The Asian Development Bank (ADB) has approved a $49.5M loan for the Government of Indonesia to build a cross-border power transmission line that will transfer hydroelectricity to West Kalimantan from Sarawak, Malaysia.
"This is a win-win-win situation," said ADB Energy Specialist Sohail Hasnie. "West Kalimantan gets renewable energy and will have the ability to exchange power; Sarawak starts its first export of hydropower; and the region moves one step closer to establishing a regional power transmission link that crosses Brunei Darussalam, Indonesia and Malaysia."
Perusahaan Listrik Negara (PLN), the Indonesian state-owned electricity company, currently uses oil for power generation in West Kalimantan, which has pushed the cost up to $0.25 per kWh. Under the power exchange agreement signed with Sarawak, the cost of power in West Kalimantan could be cut to $0.18/kWh, while carbon dioxide emissions from fossil fuel-based generation could be cut by 400,000 tons each year by 2020.
The project will build a 145km distribution line, distribution feeder extensions, and a new substation to improve the reliability of power in West Kalimantan. An 83km cross-border high-voltage transmission line and substation will connect the West Kalimantan power grid to that of neighboring Sarawak, Malaysia. An estimated 230MWh could be exchanged every hour between the two systems.
“This will make a long-term relationship with our neighbors and a step forward to making the ASEAN interconnection a reality," said PLN’s Head of Power System Planning, I Made Ro Sakya.
The interconnection project is expected to save PLN an estimated $100M annually in avoided oil generation. An estimated 8000 households will also benefit from training on energy efficiency, provision of energy-efficient lighting, and improved community centers, such as hospitals and schools, which will have access to a reliable power source.
In addition to its $49.5M loan, ADB will also administer a $49.5M loan provided by the French development agency Agence Française de Dévelopment, as well as a $2M grant provided by the Multi-Donor Clean Energy Fund under the Clean Energy Financing Partnership Facility. BIMP-EAGA is the Brunei Darussalam-Indonesia-Malaysia-The Philippines East ASEAN Growth Area.
ADB is currently preparing a second loan project to finance the transmission line on the Malaysia side. Both countries have agreed to complete the construction by December 2014 and power flow will start from 1 January 2015.
