRICES - CHIEF ECONOMIST’ OFFICE, AUSTRALIA
China, rising domestic production combined with subdued power demand;
India, a lockdown coupled with government directives that fav ...
Monday, 24 August 20
AUSTRALIA'S THERMAL COAL EXPORTS ARE FORECAST TO DROP FROM AN ESTIMATED $20 BILLION IN 2019-20 TO $16 BILLION IN 2020-21: REPORT
Thermal coal spot prices have fallen sharply as the impact of COVID-19 drives a contraction in seaborne trade for only the second time this century ...
Saturday, 22 August 20
REPORT SEES INDIA’S RELIANCE ON THERMAL POWER DROPPING TO 50% IN 2021, 43% IN 2026 - ET ENERGY | IEEFA
India’s dependence on thermal power will reduce to 50 per cent by 2021-22 and 43 per cent by 2026-27 on the back of renewable energy (RE) cap ...
Friday, 21 August 20
323 MILLION ELECTRIC VEHICLES WILL BE ON THE ROADS BY 2040 - WOOD MACKENZIE
Electric vehicle (EV) sales are expected to reach 45 million units per year by 2040, with a total global EV stock of 323 million, according to new ...
Friday, 21 August 20
BHP COMMITS TO SELLING ITS THERMAL COALMINES WITHIN TWO YEARS - THE GUARDIAN
Move follows pressure from investors but company stops short of full exit from coalmining
BHP has announced it plans to sell off its ...
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- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Parliament of New Zealand
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- Agrawal Coal Company - India
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Wilmar Investment Holdings
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Rashtriya Ispat Nigam Limited - India
- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Economic Council, Georgia
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Tata Chemicals Ltd - India
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- PTC India Limited - India
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
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