Page 1

Government policy to accelerate renewable

energy development in Indonesia
Paul Butarbutar
Regional Director SEA South Pole Group
Head of Policy, Regulation & Advocacy IRES
 Page 2

Overview

Current energy condition

National energy policy

Renewable energy potentials

RE policy and regulation

South Pole Carbon 30. J uni 2016 Page 3

Current energy condition

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Current energy condition Indonesia

1. Economic growth about 5 6% per year; population

growth 1.2% per year need to grow energy supply by
7 8% / year
2. Energy mix is still dominated by fossil-based energy
3. 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%;
 Page 5

Supply of primary energy Indonesia (without biomass)

Supply, of,primary,energy Supply. of.primary.energy.2014

120 0.46
2.62 1.11
100
80 Oil.
60 18.62 Coal.
40 43.03 Gas.
20 Hydropower.
0
Geothermal.
34.16
Biofuel.

Oil, Coal, Gas, Hydropower, Geothermal, Biofuel,

Note:
Oil Including Crude Oil, Petroleum Product and LPG Coal Including Coal and Briquette.
Gas Including Natural Gas and LNG
Biomass Including Firewood and Charcoal
Biofuel Shows Pure Bio Energy (not Blending Product)

Source: 2015 Handbook of Energy & Economic Statistics of Indonesia, Ministry of Energy and Mineral Resources
Electrification ratio
RASIO ELEKTRIFIKASI 2014
Aceh KATEGORI
92,31%
Sumut Kaltara > 70 %
91,03% 69,64% Kaltim
50 - 70 %
91,71%
Riau < 50 %
Kalbar Sulut
84,54%
Kepri 79,77% Gorontalo 85,53%
Malut
74,06% 74,65%
90,52% Papua Barat
77,81%
Sumbar Sumsel
Kalteng
80,14% 76,38%
67,23% Sulteng
75,58%
Babel Sulbar
Jambi Papua
95,53% 74,11%
80,70% 43,46%
Sultra

Bengkulu
Jakarta Jateng 66,78% Maluku
Kalsel
99,61% 88,04%
83,47% 83,75% 82,22%
Bali Sulsel
Lampung 85,17% 85,05%
81,27% Banten
92,93%
Jabar
86,04% DIY Jatim NTB NTT
82,26% 83,55% 68,05% 58,91%

REALISASI TARGET BERDASARKAN DRAFT RUKN

3
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%
3
GHG emission and energy security, main drivers for
the development of RE & EE in Indonesia
Updated baseline emission Indonesia

Source: Bappenas 2015

Hasil simulasi jangka panjang menunjukkan trend emisi GRK meningkat cukup signifikan
Emission from the energy sector will increase significantly after 2020
terutama
Simulationberasal dari sektor
of Indonesian energi
baseline hingga2010
emission tahun 2015-2030.
2045 PascatCO2e)
(in thousand 2030, emisi diperkirakan
South Pole Carbon 30. J uni 2016 Page 8

National energy policy

 National Energy Policy (Gov Regulation No. 79/2014)
Bussiness
As Usual
Under the National Energy Policy, 450
MTOE TARGET 2025
government combines RE + EC PRIMARY ENERGY
400 CONSERVATION 11%
Juta TOE
290 NRE
MTOE
TODAY EBT
23%
215
17%
MTOE
NRE Coal
6%
Coal 30%
29%
Coal
29%
TOTAL NATIONAL PRIMARY
ENERGY 215 MTOE Gas Gas
Gas 22% 22%
PRIMAY ENERGY FRO M RE:
24%
13 MTOE
GEOTHERMAL: 6 MTOE
BIOFUEL : 4 MTOE Oil Oil Oil
BIOMASS : 2 MTOE
HYDRO : 1 MTOE
41% 32% 25%

2014 2020
2025
Current 2025
Power generation 51 GW 115 GW
Energy consumption 0,8 TOE/capita 1,4 TOE/capita
Electricity consumption 776 KWh/capita 2.500 KWh/capita
 Mandatory Primary Energi Mix
Power generation (National Energy Policy)

