Post on 16-Jan-2017
Government policy to accelerate renewable energy development in Indonesia
Paul ButarbutarRegional Director SEA South Pole GroupHead of Policy, Regulation & Advocacy IRES
Page 1
Overview
Current energy condition
National energy policy
Renewable energy potentials
RE policy and regulation
Page 2
Current energy condition
South Pole Carbon · 30. Juni 2016 Page 3
Current energy condition IndonesiaPage 4
1. Economic growth about 5 – 6% per year;; population growth 1.2% per year à need to grow energy supply by 7 – 8% / year
2. Energy mix is still dominated by fossil-based energy3. Indonesia is a net oil importer, importing crude oil as well as diesel and gasoline to meet energy demand, while on the other side exporting coal and gas
4. National electrification ratio 2015 was 88.5%, target for 2016 is 90%;;
5. Province with lowest electrification ratio:1. Papua (44,40%);;2. East Nusatenggara (57,74%)3. South-East Sulawesi (66,78%)4. Central Kalimantan 68,27%;;
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0
20
40
60
80
100
120
Supply, of,primary,energy
Oil, Coal, Gas, Hydropower, Geothermal, Biofuel,
43.03
34.16
18.62
2.62 1.11 0.46
Supply. of.primary.energy.2014
Oil.
Coal.
Gas.
Hydropower.
Geothermal.
Biofuel.
Supply of primary energy Indonesia (without biomass)
Source: 2015 Handbook of Energy & Economic Statistics of Indonesia, Ministry of Energy and Mineral Resources
Note: Oil Including Crude Oil, Petroleum Product and LPG Coal Including Coal and Briquette.Gas Including Natural Gas and LNGBiomass Including Firewood and Charcoal Biofuel Shows Pure Bio Energy (not Blending Product)
© DJK – 2015
3
3
Aceh 92,31%
Sumut 91,03%
Sumbar 80,14%
Riau 84,54%
Sumsel 76,38%
Bengkulu 83,47%
Babel 95,53%
Lampung 81,27%
Jakarta 99,61%
Banten 92,93%
Jabar 86,04%
Jateng 88,04%
Jambi 80,70%
DIY 82,26%
Jatim 83,55%
Bali 85,17%
NTT 58,91%
Kalbar 79,77%
Kalsel 83,75%
Kaltim 91,71%
Sulut 85,53%
Sulteng 75,58%
Sulsel 85,05%
Malut 90,52%
Maluku 82,22%
Papua 43,46%
KATEGORI
> 70 %
50 - 70 %
< 50 %
Sulbar 74,11%
Kepri 74,06%
Sultra 66,78%
Papua Barat 77,81%
Kalteng 67,23%
NTB 68,05%
Gorontalo 74,65%
REALISASI TARGET BERDASARKAN DRAFT RUKN
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
67.15% 72.95% 76.56% 80.51% 84.35% 87.35% 90.15% 92.75% 95.15% 97.35%
Kaltara 69,64%
RASIO ELEKTRIFIKASI 2014
Electrification ratio
GHG emission and energy security, main drivers for the development of RE & EE in IndonesiaUpdated baseline emission Indonesia
12
Source: Bappenas 2015 Simulation of Indonesian baseline emission 2010 – 2045 (in thousand tCO2e)
Source: Bappenas 2015 Against this background, Indonesian government has committed to reduce greenhouse gas emission by 26% using domestic resources, and if supported by international community, the emission reduction could reach 41%, to be achieved by 2020. Further, Indonesia also commits to reduce emission between 2020 – 2030 by 29% compared with the baseline. The general business plan of PLN for the supply of electricity for 2015 — 2024 foresees the development of 55 hydro power plants with the total installed capacity of 2,438 MW. These are hydro power plant with the capacity of > 10 MW each. Power plants < 10 MW are not included in this business plan, since this category is as well accessible for Independent Power Producers (IPPs). PLN is obliged to buy electricity from IPPs generated by renewable energy sources with this installed capacity. The following table shows the government plan to develop renewable energy between 2015 - 2019:
