Considerations for selecting

an additional province for developing a NAMA proposal

Michiel Hekkenberg

Lachlan Cameron

Xander van Tilburg

March 2013

ECN-E--13-013

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ECN-E--13-013 3

Contents

1 Introduction 5

2 Practical minimum conditions for selection 6

2.1 Readiness 6

2.2 Demand 6

2.3 Data availability 7

3 Prioritizing benefits to Indonesia 8

3.1 Mitigation potential 9

3.2 Other development benefits 9

3.3 Experience and learning 10

4 Conclusion 11

4

ECN-E--13-013 Introduction 5

1 Introduction

Under the project MitigationMomentum1, ECN provides technical assistance to the

government of Indonesia with the development of a NAMA2 proposal in the province

North Sumatra. In Indonesia, NAMAs are developed against the background of the

national and provincial climate change action plans (RAN/RAD-GRK).

Additional support from CDKN allows ECN to provide technical assistance to develop a

NAMA proposal in an additional province, expanding the scope of the existing work

beyond North Sumatra and providing the opportunity for both additional visibility of the

NAMA within Government of Indonesia and learning from NAMA development

experiences across different provinces. The intended scope for the second NAMA

proposal is the same: small and medium scale, grid-connected renewable electricity

options.

This note provides background information to facilitate the province selection process

by the Ministry of Energy and Mineral Resources (ESDM) and the Ministry of Planning

(BAPPENAS). It offers criteria that may feed a discussion on how to maximize the

benefits to Indonesia of extending the project scope. The first step narrows down the

number of considered provinces based on a set of practical minimum conditions, the

second step uses several possible selection criteria based on benefits for Indonesia.

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1 MitigationMomentum is supported by the German government through the International Climate Initiative (ICI)

2 Nationally Appropriate Mitigation Action

6

2 Practical minimum

conditions for selection

Since the primary aim of the technical assistance is the development of a NAMA

proposal, the selected province should have a minimum level of capacity to “absorb”

the NAMA development process and accommodate its future implementation. If these

minimum conditions are not met, it may prove difficult to develop a NAMA proposal

with sufficient buy-in, ownership, and potential for successful implementation. The

minimum conditions may therefore serve as first selection criteria:

Readiness for and engagement with the RAD-GRK process

Evidence of interest by project developers and suppressed energy demand

Data availability and data quality.

2.1 Readiness

To date, 29 out of 33 provinces have completed RAD-GRK (Riau, East Nusa Tenggara

(NTT), Papua and West Papua not yet). 27 provinces include energy actions (Jambi and

South Kalimantan do not mention actions for energy), 20 mention “renewable energy”

so could be relevant for selection. However, actions are often described in limited

detail; e.g. “provide and manage RE”. 8 Provinces mention specific RE electricity

technologies (South Sumatera, Bengkulu, Lampung, Banten, West Nusa Tenggara (NTB),

East Kalimantan, Central Sulawesi, West Sulawesi).

2.2 Demand

The first aspect to consider, is whether project developers have expressed interest in

developing small and medium scale renewable energy projects. Evidence of this could

be obtained either from applications for the Feed in Tariff, or demands for grid

ECN-E--13-013 7

connection. A second aspect is that of so-called suppressed demand, where the current

energy supply is insufficient to service the potential demand. A NAMA would be

suitable to (partially) address a situation of suppressed demand by removing barriers

through policy interventions. An appropriate indicator for suppressed demand

(specifically for small scale RE projects) is currently lacking. Planned additional

production capacity in provinces may provide a proxy indicator of additional electricity

demand in general, which may also provide opportunities for small scale RES

production.

To provide sufficient value in terms of energy production and GHG emissions a NAMA

would typically aim to realize several hundreds of megawatts of renewable energy

capacity or more, and therewith relate to total investments in the order of $ 0.5 – 1

billion or upwards. Potential emission reduction could be in the order of 0.5 – 1 Mt

CO2-eq./year or higher. There are 14 provinces with a planned capacity increase of

>500MW in the 2010/2014 period3. The provinces with the largest additional capacity

planned were North Sumatra, South Sumatra, Banten, Jakarta, West Java, Central Java

(including Yogyakarta), East Java, East Kalimantan and South Sulawesi.

2.3 Data availability

In general, data availability on the provincial level in Indonesia is limited. In order to be

able to assess costs and benefits of the NAMA, data will be needed on e.g. expected

economic development, renewable energy potentials, financial indicators and relevant

existing policies. Collecting the relevant data will require close cooperation with the

provincial government and likely require additional local research. The selected

province should ideally be able to supply a basic dataset, and be willing to use some

resources to further refine it.

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3 Master Plan Pembangunan Ketenagalistrikan 2010 – 2014, summarized on http://repit.wordpress.com/

8

3 Prioritizing benefits to

Indonesia

There are three main benefits that may be pursued by expanding the work into a

second province:

Mitigation potential: reducing greenhouse gas emissions though implementing the

NAMA.

Development benefits: additional economic, social, and environmental benefits

associated with the implementation of the NAMA.

Experience and learning: how the process of developing the NAMA proposal can be

replicated and scaled up, both within and across provinces.

