CHAPTER 2 OBJECTIVE OF THE GUIDELINES

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1 CHAPTER 2 OBJECTIVE OF THE GUIDELINES 2.1 PURPOSE OF THE GUIDELINES The Guidelines have been prepared for the purpose of contributing to the sustainable and self-reliable promotion of rural electrification utilizing renewable energies in Indonesia. 2.2 APPLICATION OF GUIDELINES The Guidelines focuses mainly on rural electrification projects adopting dependent generation system (off-grid system) utilizing available renewable energies such as micro/small hydropower, solar power, wind power, biomass power and geothermal power. According to the decentralization, the district governments will be responsible for rural electrification respectively The Guidelines will be of practical use for not only the Central and Local Government Officer but also Non-Governmental Organization's (NGO's) staff engage in rural electrification. 2.3 POINT OF GUIDELINES For a long time, the driving force behind rural electrification was PLN (State Electricity Company). This largely resulted from Central Government policy to subsidize PLN operations in rural areas, which were mostly uneconomic to serve. However, the situation has radically changed since the financial crisis in PLN is no longer in a financial position to undertake further investment in rural electrification and the Central Government is not able to support these activities through state budgets. In fact, PLN has abolished its division for rural electrification because of lack of resources to continue with the rural electrification program. Instead, the regional governments are now in charge for rural electrification as stipulated in the New Electricity Law issued in September Among this difficult situation, more than 6,000 villages mostly located in the rural areas are reportedly left not electrified in the country as of the end In order to accelerate the electrification, many rural electrification projects have been developed and implemented by various executing agencies/organizations. Some of the projects have been working correctly long. However, some of them stopped working or died after unexpectedly short lives. Why can some live long? And why should the others die so quickly? According to the Case Studies made by the Study Team, a key to the project life must be a capability for the maintenance to the project, especially when something unexpected happens to the project. Some of the projects can survive, if the project operators can repair a wind generator hit by a lightning. Some of them die, if the project operators cannot replace old batteries with new ones in a solar system. The capability for maintenance is mainly attributable to (a) technical issues and (b) human issues, and both are tightly linked each other. TECHNICAL ISSUES Very fortunately, one can find an instant resolution in some cases for (a) the technical 2-1

2 issues. The Case Studies warn that rural electrification projects will die quickly, if imported facilities are installed, because such imported items can be no way maintained well after commissioning by the project operators, normally the villagers. The Case Studies suggest at the same time that rural electrification projects live longer, if domestic facilities are installed, because such domestic items can be any way maintained or repaired within Indonesia. Therefore, what one should look for are project facilities fully made in Indonesia, or those procured within Indonesia. The project operators need not be a good maintainer of the project facility. Instead, they need to know how to let the Indonesian supplier/manufacturer maintain and repair the troubled facilities. Here, the imported facilities can be defined to be any items, materials, equipment, gadgets, hardware, or software, of which replacement, repair or maintenance cannot be available within the normal Indonesian market. By contrast, the domestic facilities can be defined to be any items, of which replacement, repair and maintenance are possible within the normal Indonesian market. On this definition, types of the energy resource need to be selective. Because of no domestic technology so far, biomass generation, wind power generation and geothermal generation are classified not suitable for the rural electrification projects. Because of available domestic merchandise, micro hydropowers 1 and solar home systems (SHS) can fit the rural electrification projects in the country. These Guidelines assume that use of the domestic facilities is the first necessary condition to make the rural electrification projects successful. Needless to say, however, the domestic facilities cannot guarantee any success, which highly depends on other necessary conditions. HUMAN ISSUES A rural electrification project is often not affordable enough for typical villagers to self-finance. That is why, in the past, most of or all of the initial cost of the project was often borne by a public sector; a grant from the government or ODA. And then, the villagers became the project owner and the project operator as well, suddenly after construction of the project has been complete and the project facilities were transferred to the community. In some other cases, a rural electrification project was potential-oriented or natural resource oriented independently of villagers readiness to be an owner of a rural electrification project. It was often promoted as part of the public sector operations. In this former sequence for project promotion, the villagers might have little confusion of a project owner with a gift taker. In fact, the villagers could receive electricity without their own large effort; they were allowed to be passive and allowed just to wait for the gift from the government, the rural electrification project. This type of villagers confusion could eventually aggravate the capability for maintenance discussed earlier. Because the villagers are allowed to depend too easily 1 According to the Study Team as of June 2003, only cross flow turbines, SKAT T-3, T-7, T-12, T-13, and T-14 are technically justified in their design, efficiency, and reliability. No other micro hydro equipment is recommended for the rural electrification. 2-2

