MINISTRY OF ENERGY AND MINERAL RESOURCES OF INDONESIA

DIRECTORATE GENERAL OF ELECTRICITY

The International Symposium of Clean Coal Day , Tokyo - Japan 2017

GOVERNMENT POLICY ON CLEAN COAL POWER TECHNOLOGY IN INDONESIA

DITJEN GATRIK

KEMENTERIAN ESDM2

OUTLINE OF THIS PRESENTATION

Context of Indonesia electricity system

Electricity Policy and Business Planning in Indonesia

Regulatory Framework for Electricity Planning

Medium-term Electricity Business Plan (2017 – 2026)

New Electricity Business Regulation for Coal-fired Power

Plants

Electricity Safety and Environmental Standards for Coal-fired

Power Plants

CONTEXT OF INDONESIA ELECTRICITY SYSTEMI

DITJEN GATRIK

KEMENTERIAN ESDM4

THE STRUCTURE OF INDONESIA ELECTRICITY SUPPLIES AND DEMAND

IPP : 13,781 MW

PPU : 4,826 MW

PLN : 41,049 MW

INSTALLED CAPACITY

59,656 MW

Electrification ratio

92,80%

ELECTRICITY PRODUCTION290 TWh

ELECTRICITY CONSUMPTION247 TWh

ELECTRICITY

TRANSMISSION49,799 kilometer circuits

ELECTRICITY DISTRIBUTION946,101 kilometer circuits

ELECTRICITY

CONSUMPTION PER

CAPITA

978.74 kWh/Capita

DITJEN GATRIK

KEMENTERIAN ESDM5

INDONESIA ELECTRIFICATION RATIO (JUNI 2017)

> 70%

50 – 70%

< 50%

Graphic Legend:

ACEH

96.85SUMUT

97.60

RIAU

91.86

JAMBI

91.38

BABEL

100.00

KEPRI

76.97

BENGKULU

93.80

LAMPUNG

89.75

SUMBAR

87.55

SUMSEL

85.93

BANTEN

100.00

JABAR

99.47 DIY

89.63

DKI JAKARTA

97,89JATENG

94,50

BALI

94.42

JATIM

90,65

KALBAR

87.88

NTB

79.93

NTT

59.17

PAPUA

48.74

PABAR

89,84

MALUKU

87.50

MALUT

99.05

SULTRA

76.79

SULSEL

94.77

KALSEL

90.50

KALTENG

75,76

KALTARA

86.23

KALTIM

99.09

SULBAR

83.76

GORONTALO

89.08

SULTENG

83.47

SULUT

92.47

92.80%

67.1572.95 76.56 80.51 84.35 88.3 91.16 92.75 95.15 97.35

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Electrification Ratio at the National Level

Time series electrification ratio (2010 -2019)

DITJEN GATRIK

KEMENTERIAN ESDM6

ELECTRICITY TARIFF AND SUBSIDIES IN INDONESIA

30% 41%

23%

25%

22%

103.33 101.21 99.3

56.55 59.23

44.98

2012 2013 2014 2015 APBN2017

2016(unaudited)

The actual electricity subsidies (Rp. Triliun)

The structure of electricity sales

76%

36%23%

24%

64%77%

2014 2015-2016 2017

kWh Subsidi kWh Non subsidi

Actual oil consumption for electricity (%)

8.28 7.51 7.26 5.47 3.80 2.65

14.97%12.54% 11.81%

8.58%

6.51%

4.66%

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

1

2

3

4

5

6

7

8

9

2012 2013 2014 2015 2016 2017

mill

ion

Kilo

litr

es

Per

cen

Volume %

Strategies to reduce oil consumption for electricity:• The development of large size of coal power PPs,

natural gas PPs, and geothermal PPs in large electric grids to reduce operations of oil-based PPs •Develop Variable RE power plants in smaller grids and

isolated islands

DITJEN GATRIK

KEMENTERIAN ESDM7

Challenges of improving efficiency and reliability of coal-fired power plants

1. Lower thermal efficiency on average against the international benchmark2. Private power producers on average have higher availability3. Low rank coal posses challenges for electric power generation to achieve

higher efficiency while reduce the exposure to operation safety

DITJEN GATRIK

KEMENTERIAN ESDM8

PROJECTION OF GREEN HOUSE GAS EMISSIONS FROM ELECTRICITY GENERATIONS

Notes: 1. Measured in million ton of CO2

2. Source: PT PLN (Persero) RUPTL 2017-2026

1. Substantial increase of CO2 emissions that is projected to come from coal-fired power plants (batubara), constitutes more than 80% of total CO2 emissions in 2026

2. CO2 emissions from natural gas is forecasted to double over the projection period but it will only accounted for 18% of total CO2 in 2026

POLICY ON ELECTRICITY SUPPLIES

REGION-OWN

ENTERPRISE*

*COMMUNITY-BASED ENTITIY**

STATE-OWN

ENTERPISE*

PRIVATE

ENTITIES**COOPERATIVES**

ELECTRICITY BUSINESS

STATE

GOVERNMENT

REGIONAL GOVERNMENT

* : First priority of electricity provision** : integrated electricity business license

• Regulation, policies, and technical standards• Provision of funding for:

― Low income society;― Basic infrastructure in least developed regions;― Electricity development in remote and border areas;― Rural electricity development.