Oil 2025: 115 GW

Primary Energi Mix (PP 79/2014)

25% ~ 96 MTOE

Power generation
composition
Natural Gas 22% ~
76,75 MTOE
60% Fosil 40% RE

Coal
22% ~ 113,45 MTOE

RE 68,2 GW 46,8 GW
23% ~ 84,15 MTOE
 Optimazing RE power generation
46,75

Capacity gap 5GW, still in series of

discussion on how to fill in this gap

41,89
GW

20,74 GW
 Page 12

RE development plan based on National

Electricity Development Plan

Power&plant Capacity 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total
Geothermal 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
South Pole Carbon 30. J uni 2016 Page 13

Renewable energy potentials

RE resources

Indonesia blessed with huge RE potentials that can be utilized to meet

government target

RATIO OF
NO NEW RENEWABLE ENERGY RESOURCES INSTALLED CAPACITY (IC) IC/RESOURCES (%)
1 2 3 4 5 = 4/3
1 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 ***) Source: National Energy Council
**) As a center of research, non-energy ****) BPPTs Prototype
."3+$'&%%'()"-%.%(/%0$&(1,'$%(1$1*+$'%/$(*-"8(.3*1,)/$(6'1*'"/$%7(6'1*'"/$%(+"+.3*1,)/$(/")$&%3(CD(."3/"'(
1%3$(&*&%-(.3*1,)/$(+$'9%)(+"'&%8(/%0$&(EB%/.7&,"8#&C28DB,CF(1$(1,'$%7(B"3&,+5,8%'(.3*1,)/$()"-%.%(/%0$&(1$(
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Biomass/biogas potentials: oil palm and utilization of
."3/"'(-%8%'(."'#8%/$-()"-%.%(/%0$&(1$(6'1*'"/$%(5"3%1%(1$(2,+%&"3%(1%'(+"+5,)%(-%.%'#%'(.")"3:%%'(9%'#(
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Oil palm sector has huge potentials that has not been well utilized so far
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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
*Processing*capacity
No Province No*of*POM
tons*of*FFB/h*
1 Aceh 25 *******************************980
2 North*Sumatra 92 ***************************3,815
Around 10% - 20% of the palm oil
3 West*Sumatra 26 ***************************1,645 mills are located up to 5 km to the
4 Riau 140 ***************************6,660
5 Riau*Island 1 *********************************40
grid;
6 Jambi 42 ***************************2,245
7 South*Sumatra 58 ***************************3,555
8 Bangka*Belitung 16 ***************************1,235
Each ton of FFB processed
9 Bengkulu 19 *******************************990 produces:
10 Lampung 10 *******************************375
11 West*Java 1 *********************************30
- Around 22% of EFB
12 Banten 1 *********************************60 - Around 19% of palm kernel shell
13 West*Kalimantan 65 ***************************5,475
14 Central*Kalimantan 43 ***************************3,100
and fiber
15 South*Kalimantan 15 *******************************770 - Around 60 70% of POME
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 3
22 West*Papua 4 *******************************360
Total 608 *************************34,140
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
600 700 kg POME

190 kg fiber and palm kernel shell

230 kg EFB
South Pole Carbon 30. J uni 2016 Page 18

Renewable energy policy and regulation

Gov. policies in the renewable energy development
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 with

microhydro, solar PV, biomass/biogas

5. Reduce GHG emission by using more renewable energy

6. Implement energy conservation program

Private sector involvement for policy implementation
1. Government has limited budget to meet the RE target
according to NEP and GHG emission reduction target

2. Government needs support from the private sector to

develop RE projects as part of the implementation of the
policy

3. To encourage private sector involvement, Government

provide some incentives for the development of RE
projects, in form of FiT for projects < 10 MW and fiscal
incentives

