Castlerock Consulting

Introduction

Creating Value for Clients
 
Castlerock Consulting provides advisory services to government, state-owned & private enterprises, and commercial & development financial institutions in the fields of energy as core focus, infrastructure and information technology (IT). Our work spans formulation of high-level policy and strategy to preparation of and implementation support for capital projects in these fields. We have offices in Jakarta and Singapore, and have served clients throughout Asia.

The depth of our services creates synergies and generates insights that distinguish us from other professional advisory firms focusing on these sectors. Our experience with policy and regulatory development helps us design better projects. Conversely, our project-specific experience helps us formulate policy and strategy that is realistic, effective and implementable.
 
Similarly, the breadth of our experience across these three fields enables us to build upon the deeper linkages between them. For example, the understanding of state budgeting we gained through our work on Indonesia’s new treasury system helped us to develop a more realistic roadmap for preparation of specific infrastructure projects the Government is planning using a public-private partnership (PPP) approach. And our knowledge of the Government’s broad infrastructure PPP support mechanisms is helping us formulate more effective geothermal power incentive policies as well as helping companies assess specific geothermal power opportunities.
 
In addition, our focus on Asia and long-term presence in the region have established us as trusted advisors to our clients. Physical proximity to our clients enables us to be more responsive to client needs, and allows us to develop and maintain long-term relationships. Most importantly, this enables us to go beyond just sharing insights with and making recommendations to our clients. We can work side-by-side with them to implement change successfully, and thereby create real value for our clients. 
 

History
 
Castlerock was established in Jakarta in 1996 as PT Hagler Bailly Indonesia, a subsidiary of the US-based publicly listed professional services firm Hagler Bailly Inc. In 2000, UK-based PA Consulting Group acquired Hagler Bailly and its subsidiaries throughout the world, and the firm was renamed PT PA Consulting Indonesia. In 2009 PA divested its shares in the company, and the company took the name PT Castlerock Consulting. Castlerock operates a company in Singapore, Castlerock Consulting Pte Ltd, which serves the region, while PT Castlerock Consulting focuses on Indonesia. The director (CEO) of PT Castlerock Consulting is Mr. Mike Crosetti, who previously worked at the World Bank, was a partner in PA Consulting Group and originally established the company on behalf of Hagler Bailly in 1996. The directors of Castlerock Consulting Pte Ltd are Mr. Mike Crosetti and Mr. Stephen Wermert, who was previously manager for both private and public sector operations at the Asian Development Bank (ADB), as Asian Project Finance Director at BNP Paribas and as Associate Director at Deutsche Bank Asia Pacific. The firm has 20 employees and a similar number of sub-contractors working at any given time.
 

Project assignments
 
Since our establishment in 1996, we have conducted more than 100 assignments in Indonesia and throughout Asia, including high profile, multi-year assignments valued at over USD 8 million. The firm has served clients in a dozen countries throughout the Asia-Pacific region, including:
  • Multilateral agencies, such as The World Bank and the Asian Development Bank (ADB)
  • Bilateral agencies such as AFD, DFID,KfW and USAID
  • State-owned enterprises
  • Multinational corporations

Castlerock’s experience covers both conventional and renewable energy as well as other fields as summarized below.
 
Conventional Energy 
  • Power Sector Planning, Regulatory Support and Policy Development - Castlerock has worked with governments, multilateral lenders and regulated companies to prepare plans as well as to develop and implement energy sector policies and regulations, including:
    • At the request of members of the PLN Board of Directors, assessment of fixed capacity payments to independent power producers (IPPs) on the Java-Bali system, along with the impacts of high capacity factor targets for dispatch of PLN generation on that system, using Plexos, a power system planning model described below. The study laid out a restructuring road map leading to strengthening of PLN’s key supply functions on Java-Bali while separating the single buyer and system operator functions to become a new government-owned entity. 
    • Preparation of the energy inputs to Indonesia’s National Medium-Term Development Plan (Rencana Pembangunan Jangka Menengah Nasional, RPJMN) for the period 2020-2024.
    • Preparation of a national electrification roll-out plan for Papua New Guinea, and detailed electrification plans for eastern Indonesia and Fiji;
    • Development of an improved framework for power sector planning and private  sector participation in Fiji;
    • For PLN, assessment of a 3,000 MW HVDC link between Java and Sumatera using Plexos;
    • Working across Indonesian ministries and state-owned energy companies, technical assistance to formulate energy policy actions for the first energy policy loans to Indonesia as the basis for more than USD 1 billion of policy lending from World Bank, ADB, KfW and AFD;
    • Preparation of a framework and associated regulations for extending sovereign guarantees to state-owned infrastructure companies in Indonesia, so that these companies can borrow directly from bilateral and multilateral lenders that require such guarantees;
    • Preparation of electricity codes and regulations and associated regulatory capacity building covering licensing, planning and procurement, tariff setting and market supervision in India and Indonesia; 
    • Several cost of service studies and tariff design assignments in Indonesia; and
    • Inputs to gas sector regulatory development in Indonesia.
Castlerock was the first organization in Indonesia to utilize Plexos for least-cost expansion planning and power system production simulation. Plexos (www.energyexemplar.com) is a leading power system modeling package that can perform both short term chronological production simulations as well as long term capacity expansion modeling. Over 1,000 Plexos licenses have been issued worldwide to regulators, utilities, and developers. We have carried  out investment evaluation assignments for both the national utility, PLN, as well as foreign and domestic private investors.
 
