Kardaya Warnika MINISTRY OF ENERGY AND MINERAL RESOURCES REPUBLIC OF INDONESIA. By: Director General of New Renewable Energy and Energy Conservation

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1 MINISTRY OF ENERGY AND MINERAL RESOURCES REPUBLIC OF INDONESIA By: Kardaya Warnika Director General of New Renewable Energy and Energy Conservation Presented at: The 2nd Clean Power Asia Conference and Expo Jakarta, May 14 th 2012

2 I. Current Condition II. III. IV. OUTLINE Energy Policy Direction Policy Instruments for New, Renewable Energy and Energy Conservation () - Geothermal - Bioenergy - Hydro, Solar & Wind Energy Conservation V. Clean Energy Initiatives V. Conclusion

3 CONDITION OF 2011 Directorate General 2011 Total Energy Mix 1176 million BOE Share of Non Fossil Energy < 5% 1. Public access to energy (modern) is still limited: a. Electrification ratio (2011) is 72.95% (27.05% of households not yet electrified); b. Less of development of energy infrastructure particularly in rural / remote areas and outer islands. 2. The average of growth rate of energy consumption is 7% per year ; 3. High dependence on fossil energy while it reserves are more limited; 4. Utilization of renewable energy and implementation of Energy Conservation is not optimal; 5. Linkage to environmental issues: a. Mitigation of climate change; b. Carbon trading; c. National commitment to reducing emissions 26% by 2020; 3

4 ENERGY RESERVES AND PRODUCTION NO NON FOSSIL ENERGY RESOURCES (SD) INSTALLED CAPACITY (KT) RATIO KT/SD (%) = 4/3 1 Hydro MW 6.654,29 MW 8,8% 2 Geothermal MW MW 4,2% 3 Mini/Micro Hydro 769,69 MW 228,983 MW 29,75% 4 Biomass MW 1.618,40 MW 3,25 % 5 Solar Energy 4,80 kwh/m 2 /day 22,45 MW - 6 Wind Energy 3 6 m/s 1,87 MW - 7 Uranium MW *) 30 MW **) 1.00 *) only in Kalan West Kalimantan **) non energy, only for research NO FOSSIL ENERGY RESERVES PRODUCTION PER YEAR RESERVE TO PRODUCTION RATIO = 4/3 1 Oil 4.0 billion barel 347 million barel 11 years 2 Gas TSCF 3212 BSCF 32 years 3 Coal 28 billion ton 329 million ton 85 years

5 NAD 87,72% Sumbar 77,72% Jambi 76,54% Sumut 83,98% Bengkulu 71,15% Lampung 70,40% Electrification Ratio Riau 78.17% Banten 68,18% Sumsel 72,71% Jabar 70,72% ELECTRIFICATION RATIO Kepri 91,52% Kalbar 65,37% Babel 82,26% Jakarta 99,99% Jateng 77,31% Kalteng 67,28% Kalsel 75,65% DIY 75,19% Jatim 72,05% Kaltim 63,44% Sulbar 64,12% Bali 69,77% NTB 52,88% Gorontalo 54,69% Sulteng 64,84% Sulsel 74,18% Sultra 54,46% Sulut 73,21% NTT 39,92% Directorate General Malut 70,34% Maluku 70,80% Category : Papua 29,25% > 60 % % % Papua Barat 58,24% Year % 16% 28% 43% 53% 62% 63% 64.34% 65.10% 65.79% 67.15% 72.95% 5

6 CUMULATIVE CAPACITY FUEL AND POWER PLANT FROM NRE Energy Sources Biomass BBN (fuel), Million KL 0,4 1,6 3,2 6,4 11,8 Biomass Waste (electricity), MW Geothermal (electricity), MW Hydro (electricity), MW Ocean Power (electricity), MW - 0,02 0,04 0,05 1,0 Solar Power (electricity), MW Wind and other RE (electricity), MW

