PROPOSED BUSINESS STRATEGY FOR COAL-FIRED POWER GENERATION IN CONFORMING WITH INDONESIA COMMITMENT TO ADDRESS CLIMATE CHANGE

• Main Author: Nariswari, Niken
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/81187
• Institution: Institut Teknologi Bandung

PT Sumatera Pembangkit is an Independent Power Producer (IPP) which carried out construction, operation, finance, and maintenance of Sumatera CFPP (Coal-fired Power Plant) and tens kilometres transmission line from Sumatera CFPP to the nearest Extra High Voltage Substation in Sumatra. As Indonesia aims to transition towards sustainable energy practices to address the climate change and its Nationally Determined Contribution (NDC) commitment to the Paris Agreement by releasing stricter environmental regulation and Greenhouse Gas (GHG) emission target, PT Sumatera Pembangkit must strictly comply with such shifting regulation and be prepared for potential possibilities that could impact the economics of its businesses. As an CFPP business actor, PT Sumatera Pembangkit must address the challenges on the plant efficiency, environmental concerns, new technologies integration, and the global and national energy policies alignment to remain a dominant and reliable player in the power generation sector while still ensure its economic viability. This research generates conclusion of PT Sumatera Pembangkit’s business strategies of its long- term sustainability practices and competitive position and the implementation plan to enable and amplify PT Sumatera Pembangkit’s competitiveness and sustainability. To support and strengthen PT Sumatera Pembangkit 's later determined business strategy, this research also carries out financial analysis on the implication of the acceleration of carbon economic value implementation and CCS (Carbon Capture and Storage) retrofit on the Sumatera CFPP to handle carbon emissions quota excess, as the alternative of carbon trade and tax, to PT Sumatera Pembangkit’s economic viability. PT Sumatera Pembangkit is currently situated at a pivotal moment in which it can capitalize on its technological advancements, operational advantages, and strategic positioning to not only enhance its market position but also make a substantial contribution towards Indonesia's energy security and sustainability objectives. Regulation shifting is also proven to contribute on PT Sumatera Pembangkit’s sustainability and economic feasibility. From the financial analysis, it is shown that PT Sumatera Pembangkit 's economic viability is volatile and sensitive to the change of carbon cap and carbon pricing, in which its economic viability decreases by the changes of the emission cap (lower) and carbon price (higher). These changes have implications for both the implementation of carbon economic value and CCS retrofit on Sumatera CFPP. While PT Sumatera Pembangkit lacks control over these changes, PT Sumatera Pembangkit is obligated to ensure and implement plant efficiency efforts to keep the emissions emitted by Sumatera CFPP within the permitted applicable emission cap to then exploit the opportunity to sell its carbon emission unit surplus. Drawing from the analyses that have been conducted, it can be concluded that Sumatera CFPP's long-term viability depends on its ability to adapt to and align with Indonesia's evolving regulatory landscape and commitment to sustainable energy and climate goals. Such analyses indicate that Sumatera CFPP can still maintain and potentially grow its competitive position and sustainability, and still generate profit through proper business strategies, such as strengthening contribution in energy security, driving best operational patterns and adopting innovation and technological advancements to enhance plant efficicency, capitalizing on carbon trading regulation, enhancing FABA and gypsum management and utilization, engaging in strategic partnerships and collaborations to support government electricity infrastructure projects, exploring expansion opportunity, and adopting international standards. Given the context on how Indonesia’s electricity infrastructure is still highly reliance on CFPP and how CFPPs still become the most reliable source to guarantee Indonesia energy security, the outlook of CFPP sector, in general, is likely to continue growing and remain profitable in the foreseeable future. While there are challenges that need to be tackled, such as the plan for early retirement of old CFPPs and stricter compliance on environmental policies and regulations, there are also opportunities that can be exploited, such as carbon market mechanisms, value-added waste management and side product, and technological innovation and advancement. The ability and responsiveness of CFPP sector to adapt to these changes and integrate sustainable practices into its business model quite determine its long-term success, viability, and profitability.