FINAL NREL Grid Tied Mini Hydropower Report

Grid-tied Mini-hydropower in
Sulawesi Barat: A Green

Prosperity Model Project
S. Booth, M. Elchinger, G. Hill, J. Katz, and
J. Barnett
National Renewable Energy Laboratory
Produced under direction of the Millennium Challenge Corporation by
the National Renewable Energy Laboratory (NREL) under Interagency
Agreement IAG-12-1866 and Task No. WFQ9.1012
NREL is a national laboratory of the U.S. Department of Energy

Office of Energy Efficiency & Renewable Energy
Operated by the Alliance for Sustainable Energy, LLC
Technical Report
NREL/TP-7A40-61695
March 2014
Contract No. DE-AC36-08GO28308

Grid-tied Mini-hydropower in
Sulawesi Barat: A Green
Prosperity Model Project
S. Booth, M. Elchinger, G. Hill, J. Katz, and
J. Barnett
National Renewable Energy Laboratory
Produced under direction of the Millennium Challenge Corporation
by the National Renewable Energy Laboratory (NREL) under
Interagency Agreement IAG-12-1866 and Task No. WFQ9.1012
NREL is a national laboratory of the U.S. Department of Energy

Office of Energy Efficiency & Renewable Energy
Operated by the Alliance for Sustainable Energy, LLC
National Renewable Energy Laboratory Technical Report

15013 Denver West Parkway NREL/TP-7A40-61695
Golden, CO 80401 March 2014
303-275-3000 www.nrel.gov
Contract No. DE-AC36-08GO28308
NOTICE
This manuscript has been authored by employees of the Alliance for Sustainable Energy, LLC (Alliance) under
Contract No. DE-AC36-08GO28308 with the U.S. Department of Energy (DOE).
The tables and figures in this report are limited to use in this report only and are not to be further disseminated or
used without the permission of the sources cited.
This report was prepared as an account of work sponsored by an agency of the United States government.
Neither the United States government nor any agency thereof, nor any of their employees, makes any warranty,
express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of
any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately
owned rights. Reference herein to any specific commercial product, process, or service by trade name,
trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation,
or favoring by the United States government or any agency thereof. The views and opinions of authors expressed
herein do not necessarily state or reflect those of the United States government or any agency thereof.
Cover Photos: (left to right) photo by Pat Corkery, NREL 16416, photo from SunEdison, NREL 17423, photo by Pat Corkery, NREL 16560,
photo by Dennis Schroeder, NREL 17613, photo by Dean Armstrong, NREL 17436, photo by Pat Corkery, NREL 17721.
Printed on paper containing at least 50% wastepaper, including 10% post consumer waste.
Contacts
For additional information about this report, please contact:
Sam Booth at samuel.booth@nrel.gov or 303-275-4625
Acknowledgments
This work is sponsored by Millennium Challenge Corporation. NREL appreciates the
contributions of our subcontractors PT Desainas, Institut Pertanian Bogor, Mr. Edi Setianto and
Mr. Chris Bennett, and of the staff of Millennium Challenge Account- Indonesia (MCA-I).
iii
Abbreviations and Acronyms
AWLR automatic water level recorder
CF counterfactual (base case)
CO 2 e carbon dioxide equivalent
DOE U.S. Department of Energy
ERR economic rate of return
FDC flow duration curve
GHG greenhouse gas
GIS geographical information system
Ha hectares
IDR Indonesia rupiah
IFC International Finance Corporation
IPB Bogor Agricultural University
IPP independent power producer
IRENA International Renewable Energy Agency
MCA-I Millennium Challenge Account-Indonesia
MCC Millennium Challenge Corporation
MEMR Ministry of Energy and Mineral Resources
mini-HPP mini-hydropower plant
NREL National Renewable Energy Laboratory
O&M operations and maintenance
PLN Perusahaan Listrik Negara (National Electricity Corporation of Indonesia)
PPA power purchase agreement
UKL/UPL Upaya Pengelolaan Lingkungan Hidup dan Upaya Pemantauan Lingkungan

