Summary of Regulation of Minister of Energy and Mineral Resources Number 1 of 2017



With a view to increase an efficient and a stable and as well as a reliable electricity power supply, the Minister of Energy and Mineral Resources on 3 January 2017 issued a Regulation number 1 of 2017 concerning Power Plant Parallel Operation with PLN’s Grid (Regulation). The following article summarizes the provisions under such Regulation.

 

I. Mechanism of Parallel Operation

 

  1. The Power Plant Owner may conduct Parallel Operation with PLN’s electricity supply  system for the purpose of maintaining its reliability and/or obtaining better reliability. The “Power Plant Owner” means
    (i) private interest power plant which holds the Operation Permit with maximum capacity up to 200 kVA or
    (ii) the integrated Electricity Business Supply License or integrated IUPTL holder.
  1. The Parallel Operation may be conducted based on the following function:
    (i)   backup, purchasing the electricity from PLN temporarily; and/or
    (ii) supplement, purchasing the electricity from PLN as additional.
  1. The Parallel Operation may be carried out with the following electricity grid:
    (i)   high voltage;
    (ii) medium voltage; and/or (iii) low voltage.
  1. In the implementation of that Parallel Operation, Power Plant Owner first must be a regular PLN’s customer with certain term and condition to be fulfilled by such Power Plant Owner.
  1. The Parallel Operation is carried  out by considering the capability of the local PLN electricity supply system and in accordance with the applicable grid code or distribution code. Such capability of local PLN electricity supply system shall be based on the result of evaluation by PLN. The Board of Directors of PLN may stipulate further criteria of the capability of the electricity supply system.
  1. In order to carry out the Parallel Operation, the Power Plant Owner shall first submit the application to PLN along with the following documents:
    (i) a copy of a report for a power plant with a capacity of up to 25 kVA
    (ii) a copy of a certificate of registration for a power plant with a capacity of over 25 kVA up to 200 kVA a v
    copy of operation license for power plant with a capacity of over 200 kVA a copy of a IUPTL (for Power Plant Owner who holds IUPTL) a copy of Certificate of Operational Worthiness or SLO for power plant; Parallel Operation plan which consists of:
      (i) interconnection point;
      (ii) type, number and capacity of electricity power plant unit on which to carry out Parallel Operation;
      (iii) subscription capacity;
      (iv) type or characteristic of load;
      (v)  period of Parallel Operation;
      (vi) function of Parallel Operation; and
      (vii) other data in accordance with grid code or distribution code.
  1. Based on the application and documents submitted by the Power Plant Owner, PLN shall evaluate and notify in writing on the approval or rejection of such application. The approval or rejection will then be reported by PLN to the Director General Electricity.
  1. The Parallel Operation with PLN’s electricity supply system shall be incorporated into an agreement or              contract. Such agreement or contract of Parallel Operation shall be executed at the latest seven (7) business  days after the approval of application by PLN.

II. Cost of Parallel Operation

 

Type of Cost

 

  1. To conduct its activities in the Parallel Operation, the Power Plant Owner is required to pay the following costs:
      (i) connection cost, charged in accordance with the applicable regulations;
      (ii) capacity charge, shall be determined by the formula as follows: Capacity charge = total Net Power       
      Capacity of power plant (in MW) x 40 hours x electricity tariff; and
      (iii) energy charge.
  1. The energy charge shall consist of:
      (i) Energy charge rate during normal condition (normal energy charge), namely the cost of purchasing electricity at the time the power plant on which the Parallel Operation is carried out its own operation  under a normal condition in accordance with the operation plan reported to PLN.
      (ii) Energy charge rate during emergency (emergency energy charge), namely the cost of purchasing              electricity under emergency condition in which the during the operational period the power plant        uses electricity provided by PLN as a replacement of electricity to be produced by the power plant            during the Parallel Operation.
  1. No approval from the Minister of Energy and Mineral Resources (Minister) is required for the costs for Parallel Operation as mentioned in number 9 above.

 

Capacity Charge

  1. PLN may apply the capacity charge lower than the capacity charge based on the formula as described in number 9(ii) above, without Minister’s approval.
  2. In a particular case, PLN may apply the capacity charge exceeding the capacity charge based on the formula on the basis with PLN’s own cost estimate in which the Minister approval for this capacity charge must be obtained first by PLN.

 

PLN’s Obligation

  1. In order to speed up the process of Parallel Operation with the electricity supply system of PLN, PIN shall establish the following:
      (i) Parallel Operation technical instructions; and
      (ii) Standardize agreement or contract of Parallel Operation.
  1. PLN must submit annual report to the Directorate General of Electricity on the implementation of Parallel Operation. Such report shall include the following:
      (i) interconnection point;
            (ii) type and capacity of power plant on which the Parallel Operation is being carried out;
            (iii) function of Parallel Operation;
            (iv) the party who conduct the Parallel Operation;
            (v) amount of electricity transmitted; and
            (vi) cost of Parallel Operation.