In 2009, Indonesia’s vertically integrated, state electricity company, Perusahaan Listrik Negara (PLN) had an ambitious plan to invest about $1.2 billion in the electricity distribution sector during 2010−2014 to reduce distribution losses and carbon dioxide (CO2) emissions. PLN intended a large part of this plan to be financed by loans from bilateral and multilateral partners.
The Java–Bali Electricity Distribution Performance Improvement Project—approved by the Asian Development Bank (ADB) in March 2010 for a loan of $50 million and cofinanced by the
Agence Française de Développement for another $50 million—supported this initiative. By financing strategic distribution network augmentations in all the Java–Bali grid distribution areas to reduce losses, the project aimed to contribute in lessening CO2 emissions.
A pilot initiative, funded by a $1 million grant from the ADB−administered Clean Energy Fund, to reduce the peak demand on island networks by promoting energy-efficient lighting solutions to residential consumers was also incorporated into the project. However, this initiative was reformulated to retrofit PLN substation switchyard lighting and municipal street lighting with energy-efficient light-emitting diodes.
The project’s primary intended impact was to reduce CO2 emissions by 330,000 tons per year. Its planned outcomes were the deferral of new distribution network investment by $100 million and reduction of overall distribution loss to 7% from 8.4% in 2008. The targeted outputs included a saving of 400 gigawatt-hour (GWh) from a reduction in losses and additional sales of 635 GWh through the connection of new customers using the additional transformer capacity to be installed by the project.
The project, consisting of widely dispersed multiple small-scale augmentations such as additional and larger conductors, additional transformer capacity, and covered conductors, resembled a program rather than a project. But as these augmentations were undertaken parallel to PLN’s much larger network development program, the project had a relatively small impact on the overall performance of the distribution networks. For example, while the project procured distribution transformer capacity to connect an additional 600,000 residential customers, the PLN connected more than 4.5 million additional customers to Java–Bali distribution networks, during the 2 years of project implementation. As additional sales exceeded loss reductions, and without provisions to install low-emission generation, attainment of targets would indicate a net increase, rather than a reduction, in emissions.
The project outputs defined at appraisal were also intangible as they were measured by PLN only at a network level for each distribution area. The extent to which changes in output at a distribution-area level were directly attributable to the project, rather than an outcome of work undertaken by PLN outside the project, could therefore not be separately measured
Nevertheless, qall the target outputs were comfortably met across the full range of reasonable assumptions concerning project contributions toward the attainment of network outcomes.
ADB’s Southeast Asia Department rated the project successful. PLN was the executing agency. Overall implementation was coordinated by a project management unit. Installation works were delegated to the project implementation unit in each of the grid’s 5 distribution areas.