3 on a micro hydropower station presented free-of-charge by a public sector, they would not set their own tariff system high enough to well maintain the project facilities. Because the villagers were allowed to misunderstand that the solar home systems should be maintained by a public sector, they would never need to be serious about how to well manage the project. These can be categorized as the human issues and clearly a different discussion on needs of the capacity building. The Case Studies made by the Study Team tell us that all of the long-living rural electrification projects have their institutions good enough to maintain the project facilities and project cashflows. One can conclude that (b) the human issues are villagers value to the rural electrification projects and originated from very mental and emotional aspects. Because it is of human sense, it is difficult to guide to a desired way after the project has been commissioned. However, a different approach of rural electrification may overcome such human issues. These Guidelines assume that the villagers strong will and desire are essential part of successful rural electrification, and therefore the former potential-oriented promotion would be no longer necessarily taken. In other words, upon rural electrification the district officers in charge should firstly select only villagers who have strong will and desire for electrification. STAKEHOLDERS IN RURAL ELECTRIFICATION PROJECTS There are four important stakeholder groups for the rural electrification; non-electrified villagers, the district governments, the GOI, and the donors. The group of non-electrified villagers is, needless to say, the main stakeholder. The district governments should play the most important role as a facilitator to prioritize villages or areas to be electrified. As the coordinator, the GOI should play the nation-wide roles for the rural electrification projects. The roles may include general guides for energy resources to be developed. The donors in the Guidelines should have a broad meaning. They can be of any bodies that financially donate or invest in the rural electrification projects mainly at the project implementation stage. Therefore, an International Funding Agency (IFA), a district government itself, a provincial government, GOI, and a private investor may all be one of the donors, as far as those bodies provide part of the project implementation cost. 2-3

4 Project Operation Daily O&M Support and Monitoring Project Implementation Implementation of Project Project Development Community Preparation Project Development Project Initiation/ Planning Prio ritization Planning Reconnaissance Coordination and Advice based on Five-year Rolling Plan Expression of Interest Potential Survey & Campaign Village District GOI SEQUENCE OF RURAL ELECTRIFICATION PROJECTS In rural communities, peoples do not normally possess the relevant skills to maintain and operate the electrification systems. The local government should therefore be responsible for the electrification. First of all, it is necessary to identify and confirm the condition of non-electrified villages/areas in a district. Following, the potential of energy resources for the electrification must be investigated. These basic information and data contribute to estimation of total cost necessary for developing all the electrification projects, which makes it possible to have a basic plan of systematic promotion of electrification including the Five-year Rolling plan. Accordingly, the rural electrification under the Guidelines is not government oriented, but on villagers incentive basis. Those villagers who have strong desire for electrification need an expression of their desire (or interest) and initiative for electrification made to the district government or the regional institution, which is appointed for rural electrification by the district government. It is recommended that the following steps be taken: Step 1: Potential Survey and Campaign for Rural Electrification by District Government,, Step 2: Expression of Desire (or Interest) and Initiative by Villagers for Rural Electrification, Step 3: Field Reconnaissance by District Government for potential energy source, 2-4

5 Step 4: Step 5: Step 6: Electrification Plan by District Government based on results of the Field Reconnaissance and the Villagers expression as well, Prioritization of the Electrification Candidates by District Government, Development of Rural Electrification Projects, Step 7: Community Preparation in O&M, Management, Training, and Education Campaign, Step 8: Step 9: Implementation of Rural Electrification Projects, Operation and Daily Maintenance of the Projects by Village Communities, and Step 10: Support, Monitoring and Evaluation of the Projects. Steps 1 to 5 are activities that can be recognized as the Initiation or regional electrification planning targeting several numbers of non-electrified villages. Steps 6 and 7 are in the Development for a specific village, which has been higher ranked at the end of the Initiation. The Step 8 is literally referred to as Implementation for a village that has successfully been qualified at the end of the Development. The last steps, Steps 9 and 10, can be referred to as the Operation. STAKEHOLDERS IN RURAL ELECTRIFICATION PROJECTS There are four important stakeholder groups for the rural electrification; non-electrified villagers, the district governments, the GOI, and the donors. The group of non-electrified villagers is, needless to say, the main stakeholder. The district governments should play the most important role as a facilitator to prioritize villages or areas to be electrified. As the coordinator, the GOI should play the nation-wide roles for the rural electrification projects. The roles may include general guides for energy resources to be developed. The "donors" in the Guidelines should have a broad meaning. They can be of any bodies that financially donate or invest in the rural electrification projects mainly at the project implementation stage. Therefore, an International Funding Agency (IFA), a district government itself, a provincial government, GOI, and a private investor may all be one of the "donors", as far as those bodies provide part of the project implementation cost. 2-5