Indonesia National Stakeholder Workshop on Accessible and Affordable Sustainable Energy Options. Brief Report

Transcription

1 ASIAN AND PACIFIC CENTRE FOR TRANSFER OF TECHNOLOGY (APCTT) Indonesia National Stakeholder Workshop on Accessible and Affordable Sustainable Energy Options March 2014 Jakarta, Indonesia Organized by Asian and Pacific Centre for Transfer of Technology (APCTT) of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) New Delhi, India in cooperation with and hosted by Indonesian Institute of Sciences (LIPI) Jakarta, Indonesia Background Brief Report As part of the United Nations ESCAP project on Strengthening South-South Cooperation to Increase the Affordability of Sustainable Energy Options in Asia and the Pacific, APCTT-ESCAP endeavours to develop national strategy on enabling environment and technology innovation ecosystem for affordable and sustainable energy options in Indonesia. The idea of developing national strategy for Indonesia is endorsed by the underutilized huge potential of sustainable energy resources in the country which needs to be exploited to ensure energy security and energy access in Indonesia. However, Indonesia is yet to develop a robust innovation ecosystem for promotion and dissemination of sustainable energy options and sustainable energy services. It is therefore important that the country s enabling environment for developing sustainable energy options be strengthened. It is in this context, the APCTT-ESCAP organized a National Stakeholder Workshop in Indonesia. The main objective of the Workshop was sharing with sustainable energy experts and policy makers in Indonesia the experience from other developing countries on enabling environment and technology innovation ecosystem for promoting sustainable energy products and services. The two-day National Stakeholder Workshop in Indonesia held on March 2014 brought together sustainable energy experts, policy makers, business stakeholders and community representatives from India, China and Indonesia. The Workshop drew upon the examples on enabling environment for promoting various sustainable energy options being explored in different countries in Asia. The opportunity was used to understand Indonesia s experience in deploying and implementing sustainable energy options in the country, discuss various challenges and opportunities from the context of enabling environment and innovation ecosystem for sustainable energy promotion in the country.

2 Objectives To present and discuss on the national assessment framework on enabling environment and technology innovation ecosystem for making sustainable energy options affordable and accessible in Indonesia. To share experiences of other developing countries in promoting sustainable energy products and services through strengthening of enabling environment and technology innovation ecosystem. To deliberate on challenges and opportunities in deploying and implementing sustainable energy projects and programmes aimed at off-grid population in rural and urban areas. Major Outputs Opening Session Mr. Bambang Subiyanto, Deputy Chairman for Scientific Services, LIPI, in his welcome address, briefly introduced the project objectives and role of Indonesian Institute of Sciences (LIPI) in the project. In his welcome remarks, Mr. Nanjundappa Srinivasan from APCTT-ESCAP spoke about the three dimensions of sustainable energy and described the present project undertaken to develop a National Strategy Report for Lao PDR and Indonesia with the assistance of a team of international and national consultants. He explained the objectives behind organizing the Workshop, stressing on the importance of experience-sharing among other developing countries in order to promote sustainable energy products and services through strengthening of technology-enabling environment and innovation eco-system. In the opening remarks of the Workshop, Mr. Lukman Hakim, Chairman, LIPI, prioritized the need for sustainable energy options and emphasized on the need for moving towards the use of sustainable energy options in Indonesia. He stated that Indonesia needs to overcome the obstacles in developing sustainable energy options. In this direction, the country has already taken steps such as setting targets for renewable energy (RE) so as to ensure share of renewable energy in country s energy mix. Indonesia is expected to reach more than 20% share of RE in the energy mix by However, to ensure this transition, the country needs to build up and adopt suitable policies. He mentioned that Indonesian policy makers would benefit from the Workshop, as experience on sustainable energy development and policies from different countries like India and China would be discussed during the event. Besides, he emphasized on cooperation between APCTT-ESCAP and Indonesia in promoting affordable and accessible sustainable energy options in Indonesia. Mr. G.M. Pillai, International Project Consultant, APCTT-ESCAP and Director General, World Institute of Sustainable Energy (WISE), Pune, India, in his keynote speech identified the abundant RE availability in Indonesia. He pointed out the importance of RE law in creating an environment conducive for sustainable energy promotion and dissemination. While discussing on various policies and instruments that may be adopted for sustainable energy development, he drew upon examples from countries like China, India and the United States, and threw light on their success in promoting sustainable energy options. Technical Session I Mr. Satyabrata Sahu, In charge, Technology Monitoring and Assessment, APCTT-ESCAP, described the United Nations ESCAP resolution on energy security and APCTT-ESCAP s Work Programme on Renewable Energy. Afterwards, he provided information on a website developed by APCTT-ESCAP on Renewable Energy Cooperation-Network for the Asia-Pacific (RECAP).

