Renewable energies i in Indonesia - Sun & Wind Energy · Renewable energies in Indonesia Indonesia...

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I N D O N E S I A S P E C I A L

Sun & Wind Energy 2/2007

Renewable energies in Indonesia i i

75Sun & Wind Energy 2/2007Sun & Wind Energy 2/2007


Photos (5): Jörg Böthling/agenda

Renewable energies in Indonesia Indonesia is a country with an extremely

diverse geography and culture, and the

picture is no diff erent when it comes to re-

newable energies. Geothermal power has

a good chance to surpass cheap coal-fi red

generation in the not too distant future.

A new law on grid inputs and remunera-

tion has opened up a whole new market

for the small-scale hydropower sector.

Economically counter-productive and eco-

logically damaging, however, is the mas-

sive subvention given to biofuels by the

government, and the solar branch is also

lagging far behind its enormous potential.

The year 2007 got off to an appalling start for Indonesia: First landslides and earthquakes, then a series of plane crashes and ferry acci-dents, and finally the flood catastrophe in Ja-karta in February. With so much bad news in such quick succession, even the stoic and cri-sis-proven Indonesians began to lose some

of their in-born optimism. To help restore the shaken spirits of his citizens, president Susilo Bambang Yud-hoyono, a pragmatic politician with a certain techno-cratic touch, resorted to a rather unusual measure at the beginning of March this year. Accompanied by his whole cabinet, he turned up to the Friday prayers in the Istiqlal Mosque in the centre of Jakarta – to pray public-ly (and in a perfect media spotlight) for an end to the series of natural disasters.

We should not expect too much divine assistance from this action, however, as most of the disasters (apart from the earthquakes and tsunami) are in reality attributable to human causes: The ferry accidents and plane crashes are consequences of negligence and mis-management – and Jakarta’s flood disaster was quite obviously a pay-back for years of unrestrained settle-ment and forest clearance in the catchment area of the city’s rivers.

Sadly, it is also very probable that Indonesia will suf-fer further ecological catastrophes in the coming years. The population explosion (the country currently counts 241 million inhabitants, and this number is increasing by a further 3 million every year) is exerting incredible pressure on the region’s natural resources. Exploitation is already today expanding at an alarming rate. Greed for profit and rampant corruption are accelerating the process.

It is unfortunately the tropical rainforest which is suf-fering most. According to the Global Forest Resources Assessment of the UN Food and Agriculture Organisa-tion (FAO), some 4,900 hectares of forest are being lost every day – for the most part through illegal slash-and-burn clearance to expand arable land. It is not the small-scale local farmers who are playing with fire, however, but major corporations looking to make a killing with enormous plantations. Comparisons of satellite photos

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MHPP in Bandung has proved the nucleus for a

small-scale hydropower in-dustry whose know-how is in demand all over the

world.Photo: Entec

Controversial energy source: The massive expansion of oil palm plantations for biodie-sel production is endanger-ing the natural rainforests of Borneo and Sumatra.Photo: BPPT

by environmental organisations have proven that exten-sive monocultures, mostly palm oil plantations, are soon to be seen wherever deliberate fi res destroy vast areas of rainforest.

Sacrifi cing rainforest for biofuels

The oil palm has long since ceased to serve exclusively as a source of edible oils, and is instead processed abo-ve all by the Indonesian biofuels industry – for the pro-duction of biodiesel. This market is set to experience enormous growth. In 2006, president Yudhoyono passed a decree which declared biofuels to be an integral part of the national energy supply strategy. By 2025, they are to cover 5 % of the total primary energy demand in In-donesia. This ambitious target (the biofuel contribution is at present still only marginal) must be placed against the background of the country‘s dwindling oil reserves:

Although, curiously enough, an OPEC member, Indone-sia has for a number of years actually been a net impor-ter of oil products. To reduce the dependence on imports, the government is now pushing the biofuels sector. Re-fi neries are being built and land is being released for cultivation on a large scale. Not only for oil palms, but also for jatropha cultures (see S&WE 1/2007, page 152), another important biodiesel plant, a total of 7.6 million hectares are to be made available up to 2010 alone – an area corresponding to the whole of Ireland, for examp-le. Figures which are quite literally devastating for the rainforest are taken as indicators of progress by Indone-sian scientists. »Big is beautiful« is the motto: »We want to become the biggest producer of crude palm oil (CPO) worldwide,« says Marzan Iskandar, head of the energy department at the Agency for the Assessment and Ap-plication of Technology (BPPT), the national research centre in Jakarta. Malaysia is still the world leader, but


