Analysis of Investment Feasibility and Risk for the Batanghari Micro-Hydro Power Plant Project at PT Brantas Total Energi


Authors : Ardiyansyah Suhendar; Irni Yunita

Volume/Issue : Volume 9 - 2024, Issue 12 - December

Google Scholar : https://tinyurl.com/3k2w5966

Scribd : https://tinyurl.com/3cwm3xxu

DOI : https://doi.org/10.5281/zenodo.14410573

Abstract : The increasing demand for electricity and the Indonesian government's commitment to reducing carbon emissions necessitate the development of renewable energy, including Mini Hydro Power Plants (PLTM). PT. Brantas Total Energi, a subsidiary of PT. Brantas Energi, plans to develop the Batanghari PLTM project in West Sumatra. This study aims to evaluate the investment feasibility of this project from financial and risk perspectives and to provide recommendations for its continuation. The research methodology employed financial analysis using four key indicators: Internal Rate of Return (IRR), Net Present Value (NPV), Discounted Payback Period (DPP), and Profitability Index (PI). In addition, a sensitivity analysis was conducted to assess investment risk in response to changes in key variables, such as electricity sale tariffs, investment costs, and electricity production rates. The results indicate that the Batanghari PLTM project achieves an IRR of 12.25%, a positive NPV of IDR 31.257 billion, a DPP of 15 years, and a PI of 1.18, signifying that the project is financially feasible. However, the sensitivity analysis results show that the project is somewhat sensitive to fluctuations in tariffs and investment costs. In a worst-case scenario, such as a decrease in electricity tariffs and an increase in investment costs, the project could become financially unfeasible. Consequently, it is recommended that PT. Brantas Energi and PT. Brantas Total Energi conduct regular risk monitoring and consider mitigation strategies, such as tariff renegotiations or investment cost controls, to maintain the project's sustainability and profitability.

Keywords : Mini Hydro Power Plant, IRR, NPV, Discounted Payback Period, Profitability Index, Sensitivity Analysis.

References :

  1. Chakrabarty, P., Alam, K. C. A., Paul, S. K., & Saha, S. C. (2024). Hydrogen Production by Electrolysis: A Sustainable Pathway. In Hydrogen Energy Conversion and Management. Elsevier, 81–102.
  2. Ekowati, T., Sumarjono, D., Setiadi, & Agus. (2020). Buku Ajar Studi Kelayakan Dan Evaluasi Proyek.
  3. Gupta, R., Gosavi, & Subhash. (2023). Financial Management: E-Book for MBA, 2nd Semester, SPPU. Mumbai: Thakur Publication Private Limited.
  4. Hadi, & Mustofa Amirul. (2018). Penilaian Properti Berwujud (Tangible) Jilid I. Bandung: Balai Pustaka (Persero), PT.
  5. Halim, A. (2024). Analisis Investasi Dan Aplikasinya: Dalam Aset Keuangan Dan Aset Riil Edisi 3. Jakarta: Penerbit Salemba.
  6. Hasan, S., Elpisah, J. S., Nurwahidah, Abdullah, & Fachrurazi. (2022). Manajemen Keuangan. Bandung: Penerbit Widina.
  7. IEA. (2023). World Energy Outlook 2023. Paris, France.
  8. Institute, Energy. (2023). Statistical Review of World Energy. United Kingdom: Energy Institute.
  9. Merzy, A. M., & Daryanto, W. M. (2018). “Financial Feasibility Studies for Perusahaan Gas Negara (PGN) Project: A Case Study of City Gas Project in Indonesia for The Period of 2018-2038.” South East Asia Journal of Contemporary Business, Economics and Law, 17(2), 28–35.
  10. Paramita, R., Pranchiska, & Indah. (2024). “Target Bauran Energi Indonesia Tahun 2023 Kembali Melesat.” Buletin APBN, IX(3).
  11. PLN. (2023). Rencana Bisnis Pasokan Listrik PT. PLN (Persero) Tahun 2021-2030. Jakarta.
  12. Riesty, P., Masdiantini, S. D., Rieke, & Rizki, S. (2024). Panduan Komperehensif Akuntansi Dan Keuangan: Menguasai Dasar-Dasar Dan Praktik Terbaik. Yogyakarta: PT. Green Pustaka Indonesia.
  13. Rusydi, I., Ridho, R., Purnamasari, D. L., & Haidar, M. H. (2018). Analisis Kelayakan Usaha Pembesaran Ayam Sentul (Studi Kasus Di PT. Sumber Unggas Indonesia). Jakarta: Penerbit Qiara Media.
  14. Setiadi, D., Anwar, S., & Surianti, S. (2020). “Investments Evaluation Model Case in Indonesian Hospital.” In 1st International Conference on Accounting, Management and Entrepreneurship (ICAMER 2019). Jakarta: Atlantis Press, 141–44.
  15. Zativita, F. I., & Chumaidiyah, E. (2019). “Feasibility Analysis of Rumah Tempe Zanada Establishment in Bandung Using Net Present Value, Internal Rate of Return, and Payback Period.” In IOP Conference Series: Materials Science and Engineering, IOP Publishing, 12007.

The increasing demand for electricity and the Indonesian government's commitment to reducing carbon emissions necessitate the development of renewable energy, including Mini Hydro Power Plants (PLTM). PT. Brantas Total Energi, a subsidiary of PT. Brantas Energi, plans to develop the Batanghari PLTM project in West Sumatra. This study aims to evaluate the investment feasibility of this project from financial and risk perspectives and to provide recommendations for its continuation. The research methodology employed financial analysis using four key indicators: Internal Rate of Return (IRR), Net Present Value (NPV), Discounted Payback Period (DPP), and Profitability Index (PI). In addition, a sensitivity analysis was conducted to assess investment risk in response to changes in key variables, such as electricity sale tariffs, investment costs, and electricity production rates. The results indicate that the Batanghari PLTM project achieves an IRR of 12.25%, a positive NPV of IDR 31.257 billion, a DPP of 15 years, and a PI of 1.18, signifying that the project is financially feasible. However, the sensitivity analysis results show that the project is somewhat sensitive to fluctuations in tariffs and investment costs. In a worst-case scenario, such as a decrease in electricity tariffs and an increase in investment costs, the project could become financially unfeasible. Consequently, it is recommended that PT. Brantas Energi and PT. Brantas Total Energi conduct regular risk monitoring and consider mitigation strategies, such as tariff renegotiations or investment cost controls, to maintain the project's sustainability and profitability.

Keywords : Mini Hydro Power Plant, IRR, NPV, Discounted Payback Period, Profitability Index, Sensitivity Analysis.

Never miss an update from Papermashup

Get notified about the latest tutorials and downloads.

Subscribe by Email

Get alerts directly into your inbox after each post and stay updated.
Subscribe
OR

Subscribe by RSS

Add our RSS to your feedreader to get regular updates from us.
Subscribe