Hidup
USD United States dollar
WP with project
iv
Preface
This study supports the Millennium Challenge Corporations (MCC) Compact with Indonesia. 1
NREL has contributed to the Compact in many areas, including by formulating project
evaluation guidance, participating in stakeholder forums, and developing studies of illustrative
projects meeting Indonesian and MCC requirements and aspirations.
Green Prosperity, the largest project of the Compact, seeks to address critical constraints to
economic growth while supporting the Government of Indonesias commitment to a more
sustainable, less carbon-intensive future. An ambitious project, Green Prosperity seeks to
contribute to some of Indonesias most prominent development priorities, including increased
access to clean and reliable energy in rural areas, and improving stewardship of natural
resources.
This report is one of a series evaluating eight model Green Prosperity projects on behalf of MCC
and the Indonesian implementing organization, Millennium Challenge Account-Indonesia
(MCA-I). Each report reviews the potential of a project centered on a defined geographic area, or
landscape. Ideal Green Prosperity projects will be designed to improve the economic conditions
of the people living in the identified landscape, integrating some combination of renewable
energy, natural resources management, and sustainable land use activities. The eight studies are
identified in Table P-1.
Note that two studies, centered on Rantau Suli village and Berbak National Park, are examples of
integrated projects strongly linking renewable energy production, natural resources management
and sustainable land use. The other six studies are also defined in a landscape context, but focus
more on particular project types identified in the Compact. All of the project types explored in
the series of eight model studies can be considered by project developers and sponsors for any
landscape, and in any combination that makes sense in local context.
Each study includes a project description; technical analysis; economic assessment;

environmental and land use impacts; and social implications. Other potential energy or land use
activities are also often noted. The studies are intended to serve as examples for potential project
sponsors, who may choose to propose something similar, or who may be inspired to propose
some other innovative project. Further, the technical, economic, environmental/land use, and
social discussions and analyses in these studies are intended to help guide the assessment of
proposals submitted to MCA-I for Green Prosperity funding.
This report does not constitute an endorsement of the identified projects by anyone, and does not
give the identified projects preferential status for funding. Additional detailed analysis of formal
proposals would be needed prior to any investment decision.
1
Additional information about the Millennium Challenge Corporations Indonesia Compact is available at
http://www.mcc.gov/pages/countries/program/indonesia-compact.
v
Table P-1. The Eight-Model Green Prosperity Projects
Model Project Kabupaten/Province Emphasis
Mini-hydropower, with protection
Rantau Suli Integrated Project Merangin, Jambi
of forested catchment area
Forest protection and restoration,
Berbak National Park Integrated
Muaro Jambi, Jambi with off-grid solar photovoltaic
Project
power production
Methane Capture for Power Power production from methane
Muaro Jambi, Jambi
Generation captured from palm oil mill effluent
Training to improve cacao yields,
Mamuju and Mamasa, Sulawesi
Cacao Intensification as an example of agricultural
Barat
intensification
Solar photovoltaic power for an
Karampuang Island Solar island, with project options
Mamuju, Sulawesi Barat
Photovoltaic Electricity including connection to the
mainland grid
Assessment of a larger mini-
Grid-tied Mini-hydropower Mamasa, Sulawesi Barat
hydropower project
Forest boundary protection
Community Agroforestry Mamuju, Sulawesi Barat through community-based
peripheral agroforestry
Transaction/implementation cost
Aggregated Micro Hydropower Mamasa, Sulawesi Barat reduction through aggregation of
small projects
vi
Executive Summary
A project to provide hydroelectric power to the grid plus economic development for villages in
the Bambang sub-district of Mamasa has been examined as one of several Green Prosperity
Program model studies. This report includes an overview of the project, technical assessment,
economic analysis, assessment of environmental and spatial land use issues, assessment of social
and gender impacts/opportunities, and potential risks related to this model project.
Project Overview
The main element of this project is building a grid-connected mini-hydropower plant that can sell
power to Perusahaan Listrik Negara (PLN), the National Electricity Corporation of Indonesia.
The benefits of this project will be that it can provide green power to PLN as well as provide a
potential revenue stream for community development projects. An independent power producer
(IPP) could be funded to build a hydropower system with a loan from MCC/MCA-I. As part of
this project, the sponsor would be required to make payments to a community development fund
from the revenue of the project. The sponsor could be required to make an equity contribution to
the project, obtain the necessary permits, and secure a power purchase agreement (PPA).
Bambang was selected from several sites in the Mamasa region because it had good road access,
a nearby PLN line for easy interconnection, and good hydrologic resource capacity. Several
potential project sponsors have already studied the site and had discussions with MCC/MCA-I. A
key challenge for this project will be the ability of PLN to transport the power produced to the
communities of Mamuju or Poliwali because the local demand in the Mamasa region is not large
enough to utilize all of the power produced from this project. The community development fund
is required to meet MCC/MCA-Is goals of poverty reduction and economic development. The
community development fund would focus on items such as improved cacao and coffee
cultivation, increased electrification, and other areas of need identified by the villagers.
Technical Assessment
The technology for hydroelectric generation is mature and readily available in Indonesia.
Desainas an expert Indonesian hydropower technology company was hired for this project to
help assess the technical hydropower potential.
The proposed project is a diversion or run-of-the-river hydropower system and no reservoirs are
needed. However, several types of civil works are required to capture, direct, and maintain the
water flow for the hydropower plant. These include a weir, intake and settling basin, forebay,
penstock, and powerhouse. The powerhouse contains the additional electrical and mechanical
equipment such as the turbine and generator.
Hydrologic analysis is required for mini-hydropower plant (mini-HPP) development and

