Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

Presented at

RENEWABLE ENERGY CONFERENCE: GREEN SUPPLY FOR GROWING DEMAND

by :

Director General Of New and Renewable Energy and Energy Conservation

Jakarta, 24th October 2011

TOWARDS SUSTAINABLE ENERGY SUPPLY:

INDONESIA’S ENERGY VISION 25/25

DIRECTORATE GENERAL OF NEW RENEWABLE ENERGY AND ENERGY CONSERVATION

MINISTRY OF ENERGY AND MINERAL RESOURCES

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

OUTLINE

I. Current Energy Condition

II. Shifting Paradigm

III. Renewable Energy Policy

• Policy and Strategy

• Policy Instrument

• Regulatory Framework

IV. Clean Energy Initiative

2

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

2.1 People access to energy is still limited :

a. Electrification ratio in 2010 is 67,2% (32,8% of

household is not yet have access to electricity);

b. Development of the infrastructure (rural area and

outer island commonly is not yet have access to

energy);

2.2 Energy consumption growth is 7% per year, not yet

balance with the energy suppy;

2.3 The depence to fossil energy is high, besides the

energy reserve is limited;

2.4 Fossil subsidy is increasing;

2.5 Renewable energy utilization and energy conservation

implementation is not yet optimized;

2.6 Link with environmental issue:

a. Climate change mitigation;

b. Clean energy initiative: national commitment to

reduce emission by 26% in 2020;

2.7 Funding for energy development is limited

I. CURRENT ENERGY CONDITION

National Energy Mix 2010

1.066 millon BOE

Energy Elasticity = 1,60

Non Fossil Energy Share < 5%

Oil46.93%

Gas21.9%

Coal26.38%

Geothermal1.5%

Hydro3.29%

4

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

NO NON FOSSIL ENERGYRESOURCES

(SD)

INSTALLED

CAPACITY (KT)

RATIO KT/SD(%)

1 2 3 4 5 = 4/3

1 Hydro 75,670 MW 5,705.29 MW 7.54

2 Geothermal 29,038 MW 1,189 MW 4.10

3 Mini/Micro Hydro 1,013.5 MW 462.0 MW 46.0

4 Biomass 49,810 MW 1,618.40 MW 3.25

5 Solar Energy 4.80 kWh/m2/day 13.5 MW -

6 Wind Energy 3 – 6 m/s 1.87 MW -

7 Uranium3.000 MW

(e.q. 24,112 ton) for 11 years*)

30 MW

(Thermal)1.00

*) only in Kalan – West Kalimantan

ENERGY RESERVES AND PRODUCTION

NO FOSSIL ENERGYRESOURCES

(SD)

RESERVES

(CAD)

RATIO SD/CAD

(%)

PRODUCTION

(PROD)

RASIO CAD/PROD(YEAR)*)

1 2 3 4 5 = 4/3 6 7 = 4/6

1 Oil (billion barrel) 56.6 7.99 **) 14 0.346 23

2 Gas (TSCF) 334.5 159.64 51 2.9 55

3 Coal (billion ton) 104.8 20.98 18 0.254 83

4 Coal Bed Methane/CBM (TSCF) 453 - - - -

*) with assumption there is no new found

**) Cepu Block is included

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

GROWTH OF SHARE AND FOSSIL SUBSIDY 2000 – 2009

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

1. Electricity Subsidy 3,93 4,30 4,10 3,36 3,31 10,65 33,90 37,48 78,58 53,72

2. Fossil Electricity

Subsidy *)3.30 3.55 3.49 2.92 2.86 9.20 29.75 32.63 68.16 46.14

3. Fuel Subsidy 55.64 63.26 31.75 30.04 59.18 103.35 64.21 83.79 139.03 45.04

4. LPG Subsidy 0 0 0 0 0 0 0 0.15 3.84 7.78

Total Fossil Subsidy58.94 66.81 35.24 32.96 62.04 112.55 93.96 116.57 211.03 98.96

42,99 %

34,47 %

18,48 %

4,07%

*) Proportionate to the role of fossils in the composition of primary energy for electricity supply

The last 10 years average growth:

1. Oil : 0,52 %/year

2. Coal : 13,70 %/year

3. Natural Gas : 1,81 %/year

4. Total : 4,33 %/year

A. Growth of Total Share (inmillion BOE)

B. Growth of Fossil Subsidy (in trillion Rupiah)

727772

800859 873 896 897

956

1065 NRE

Coal

Natural Gas

Oil

1014

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

ENERGY SUPPLY SIDE MANAGEMENT ENERGY DEMAND SIDE MANAGEMENT

TRANSFORMATION PARADIGM OF NATIONAL ENERGY MANAGEMENT

SUPPLY SUPPLYDEMAND DEMAND

Current condition: Future Condition:

1. Energy needs has not been efficient

2. Energy needs are met with fossil energy at a cost of

whatever and even subsidized

3. Renewable energy as an alternative only

4. Renewable energy sources that are not utilized is

wasted God's gift

1. Minimize the energy requirements

2. Maximize the provision and utilization of renewable

energy, at least with the price of fossil energy

avoided cost, if necessary, subsidized

3. Fossil energy is used as a counterweight

4. Fossil energy sources are not utilized as a legacy for

their children and grandchildren / exported

Supplied by Fossil Energy, at any cost

(Subsidize)