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8 DEVELOPMENT OF GREEN AND CLEAN ENERGY UNFCCC *) UU 10/1997 UU 27/2003 UU 30/2007 UU 30/2009 Policy Directives President RI in Tampak Siring (2010) Green Values Climate Change Mitigation No.8 : Energy Security No.10 : Strengthen the Green Economy Increasing Consumption of Fossil Energy The effort of new and renewable energy development, and Efficient Energy Utilization GREEN ENERGY CONCEPT: 1. Efficient energy utilization 2. Renewable energy use 3. Use Clean Energy Technologies for fossil and non-fossil energy Green Energy 0 Green Industry Green Transportation *) United Nations Framework Convention on Climate Change Energy Security, Social Welfare, Sustainable Development

9 TWO 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) as below New Energy Renewable Energy a. Liquefied Coal, a. Geothermal, b. Coal Bed Methane, b. Bioenergy, c. Gasified Coal, c. Hydro, d. Nuclear, d. Solar, e. Hydrogen, e. Wind, f. Other Methanes. f. Ocean.

10 POLICY INSTRUMENTS FOR

11 MAIN AGENDA AGENDA ON TO SUPPORT THE NATIONAL ENERGY SECURITY 1. Harmonizing new renewable energy and energy conservation regulations 2. Updating Master Plans on Energy Diversification and Energy Conservation 3. Improvement of energy efficiency 4. Development of geothermal 5. Development of bioenergy 6. Development of other new renewable energy 7. Clean Energy Initiative (REFF-Burn) 8. Increasing local content and supporting industry 9. Energy Self-Sufficient Village 10.Role model of clean manufacture, clean industrial park, low carbon city, and provinces SUPPORTING AGENDA 1. Enhancing research and development 2. Enhancing training and education

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13 GEOTHERMAL POTENTIAL MAP Directorate General No. Island Number of Locations Potency (MW) Install Capacity (MW) 1 Sumatera Java Bali Nusa Tenggara Kalimantan Sulawesi Maluku Papua 3 75 Total Source : Geological Survey, MEMR(2010) Note: Preliminary Survey Ready to Developad Detail Survey Already Developed

14 GEOTHERMAL DEVELOPMENT VS NATIONAL ENERGY POLICY PLAN Directorate General No Geothermal Development I Plan based on NEP: - Installed Capacity(MW) II Development 1. Added Capacity (MW) Installed Capacity (MW) III Development/NEP Plan (%) Note: - CF PLTP = 90%

15 Directorate Direktorat Jenderal General EBTKE ROAD MAP OF GEOTHERMAL DEVELOPMENT (Based on Presidential Decree No. 5/2006 National Energy Policy) MW (Production) 2000 MW 3442 MW 4600 MW 6000 MW 9500 MW (Target) 1148 MW Existing GWA 1442 MW Existing GWA 1158 MW Existing GWA + New GWA 1400 MW New GWA 3500 MW New GWA 1226 MW Current Condition 6151 MW Scenario Crash Program Phase II (4925 MW) MW Vision 25/25 EBTKE esdm untuk kesejahteraan rakyat

16 GOVERNMENT POLICIES TO SCALE UP GEOTHERMAL DEVELOPMENT IN INDONESIA 1. Ministerial Regulation No. 01 / 2012 (2 nd Stage of 10,000 MW Crash Program) in order to speed up the development of geothermal power to the amount of 4,925 MW by the year 2014, 2. Pricing Policy Ministrial Regulation of MEMR No. 02/2011 on geothermal price structure. The MR gives Ceiling price US $ 9,7 cents/kwh from geothermal power plant. Fiscal incentives for geothermal development (based on Government Regulation No. 62/2008 jo No. 1/2007; MR of MoF No. 177/PMK.011/2007; and MR of MoF No. 22/PMK.011/2011) : - 30% of corporate income tax; - 10% of added-value tax paid by the GoI; - Custom duties exemption for geothermal developer; - 25% per year depreciation for 8 years with double declining balance method; and - Investment tax credit 5% per year for 6 years. Currently the mechanism of Feed in Tariff for each GWA is being developed by the GoI in order to make geothermal business more attractive to investors.

17 INVESTMENT OPPORTUNITIES Directorate General - Development of 4,925 MW electricity from Geothermal in 10,000 MW Crash Program Stage II up to the year 2014 is required more than US$ 11 billions for the investment. - International supports are needed in development plan of 12,000 MW Geothermal Power Plant up to the year 2025; - Foreign ownership in Geothermal Business is allowed up to 95 %; - Business opportunities in geothermal sector: Geothermal direct use; Low temperature geothermal potential; Small scale power plant; - Partners and Investors are welcome to be parts of Indonesia s development as the largest geothermal producer in the world.