  • Corporate Strategy and Utility Operational Improvement - Castlerock has helped electricity companies develop business strategies, restructure their operations and improve performance. Castlerock personnel have carried out such assignments in India, Bangladesh, Vietnam, and Indonesia. Assignments in Indonesia, for example, have included preparation of a corporate strategy for the national utility, PLN, in the face of fundamental reform of the power sector, as well as a multi-year USD 3 million restructuring and performance improvement program for PLN’s Jakarta distribution operations.
  • Project Preparation, Due Diligence and Financial Advisory Support - The firm has also assisted lenders and investors with preparation or due diligence of specific power projects. For example,
    • Castlerock serves as the independent verification agent for the ADB’s Results-Based Loan (RBL) programs for PLN in Sumatera, Sulawesi and Nusa Tenggara, responsible to verify PLN achievement of technical, financial, organizational, social and environmental disbursement-linked indicators.
    • For the ADB, Castlerock prepared a USD 250 million power sector loan to the Indian  state of Assam. This work included project design and appraisal of transmission and distribution components, social and environmental assessment, as well as utility restructuring;
    • The firm conducted a statistically valid load research survey of 1,500 electricity  consumers outside Java to help the government design tariffs;
    • Castlerock assisted PLN with structuring of the Tanjung Kasam coal-fired power plant project, the first limited recourse power generation project initiated in Indonesian after the Asian financial crisis;
    • The firm worked with the developer of a 1,000 MW coal-fired power project and its financial advisors to assess the impacts of foreign exchange volatility on PLN’s credit worthiness as off taker;

Renewable Energy
  • Renewable Energy Pre‐Feasibility Studies, Investment Project Preparation and Due Diligence – Castlerock has worked with investors and financial institutions to conduct pre‐ feasibility studies for specific renewable energy projects in Indonesia and elsewhere in Asia-Pacific, as well as more detailed project preparation, including technical, social, environmental and financial evaluations. Recent examples include:
    • a 2015 pre-feasibility study for a wind farm on the island of Sumba in Indonesia;
    • the preparation and implementation of off-grid community photovoltaic systems as part of a consortium to supply 909 households totaling 492 kWp, also on Sumba;
    • site selection and pre-feasibility assessment of marine energy projects in eastern Indonesia;
    • power market study for expansion of the Sarulla Geothermal Power Plant using Plexos;
    • market, regulatory and technical due diligence in 2017 for a foreign investor evaluating two hydro projects in Sumatera;
    • preparation of a geothermal power pre-feasibility study, grid extension plan, and commercial and regulatory options analysis for Vanuatu;
    • technical and economic analysis of 55 geothermal prospects across Indonesia;
    • technical due diligence for a lender evaluating two geothermal projects on Java; and
    • support to the stated-owned infrastructure finance company, PT Sarana Multi Infrastruktur (PT SMI), for the review and due diligence of renewable energy projects proposed by potential borrowers.
  • Renewable Energy Policy and Regulatory Development – Over the past 10 years, Castlerock has worked closely with governments and international agencies to prepare renewable energy policies and regulations. These assignments have covered wind, photovoltaic, hydro, biomass and geothermal power generation. Examples include:
    • preparation of a framework for the Indonesian Ministry of Finance to provide incentives including subsidies for the implementation of renewable energy projects;
    • Castlerock’s work from 2011 to 2015 on the Indonesia Clean Energy Development (ICED) program, during which the firm engaged with national and local government, PLN (the national electric utility), developers and financial institutions to prepare policies and regulations as well as improve commercial arrangements for hydro, wind, PV and biomass power projects; 
    • assistance to the Government of Indonesia for the development and implementation of policies and programs under the Sustainable and Inclusive Energy Program (SIEP), a multi-year, multi-billion dollar policy lending program supported by ADB, World Bank, AFD and KfW. As part of this assistance the firm has actively participated in the drafting of new PV and wind power regulations;
    • support from 2010 to 2013 to the Indonesia Ministry of Energy and Mineral Resources for the preparation of a new geothermal regulatory and policy framework, which contributed to the new geothermal law enacted in 2014 as well as subsequent implementing regulations; and
    • review of renewable energy regulations and policies across Southeast Asia for the ASEAN Center for Energy as well as the World Bank.
  • Renewable Energy Business Strategy and Market Assessments for Entry to the Indonesian Market – Castlerock has advised some of the largest energy and infrastructure companies in the world on the Indonesian renewable energy market, including opportunities, risks and entry strategies. These assignments typically entail comprehensive review of the current and expected future regulatory and investment environment, analysis of economic competitiveness of the target renewable energy technology, and assessment of market size. Examples include:
    • Castlerock prepared a business strategy for a new PLN subsidiary for geothermal development and operations,
    • In 2012 the firm advised one of the largest global oil companies on the nature, opportunities and risks for entry into the Indonesian geothermal market, and
    • As part of a global geothermal market review for a leading Japanese trading house, Castlerock provided an in-depth review of the geothermal power market in both Indonesia and the Philippines. Castlerock also provided technical inputs to help the company prepare its bid for Chevron’s geothermal assets.
 
Other Areas
  • Climate Change Advisory. Castlerock has conducted a several climate finance and climate  change planning and regulatory development assignments in Asian countries. Indicative assignments include:
    • assessing opportunities for the Indonesian Climate Change Trust Fund (ICCTF) to  leverage private funding for climate change activities through Public-Private Partnerships (PPPs);
    • assisting GIZ in Vietnam to explore available climate change funding options and to  strengthen government capacity to access these funding sources;
    • supporting cities in East Java and South Sumatera to identify appropriate adaptation measures and climate finance options to implement these measures;
    • developing guidelines for Indonesian cities to identify appropriate measures for  climate change mitigation and available public finance mechanisms for implementation; and
    • for Cities Development in Asia (CDIA), assessing financing sources for mitigation and  adaptation measures for cities in CDIA countries.