3 In his presentation, Mr. Pillai briefly explained the concept of sustainability and sustainable development. He stated that availability and utilization of sustainable energy is indispensable for sustainable development. A transition from fossil fuel-driven economy to a sustainable energybased economy is necessary due to three major reasons, namely, depletion and extinction of fossil fuels, energy autonomy/independence, and climate change, he pointed out. Mr. Pillai also briefly described the leading commercial RE technologies such as wind power, solar photovoltaic and concentrated solar thermal power and their importance in providing solutions in the scenario of fossil fuel depletion. Technical Session II Mr. Debarshi Gupta, Research Associate, Centre for Renewable Energy Regulation and Policy (CRRP), WISE, presented Selected National Programmes and Projects aimed at Sustainable Energy for All (SE4 All) initiative with the help of three case studies from Sri Lanka, Norway and India, which are relevant to the action areas spelt under the SE4 All initiative, especially in the context of Indonesia. Mr. Sicheng Wang, Senior Researcher, China Renewable Energy Society, presented the current status and incentive policies for RE in China, with special emphasis on solar photovoltaic. He explained some rural applications and micro-grid technologies promoted in China, and described the use of RE technologies in different sectors like industry, household and agriculture. During his presentation, he pointed out the high level of manufacturing capacity in China s RE sector and various incentives provided for RE promotion in the country. Technical Session III The international consultant, Mr. Pillai, explained different components of national assessment framework on enabling environment and technology innovation ecosystem for sustainable energy in Indonesia. During his presentation, he emphasized different parameters that need to be studied in order to assess the technology and business enabling environment and eco system for affordable sustainable energy options in Indonesia. Mr. Supandri Prabono, a senior official from the Chamber of Commerce, Indonesia, discussed the business enabling environment and ecosystem to promote sustainable energy in Indonesia. While highlighting different regulatory barriers in starting energy business in the country and the possible solutions in removing these barriers, he emphasized on the need for regulatory reforms for facilitating energy business in the country. The resource person from WISE, Mr. Gupta, presented two case studies from India and one from Thailand to illustrate the Role of Technology and Business Enabling Environment and Ecosystem in promoting affordable sustainable options. In one of the case studies from India, he illustrated the concept of bundling of relatively expensive solar energy with coal-based energy, which is helpful in providing affordable sustainable energy options. The example of adder tariff and ESCO Revolving Fund used in Thailand incentivize small- and very small-scale power production from RE resources was also discussed. Technical Session IV Mr. Unggul Priyanto, Deputy Chairman for IT, Energy and Materials, Agency for Assessment and Application of Technology (BPPT), Indonesia, explained various efforts taken to develop geothermal energy in Indonesia, and the investment risks of geothermal development and various obstacles facing the geothermal industry in the country. He also pointed out the prospects of smart grid and challenges facing this option in Indonesia. He emphasized that the existing regulated pricing mechanism hinders the adoption of smart micro-grids, as the price of electricity through smart-grids is higher and dynamic pricing of electricity is required.