Each of these benefits may materialize to some degree in each province, but provinces

differ with regard to which benefit will be most pronounced, and their expected

magnitude. National and provincial development priorities determine the weight given

to each of these expected benefits. The province selection process is therefore not

merely a ‘scoring exercise’, but rather a dialogue in which the national and provincial

government, and other stakeholders, weigh the various benefits. An indication of

provinces scores towards expected benefits is provided below.

Each of these benefits may materialize to some degree in each province, but provinces

differ with regard to which benefit will be most pronounced, and their expected

magnitude. National and provincial development priorities determine the weight given

to each of these expected benefits. The province selection process is therefore not

merely a ‘scoring exercise’, but rather a dialogue in which the national and provincial

government, and other stakeholders, weigh the various benefits. An indication of

provinces scores towards expected benefits is provided below.

ECN-E--13-013 9

3.1 Mitigation potential

The mitigation potential in the different provinces depends on, inter alia, the following

factors :

Current and projected energy consumption and GHG emissions

Renewable energy resource potential

Possibility for IPPs to connect to the grid.

Energy consumption and GHG emissions are generally highest in the provinces with the

largest economy and population. These provinces could host a large(r) number of

projects that fit within the intended NAMA scope. The abatement potential however,

also depends on the current activities and alternative energy sources (i.e. what would

be business as usual). As a consequence, as long as a minimum energy demand exists, a

province would be eligible for selection. A ‘rough’ proxy could be obtained from

province population. The 2010 census4 identified 9 provinces with a population of over

5 million; North Sumatra, Riau, South Sumatra, Lampung, Banten, West Java, Central

Java, East Java, South Sulawesi.

Most provinces have a significant renewable energy resource potential. The islands of

Sumatra, Kalimantan, Sulawesi and the province of West Nusa Tenggara (NTB) are

identified as having > 50MW small scale hydro potential (<10MW) remaining

undeveloped, and large potentials for large scale hydro5,6

. Biomass and solar potentials

are considered significant in many provinces in Indonesia. Note that more densely

populated provinces may have difficulty finding suitable locations to harvest renewable

resources.

Possibility for IPPs to connect to the grid: For a NAMA targeting grid-connected small

and medium scale renewables to be successful, the existing grid structure and

penetration to the village level, is a good proxy for IPP market potential. The

electrification rate is generally a good sign for economic activity. West Sumatra, Bangka

Belitun, Banten, South Kalimantan, North Sulawesi, Bali and all provinces on Java have

village electrification rates above 99% and general electrification rates above 60%.

3.2 Other development benefits

Additional renewable energy production capacity may provide benefits in systems with

a low current capacity, e.g. by improving access to modern energy sources. In systems

that are not interconnected through large high voltage grids, this benefit of additional

capacity may even be more pronounced as the system cannot fall back to importing

power from another region. Apart from the technical benefits, pursuing policy

interventions for supporting renewable energy (through a NAMA) may build

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4 http://www.bps.go.id/eng/index.php

5 Investment Opportunities EMR Sector, Ministry of Energy and Mineral Resources, 2011

6 Renewable Energy Action Plan of West Nusa Tenggara Province 2010-2025, Casindo Team, 2011

10

institutional capacity and awareness with stakeholders. Developmental benefits are

likely have highest impacts in the lesser developed provinces. This presents a balance:

whereas the impacts are highest in least developed provinces, there is a need for a

minimum understanding of energy systems, GHG emissions, and mitigation options to

ensure the NAMA-concept to be taken up successfully.

3.3 Experience and learning

The additional province may lead to most learning effects when situational differences

exist. Given the different provinces on Sumatra may be relatively alike, e.g. with regard

to geography, economic situation and the that the electricity system of the provinces on

Sumatra is interconnected, the learning process may be a reason to select a province

outside the island of Sumatra.

ECN-E--13-013 11

4 Conclusion

This note provides possible criteria for selecting a second province to develop a NAMA

proposal to support small and medium scale renewable energy projects. If most focus is

given to maximizing technical (mitigation) aspects of NAMA implementation, the

presented selection criteria provide arguments to consider selection of the provinces of

South Sumatra, Banten, East Java, South Sulawesi or East Kalimantan. Each of these

province has characteristics that make it potentially interesting for selection, but each

also has potential drawbacks. Based on initial discussions with Bappenas and ESDM,

regarding cross-provincial learning, development benefits, and expected provincial buy-

in, West Nusa Tenggara (NTB) can added to this list.

It should be noted that this first selection is based on limited data, without taking into

account provincial buy-in or institutional capacity.

Table 1: summary of considerations for selection of an additional province

RA

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RK

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tio

ns

spec

ific

RE

op

tio

ns

Sign

ific

ant

cap

acit

y

dem

and

po

pu

lati

on

>

5M

Hyd

ro p

ote

nti

al

hig

h

elec

trif

icat

ion

rate

lear

nin

g

ou

tsid

e

Sum

atra

Oth

er

dev

elo

pm

en

t

ben

efit

s

South Sumatra X X X X

Banten X X X

X X

East Java

X X

X X

South Sulawesi

X X X (X) X X

East Kalimantan X X

X

X X

West Nusa Tenggara (NTB)

X

X (X) X X

12

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