4. For project with installed capacity > 10 MW, some has

already ceiling tariff (geothermal and large scale hydro), the
rest, B2B approach
FiT to encourage private sector involvement
NO REGULATION
1 MEMR Regulation No. 17/2013
2 MEMR Regulation No.17/2014
3 MEMR Regulation No. 27/2014
4 MEMR Regulation No. 3/2015
5 MEMR Regulation No. 19/2015
6 MEMR Regulation No. 44/2015
7 Presidential Regulation No.. 18/2016
7 Being prepared
8 Being prepared
POLICY
Feed-in Tariff for Solar PV Power Plant ( Under
Revision)
Ceiling Price for Geothermal Power Plant
Feed-in Tariff Biomass and Biogas Power Plant
Ceiling tariff for hydro power plant > 10 MW
Feed-in Tariff for Hydro Power Plant
Feed-in Tariff for MSW Power Plant
Acceleration for the utilization of municipality solid
waste in to energy
Feed-in Tariff for Wind Power Plant
Incentive for Roof Top Solar PV
 Page 22

FiT and ceiling tariff

Geothermal*tariff*based*on*MEMR*Regulation*No.17/2014
Voltage Tariff,(IDR),x,F Ceiling*tariff*(US*cent/kWh)
COD
Medium'x'F Region*I Region*II Region*II
Biogas '''''''''''''''1,050 2015 11.8 17.0 25.4
Biomass '''''''''''''''1,150 2016 12.2 17.6 25.8
Low'x'F 2017 2.6 8.2 26.2
Biogas '''''''''''''''1,400
2018 13.0 18.8 26.6
Biomass '''''''''''''''1,500
2019 134.0 19.4 27.0
Location'factor F
Java 1.00
2020 13.8 20.0 27.4
Sumatra 1.15 2021 14.2 20.6 27.8
Sulawesi 1.25 2022 14.6 21.3 28.3
Kalimantan 1.30 2023 15.0 21.9 28.7
Bali,'Bangka'Belitung,'Lombok 1.50 2024 15.5 22.6 29.2
RiaumIslands,'Papua'and'other'islands 1.60 2025 15.9 23.3 29.6

Biomass - biogas Geothermal

 Page 23

FiT and ceiling tariff

Voltage River,flow,or,water,fall Existing,irrigation Adjustment
Medium'x'F
Year'1'.'8 12.0 10.8 9.3
Year'9'.'20 7.5 6.8 9.3
Low'x'F
Year'1'.'8 14.4 13.0 11.0
Year'9'.'20 9.0 8.1 11.0
Location'factor F
Java,'Bali,'Madura 1.0
Sumatra 1.1
Kalimantan'and'Sulawesi 1.2
East'and'West'Nusatenggara 1.3
Molucca'and'North'Molucca 1.3
Papua'and'West'Papua 1.6

Mini-hydro < 10 MW

Ceiling*tariff*(Cent*USD*
Availability* Contract*
No. Generator*Capacity
/*kWh) Factor Period
1 >#10#%#<#50#MW 9
2 50##100#MW 8.5 60% 30#years
3 >#100#MW 8

Large hydro > 10 MW

 FINANCIAL INSTRUMENTS
SUPPORT

Income Tax Value Added Tax Import Duty Tax Borne by

Government

Reduction of net income for Exemptions for Import Duty of

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
q Goods and Machinery for
Exemptions of VAT for
development and capital Regulated in State
Taxable Goods, investment
machinery and Annual Budget Law
q Capital Goods Imports for
equipment for RE construction and
and its implementing
utilization (not included development of electricity regulations
spare parts) industry
South Pole Group 14/01/16 Page 25

How to invest in RE in Indonesia?

 Page 26

An example of investment model on hydro power

plant in Indonesia

Swedish investor
Project developer

Int. Financial institution Foundation for implementation

Local Financial Institution of health, social and env.

Technical
El & Mec
Legal
Civil
Tax

Role o f South Pole as PMU:

- Deal flow
- Initial d ue d iligence
- Coordination with o ther third p arty
support, incl. contractors,
consultants
O&M Cont. - Supervision d uring construction
 Page 27

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 Butarbutar
p.butarbutar@thesouthpolegroup.com

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