77Sun & Wind Energy 2/2007

On-grid in the future? Most small-scale hydropower in-stallations in Indonesia are off -grid systems supplying remote villages – but new le-gislation now allows electric-ity to be fed into the public grid.Photo: Entec

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Mark Hayton (left), Entec‘s project manager at MHPP in Bandung, a real expert of small hydropower visits an in-stallation in the village Curug Agung near Bandung, Java.Photo: Jörg Boethling

Indonesia boasts proudly that it is ready to overtake. Crude palm oil is already an export product, and also ends up in Germany, where the EEC (European Econo-mic Community) guidelines even subsidise its use in power generation as »climate-friendly«.

An absurd situation, because the climate balance for this Indonesian »green gold« is no less disastrous that the immediate ecological damage. The clearing of the rain-forests for plantations produces enormous quantities of carbon dioxide, and furthermore a terrible »haze« which shrouds vast areas of Borneo and Sumatra and even reaches as far as Singapore. The latter complains regu-larly to the Indonesian government about this heavy smog, but the ensuing fi re-fi ghting measures are rather half-hearted. In fact, it is scarcely possible to bring the fi res under control, as they have long since set the peat beds smouldering in the forest undergrowth. Experts es-timate that the burning of these gigantic peat beds, one of the greatest carbon reserves in the world, releases 6.5 times as much carbon dioxide as the whole of the Indo-nesian economy. On top of all this, the rotting waste af-ter pressing of the oil produces huge amounts of meth-ane – a climate killer 21 times more potent than CO2. »Climate-friendly« is actually one of the last descriptions earned by biodiesel from Indonesia. But despite the scathing criticism of environmental organisations such as Greenpeace and the WWF, the Indonesian government is sticking unerringly with its biofuels programme.

There are already 180 outlets for biodiesel in Jakarta and its surroundings. The fuel sold, which currently con-tains only a 5 % addition of »real« biodiesel, is market-ed by the Indonesian petrochemical corporation PT Per-tamina under the fi ne-sounding label »BioSolar«. Many of Jakarta’s municipal buses are already running on Bio-Solar. Some Indonesian petrol stations are also off ering »bio«-petrol (with bioethanol additives). The raw mate-rials for ethanol production are cassava and molasses from sugar cane. Bioethanol production is at the mo-ment still a minor niche, but here, too, there could well be an explosion soon, with no less questionable ecolog-ical consequences.

Geothermal power: soon competition for coal-fi red generation?

Contrary to the controversial situation with biofuels, the ecological balance for geothermal power is positive. The only real defi cit for the second most important source of renewable energy in Indonesia is the fact that it is not being fully utilised. It is true that Indonesia occupies fourth place behind the USA, the Philippines and Mexi-co in international comparisons of installed geothermal power generation capacity (reference year 2005), but compared to its population fi gures – and the immense potential – there is still not enough happening. Geother-mal electricity currently contributes approx. 6 % to the country‘s total power generation, accounting for approx. 1 % in the primary energy balance. A generation capac-ity of 855 MW is installed at seven diff erent locations around the country. Most of the power stations are to be found on Java, the most densely populated of the Indo-nesian islands, where the electricity demand is highest and the geothermal potential is thankfully very high. The largest geothermal power station is in Gunung Salak, some 70 km south of Jakarta, with a nominal output of 330 MW. It is operated jointly by the US oil giant Chev-ron and the state power generation corporation PT Pe-rusahaan Listrik Negara (PLN). Normally, one of the state energy corporations PLN or Pertamina is always involved where geothermal energy sources are harnessed, even though a special »Geothermal Law« since 2003 has also opened the doors for wholly private power station op-erators. Private investors are in fact bitterly needed, be-cause the state and its energy corporations are not able to fi nance the building of new power stations alone. This became painfully clear during the Asian economic

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Misleading label: The Indone-sian »biodiesel« already used

by many municipal buses in Jakarta contains only 5 % fuel

of vegetable origin.

