Rotating power blackouts

Rotating power blackouts

Official warnings of rolling power blackouts in Java and Bali
over the next two weeks, due to a cut of only about 350 megawatts
(MW) from two power plants in Jakarta, strengthens the great
concern among businesspeople about an impending electricity
crisis in Indonesia.

The state electricity company (PLN) warned last week that
rolling blackouts might have to be imposed because of tie-in work
on gas pipelines from BP Plc's Offshore Northwest Java field to
the Muara Karang and Tanjung Priok power plants in Jakarta, which
would cut power supply by around 350 MW. This raises many
troublesome questions.

The technical reasons cited for the supply reduction seems
reasonable enough. However, the need for rolling blackouts during
the peak-load period from 5 p.m. to 10 p.m., simply because of a
350-MW cut in supply, is rather baffling.

What, then, is the meaning of the Java-Bali interconnected
electricity system? Doesn't it mean that a supply shortfall in
Jakarta can be covered by power from other plants in Java through
the Java-Bali grid? If this cannot be done, then it means that
the total electricity capacity of the system must be way below
demand.

PLN explained that total demand during peak hours in Java and
Bali is around 14,800 MW. This means that total capacity in the
Java-Bali system is less than 15,500 MW, while a minimum reserve
margin of 35 percent is required to avert power-supply cuts
during the peak-load hours.

Hence, the total capacity of the Java-Bali grid should be at
least 20,000 MW. A reserve capacity less than this level could
easily plunge Java into darkness during peak hours. This is, we
think, what may well happen over the next two weeks, unless
consumers respond to PLN's appeal to reduce their electricity
usage during peak hours to offset the 350-MW supply cut.

Both energy analysts and PLN warned as early as 2000 of a
looming power supply disruption in Java and Bali in view of the
high increase in demand as the economy began to recover at a more
robust pace.

In May and early December, 2003, many areas in Java and Bali
fell into total darkness for two consecutive nights due to supply
disruptions caused by technical problems at the Paiton plant in
East Java and the Suralaya plant in West Java. The shortage of
power outside Java was even worse, forcing frequent blackouts.

Some newspapers, however, quoted informed sources at PLN as
disclosing that PLN's total capacity in Java now already exceeded
19,500 MW thanks to the completion of the 840-MW capacity Muara
Tawar plant near Jakarta and the 600-MW plant in Cilacap, Central
Java.

Could it be then that several other major power stations are
also encountering technical problems?

Whatever the case, the power supply capacity is indeed at a
critical level and is dangerously low.

This power supply problem once again raises big questions
about PLN's peak load management, maintenance systems and the
efficiency of its transmission and distribution lines.

The power supply disruption could have been compounded by
losses caused by technical problems in supply capacity at power
stations and in transmission and distribution lines. PLN itself
has acknowledged that such losses could range from 15 to 16
percent, not including losses incurred by power theft.

Even though rotating blackouts could perhaps be prevented over
the next two weeks presuming cooperation on the part of
householders cutting down their power consumption, and industrial
users operating on their own power units, the current supply
problem should jolt the state power monopoly and the government
to the urgent need for building additional power capacity.

Many investors, notably those from overseas and including
Japan, have cited acute power shortages as one of the main
impediments to new investment in the country.

The government has rightly put power generation as a top
priority for the infrastructure projects being offered to private
investors.

But not a single investor will be interested unless the
government restores legal certainty for investment in the power
sector, especially after the annulment by the Constitutional
Court of Law No.20/2002 on electricity last December.

This law was supposed to break down the PLN monopoly in power
generation, transmission and distribution to mid-size and large
users and allow investors to enter the public utility industry.
But now that this law has been decreed null and void, the
electricity sector requires a new legal umbrella for arranging
relationships between PLN and private investors.