International Conference on Economics, Finance & Business, Rome

FINANCIAL STUDY OF PASIR HANJUANG MINI HYDRO POWER PLANT PROJECT IN GARUT, WEST JAVA, INDONESIA

JUAN HUTAGAOL

Abstract:

The purpose of this study is to examine the financial prospect of the mini hydro power plant construction in Garut, West Java, Indonesia using financial terms such as payback period, internal rate of return, net present value, and benefit cost ratio. The current economic growth is one of the factors that drive the demand of electricity energy, and the current issues that Indonesia is facing is there isn’t sufficient electricity supply available. One of the efforts that the Indonesia government has made to increase the electrification ratio is to construct a new power plant that’s developed by either PLN, a state-owned electricity supplier company in Indonesia, or by an Independent Power Producer. To build a sufficient financial study, a literature review is first developed. The literature review consists of both general and Indonesia electricity industry review, alternative/renewable energies, the benefits of using renewable energy for companies, and the use of mini hydro power plants. Second, the information is gathered from the project valuation of the company that conducts this project. The company will provide project valuation that contains all financial information necessary to create a financial analysis. Third, a recommendation is made for future researchers who want to conduct similar research more thoroughly since this study is solely focused on financial terms, therefore there are some other aspects that are not considered while conducting this research. After the analysis is concluded, the conclusion is made whether the project is profitable, in the short term or long term, or not profitable.

Keywords: Electricity, Mini Hydro Power Plant, Project Valuation, Financial Profit