Vehicles running on bioethanol (here an example from the fl eet of the Ministry of Energy) are still rare on Indonesia‘s roads. Photos (2): Bernhard Brand

Population 241 million

Primary energy supply (2003) 159,500 ktoe

Electricity production* 120.2 TWh

Electrifi cation rate (2006) 56 %

Total electricity generation capacity* 25,218 MW

Geothermal generation capacity 855 MW

Hydroelectric generation capacity* 4,300 MW

Wind power installed** 250 kW

Accumulated PV power installed*** 10 to 20 MW

* 2004 data, source: PLN, IAEA ** experimental plant on Bali *** estimation, exclusively off -grid systems

Factsheet Indonesia

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crisis in the late 1990s, when the expansion of geother-mal power generation came to a complete standstill. Today Indonesia is doing what it can to make up the lost ground. Countless new projects are planned, and gov-ernment targets specify the installation of 9,000 MW by 2025 (geothermal power would then contribute the same 5 % to Indonesia‘s primary energy as biomass). But there is still room for further expansion beyond the envisaged 9,000 MW. The economically viable geothermal poten-tial is quoted at a gigantic 27 GW – one positive aspect of the country’s location around one of the world‘s vol-canic and tectonic hot spots. Geothermal energy is available without complex deep drilling practically eve-rywhere in Indonesia, and that makes for relatively fa-vourable investment and electricity generation costs: The price lies at present between 7 and 8 $Ct/kWh.

That is still too high for the state power company PLN. »We are still too benchmarked to coal generation prices,« explains PLN primary energy management spe-cialist Dasnulmadi. A coal-generated kWh costs only 4.5 $Ct and means that investments in conventional coal-fi red power stations are still more attractive. Over 40 % of Indonesia‘s electricity is generated in coal-fi red pow-er stations. The question as to whether this share can be reduced in favour of geothermal energy in the future will be dependent above all on whether or not the price can one day be brought down below that of cheap coal-generated electricity. The scientists at BPPT are confi -dent. They are currently working on ways to use the re-sidual heat from existing geothermal power stations in a second circuit to generate additional electricity by the so-called Kalina process. In this way, according to Marzan Iskandar from BPPT, the generation costs could be re-

duced to below 5 $Ct/kWh. Therefore it will be the price factor which determines the rate of expansion. The out-come of the race is still open, but geothermal power is not to be written off by any means.

Wind energy: minimal potential With the whole energy branch geared to the cheap coal prices, it is all too understandable that the market op-portunities for other, decentralised power generation options based on renewable energies are limited. The best cards in this respect are still held by wind power, which is a proven producer of electricity at competitive prices. Unfortunately, the outlook for wind farms in In-donesia is rather slack: In the inner tropics, where the Coriolis eff ect is reduced by the proximity to the equa-tor, no major wind systems are able to develop as at medium latitudes. It is at best possible to make use of local sea-breeze eff ects on certain Indonesian islands, which is expressed in a few smaller projects, for exam-ple a 250 kW wind farm on the holiday island Bali.

There is also little legislative tailwind for the eff orts of the »small renewables« to gain a foothold on the Indo-nesian electricity market. It is true that there are two government decrees dating from 2002 and 2006 which defi ne the connection of small and medium-scale pow-er stations to the national grid and even specify remu-neration rates for the power input. But this still falls far short of providing genuine incentives. On the contrary: The remuneration system even places renewable ener-gies at a disadvantage. Both ordinances, the older PSK (»Pembangkit Skala Kecil«) on small-scale generation, for installations up to 1 MW, and the newer PSM (»Pem-

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Indonesian standard: 50 W is the typical size for solar

home systems under the go-vernment programme.

Photo: DGEEU (Directorate General of

Electricity and Energy Utilisation)

81Sun & Wind Energy 2/2007

Indonesian energy policy: presidential decree to map the route

Indonesia’s energy supply stands on shaky foundations. Demand has increased more than tenfold over the past 30 years and the rapidly growing, but sadly equally energy-ineffi cient economy continues to drive massive expansion of the supply capacities. Warnings of bottlenecks have been circulating for some time, but it was only in 2004, when it was realised that the country could no longer satisfy the demand for oil, one of the most important ener-gy sources, from its own resources, that politics fi nally awoke. The gov-ernment hastily in-troduced its fi rst energy-saving measures, for ex-ample the gradual discontinuation of diesel subsidies.

Last year, when Decree 5/2006 was signed by presi-dent Yudhoyono, the country at last received an offi cial framework for its future energy poli-cies. Two main objectives are de-fi ned: improved energy effi ciency and a modifi ed primary energy mix. The target for energy effi ciency is that, from 2025, energy consumption is not to increase faster than national economic growth. The energy mix goals also refer to 2025, and are formulat-ed as percentage shares of primary energy consumption.