Renewable Energy as an alternative

Inefficient Sectoral Energy Demand:

HouseholdTransportIndustry

Commercial

Maximize the supply and utilization of New

Renewable Energy, with Avoided Fossil Energy

Costs

Fossil Energy as balancing factor

Efficient Sectoral Energy Demand:

HouseholdTransportIndustry

Commercial

(CONSERVATION)

(DISVERSIFICATION

8

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

Oil30%

Coal22%

Gas23%

NRE25%

Oil42%

Coal34%

Gas21%

NRE3%

POLICY DIRECTION

NRE

Gas

Coal

Oil

21 %

30,7 %

43,9%

4,4 %

NRE

Gas

Coal

Oil

2010* 2015 2020

2025

ENERGY

CONSERVATION

(33,85%)

EN

ER

GY

DIV

ER

SIF

ICA

TIO

N

BAU**

Souce: *Estimation 2010, DEN 2010-2025, **BAU EBTKE

PERPRES 5/2006

25 %

22 %

30 %

23 %

41.7%

20,6%

34.6%

3,1%

4300

Million BOE

2852

Million BOE

1066

MillionBOE

Oil20%

Coal33%

Gas30%

NRE17%

3200

Million BOE

20%

30%

33%

17%

Coal; 30,7%

Gas;

21,0%

Oil;

43,9%

NRE; 4,4%

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

MAIN POLICIES

1. Energy Conservation to improve efficiency in energy utilization

from up-stream up to down-stream (Demand Side) i.e industrial,

transportation, household and commercial sector

2. Energy Diversification to increase new renewable energy share

in national energy mix (Supply Side). i.e

New Energy

a. Liquefied Coal,

b. Coal Bed Methane,

c. Gasified Coal,

d. Nuclear,

e. Hydrogen,

f. Other Methane.

Renewable Energy

a. Geothermal,

b. Bioenergy,

c. Hydro,

d. Solar,

e. Wind,

f. Ocean.

8

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

NRE-EC DEVELOPMENT STRATEGY

STRATEGY IN THE ENERGY (SUPPLY SIDE) :

• Applying the mandatory provision of NRE.

• Increasing the use of NRE.

• Use of cleaner fuels (fuel switching) in providing energy.

STRATEGY IN THE SIDE OF ENERGY UTILIZATION (DEMAND SIDE) :

• Applying the energy utilization efficiency commitment.

• Use of cleaner fuels (fuel switching) in energy utilization.

• Applying the principles of energy saving.

• Use of clean and efficient energy technologies.

• Develop the attitude of life-saving energy.

9

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

POLICY INSTRUMENTS

Fiscal• Fiscal incentive for NRE development (Article 20 paragraph 5 Law No. 30/2007)

• Pricing for new renewable energy (Feed-in Tariff/FIT)• Renewable Portfolio Standard (RPS)

Institutional• National Energy Council

• Ministry of Energy and Mineral Resources (National Level)

• Governor, District Mayors (Local Level)

Funds

• National budget (APBN, APBD, Private Budget) and International budget from partners

• Clean Development Mechanism (CDM)

10

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

POLICY AND REGULATION RELATED TO

RENEWABLE ENERGY

10

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

BIOFUEL MANDATORY PROGRAM

(based on Ministerial Decree No. 32/2008)

BIOETHANOL (Minimum)

Sector 2010 2015 2020 2025

Transportation,

PSO

3% 5% 10% 15%

Transportation,

Non PSO

7% 10% 12% 15%

Industry 7% 10% 12% 15%

BIODIESEL (Minimum)

Sector 2010 2015 2020 2025

Transportation,

PSO

2.5% 5% 10% 20%

Transportation,

Non PSO

3% 7% 10% 20%

Industry 5% 10% 15% 20%

Electricity 1% 10% 15% 20%

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

Article 1 paragraph (1)

PT PLN (Persero) shall be obliged to purchase electricity from small and middle scale renewable power plant up to 10 MW or theexcess electricity from State Electricity Enterprises, Regional Electricity Enterprises, private enterprises, cooperatives and non-

governmental organization in order to enhance local electricity supply systems.

Article 2 paragraph(1)

The price of electricity purchase as referred in paragraph (1) is stipulated :

a. IDR 656/kWh x F, if interconnected to Medium Voltage ;

b. IDR 1,004/kWh x F, if interconnected to Low Voltage .

Article 2 paragraph (2)

F is an incentive factor which based on the location of the

electricity purchase by PT PLN, as referred in article 2 which values at:

• Java and Bali region : F = 1

• Sumatera and Sulawesi region : F = 1,2

• Kalimantan, NTB dan NTT region : F = 1,3

• Maluku dan Papua region : F = 1,5

Article 3 paragraph (2)

The electricity purchasing price as referred in Article 2 is used in the power purchase agreement from excess electricity without any

negotiation and without approval from the Minister of Energy and Mineral Resources, or Governor’s or Major’s/Regent’s, based on their authorization.

