Conglomerate Sinar Mas Group is planning to invest trillions of rupiah in the energy sector by developing biomass power plants with a total capacity of up to 1,000 megawatts (MW) in South Sumatra to supply the country’s high energy demand.
Sinar Mas managing director G. Sulistiyanto told reporters on Wednesday that the business empire was looking to enter the commercial renewable energy sector, saying that the group hoped to gradually set up a number of biomass power plants in South Sumatra.
Each 100 MW of capacity, he said, would require around Rp 1 trillion (US$78.55 million) in investment, meaning that Sinar Mas would have to disburse around Rp 10 trillion in total.
The power plants will be operated by Sinar Mas’ paper-producing subsidiary Asia Pulp and Paper (APP). They will be fueled by biomass, which is usually produced from residues of agriculture and forestry operations.
Sulistiyanto said the group hoped to carry out the project within eight years. However, the exact date to begin the project is not certain yet, as the group remains in discussions with the government.
“We plan to set up a 200-MW plant in the early stages,” he said.
He added that the power generated from the plant would be for commercial use. While it will be based in South Sumatra, the project is expected to be able to supply other regions in the country, depending on the transmission to be built.
“This will be our first experience in developing biomass power plants. We have already have tens years’ experience in operating coal-fired plants for our own business operations,” Sulistiyanto said.
Sinar Mas, he explained, already operated coal-fired power plants nationwide and in China with a total capacity of 3,000 MW for its own operations, as well as operating a 2x150-MW coal-fired power plant in South Sumatra and a 170-MW CPO-fueled plant in Italy for commercial use.
“It will be the first large-scale biomass power plant project. There are currently only small-scale ones operated by HTR [community-based forest] farmers. We want to develop an industrial-scale plant using new technology from Germany,” he said.
“We want to help supply electricity to the country. The problem is that there’s no reference price stipulated by the government for large-scale biomass plants. There is only a stipulation for those with a capacity below 10 MW,” he said.
Electricity produced by a biomass power plant is priced at a minimum of Rp 1,150 per kilowatt hour (kWh). The price rises depending on the location of the biomass and its connection to national electricity firm PLN’s transmission grid.
Sulistiyanto further revealed that Sinar Mas group was currently in talks with the government regarding the plan, having informally conveyed their intentions to the Energy and Mineral Resources Ministry and former PLN president director Nur Pamudji.
Sulistiyanto claimed that the plan had been warmly welcomed by the government.
The government, as previously reported, is aiming to see around 1,000 to 1,200 MW in additional power generation from bioenergy resources within five years, and has stated that the sector needs massive investment.
Given the government’s target of adding 1,200 MW of biogas and biomass power, a total of $3.7 billion will be needed, based on the Energy and Mineral Resources Ministry’s calculation that each MW will need around $3.1 million in investment.
Currently, the total capacity of power plants fueled by bioenergy resources reaches 1,716.5 MW. Meanwhile, the country’s total electrical capacity stands at 51,981 MW.