4 Mr. Bambang Subiyanto, LIPI, presented a case study on sweet sorghum-based bio-ethanol production in Indonesia. He stressed that the advantage of sweet sorghum-based bio-fuel production is that sweet sorghum grows faster than Indonesian sorghum. Mr. Adi Laksono from the Foundation of People-centred Business and Economic Initiative (IBEKA), Indonesia, presented how the organization is developing micro-hydropower projects in rural areas of Indonesia to increase access to electricity and enhancing economic development. He described that their focus is on community empowerment in terms of technical and managerial capability and encouraging active community participation in projects. He drew upon the example of Cisalimar project in remote part of Cipeuteuy village, which is owned and managed by the Arum Mekar community. Mr. Muhammad Nashar, Secretary, Indonesia Wind Energy Society (MEAI) spoke about wind energy potential and installations in Indonesia. He listed the several barriers for wind power development in the country, such as high wind turbines prices, lack of skilled labour for operation and maintenance of windmills in remote parts of the country, and inadequate incentives for private companies for investing in wind industry. Mr. Anang Yahmadi, Senior Manager for Geothermal in PT PLN, Indonesia, introduced the company s policies, activities and plans in the RE sector in Indonesia. He pointed out that, apart from geothermal and large hydro, small hydro and solar photovoltaic (PV) are expected to dominate the RE sector. He also mentioned PLN s 1000 islands programme on promoting solar PV technology, as part of which PLN plans to develop solar as a hybrid system with existing diesel, biomass or other RE potentials in small islands of the country. In conclusion, he described the challenges before the RE sector in the country and stressed on the need for synergy among various stakeholders to create supportive climate for RE development. Technical Session V Mr. Abdi Dharma Saragih, Deputy Director for Investment and Cooperation, Directorate of Various New Energy and Renewable Energy, described the overall regulatory framework related to RE and explained the role of the Directorate of New and Renewable Energy in promoting RE in the country. He also elaborated on the regulations adopted and incentives provided for promotion of different RE technologies in Indonesia. Mr. Syahrul Aiman, a senior expert from LIPI, briefly discussed Indonesia s dependence on fossil fuel and the prospects of various sustainable energy options. While elaborating on bio-fuel potential and development progress in the country, he pointed out that the unemployed people may find employment in the industry and that community participation may be enhanced through the adoption of this technology. He concluded by pointing out that huge subsidies on fossil fuel, lack of infrastructure and low public participation are the major problems in promoting RE in the country. Major points discussed during the technical sessions of the Workshop include: To present and discuss on the national assessment framework on enabling environment and technology innovation ecosystem for making sustainable energy options affordable and accessible in Indonesia. The need for scientific studies on peaking of conventional energy resource in Indonesia was discussed, as this would help to understand the country s position in terms of conventional energy reserves and its availability for the future. Although there are renewable energy targets for the country, the absence of a comprehensive policy framework specifically dedicated to RE in the country slowed down the process of developing sustainable energy technologies.

5 The abundant availability of hydro and coal resources in the country acted as a deterrent for development of the RE sector. If the government provided subsidies for promoting RE, the country could suffer financially, as RE technologies remained relatively expensive when compared with conventional energy technologies. Prevailing market entry barriers for the private sector restricted their participation in the energy market, leading to lack of competition. If entry barriers continue to exist, energy market may soon become inefficient. Problems of market entry barriers are compounded by Indonesia s regulatory barriers. One such regulatory barrier is mandatory domestic shareholding for the foreign companies that led to significant delays in investment and eventual cancellation of many projects. A complicated permit and approval regime, lack of institutional framework for monitoring the project approval activities, absence of appellate bodies and inefficient process of resolving commercial disputes create hindrances in the way of project implementation. Indonesia has a high potential of RE resources, but they are not being optimally used for electricity generation despite their suitability for electricity generation in remote areas, where the diesel used for electricity generation is expensive. Indonesia has great potential for developing geothermal, and most of the development in future will be dominated by independent power produces (IPPs). However, lower cost and lower risk resources like hydro and biomass should be prioritized. In the past, developers faced many difficulties for the development of geothermal plants in conservation forest areas, as they did not get clearances from the Ministry of Forest. This slowed down the process of geothermal development in the country. On occasions, geothermal site development was also hindered by social factors. For example, Hindu communities in some places of Bali province did not allow exploration of potential sites because of religious sentiments. The wind power potential in Indonesia is moderate, with average wind speeds of about 5 m/ s. At present, the country is working with DANIDA for wind resources assessment. Nonetheless, existing high prices of wind turbines act as a barrier for wind power development. Moreover, maintenance work for wind turbines becomes difficult owing to unavailability of spare parts and trained labour. Development of bio-diesel is another option for Indonesia and the country is among the top producers of bio-diesel crops like oil palm and jatropha, thus ensuring the raw materials for bio-diesel industry in the country. Indonesia is currently exploring the option of smart micro-grid, which helps in increasing the penetration of RE into the grid. There are two projects running on smart micro-grid: one is a photovoltaic project of 500 kw peak capacity and the other is a hydro project of 3 MW capacity. Lack of coordination among government institutions for providing licences, requirements of large number of permits, and the complexity and duration of getting licences and permits delay the process of project commissioning. Lack of availability of cheap finance for RE development is a challenge for developers. The average interest rate offered by lenders for RE project financing is 12%, which is on higher side when compared to countries like China. Lack of trained and skilled labour and the lack of overall national capacity for RE development in the country are gaps that the country is facing now.

