GIZ WORKSHOP

POLICY AND REGULATION OF

RENEWABLE ENERGY IN INDONESIA

BERLIN, AUGUST 24, 2011

PRESENT BY ARIO SENOAJI

VICE CHAIRMAN FOR POLICIES & REGULATIONS
INDONESIA RENEWABLE ENERGY SOCIETY (IRES/METI)
WEBSITE : WWW.METI.OR.ID
INTRODUCTION ABOUT IRES/METI

IRES/METI is an communication, consultancy and

cooperation forum among Renewable Energy (RE)
practitioner, which has goal to accelerate gain on RE
function to fulfill national energy demand.

Founders :
- A Group of Intellectuals
- Government Officials
- Private Companies

Officially declared May 11,1999

INTRODUCTION ABOUT IRES/METI (continued)

IRES/METI is Forum for Scientist, educations, regulations, business

developers and organizations, NGOs and other stakeholders to
discuss and exchange views on strategic and pragmatic issues using
renewable energy to serve the nations interest and objectives to be
less dependences on fossil energy and prevent the environment from
deteriorating as a result of the continuous and unabated use of fossil
energy.

IRES/METI is Committed to contribute to the global efforts in combating

the negative impact of the global climate change by producing ideas
and solutions forward the global concerns, particularly through
advocating and promoting the use of renewable energy.
A COUNTRY WITH 17.000 ISLAND
 Renewable Energy (RE)
Development Challenges
High initial investment cost
High production cost that cannot compete with the
conventional technology
Lack of incentives and smart funding mechanisms
Energy subsidy removal (subsidies have created an
unfair market advantage for conventional fuels and
technologies)
Formulating energy price based on its economic
value (electricity prices not reflect the true cost of
generating power)
Quantifying externality costs
Advantages
1. Abundant of RE Potential in Indonesia

2. RE available throughout the year

3. Indonesia is an Archipelago Country which is

have barrier in Fuel Supply and electricity
Transmission/ Distribution
 New and Renewable Energy Policy
Regulation
1. Law No. 30/2007 on Energy
2. Law No. 30/2009 on Electricity
3. Law No.27/2003
on Geothermal
4. Ministerial Regulation
No.31/2009 on Small and Medium
Scale Power Generation using
Renewable Energy
5. Minister of Finance Regulation
No. 21/PMK.011/2010 and
24/PMK.011/2010 on Renewable
Energy Incentives
Description
Provision and utilization of new & renewable energy should be increased by the
government and local government in accordance to their authorities.
Provision and utilization of new renewable energy can get incentives from
government/local government for certain period until it reaches economical
development stage.
Putting priority to utilize locally available energy resources for electricity
generation.
Process of procurement is implemented through direct selection ( without tender).
To regulate the management and development of geothermal energy sources for
direct and indirect utilization.
According to Ministerial Regulation, the highest benchmark of electricity purchasing
price from geothermal power plant is set to be US$ 9,70 cent/kWh.
State owned (PT.PLN) has the obligation to purchase electricity from small-medium
scale RE power plant which is developed by cooperatives, community or business
entities; ( Capacity : 10 MW)
Price: Rp 656/kWh x f, if connected to medium voltage
Rp1,004/kWh x f, if connected to low voltage; f =1.0, 1.2, 1.3, 1.5
PT. PLN is allowed to purchase electricity higher than the above mentioned price
based on PLNs Own Estimation (OE) price and has to be approved by the Minister
of Energy and Mineral Resources
Tax facility for renewable energy In the form of Income Tax, Import Duty and Tax
Holiday, Tax Exemption etc.
 MEMR REGULATION NUMBER 31 YEAR 2009

Regulation of electricity price from renewable energy resources and incentive factor based on plants
location:

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 the excess 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. Rp 656/kWh X F, if interconnected at Medium Voltage level;
b. Rp1,004/kWh X F, if interconnected at Low Voltage level.