Signifi cant changes are planned compared to the present situ-ation (see fi gure). The most important aim: reduction of the dependence on oil to below 20 %. The chosen alternatives are bio-fuels (planned 5 %), as well as fuels obtained through coal lique-faction (2 %). The government has assigned coal an important role in the future energy mix. Its share is to be expanded massive-ly and is to grow to over 30 % of the total energy consumption – a clear confession in favour of a fossil fuel which is still to be found in abundance in Indonesia. Gigantic new power stations are plan-ned near the mining areas on the island of Sumatra – the electric-ity is to be sent via submarine cable to the main island Java and even exported to Malaysia. Nuclear power is also called upon to secure the national electricity supplies. Offi cially, a 4 GW power station is to go into service on the island Muria off central Java in 2015. Observers, however, are sceptical as to whether the govern-ment plans can really be implemented that quickly. It is more like-ly that gas-fi red power stations will be contributing even more signifi cantly to power generation. After all, Indonesia can still draw on seemingly unlimited natural gas reserves: According to the targets, the gas contribution to primary energy consumption is to increase to 30 %. The planned 5 % for geothermal power by 2025 – actually quite an ambitious goal – represents rather a modest share of the Indonesian energy cake along side the slices held by fossil fuels.

Natural gas 21%

Geothermal 1%

Biomass**21%

Hydro-power

3%

Coal 11%

Oil*43%

Primary energy supply in Indonesia in 2003 – by energy sources. * oil, diesel, petrol, kerosene

** mainly domestic fuel for rural households

Source: Ministry of Energy and Mineral Resources (2003),

www.esdm.go.id, fi gure: S&WE

bangkit Skala Menengah«) on medium-scale genera-tion, for installations with a connected capacity of up to 10 MW, off er a grid input remuneration amounting to 80 % of the regional electricity generation price of the state power monopoly PLN. The intention is no doubt to grant access to the grid only to those renewable ener-gies which are able to compete with the pricing of con-ventional power generation. The result is somewhat un-fair, but it is still not an absolutely hopeless situation, as the PLN generation costs are not equally low through-out the whole country. In some areas, especially in sparsely populated regions and on small islands, the elec-tricity grid is fed exclusively from diesel generators. In such cases, the costs are around 24 $Ct/kWh – which ac-cording to the 80 % rule means that PLN must pay an feed-in tariff of over 19 $Ct. That is indeed an opening for renewable energies, and the fi rst IPPs (independent power producers) have already ventured into business on the basis of the PSK and PSM schemes.

Small-scale hydropower: success at a modest level

The pioneers are to be found in the hydropower branch. The fi rst PSK project was connected to the grid in Selo-liman in East Java in 2003. The 25 kW generator, which is driven by a cross-fl ow turbine, is operated by a coo-perative founded by the inhabitants of the local commu-nity. Even though the power, according to the local PSK rates, can only be sold to PLN for a meagre 5$Ct/kWh, the project is considered a milestone in the Indonesian hydropower scene. To date, the small-scale installations (defi ned in Indonesia as anything below an output of 200 kW) had fed exclusively off -grid systems in regions without existing electrifi cation. Now, however, commu-

nities with a grid connection are also able to operate a small-scale hydropower station – at the same time ge-nerating income for the village coff ers from the sale of excess electricity.

The option of feed-in opens up whole new markets. Currently, a mere 20 MW of small-scale hydropower is installed in Indonesia, of a national potential estimated to be over 500 MW. When compared to the major dam power stations with a total 4.3 GW of installed capacity and an estimated potential of 75 GW, the contribution of small-scale hydropower to the country‘s energy sup-plies appears almost negligible – but it does have one important advantage: Nature conservation is on its side. Small-scale hydropower projects, after all, are considered both ecologically and socially sustainable, as they re-quire little intervention in the natural environment and are furthermore operated generally at local level.

The main player in the Indonesian small-scale hydro-power business is MHPP (Mini Hydro Power Project) with offi ces in Bandung, a university city in West Java. Bene-fi ting no doubt from the intellectual environment – Ban-dung is home to the most prestigious engineering col-lege in Indonesia – MHPP was set up here in 1991 by the German Society for Technical Cooperation (GTZ). It sees itself as a long-term project to promote small-scale hydro-power projects in Indonesia and is managed on behalf of GTZ by the Swiss hydropower consultants Entec from Sankt Gallen. Mark Hayton, Entec‘s project manager at MHPP, revealed that another installation is about to be hooked up to the grid under the PSK remuneration scheme. It is to be a relatively large 340 kW installation on the island of Sumatra, with Entec for the fi rst time acting as an IPP and selling electricity to the state mo-nopolist PLN.

