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Financing approved for Indonesia’s first pumped-storage plant

The financing, to Indonesia’s Ministry of Energy and Mineral Resources, will support the construction of the 1040 MW Upper Cisokan pumped-storage (UCPS) plant, to be located between the capital city, Jakarta, and Bandung on the island of Java.

The World Bank has approved a US$ 380 million loan to develop Indonesia’s first pumped-storage plant, aimed at improving power generation capacity during peak demand, while supporting the country’s energy transition and de­carbonization goals.

“The facility will have significant power generation capacity to meet peak demand, provide significant storage capacity to enable a larger penetration of renewable energies and, because of its location close to two large demand centres, will alleviate increasing transmission loads on the grid”, the World Bank announced on 10 September. “As a result, a more environmentally friendly and reliable supply of electricity will benefit consumers in Java and Bali”.

The US$ 800 million project, which is being co-financed by the Asian Infrastructure Investment Bank and developed by state-owned utility, PT Perusahaan Listrik Negara (PLN), will be constructed around 150 km southeast of Jakarta, in the upstream end of the Cisokan river basin, part of the Ciratum river catchment that flows north to the Java Sea.

The UCPS will have an underground powerhouse equipped with four 260 MW units with a combined generating capacity of 1040 MW, and a pumping capacity of 1100 MW, with an estimated generation duration of 6.5 hours per day and a pump duration at maximum input of 8.5 hours per day. Other main features of the project are tunnels, access roads, a switchyard, a quarry, temporary construction facilities and two 500 kV transmission lines. The upper 75.5 m-high dam, located at el. 800 m, will impound a reservoir with a maximum surface area of 80 ha. A 98 m-high dam at about el. 460 m will impound the lower reservoir with a surface area of up to 260 ha. Two double-circuit transmission lines will connect the plant with the Cibinong-Saguling network in the north. A new 27 km-long access road to the construction site has been constructed, and the existing 7 km-long road between an existing quarry, which will be used as a source of rock foundation and building materials, and the new access road, has been upgraded.

This is a renewed engagement between the World Bank and PLN on the UCPS, which started in 2008. In May 2011, the World Bank approved a US$ 640 million IBRD loan to support the development of the project, as well as the feasibility study and environmental and social impact assessment for the Matenggeng pumped-storage project, also on the island of Java. However, contractual disputes between PLN and the dam and civil works contractor, including site readiness for mobilization of works, led the Bank to cancel US$ 596 million from the loan in 2017. PLN approached the World Bank again in 2019 to finance the project, which remains a key part of the Java-Bali system expansion plan and would represent a turning point for Indonesia’s grid decarbonization pathway. The concept project information document for the ‘Development of Pumped Storage Hydropower in Java Bali System Project’ was approved in January 2020.

The main development objectives of the project are to increase Java-Bali power system’s peaking capacity and the ability to absorb variable renewable power generation as well as to strengthen PLN’s capacity to develop and manage hydropower projects in an environmentally sustainable manner.

The project is part of a broader range of support to the Govern­ment of Indonesia in meeting its increasing electricity demand, which grew at an annual compound growth rate of 5.4 per cent between 2011 and 2019, while displacing thermal-based generation capacity in peak load through the integration of variable renewables. Indonesia relies primarily on fossil fuels to meet its fast-growing energy needs. More than 80 per cent of the power generated for the Java-Bali grid, which supplies electricity to 70 per cent of the country’s population, comes from fossil fuels. In 2020, total installed generation capacity was around 72 GW, of which around 86 per cent was from fossil fuels and 14 per cent renewable sources (see details of the country’s capacity and generation in the H&D World Atlas 2021).

The Government of Indonesia aims to reduce GHG emissions by 41 per cent by 2030 as its Nationally Determined Contri­bution to the Paris Agree­ment, and to reach 23 per cent renewable energy in the national energy mix by 2025.

Upper Cisokan will be implemented through three components. In addition to preparation, construction, and commissioning of the plant, and supervision and support to the Project Implementation Unit, financing will be provided for environmental and social plans and hiring an independent environmental and social monitoring consultant and environmental and social panel.

Also covered will be technical assistance and capacity building for the preparation of the Mateng­geng pumped-storage project in the Cijolang river basin and the Poko hydro project, as well as preparation of the Java-Bali Mas­ter­­plan.

The World Bank pointed out in a Project Information Document updated in May 2021 that: “The potential environmental and social impacts of the UCPS and Mateng­geng schemes are significant. The specific mitigation measures for UCPS (ESMP, BMP, Integrated Water Catchment Management, and LARAP) require complex and specific expertise”.