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19 BIOENERGY POTENTIAL FOR SOLID BIOFUEL /BIOMASS No Type of Biomass Energy Potential (MJ/ha/year) 1 rice husks 11,800 2 corncob 17,300 3 skin of peanuts 9,300 4 soybean waste 24,200 5 stem and roots of cassava 43,200 6 sugarcane bagasse 288,800 7 coconut shell 9,600 8 coconut fiber 12,700 9 palm empty fruit bunches 32, palm fruit fiber 19, palm fruit shells 6, coffee fruit skin 5,600 Source: Pusat Kebijakan Keenergian ITB

20 DEVELOPMENT ON WASTE BIOMASS VS NATIONAL ENERGY POLICY PLAN No Development I Plan based on NEP: - Installed Capacity(MW) II Development 1. Added Capacity (MW) Installed Capacity (MW) III Development/NEP Plan (%) Note: - CF = 70%

21 BIOENERGY POTENTIAL FOR LIQUID BIOFUEL No Type of Raw Material 1 Sugar cane/ molasses 2015 (ton) 2020 (ton) 2025 (ton) 2,000,000 3,000,000 4,000,000 2 Cassava 5,000,000 6,000,000 8,000,000 3 Palm 33,000,000 40,000,000 45,000,000 4 Coconut 2,200,000 2,500,000 2,700,000 Source: APROBI

22 DEVELOPMENT OF BIOMASS FROM BIOFUEL VS NATIONAL ENERGY POLICY PLAN No Development I Plan based on NEP: - Production of Biofuel (Million KL) 0,4 1,6 3,2 6,4 11,8 II Development 1. Added Production (MW) -- 0,9 1,2 3,8 5,4 2. Production of Biofuel (Million KL) 0,4 1,4 2,6 6,4 11,8 III Development/NEP Plan (%)

23 Biodiesel Utilization BIOFUEL UTILIZATION 2009 (KL) 2010 (KL) 2011 (KL)* Mandatory Realization * * Directorate General Percentage of Utilization 15,38 % 20,73 % 27,66 % Bioethanol Utilization 2009 (KL) 2010 (KL) 2011 (KL) * Mandatory Realization Percentage of Utilization % 0 % - * Biodiesel Utilization only for Transportation Sector

24 BIOMASS WASTE POTENTIAL FOR ELECTRICITY GENERATION

25 IMPLEMENTATION OF BIOENERGY IN INDONESIA 1. Development of biofuel as fossil fuel substitution: There are 23 biodiesel produver and 7 bioethanol producer that have commercial business license to operate in Indonesia (status on 2010). Installed capacity of biodiesel is 4,506,629 KL/year and installed capacity of bioethanol is 286,686 KL/year. 2. Development and utilization of Mitanol (kerosene from bioethanol) as kerosene substitution for household 3. Development of biogas digester for cooking in household sector through BIRU (Biogas Rumah) Programme as Indonesia Domestic Biogas Programme. This programme implemented by HIVOS, as NGO from Netherlands and funded by Netherlands Governtment. Status until August 31 st the total biogas digester that have been built is 3,707 unit from total target is 8,000 unit. 4. Development of power plant based on biomass with the total installed capacity is 1, MW. Indonesia as agricultural country has a large potency of biomass for electricity generation.

26 GOVERNMENT POLICIES ON BIOFUEL DEVELOPMENT 1. Ministry of Energy And Mineral Resources Regulation Number 32 Year 2008 Concerning On Provision, Utilization, and Procedures of Commerce Biofuels (Biofuel) As Other Fuel. (Biofuels Mandatory); 2. Ministry of Finance Regulation No. 21/PMK.011/2010 Concerning on Tax And Custom Facilities For Renewable Energy Utilization; 3. Ministry Of Finance Regulation Number 130/PMK.011/2011 Concerning on Provision of Exemption Facilities or Reduction of Income Tax. 4. Ministry of Energy and Mineral Resources Regulation Number 04 Year 2012 Electricity Power Purchased Price from Renewable Generations (small and medium scale) and Excess Power