The years of commitment to small-scale hydropower seem to be paying off in the meantime. Since its found-ing, MHPP/Entec has established and supported over 200 small-scale projects. Most of these are already stand-ing on their own feet, and a small professional hydro-power industry has developed in Bandung: planning of-fi ces, turbine manufacturers and generator suppliers. Indonesian hydropower systems are also being export-ed – to the other Asian countries, to Africa and even to Europe. Only recently, as Mark Hayton proudly reports, a turbine from one of his partner companies in Band-ung was installed in a small-scale hydropower station in Switzerland, the country from which the know-how was transferred to Indonesia just a few years ago.

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Great potential: The Indonesi-an GSM telecommunication

providers are expanding their infrastructure. In rural areas,

more and more PV or PV-die-sel hybrid systems are in use.

Photo: PT Gerbang Multindo Nusantara

Perfect rural reputation: Small-scale hydropower consumes no natural resources and re-

mains unobtrusive in the envi-ronment.

Photo: Entec

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Solar energy: photovoltaics on a low fl ame

The solar branch, too, is able to point to companies whose products are successful on the world market. In the PV sector, PT Sundaya from Jakarta is known the world over as a supplier of plug-&-play solar home sys-tems. Sundaya‘s simple-to-install SHS solutions are used in rural electrifi cation projects in developing countries, but at the same time also in Europe in the camping and leisure sector. It is only in Indonesia itself that the mar-ket situation is rather dim. The fi gures are languishing at no more than 1 MW installed capacity per year.

Industry observers attribute this above all to the poorly planned government electrifi cation project, which distributes tens of thousands of solar home systems to the rural population free of charge each year. As no main-tenance structures exist, these systems very soon give up the ghost, lie around to rot, or else are simply broken down into their components and sold on by the recipi-ents before they are even used. Over the years, it is esti-mated that around 30,000 of the 50 W solar home sys-tems have shared this fate. The whole photovoltaic branch is suff ering the eff ects of these catastrophic gov-ernment projects. »PV will never prosper if you just give it to the people for free,« is how Lolo Panggabean from the non-government organisation YBUL comments the failed SHS programmes, which already began back in the

1980s under president Suharto. He demands that admin-istration of the government funding be placed in the hands of local NGOs, which can then assume the role of a bank in their dealings with the SHS users. Chayun Bu-diono, managing director of systems supplier PT Gerbang Multindo Nusantara (GMN) in Jakarta, also favours a busi-ness-style approach, with the PV customers paying – at least in part – for the solar systems. GMN seems to steer clear of the thankless business with solar home systems. The company prefers to work in the private sector, for example with the Indonesian mobile telecommunica-tion providers, who are currently expanding their net-works in the rural areas and use solar energy to power their distributed transmission stations. Chayun Budiono also sees opportunities for PV mini-grid systems in the more remote villages, particularly since the increasing fuel prices have been raising the costs of conventional diesel generation.

Remuneration which discriminates against green electricity, and a rural electrifi cation programme which is ruining the reputation of photovoltaics: It almost seems that renewable energies are undesirable in Indonesia. It is the large-scale projects which are courted, among them geothermal power, but above all the highly ques-tionable biofuels. The situation is in some ways reminis-cent of the Suharto era, in which mammoth technology projects, for example the establishing of a national avi-ation industry, were placed on the agenda in total disre-gard for the country‘s true development interests. When it comes to renewable energies, today‘s government similarly seems to have lost all sense of proportion. ✹

Bernhard Brand

Further information:Ministry of Energy and Mineral Resources: www.esdm.go.idBPPT (Ministry of Science research centre): www.bppt.go.idElectricity company PLN: www.pln.co.id

Non-government organisations (with focus on renewable energies):YBUL: www.ybul.or.idPELANGI: www.pelangi.or.idIndonesian Renewable Energy Society METI: www.meti.or.idPT Gerbang Multindo Nusantara: www.gerbangmultindo.co.idPT Sundaya Indonesia: www.sundaya.comMini Hydro Power Project: www.mhpp.org

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Solar water heating is consi-dered a luxury for wealthy

households in Indonesia – as here on Bali.

Photos: Bernhard Brand

Solar thermal installations, mostly thermosiphon sys-tems, are few and far-bet-

ween in Indonesia. The total market for such systems is

estimated to be only around 15,000 systems per year,

due to a high value-added tax of 20 %.

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