Hasil simulasi jangka panjang menunjukkan trend emisi GRK meningkat cukup signifikanterutama berasal dari sektor energi hingga tahun 2015-2030. Pasca 2030, emisi diperkirakanstabil pada seluruh sektor, kecuali di sektor Energi. Peak Emisi Indonesia diperkirakan berada
pada tahun 2045 dengan tingkat emisi sebesar 3.48 Gg ton CO2e pada 2045Sector 2010 2015 2020 2030 2045
IPPU 37,749 37,717 47,876 78,205 130,658 Energy 414,786 560,282 806,081 1,438,629 1,712,274 Waste 108,156 133,432 182,027 284,886 491,897 AFOLU (no peat) 339,804 367,130 379,803 436,171 625,235 Peat decoposition 245,411 249,546 251,093 254,047 257,230 Peat fire 314,467 288,445 137,171 385,709 266,998 Total emission (without peat fire) 1,145,906 1,348,107 1,666,880 2,491,938 3,217,294 Total emission (including peat fire) 1,460,373 1,636,552 1,804,051 2,877,647 3,484,292
Emission from the energy sector will increase significantly after 2020
National energy policy
South Pole Carbon · 30. Juni 2016 Page 8
23%
2014 20202025
290MTOE
215MTOE
450MTOE
Bussiness As Usual
TARGET 2025
400Juta TOE
PRIMARY ENERGY CONSERVATION 11%
NRE
Coal
Gas
Oil
30%
22%
25%
EBT
Coal
Gas
Oil
17%
29%
22%
32%
NRE
Coal
Gas
Oil
6%
29%
24%
41%
TODAY
§ TOTAL NATIONAL PRIMARYENERGY 215 MTOE
§ PRIMAY ENERGY FROM RE:13 MTOEü GEOTHERMAL: 6 MTOEü BIOFUEL : 4 MTOEü BIOMASS : 2 MTOEü HYDRO : 1 MTOE
National Energy Policy (Gov Regulation No. 79/2014)
Current 2025Power generation 51 GW 115 GW
Energy consumption 0,8 TOE/capita 1,4 TOE/capita
Electricity consumption 776 KWh/capita 2.500 KWh/capita
Under the National Energy Policy, government combines RE + EC
Mandatory Primary Energi MixPower generation (National Energy Policy)
Oil25% ~ 96 MTOE
Natural Gas 22% ~ 76,75 MTOE
Coal22% ~ 113,45 MTOE
RE 23% ~ 84,15 MTOEPr
imar
yE
nerg
iM
ix(P
P 79
/201
4)
Power generationcomposition
60% Fosil 40% RE
46,8 GW
2025: 115 GW
68,2 GW
46,75
Capacity gap ± 5GW, still in series ofdiscussion on how to fill in this gap
20,74 GW
41,89 GW
Optimazing RE power generation
RE development plan based on National Electricity Development Plan
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Power&plant Capacity 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 TotalGeothermal MW 85&&&& 350& 320&&&&& 590&&&&& 580&&&&& 450& 340&&&&& 935&&&&& 1,250& 1,250& 6,150&&&&Large&hydro MW 45&&&& 57&&&& 175&&&&& 1,405& 147&&&&& 330& 639&&&&& 2,322& 2,031& 5,950& 13,101&Minihydro MW 32&&&& 78&&&& 115&&&&& 292&&&&& 81&&&&&&& 86&&&& 196&&&&& 26&&&&&&& 257&&&&& 201&&&&& 1,364&&&&PV MW 26&&&& 122& 70&&&&&&& 50&&&&&&& 118&&&&& 11&&&& 10&&&&&&& 17&&&&&&& 10&&&&&&& 10&&&&&&& 444&&&&&&&Wind MW E 70&&&& 190&&&&& 165&&&&& 195&&&&& 10&&&& E 5&&&&&&&&& E 5&&&&&&&&& 640&&&&&&&Biomass/MSW MW 125& 142& 135&&&&& 11&&&&&&& 21&&&&&&& 11&&&& E 21&&&&&&& 15&&&&&&& 6&&&&&&&&& 487&&&&&&&Ocean MW E E E E E E E E E E E&&&&&&&&&&&&Biofuel Thousand&kL 812& 594& 365&&&&& 261&&&&& 230&&&&& 170& 173&&&&& 179&&&&& 189&&&&& 191&&&&& 3,164&&&&Total MW 313& 819& 1,005& 2,513& 1,142& 898& 1,185& 3,326& 3,563& 7,422& 22,186&
Note: only power plants with installed capacity > 10 MW needs to be registered in the National Electricity Development Plan
Renewable energy potentials
South Pole Carbon · 30. Juni 2016 Page 13
NO NEW RENEWABLE ENERGY RESOURCES INSTALLED CAPACITY (IC) RATIO OF IC/RESOURCES (%)
1 2 3 4 5 = 4/31 Hydro 75,000 MW 7,572 MW 10.1 %2 Geothermal 28,910 MW 1,403.5 MW 4.9 %3 Biomass 32,654 MW 1,717.9 MW 5.4 %4 Solar 4.80 kWh/m2/day 48.05 MW -5 Wind 3 – 6 m/s 1.87 MW -6 Ocean 49 GW ***) 0.01 MW ****) -7 Uranium 3,000 MW *) 30 MW **) -
*) Only in Kalan – West Borneo**) As a center of research, non-energy