Article 2 paragraph (2)

F is an incentive factor which based on the location of
the electricity purchase by PT. PLN, as referred in Price at MV Price at LV
Region
article 2 which values at : (Rp/kWh) (Rp/kWh)
*Java and Bali region : F = 1.0
*Sumatera and Sulawesi region : F = 1.2
Java , Bali 656 1,004
*Kalimantan, NTB & NTT region : F = 1.3 Sumatera , Sulawesi 787 1,205
*Maluku & Papua region : F = 1.5
Kalimantan, NTB,NTT 853 1,305
Maluku, Papua 984 1,506
 MEMR REGULATION NUMBER 31 YEAR 2009

Regulation of electricity price from renewable energy resources and incentive factor based on plants
location (continued):

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

FINANCIAL INSTRUMENTS
SUPPORT

Tax Borne by
Income Tax Value Added Tax Import Duty
Government

Reduced net income Exemptions for

for 30% of total Exemptions of Import Duty of
investment VAT for Taxable Goods and Regulated in
Accelerated Goods, Machinery for State Annual
depreciation development and
machinery and Budget Law
Imposition of Income capital investment
Tax on dividend paid to equipment for RE Capital Goods and its
Foreign Taxable at 10% utilization (not Imports for implementing
Compensation for included spare construction and regulations
losses in certain parts) development of
circumstances electricity industry
 National Energy Mixed

CURRENT POSITION VISION 25/25

Gas 21 Gas 23
Coal Coal %
30,7 % %
32 %

Oil Oil
43,9 % NRE 20 %
NRE 25 %
4,4 %

By Directorate General of New

RE and Energy Conservation,
MEMR
 ENCOURAGEMENT OF RE UTILIZATION

President decree no 5/2006, Target RE for national

energy mixed of 17% by 2025

Oil Bio fuel 5%

20%
Coal
N&RE
Geothermal 5%
33%
17%
Biomas, Nuclear, Hydro, Solar
Gas Power, Wind Power 5%
30%
Coal Liquefaction 2%
 RESOURCES AND EXISTING CAPACITY
NO NEW/ RE RESOURCES INSTALL RATIO %
CAPACITY
1 2 3 4 5 = 43
1 Hydro Power 75,670 MW 5,705.29 MW 7.54

2 Geothermal 28,543 MW 1,189 MW 4.17

3 Mini/Micro Hydro 769.69 MW 217.89 MW 28.31

4 Biomass 49,810 MW 1,618.40 MW 3.25

5 Solar Power 4.80 kWh/m/day 13.5 MW -

6 Wind Power 3 6 m/s 187 MW -

7 Nuclear/Uranium 3.000 MW 30 MW 1.00

(e.q.24,112 ton) for 11 years*
Source: EBTKE-KESDM
* Only at Kalan West Kalimantan
 RUKN 2010 - 2029
GW TWh
200 800

180
700
160
600
140
~ 4.5 Times
500
120

100 400

80
300
60
200
40
100
20

0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Kebutuhan tambahan daya 4 8 12 16 20 25 30 36 42 48 54 62 70 79 89 100 112 125 140 156
Kapasitas existing *) 30 30 29 28 28 27 26 26 25 24 24 23 23 22 22 22 21 21 20 20
Beban Puncak 26 28 31 33 36 39 42 46 50 54 58 64 69 76 83 91 99 109 119 131
Kebutuhan tenaga listrik 145 157 169 183 198 215 233 253 274 298 325 353 385 419 458 500 546 597 653 716

Source: DJLPE-KESDM
 The Proposal of Electricity Price of Biomass to
Govt. of Indonesia by IRES (METI)
July 25, 2011

Biomass : Rp1,000/kWh
Biogas : Rp1,000/kWh
Municipal waste : Rp1,100/kWh (plus tipping fee
Rp150,000/ton*)

* Depend on local government regulation/capability

Incentive for Biomass & Biogas

Region F Price (Rp/kWh)

Java, Madura, Bali and 1.0 1,000
Sumatera

Kalimantan, Sulawesi, 1.2 1,200

NTB and NTT

Maluku and Papua 1.3 1,300

Incentive for Municipal Waste

Region F Price (Rp/kWh)

Java, Madura, Bali and 1.0 1,100
Sumatera

Kalimantan, Sulawesi, 1.2 1,320

NTB and NTT

Maluku and Papua 1.3 1,430

 Biomass Resources Ready to be
Developed as an Electricity

1. Palm oil, total area +/- 7.50 Million Ha

2. Rice husk, total area +/- 12.87 Million Ha
3. Bagasse, total area +/- 448.75 Ha
4. Municipal Waste
 Thank You
email : asenoaji17@yahoo.com