Financial Feasibility Analysis of Cilampuyang Hydropower Plant Project (2X15 MW)

Abstract

The Cilampuyang Hydropower Plant (2x15 MW) project is deemed feasible based on the financial analysis conducted. The electricity demand in West Java is projected to reach 20.1 million customers by 2030, with a growth rate of 3.27%. In light of the renewable energy policy, hydropower is considered a viable solution. The project is undertaken by PT Bangun Daya Utama and PT Bukaka Teknik Utama. According to the Renewable Power Generation Costs in 2021 report by IRENA, the construction costs for new hydropower plants from 2010 to 2021 ranged from USD 600/kW to USD 4,500/kW, equivalent to approximately Rp. 8,907,990/kW to Rp. 66,809,925/kW. Hence, the estimated costs for implementing the Cilampuyang Hydropower Plant project (2x15 MW) are substantial. Therefore, a financial analysis is crucial to determine the project's feasibility. This study aims to evaluate the economic viability and identify associated risks through the TPEM and LCOE investment feasibility analysis methods. Monte Carlo simulations were employed to assess project implementation risks. The research findings indicate that the TPEM and LCOE values for the Cilampuyang Hydropower Plant project are superior to the minimum required values. The NPV is Rp. 32,112,681,609,569, the IRR is 275%, and the LCOE is 0.013 USD/kWh. These results indicate that the investment in the Cilampuyang Hydropower Plant is financially viable. Furthermore, project implementation risks were measured using Mean NPV and minimum NPV parameters from 10,000 Monte Carlo simulations, yielding a Mean NPV of Rp. 33,867,831,000,000 and a minimum NPV of Rp. 26,331,417,000,000. In conclusion, the Cilampuyang Hydropower Plant presents a promising alternative for meeting the electricity needs in West Java while adhering to renewable energy policies. From an economic perspective, the investment in the Cilampuyang Hydropower Plant is feasible based on the favorable NPV, IRR, and LCOE values. However, project implementation risks should be considered based on known significant variables.