***) Source: National Energy Council****) BPPT’s Prototype
RE resources
Indonesia blessed with huge RE potentials that can be utilized to meet government target
Biomass/biogas potentials: oil palm and utilization of
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Oil palm sector has huge potentials that has not been well utilized so far
Government has agreed to allocate millions of hectare of degraded land for energy forests as part of strategy for the forest rehabilitation and improving energy access
Palm oil mills in Indonesia
Around 10% - 20% of the palm oil mills are located up to 5 km to the grid;;
Each ton of FFB processed produces:- Around 22% of EFB- Around 19% of palm kernel shell and fiber
- Around 60 – 70% of POME
No Province No*of*POM*Processing*capacity
tons*of*FFB/h*1 Aceh 25 980*******************************2 North*Sumatra 92 3,815***************************3 West*Sumatra 26 1,645***************************4 Riau 140 6,660***************************5 Riau*Island 1 40*********************************6 Jambi 42 2,245***************************7 South*Sumatra 58 3,555***************************8 Bangka*Belitung 16 1,235***************************9 Bengkulu 19 990*******************************10 Lampung 10 375*******************************11 West*Java 1 30*********************************12 Banten 1 60*********************************13 West*Kalimantan 65 5,475***************************14 Central*Kalimantan 43 3,100***************************15 South*Kalimantan 15 770*******************************16 East*Kalimantan 29 1,545***************************17 Central*Sulawesi 7 590*******************************18 South*Sulawesi 2 150*******************************19 West*Sulawesi 6 260*******************************20 SouthTeast*Sulawesi 3 260*******************************21 Papua 322 West*Papua 4 360*******************************
608 34,140*************************Total
Mass balance in palm oil mill
Energy inputs for process:- 20 – 25 kWh/t- 0.73 ton steam
1 ton of FFB
Palm oil mill
Waste
190 kg fiber and palm kernel shell
600 – 700 kg POME
230 kg EFB
Renewable energy policy and regulation
South Pole Carbon · 30. Juni 2016 Page 18
1. Improving energy security
2. Adding capacity of energi production and power generation,in particular hydro power and geothermal
3. Improve access to energy, in particular in the remote area,utilizing microhydro, solar PV, biomass and biogas
4. Reducing fuel subsidy, converting diesel genset withmicrohydro, solar PV, biomass/biogas
5. Reduce GHG emission by using more renewable energy
6. Implement energy conservation program
Gov. policies in the renewable energy development
1. Government has limited budget to meet the RE targetaccording to NEP and GHG emission reduction target
2. Government needs support from the private sector todevelop RE projects as part of the implementation of thepolicy
3. To encourage private sector involvement, Governmentprovide some incentives for the development of REprojects, in form of FiT for projects < 10 MW and fiscalincentives
4. For project with installed capacity > 10 MW, some hasalready ceiling tariff (geothermal and large scale hydro), therest, B2B approach
Private sector involvement for policy implementation
NO REGULATION POLICY
1 MEMR Regulation No. 17/2013Feed-in Tariff for Solar PV Power Plant ( UnderRevision)
2 MEMR Regulation No.17/2014 Ceiling Price for Geothermal Power Plant
3 MEMR Regulation No. 27/2014 Feed-in Tariff Biomass and Biogas Power Plant
4 MEMR Regulation No. 3/2015 Ceiling tariff for hydro power plant > 10 MW