feasibility analysis. A good analysis will inform the project of the availability of water, the
stability or variation in water flow, location of the mini-HPP building in relation to flood zones,
and impacts of turbine discharge. For Bambang, since no direct flow data was available, an
estimate of river flow data was made using two different methods: scaling data from a
neighboring watershed (automatic water level recorder [AWLR]) and water balance calculations
based on the F.J. Mock evapotranspiration model. The two different methods were used to
generate flow duration curves. Table ES-1 shows a comparison of the data and the deviation
vii
between the methods. The F.J. Mock-calculated flow values were used in the design feasibility
analysis.
Table ES-1. Comparison of AWLR and F.J. Mock Method Estimated Bambang mini-HPP Site Flow
Probabilities
Observed Difference
Observed Simulation
Discharged Observed
Probability Discharged Discharged
Bambang MINI- Simulation
(%) Mamasa River F.J. Mock
3 HPP 3 Discharge
(m /s) 3 (m /s) 3
(m /s) (m /s)
10 158.00 20.71 20.75 -0.04
20 112.29 14.72 16.39 -1.68
30 93.10 12.20 13.75 -1.54
40 82.00 10.75 11.02 -0.28
50 68.00 8.91 8.71 0.20
60 56.50 7.40 7.02 0.38
70 42.10 5.52 4.89 0.62
80 32.10 4.21 3.21 1.00
90 25.80 3.07 1.12 1.95
100 25.80 0.91 0.22 0.69
The system being considered for Bambang has design flow of 6.53 m3/s and a net head of 117 m.
The initial design is for a maximum power output of 6,000 kilowatt (kW) from two 3,000-kW
turbines. The turbine selected for this project by Desainas was a normal speed Francis turbine.
The project would have a capacity factor of 69% and an estimated total production of 36,486
megawatt-hours (MWh)/year.
The hydroelectric system would be connected to the PLN utility grid. The proposed powerhouse
location is approximately 1/3 of a kilometer mi from the nearest PLN line. The power would be
sold to PLN at the standard feed-in tariff rate of Indonesia rupiah (IDR) 787/kW-hour (kWh) for
medium voltage power in Sulawesi.
The system would cost roughly IDR 20,250/W to build, totaling IDR 121.5 billion (U.S. dollars
[USD] 11.5 million). These costs are approximately USD 2/Watt (W), well within the normal
range for a hydropower plant, especially in a remote area. Operations and maintenance (O&M)
requirements were analyzed and include maintenance of the civil works, power production
equipment such as the turbine and generator, and electrical system maintenance. O&M costs of
2.5% of capital costs or approximately IDR 3 billion were used for the hydropower project
components. O&M of the power plant will require approximately 510 people. Sample positions
include a manager, power plant operators, administrative staff, and maintenance personnel.
Technical risks include: flow degradation from loss of forest, damage to civil works from
flooding and landslides, damage to the turbine from silt and sediment in the water, and improper
O&M. These risks could be partially mitigated though selection of qualified personal, good
system design, proper catchment area protection, and appropriate oversight.
viii
Community Development Fund
This project includes the creation of a community development fund. The purpose of including
this fund in the project was to ensure that the MCC/MCA-I goals of poverty reduction and
economic development in the local region are fulfilled. Without this fund or a similar mechanism
to share the benefits of this project with the local community, these goals will not be achieved
and direct benefits would only be provided to the IPP and to PLN.
Additionally MCC/MCA-I stated that they did not want to fund projects that a standard
Indonesian bank could fund. Hydropower projects in Indonesia are relatively mature and can
receive bank funding. The community development fund also helps differentiate this project
from a standard bank-funded hydropower project.
Thus the creation of the community development fund is an essential part of this project to
ensure that the goals of the Green Prosperity Program are fulfilled. Full analysis of the options
for a community development fund in the area was beyond the scope of this prefeasibility study
since the report was primarily focused on hydropower project feasibility. However, some initial
analysis uncovered many areas of need in the community including capacity building for cacao
and coffee cultivation, increased electrification, more clean drinking water and sanitation, and
access to credit. The community near Bambang has many needs which could be good for
achieving MCC/MCA-Is goals of green prosperity in the region. Since there is a direct goal of
poverty reduction and economic development, it seems like programs focused toward increasing
the incomes of farmers cultivating cacao and coffee, the dominant economic activities for most
households in the region, could be a good fit for the community development program.
Economic Assessment
This project performs very well from an economic perspective. The net present value (NPV)
created by the project is IDR 284 billion (USD 26.9 million), with an economic rate of return
(ERR) of 32.4%. The primary benefit to the project is created by avoided PLN generation cost.
In Sulawesi, PLNs weighted average generation cost is IDR 1,596/kWh, compared to a
hydropower feed-in tariff of IDR 787/kWh. The total benefit to PLN for this cost reduction is
IDR 289 billion (USD 27.4 million). This 6-MW mini-HPP would produce 36.5 million kWh
annually at half the cost to PLN and a levelized cost per kilowatt-hour of IDR 124. The system
would cost IDR 20,250/W to build, totaling IDR 121.5 billion (USD 11.5 million). A seven
percent share of IPP revenue would be paid to a community development fund, and would
deliver net present value of IDR 11.4 billion to the local community.
The economic returns of the project are large and relatively stable across large input ranges. The
sensitivity analysis performed reveals that the project delivers economic returns well above the
10% MCC/MCA-I target even at very conservative input values. The input with the largest
impact on project returns is PLNs cost of avoided generation. PLN annual reports provide
generation costs for most technologies with the exception of rented diesel and purchased power.
An analysis using the full range of possible input values for these was conducted to ensure that
the deterministic value used was reasonable or, at the very least, conservative. A double-variable
sensitivity analysis was also conducted to examine the impact of the full range of this value and
the growth rate over the project period. At low growth rates and avoided generation costs, the
project delivers a return well above 10%.
ix
The risks associated with project performance pertain mostly to project execution rather than to
input variables. Most inputs are known with relative certainty, and project returns are not
particularly sensitive to those that are not. Rather, the more significant risk is whether the system
can be built to the designed specifications, obtain appropriate permits and offtake agreements,
and be managed effectively over the full project period. Despite these risks, this is still an
attractive project from an economic perspective.
Environmental and Spatial Land Use Assessment