ELECTRICITY BUSINESS LICENCE HOLDERS

REGULATORY FRAMEWORK FOR ELECTRICTY PLANNINGIII

REGULATORY FRAMEWORK FOR ELECTRICITY POLICY IN INDONESIA

Basic Law 1945

Energy Law Number 30 Year 2007

Electricity Law Number 30 Year 2009

Government Regulation Number 14 Year 2012 of Electricity Business

RUEN (GENERAL OF ENERGY), RUKN (GENERAL PLAN OF ELECTRICITY)

CLEAN FOSSIL

FUEL POLICY

RENEWABLE

ENERGY

DEVELOPMENT

POLICY

ENERGY MIXPP 79/2014 (KEN)

SUSTAINABLE ECONOMIC GROWTH,

(ENERGY SECURITY, PRICE AFFORDABILITY,

ENVIRONMENT SUSTAINABILITY)

DITJEN GATRIK

KEMENTERIAN ESDM12

BASIC LAW AND ELECTRICITY PLANNING PROCESS IN INDONESIA

Law 30/2007

(ENERGY)LAW 30/2009

(ELECTRICITY)

GOVERNMENT REGULATION 79/2014

(NATIONAL ENERGY POLICY)• National energy policies based on the principles of inclusive energy access,

sustainable and environmentally acceptable to achieve self reliance onenergy and enhanced energy security,

• Prepared by the National Energy Council• Published by the Government after gaining approval from the Parliament

Presidential Regulation 22/2017

(General Plan of National Energy - RUEN)• Energy policy at the national level that

outlines overall energy plan at thenational level

• Prepared by the Government andpublished by the National Energy Council

General Plan of Electricity (RUKN)• General Plan of Electricity prepared by the

Central Government that containsdevelopment plan for electricity generation,transmission, and distribution.

• Prepared by the National Government andneeds to be approved by the Parliament. Business Plan for Electricity Supplies (RUPTL)

• Key reference document for electricitybusiness

• Prepared by state owned enterprise/privateutility companies

• Approved by the respective minister/Governorin accordance with their authority

Government Regulation 14/2012

jo PP 23/2014(Electricity Supply Businesses)

*) RUK: RUKN dan RUKD

Regional Plan of General Electricity

(RUKD)Prepared by the respective local governmentin accordance with the RUKN and consultationwith the local parliament

Regional Plan of General Energy

(RUED)Prepared by the respective localgovernment that is in accordance with theRUEN

DITJEN GATRIK

KEMENTERIAN ESDM13

50.44%

0.39%

26.72%

22.45%

THE STRUCTURE OF ENERGY MIX – CURRENT AND THE MEDIUM TERM OUTLOOK

ENERGY MIX FOR ALL SECTORS(The National Energy Plan, PP No.79/2014)

ENERGY MIX FOR

POWER GENERATIONS (GENERAL PLAN OF NATIONAL ELECTRICITY 2015-2034)

30% 41%

RENEWABLE

OIL

NATURAL GAS

COAL

23%

30%25%

22%

53%

11%

24% 50%24%

25%

6% 23%

12%

1%

ACTUAL ENERGY MIX

(2013)NATIONAL TARGET

(2025)

NATIONAL TARGET 2025ACTUAL FUEL MIX (2014)

56,06%

10,47%

24,89%

8,58%

200 TWh

562 TWh

ACTUAL FUEL MIX (2015) NATIONAL TARGET 2026

ENERGY MIX FOR

POWER GENERATIONS (RUPTL PT PLN (PERSERO) 2017-2026)

DITJEN GATRIK

KEMENTERIAN ESDM14

GOVERNMENT POLICY ON THE SELECTION OF ELECTRICITY FUEL TYPE AND TECHNOLOGY(Source : Draft RUKN 2015-2034)

The policy objective is to meet the electricity demand and improve security of electricity

supplies through adequate installed capacity for reserve margin

• CFPP : Indonesia will continue to develop coal fired power plants to

serve the baseload electricity demand. It will mainly focus on the

utilization of clean coal technology for new power plants in the Java-Bali

and Sumatera power grids.

• GAS-TURBINE PPs and Pump Storage of Hydro PPs are developed to

fulfil the electricity peak demand and reduce the oil-based power plants

operating at the peak loads.