27 BIOFUEL USAGE MANDATORY BIOETHANOL (Minimum) Directorate General Sector Transportation, PSO Transportation, Non PSO 3% (Existing) 5% (Existing) 1% 3% 5% 10% 15% 5% 7% 10% 12% 15% Industry 5% 7% 10% 12% 15% BIODIESEL (Minimum) Sector Transportation, PSO Transportation, Non PSO (Based on Ministerial Regulation No. 32/2008) 1% (Existing) 1% 2.5% 5% 10% 20% 1% 3% 7% 10% 20% Industry 2.5% 2.5% 5% 10% 15% 20% Electricity 0.1% 0.25% 1% 10% 15% 20%

28 ELECTRICITY PRICE (FEED-IN TARIFF) BASED ON ENERGY BIOMASS, BIOGAS, AND MUNICIPAL SOLID WASTE * ) No. Energy Capacity Electricity Tariff Note 1. Biomass until 10 MW Rp. 975,- / kwh X F 2. Biogas until 10 MW Rp. 975,- / kwh X F Non Municipal Solid Waste 3. Municipal Solid Waste until 10 MW Rp. 1050,- / kwh Zero waste ** ) 4. Municipal Solid Waste unti 10 MW Rp. 850,- / kwh Landfill **) F as an incentive factor based on the region where the power plant installed, as follows: Jawa, Bali, and Sumatera region : F = 1 Kalimantan, Sulawesi, NTB and NTT region : F = 1,2 Maluku and Papua region : F = 1,3 Feed in Tariff will be issued in Minister of ESDM decree. Note : * ) Connected to medium voltage system ** ) - Based on Act No. 18 Year 2008 concerning to Waste Management. - For municipal solid waste, tipping fee applied at minimum Rp , - / ton of waste

29 MINISTRY OF FINANCE REGULATION NUMBER 21/PMK.011/2010 REGULATION OF TAX AND CUSTOMS FACILITY FOR RENEWABLE ENERGY RESOURCES UTILIZATION ACTIVITIES FINANCIAL INSTRUMENTS SUPPORT Income Tax Value Added Tax Import Duty Tax Borne by Government Reduced net income for 30% of total investment accelerated depreciation Imposition of Income Tax on dividend p aid 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) Exemptions for Import Duty of Goods and Machinery for development and capital investment Capital Goods Imports for construction and development of electricity industry Regulated in State Annual Budget Law and its implementing regulations

30 MINISTRY OF FINANCE REGULATION NUMBER 130/PMK.011/2011 CONCERNING ON PROVISION OF EXEMPTION FACILITIES OR REDUCTION OF INCOME TAX CORPORATE TAXPAYERS can get facilities: EXEMPTION OR REDUCTION OF CORPORATE INCOME TAX PIONEER INDUSTRIES Having a new investment plan min. IDR 1 trillion Placing funds in the Indonesian banking min 10% from the total capital investment plan Existed as ENTITY INDONESIA EXEMPTION OF CORPORATE INCOME TAX 5-10 tax year After the end of Corporate Income Tax exemption facility REDUCTION OF CORPORATE INCOME TAX 50% of Income Tax Payable for 2 tax yearh Industry of Basic Metals Manufacutre Industry of Oil Refining and / or Basic Organic Chemicals sourced from Oil and Natural Gas Industry of Machinery INDUSTRY OF RENEWABLE RESOURCES FIELD Industry of Communications Equipment Minister of Finance may provide facilities Corporate Income Tax exemption or reduction for a period EXCEED predetermined period of time PIONEER INDUSTRIES *) The facility can be utilized if: 1. Had executed the entire capital investment 2. Has been produced commercially

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32 MAP OF POTENTIAL HYDRO-POWER Directorate General

33 HYDRO POWER PLANT DEVELOPMENT VS NATIONAL ENERGY POLICY PLAN Directorate General No Development I Plan based on NEP: - Installed Capacity(MW) II Development 1. Added Capacity (MW) Installed Capacity (MW) III Development/NEP Plan (%) 100, Note: - CF Hydro Power Plant = 40%

