“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,” said ADB energy specialist Sohail Hasnie.
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 US$0.25 per kilowatt-hour (kWh). Under the power exchange agreement signed with Sarawak, the cost of power in West Kalimantan could be cut to US$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 145 km distribution line, distribution feeder extensions, and a new substation to improve the reliability of power in West Kalimantan. An 83 km cross-border high-voltage transmission line and substation will connect the West Kalimantan power grid to that of neighbouring Sarawak, Malaysia. An estimated 230 megawatt-hour of power could be exchanged every hour between the two systems.
“This will make a long-term relationship with our neighbours 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 US$100 million 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 centres, such as hospitals and schools, which will have access to a reliable power source.
In addition to its US$49.5 million loan, ADB will also administer a US$49.5 million loan provided by the French development agency Agence Française de Développement, as well as a US$2 million 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.