• New Energy Sources and Renewable Power Generations are being

developed to supply electricity and meet the national targets on CO2emission reductions.

• Nuclear Power Plants are to be considered as the last option for

electricity supplies when other fuel and power plant technologies could

not meet the substantial increase of electricity demand more

economically and environmentally sustainable. Stringent electricity

safety regulations will be applied if Nuclear PPs will be developed in the

future.

Coal-fired PP

Gas-fired PP

Nuclear PP

NRE PP

MEDIUM TERM ELECTRICITY BUSINESS PLAN (2017 – 2026)IV

Electricity Energy Mix (2017-2026)

2017

2026

(SOURCE: PT PLN BUSINESS PLAN (RUPTL) 2017 – 2026)

Outlook of Electricity Fuel Consumptions (2017 – 2026)

Oil (kilo litres) Coal (million tons) Natural Gas (TBTU)

(SOURCE: PT PLN BUSINESS PLAN (RUPTL) 2017 – 2026)

DITJEN GATRIK

KEMENTERIAN ESDM18

POWER PLANT BUSINESS DEVELOPMENT PLAN (2017 – 2026)

MW

Source: PT PLN (Persero) Electricity Business Development Plan (2017 – 2026)

DITJEN GATRIK

KEMENTERIAN ESDM19

EFFICIENCY IMPROVEMENT STRATEGIES OF COAL POWER PLANTS IN THE RUPTL 2017 - 2026

Source: PT PLN (Persero) Electricity Business Development Plan (2017 – 2026)

Existing coal-fired power plants• Periodic refurbishment of main power plant equipment to improve power plant operation

reliability and thermal efficiency;

• Long term retirement plan of coal-fired power plants that utilize subcritical pulverizedtechnologies and substitution with more efficient technology, once they have reached theeconomic life time.

Medium term plan for new coal-fired power plants (RUPTL 2017-2026)

• The adoption of supercritical and ultra-supercritical coal power technology for large scalepower plants in the Java-Bali electric grid.

• The adoption of supercritical for coal power plants with installed capacity of 600 MW in theSumatera electric grid.

NEW ELECTRICITY BUSINESS REGULATION FOR COAL-

FIRED POWER PLANTSV

DITJEN GATRIK

KEMENTERIAN ESDM21

BUSINESS INCENTIVE FOR COAL-FIRED POWER PLANTS (ACCORDING TO THE MINISTRY OF ENERGY AND MINERAL RESOURCES NUMBER 19/2017)

Direct appointment of new power purchase agreement can beapplied to :

Mine-mouth power plants

Power plant capacity expansion in the same location of theexisting plants

The concession period for electricity purchase is calculated fromthe plant commercial operation date up to the 30 years withcapacity factor of 80% and scheme of Build, Own, Operate andTransfer (BOOT)

The commercial arrangement for transmission lines between themine-mouth power plants and the grid interconnection substationis conducted as business to business between Independent Powerproducers (IPPs) and state utility offtaker

The price of electricity purchased from the IPPs is establishedbased on the referenced costs of electricity production at thenational or regional level.

DITJEN GATRIK

KEMENTERIAN ESDM22

REFERENCE COSTS OF ELECTRICITY PRODUCTIONS(ACCORDING TO THE MINISTRY OF ENERGY AND MINERAL RESOURCES NUMBER 19/2017)

Mine-mouth PPs Regular CFPPs

Power Plant capacity All capacity >100 MW ≤100 MW

Ceiling price (BPPS ≤ BPPN)

75% BPPS BPPS BPPS

Ceiling price (BPPS > BPPN) 75% BPPN BPPN Tender or B to B

Notes: 1. BPPS is the electricity production cost at the respective regional level (Biaya Pokok Produksi

setempat)2. BPPN is the electricity production cost at the national level (Biaya Pokok Produksi nasional)

Mine-mouth coal-fired power plants according to RUPTL 2017-2026 (Total: 5,490 MW)

THE 2017 CEILING PRICE OF MINE-MOUTH COAL-FIRED POWER PLANTS

Ceiling Price| cent/kWh

BPP (National): 7.39 cent/kWh

Electricity price

75% BPP*

BPP (regional)

Mine-mouth PPs 3290 600 600 1000

6.5

1

6.5

1

6.5

1

6.5

2

6.5

4

6.6

2

7.7

7

7.8

6

8.0

7

8.1

0

9.0

4

9.2

8

10

.14

10

.20

10

.39

12

.17

12

.43

12

.75

13

.54

13

.65

13

.68

17

.32

17

.52

4.88 4.88 4.89 4.91 4.975.54 5.54 5.54 5.54 5.54 5.54 5.54 5.54 5.54 5.54 5.54 5.54 5.54 5.54 5.54 5.54 5.54 5.54