34 SOLAR POWER PLANT DEVELOPMENT VS NATIONAL ENERGY POLICY PLAN No Development I Plan based on NEP: - Installed Capacity(MW) II Development 1. Added Capacity (MW) Installed Capacity (MW) III Development/NEP Plan (%) Note: - CF Solar Power Plant = 40%

35 DEVELOPMENT OF WIND ENERGY AND OTHER RENEWABLE ENERGY No Geothermal Development I Plan based on NEP: - Installed Capacity(MW) II Development 1. Added Capacity (MW) Installed Capacity (MW) III Development/NEP Plan (%) Note: - CF Wind Power Plant = 40%

36 PROGRAM OF SOLAR ENERGY, WIND AND OCEAN ENERGY 1. Rural Electricity: increasing rural community accessibility to electricity; targeting electricity demand in remote area 2. Urban Electricity: targeting middle and high class household, real estate, office and commercial buildings, hotel and resort, industry and others 3. Electricity for Frontier Island: targeting community in the island located along the country border line

37 GOVERNMENT POLICIES ON OTHER NEW AND RENEWABLE ENERGY 1. Ministry of Finance Regulation No. 21/PMK.011/2010 Concerning on Tax and Custom Facilities for Renewable Energy Utilization; 2. Ministry of Finance Regulation Number 130/PMK.011/2011 Concerning on Provision of Exemption Facilities or Reduction of Income Tax. 3. Ministry of Energy and Mineral Resources Regulation Number 04 Year 2012 Electricity Power Purchased Price from Renewable Generations (small and medium scale) and Excess Power

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39 REGULATORY FRAMEWORK Directorate General LAW NO. 30 / 2007 ON ENERGY GOVERNMENT REGULATION No.70/2009 ON ENERGY CONSERVATION Responsibility Implementation of Energy Conservation Standard and Labeling Facilitation, Incentive and Disincentive Direction and Supervision Government : Formulating policy, enhancing capacity building, etc Private sector : Conduct energy conservation measures in all stage of activities, Utilize energy efficient technology, Produce service and production output efficiently Public/Community : Conduct energy conservation program in all activities Energy Conservation should be implemented in all stages of activities: Energy supply Energy business Energy utilization Conservation of energy resources Implementing energy efficiency standard and labeling MEMR Regulation No. 6/2011 (Energy Labeling for CFL) Facilitation : Providing information access on energy efficient technology Consultative services on energy efficiency measures Incentive Disincentive Direction : Conduct training, technical assistance, energy efficiency dissemination, and facilitating R&D on energy efficient technology Supervision to industries and commercial sector on implementing energy manager, program, energy audit, etc

40 PRESIDENTIAL INSTRUCTION NO.13/2011 ON ENERGY AND WATER SAVING Instruction to the leaders of Government Institutions both at central and local governments to measures water and energy saving. Establish a National Team of Water and Energy Savings Target : 20% Electrical saving 10% Subsidized fuel consumption saving 10% Water saving

41 NATIONAL COMMITMENT TO REDUCE GREENHOUSE GASSES Directorate General President Commitment in G-20 Pittsburgh and COP15 to reduce greenhouse gasses emission by 2020 Domestic efforts 26% (767 million Ton) 41% Domestic efforts and international support Forestry, Peat, Agriculture Energy Sector Wastes Industry and Transport 680 million Ton 30 milion Ton 48 million Ton 9 Juta Ton Through new renewable energy development and energy conservation implementation in all sector

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43 REFF-Burn : REDUCING EMISSIONS FROM FOSSIL FUEL BURNING 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

44 CONCLUSION

45 CONCLUSIONS It s time to move from fossil energy to renewable energy along with effort to improve energy efficiency. Government has issued many regulations to make the renewable energy and energy conservation business more conducive. Government will continue to up date the policy and regulations encourage private sector to participate in the development of new renewable energy and energy conservation.

46 Thank You Go Green Indonesia! green energy, future energy MINISTRY OF ENERGY AND MINERAL RESOURCES REPUBLIC OF INDONESIA DIRECTORATE GENERAL OF NEW, RENEWABLE ENERGY, AND ENERGY CONSERVATION Jalan Jenderal Gatot Subroto, Kav. 49 Jakarta 12950; Telp: ; ; Faks: ; ;