Who has won contract for Indonesia’s controversial floating PV project?

Has UAE solar developer Masdar succeeded in securing the contract for a 200 MW Indonesian floating solar project it believed it had sewn up two years ago? The answer is, nobody knows.

The Indonesian government was due to announce the victor in a reverse auction to establish the Cirata Dam facility on August 19 but, almost a month on, no decision has been publicized.

The contract has been mired in controversy since the beginning, with state power company Perusahaan Listrik Negara (PLN) having awarded the deal to Masdar in July 2017 only to be forced to rip up the arrangement six months ago because state rules dictate such business must be tendered rather than awarded directly.

That meant the contract had to go through a public procurement which matched up Masdar with seven rivals from Japan, China, South Korea and Saudi Arabia. No outcome has yet been announced by Jakarta regarding an installation that was meant to start construction this year.

Tender attention

Ministry of Energy and Mineral Resource regulation 50/2017 stipulates tenders must be held in relation to the purchase of renewable energy by the PLN. The rule was introduced after the direct award of a contract to develop the Riau-1 coal-fired power plant in Sumatra prompted a corruption scandal.

When Masdar was awarded the Cirata Dam project and given until November last year to negotiate a power purchase agreement with the PLN, deputy energy and mineral resources minister Archandra Tahar told broadcaster CNBC Indonesia at the time: “[The] PLN needs to carefully arrange the contract because this project is categorized as a direct appointment.”

Marlistya Citraningrum, program director of Indonesian thinktank the Institute for Essential Service Reform, backed the call to conduct a tender. “We highly recommend to adopt a reverse auction, specifically for high scale utility solar photovoltaic projects in Indonesia for speeding up the development of renewable energy, the fulfillment of national energy targets and for driving the economic scale of solar photovoltaic power plants,” she said.

Another floating project planned

The institute published a comparative study of reverse auction tender systems applied in India, Brazil, Mexico and – ironically – the UAE which could be applied in Indonesia and which emphasized the importance of auction design and process, incentives and bidder quality.

The cloud of uncertainty over the Cirata Dam project, however, has not dissuaded state-owned mining company Bukit Asam from planning a 1 MW floating PV project at the Sigura-Gura Dam, in North Sumatra province. The miner will work with Indonesian Asahan Aluminium to develop two 500 kWp arrays which will be set to start operating in the third quarter of next year.