BPP Nasional: 7.39 cent/kWh

Electricity price

100% BPP*

BPP setempat

Ceiling Price| cent/kWh

6.5

1

6.5

1

6.5

1

6.5

2

6.5

4

6.6

2

7.7

7

7.8

6

8.0

7

8.1

0

9.0

4

9.2

8

10

.14

10

.20

10

.39

12

.17

12

.43

12

.75

13

.54

13

.65

13

.68

17

.32

17

.52

6.51 6.51 6.51 6.52 6.54 6.62

7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39

Non Mine Mouth 2,400 200 600 400 600 100 200

THE 2017 CEILING PRICE OF NON-MINE-MOUTH COAL-FIRED POWER PLANTS

Non-Mine-mouth coal-fired power plants according to RUPTL 2017-2026 (Total: 4,500 MW)

REGULATIONS ON ELECTRICITY SAFETY AND

ENVIRONMENT COMPLIANCE FOR CFPPs VI

FRAMEWORK OF ELECTRICITY SAFETY REGULATIONS

Every electrical installations

must obtain the electrical

installation-worthy certificates

Every service providers in

electricity business must

obtain relevant certificates

for electricity service

providers

Every people working in

electrical industry must

hold relevant certificate of

personal competencies

Every electrical equipment

and appliances must meet

mandatory of the National

Standard of Indonesia

All electricity business shallcomply with electricity safetyregulations

All electricity business must meet the mandatory requirements concerning environmental sustainability

MINISTRY REGULATION FOR THERMAL POWER EFFICIENCY TEST

Fuel consumption test that is measured in the Nett Plant Heat Rate (NPHR) is conducted

as a pre-requisite before a coal-fired power plants can commence commercial

operation

(ACCORDING TO THE MINISTRY OF ENERGY AND MINERAL RESOURCES NUMBER 10/2016)

EMISSION REGULATION - CFPP (National and Local Level)

Ministry of Environment and Forestry

(MEF)

• Law No. 32 Year 2009 Regarding The Protectionand Management of Environment

• Government Regulation No. 27 Year 2012 Regarding Environmental license

• Government Regulation No. 41 Year 1999 Regarding Air Emission Control

• Ministry of Environment Decree No. 21 Year 2008 Regarding Static Emission Sources Quality Standard for business and/or activities of a Thermal Power Plant

Ministry Of Energy And Mineral Resources

(MEMR)

• Law No. 30 Year 2009 Regarding Electricity

• Government Regulation No. 14 Year 2012 Regarding Business Of Electricity Supply

• Ministry of Energy and Mineral Resources Decree No. 10 Year 2016 Regarding Procedures for Accreditation and Certification of Electricity

Local goverment level:• May set emission quality standards with the provisions of the same or more stringent than the

standard that has been set nationally;• May set additional emission parameters after the approval of the Minister in the environmental field.

Environmental Licence

Administrative

Technical

Environmental

Law 32 Year 2009

Environmental Licenses

Law 30 Year 2009

Business Licence for Electricity or Operation Licence for Electricity

Environmental Licenses

Preparing the Environmental Impact Analysis (EIA) or

Environmental Management and Monitoring Scheme -

EMMS

Assessment

Application andissuance of

Environmental licenses (based on

EIA or EMMSapproval)

Environmental licence issued by :• Regent/Mayor

• The Installation is located in the regent/city ;• Governor

• The installation is located in the province, where the regent/city is not able to conduct environmental licensing.

• Minister• The instalastion is located in protected area

(ex. : protected forest)

REGULATED POLLUTANTS – AIR EMISSION FROM CFPP

7

No. Parameter

Maximum level (mg/Nm3)

A B

1. Sulfur Dioxide (SO2) 750 750

2. Nitrogen Oxide (NOx) stated as NO2 850 750

3. Total Particulate 150 100

4. Opacity 20% 20%

A. For CFPPs that commenced operation before 1 December 2008;B. For CFPPs that commenced operation after 1 December 2008.

Notes:o Gas volume is measured under standard condition (25o C and 1 atm).o Opacity is used as a practical indicator for monitoring.o All parameters corrected by O2 : 7 %o For CFPP with CEMS installed, the imposition of emission quality standard is

for 95 % of normal operation time for 3 months.

DITJEN GATRIK

KEMENTERIAN ESDM31

CONCLUSSION OF THIS PRESENTATION

Coal will continue to be utilized for generating electricity over

the medium term period although its share to the total energy

mix will be reduced

The Government of Indonesia adopts clean coal power

technology to reduce carbon emissions from electricity

generations while it improves thermal efficiency of the power

plants

The Government of Indonesia introduces ministry regulations

to improve business process of coal power development for

mine-mouth and regular coal-fired power plants

All coal power plants must comply with electricity safety

regulations and environmental standards

THANK YOU