6 The high subsidy offered to fossil fuel distorts the price of conventional energy sources and makes RE sources appear expensive and less affordable. Moreover, people have got accustomed to huge subsidy on fossil fuels and electricity, which makes it difficult to encourage the end users to adopt RE. The lack of infrastructure and the low investment in research and development have remained impediments for developing RE resources. Manufacturing capacity for sustainable energy equipment in Indonesia is still low. However, there are policies for local manufacturing of equipment for geothermal projects, and these policies emphasize on domestic technologies. To facilitate small- and medium-scale manufacturing, certain technology-specific local content requirements have been adopted and enforced in the country. Participation of public and communities in RE development is still very low in the country and needs to be addressed, especially in the case of developing off-grid solutions for energy supply. There are organizations like IBEKA, working towards increasing community awareness on sustainable energy technologies like micro hydro, enhancing community capability in using the technologies. Efforts towards technology innovation from the government institutions, private entrepreneurs and academic institutions are required to bring in appropriate technologies as well as for reducing the price of RE options. Closing Session Mr. N. Srinivasan, APCTT-ESCAP, summarized the overall country situation in his closing remarks. He pointed out that the distributed topology with island nature of the country is suitable for locally developed sustainable energy options. However, there are various challenges in the development of RE options. Moreover, there is need for adopting suitable policies and implementing these policies to make sustainable energy options affordable and accessible in the medium to long term. Mr. Bambang Subiyanto, LIPI, in his closing remarks identified the need for different policies and programmes for urban and rural areas. He also expressed the hope that policies adopted by China will serve as guidelines in preparing policies for the development of sustainable energy options in Indonesia. Conclusions and Recommendations The following were some of the major conclusions and recommendations of the Workshop: Civil society and community groups have a major role to play in the promotion and development of RE options. They need to participate in discussions with the government and convince it through the process of discussions to put emphasis on various RE sources, improve the R&D environment, and provide sufficient financial resources for promotion of sustainable energy options. The government should provide fiscal incentives like subsidies at the early stage of development of sustainable energy. If the cost of externalities along with the subsidies offered to the fossil fuel is considered while pricing the fossil fuel based energy, then the cost of sustainable energy sources may appear at par with that of the conventional energy sources. Thus, providing subsidies for sustainable energy technologies will create a level playing ground. Small-scale sustainable energy projects/options should also be considered for urban areas. However, the promotion of small-scale sustainable energy options in urban areas depends on various factors like building size, location and availability of space, which restricts the development of small-scale sustainable energy options in urban areas.

7 The private sector must have full market access to trigger significant investments in sustainable energy options. Key regulatory reforms should be identified and implemented. For example, the requirement of mandatory domestic shareholding from inception needs to be removed and companies may be given a minimum of 15 years to find domestic shareholders. In case any company retains 100% foreign shareholding for more than 15 years, then a tax may be imposed on the company. The market for energy sector may be liberalized to bring competitiveness, which will increase efficiency of products and services in the country. The number of permits required for a project to become operational should be reduced and complexity of getting permits should be eased to reduce the duration for getting permits. To ensure that project approvals are not denied without proper reason, the government may mandate local authorities to submit a report on every occasion a land use, location or construction permit application is not approved, justifying why approval was not granted. Companies should be given the right of appeal to the concerned ministry. Coordination among various government departments for providing permits should be increased. The tariff for electricity should be viable for both the developers and the off-takers, and there should be sufficient financial resources available. National capacity on skill and expertise building for sustainable energy should be increased. The capability of universities should be enhanced to promote R&D. Also capacity of local manufacturers needs to be improved. In order to ensure availability of cheap financing for sustainable energy projects, the commercial banks will have to play a crucial role. Micro-finance organizations are not a good option, as they charge relatively high interest rates. Sufficient infrastructure like roads, communication and electricity should be provided by the government to create suitable environment for projects. The geothermal law should be revised to allow geothermal development in conservation forest. Moreover, regulations for geothermal business should be improved and harmonized to expedite the development of geothermal-based energy generation. Subsidy on fossil fuels should be gradually reduced to make several RE resources costcompetitive and increase the use of sustainable energy resources. Public awareness on benefits of sustainable energy sources should be increased to promote public participation for increasing the use of sustainable energy options. See Annex I for the programme. Participants Five international resource persons from and eight national experts shared their knowledge and experiences during various sessions of the Workshop, which was attended by about 40 participants representing various government and private sector agencies in Indonesia. See Annex II for the participants list.