Article 4 paragraph (2)

The electricity purchase as referred in paragraph (1) is based on PT PLN (Persero)’s Self Estimated Price and shall be obligated to receive the Minister of Energy and Mineral Resources’ approval

MEMR REGULATION NUMBER 31 YEAR 2009

Price at MV Price at LV

(IDR/kWh) (IDR/kWh)

Java and Bali 656 1,004

Sumatera, Sulawesi 787 1,205

Kalimantan, NTB, NTT 853 1,305

Maluku, Papua 984 1,506

REGION

Regulation of electricity price from renewable energy resources and incentive factor

based on plant’s location

13

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

No. FEEDSTOCK CAPACITY TARIFF NOTE

1. Biomassa s.d 10 MW Rp. 975,- / kWh X F

2. Biogas s.d 10 MW Rp. 975,- / kWh X F Non MSW

3. Municipal City Waste s.d 10 MW Rp. 1050,- / kWh Zero waste *)

4. Municipal City Waste s.d 10 MW Rp. 850,- / kWh Landfill *)

Note : *)

1. Act no. 18 Tahun 2008 on waste management to prioritize Zero Waste Technology.

2. For MSW, minimum Tipping Fee of Rp. 100.000,- / ton

A NEW BIOMASSA BASED FEED IN TARIFF

F factor as an incentive for specific areas:

Region Jawa, Bali, Sumatera : F = 1

Region Kalimantan, Sulawesi , NTB dan NTT : F = 1,2

Region Maluku dan Papua : F = 1,3

Feed in Tariff will be formalised by Ministerial Decree

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

PT PLN (Persero) shall be obliged to purchase electricity from geothermal

energy;

The ceiling price for electricity produced from geothermal energy is

determined at 9.70 cents/kWh;

If the electricity price from auction exceeds 9.70 cent/kWh, there must be

a renegotiation process based on PT PLN’s Self Estimated Price and

the result must be approved by Ministry of Energy and Mineral Resources

for Power Purchase Agreement

MEMR REGULATION NUMBER 02 YEAR 2011

Regulation of electricity price from geothermal and the benchmark price

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

8,7

JAMALI GridUS$ MALUT

5.9

26.9 26.9

NTT Grid

20.9

SUMBAGUT

TT

TM

9.5

6.9

SUMBAGSEL-BARAT-RIAU

25.7

BPP (production cost) per kWh Local PLN Grid System

Geothermal (PLTP) Price Tender Resultper kWh

Tan

gkuban

Per

ahu (

12

0 M

W)

19.1

6.6

7.0

8.09

Jailolo

(10 M

W)

Tam

pom

as

(45

MW

)

Cis

olo

k C

isukar

ame

(40

MW

)

Ungar

an

(110 M

W)

Ata

dei

(10 M

W)

9.5

8.1

Sori

k M

erap

i

(240

MW

)

8,7 8,7

8,7

Sokori

a

(30 M

W)

13.8

23.9

PL

TP

Jab

oi

(10 M

W)

18.9

6.3

9.4

6.3 6.3

Muar

alab

oh

(220 M

W)

Raj

abas

a

(220 M

W)

Suoh S

ekin

cau

(110 M

W)

5,9

SUBSIDY SAVING ON ELECTRICITY

FROM GEOTHERMAL POWER GENERATION

6.9

Ceiling Price 9.7

Current average TDL

Sub

sidy

Currnet average of PLN’s BPP

Avoided Electricity Subsidy

12.9

21

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

MINISTRY OF FINANCE REGULATION NUMBER 21/PMK.011/2010Regulation of tax and customs facility for renewable energy resources utilization activities

Income Tax

FINANCIAL INSTRUMENTS

SUPPORT

Value Added

Tax

• Reduced net income for

30% of total investment• accelerated depreciation• Imposition

of Income Tax on dividend paid

to Foreign Taxable at 10%• compensation for losses in

certain circumstances

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 DutyTax Borne by

Government

Exemptions for Import Duty

of Goods and Machinery

for development and

capital investment Capital Goods Imports

for construction and development of electricity industry

17

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

CLEAN ENERGY INITIATIVE:

Reducing Emissions from Fossil Fuel Burning (REFF-Burn)

A. Pre-Fossil Combustion to avoid using more fossil energy :

1. Efficient Energy Technologies (High Efficiency Light, Efficient Appliances, etc)

2. Renewable Energy Technologies (Geothermal, Hydro, Solar, Wind, etc)

3. Fossil Pre-Treatment (Coal Upgrading)

B. During Fossil Combustion to reduce greenhouse gases emitted from fossil fuel burning:

1. Efficient Technologies (Co-generation)

2. Low Carbon Electricity Generation (High Efficiency Low Emission, IGCC, etc)

3. Clean Fuel Technology (Fuel Switching)

C. Post Fossil Combustion to capture and store the greenhouse gases from fossil fuel burning :

1. Carbon Capture and Storage Technologies (CCS & Algae)

2. Utilization of CO2

7

Directorate General of New Renewable Energy and Energy ConservationMinistry of Energy and Mineral Resources

Go Green Indonesia !Green energy, Future energy

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