5 MEMR Regulation No. 19/2015 Feed-in Tariff for Hydro Power Plant
6 MEMR Regulation No. 44/2015 Feed-in Tariff for MSW Power Plant
7 Presidential Regulation No.. 18/2016Acceleration for the utilization of municipality solid waste in to energy
7 Being prepared Feed-in Tariff for Wind Power Plant
8 Being prepared Incentive for Roof Top Solar PV
FiT to encourage private sector involvement
FiT and ceiling tariffPage 22
Voltage Tariff,(IDR),x,FMedium'x'FBiogas 1,050'''''''''''''''Biomass 1,150'''''''''''''''Low'x'FBiogas 1,400'''''''''''''''Biomass 1,500'''''''''''''''
Location'factor FJava 1.00Sumatra 1.15Sulawesi 1.25Kalimantan 1.30Bali,'Bangka'Belitung,'Lombok 1.50RiaumIslands,'Papua'and'other'islands 1.60
Biomass - biogas
Geothermal*tariff*based*on*MEMR*Regulation*No.17/2014
Region*I Region*II Region*II2015 11.8 17.0 25.42016 12.2 17.6 25.82017 2.6 8.2 26.22018 13.0 18.8 26.62019 134.0 19.4 27.02020 13.8 20.0 27.42021 14.2 20.6 27.82022 14.6 21.3 28.32023 15.0 21.9 28.72024 15.5 22.6 29.22025 15.9 23.3 29.6
COD Ceiling*tariff*(US*cent/kWh)
Geothermal
FiT and ceiling tariffPage 23
Voltage River,flow,or,water,fall Existing,irrigation AdjustmentMedium'x'FYear'1'.'8 12.0 10.8 9.3Year'9'.'20 7.5 6.8 9.3Low'x'FYear'1'.'8 14.4 13.0 11.0Year'9'.'20 9.0 8.1 11.0
F1.01.11.21.31.31.6
Location'factorJava,'Bali,'MaduraSumatraKalimantan'and'SulawesiEast'and'West'NusatenggaraMolucca'and'North'MoluccaPapua'and'West'Papua
Mini-hydro < 10 MW
No. Generator*CapacityCeiling*tariff*(Cent*USD*/*kWh)Availability*Factor
Contract*Period
1 >#10#%#<#50#MW 92 50#–#100#MW 8.53 >#100#MW 8
60% 30#years
Large hydro > 10 MW
Income Tax
FINANCIAL INSTRUMENTS SUPPORT
Value Added Tax
• Reduction of net income for total 30% of total investment for 6 years• Accelerated depreciation and
amortization• Imposition
of Income Tax on dividend paid to Foreign Taxable at 10%• Compensation for losses for 5
– 10 years
Exemptions of VAT for Taxable Goods, machinery and equipment for RE utilization (not included spare parts)
Regulated in State Annual Budget Law and its implementing
regulations
Import Duty Tax Borne by Government
Exemptions for Import Duty ofq Goods and Machinery for
development and capital investment
q Capital Goods Imports for construction and development of electricity industry
How to invest in RE in Indonesia?South Pole Group · 14/01/16 Page 25
An example of investment model on hydro power plant in Indonesia
Page 26
Swedish investorProject developer
Int. Financial institutionLocal Financial Institution
Role of South Pole as PMU:- Deal flow- Initial due diligence- Coordination with other third party
support, incl. contractors, consultants
- Supervision during construction
El & Mec
Civil
Technical
Legal
Tax
Foundation for implementationof health, social and env.
O&M Cont.
Summary
• Government encourage the development of renewable energy as part of the effort to improve energy security, access to energy in the remote area and reduce GHG emission;;
• Indonesia is blessed with the abundant renewable energy resources;;
• Government encourage private sector to actively involve in the investment of renewable energy
• To encourage private sector, government provides incentives in the form of FiT and fiscal
• The opportunity is open for international investors to invest in renewable energy in Indonesia, however, there is some limitation in share ownership (only 49% for project < 10 MW)
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Thank you for your attention!
thesouthpolegroup.com
Paul Butarbutarp.butarbutar@thesouthpolegroup.com
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