The Opportunity of Corporate PPA (CPPA) Implementation in Indonesian Electricity Market to Increase Renewable Energy Penetration

Abstract

One of the main challenges in developing renewable energy (RE) power plants is the selling price of the electricity produced. Indonesia has constraints in increasing the capacity of renewable energy generation: the cost of producing clean energy electricity is often higher than the tariff that PLN gets from selling electricity to consumers. The availability of RE subsidies in Indonesia still does not exist. To overcome the issue, this study was conducted to evaluate the opportunity of Corporate Power Purchase Agreement (CPPA) as a solution to increase the capacity of renewable energy generators in Indonesia. The application of the CPPA requires IPP as a power producer to find its off-takers. PLN only provides electricity transmission networks and supporting facilities. Thus, PLN and the Government are not burdened with large capital costs for investment. The main advantage of IPP is that it is more flexible to negotiate with corporate off-takers in determining electricity production rates and seeks cooperation with other countries to generate additional income from the sale of renewable energy certificates.

Keyword:Renewable energy, tariff, capacity