Initiating any project in Indonesia will require permits and/or licenses from the government of
Indonesia. This includes an environmental permit for projects with potential for environmental
impacts. For the project under consideration, since it is an electricity generation project with
capacity less than 10 MW, the Upaya Pengelolaan Lingkungan Hidup dan Upaya Pemantauan
Lingkungan Hidup (UKL-UPL) is the only required environmental document. MCC also
requires that Green Prosperity projects adhere to the International Finance Corporation (IFC)
Performance Standards
A preliminary list of positive environmental impacts of this project includes:
Clean energy source that will be nearly carbon neutral.

An increase in renewably generated electricity contributing to Indonesias 2025
renewable energy target of 15% renewable power. 2
Potential negative environmental impacts include:

Construction-phase environmental disturbances, which might include heavy construction
equipment impacting roads and air quality.
Longer-term impacts of added infrastructure (powerhouse, waterway, roads, and power
line connection to PLN).
This project will reduce overall greenhouse gas (GHG) emissions. The preliminary estimate of
the GHG emission reduction associated with the mini-hydropower project is 9,741 tons carbon
dioxide equivalent (tCO2e) per year. This reduction is from an increase in clean power being
sold by PLN of 0.267 tCO2e/kWh.
Social Assessment
The social assessment for this project was developed with information gathered during the
National Renewable Energy Laboratory (NREL) and MCA-I team site visits and information
gathered by Bogor Agricultural University (IPB), under subcontract to NREL. Two villages were
visited in the Bambang sub-district Bambang Village and Masoso Village. The villages were
chosen because they are the locations of the powerhouse (Bambang) and intake (Masoso). The
local inhabitants in these villages are of Mamasa ethnic decent. Most of the villagers are
practicing Christians and the church plays a significant role in village life. The average per capita
income in Mamasa Regency in 2012 was IDR 4,789,581. This translates to an average daily
income of approximately USD 1.25. Of the villagers in Bambang, 81% are classified as either
2
http://www.icafrica.org/fileadmin/documents/Knowledge/GIZ/Legal Frameworks for Renewable Energy.pdf
x
very poor, poor, or near poor by Indonesian standards. Most villagers lack access to clean
drinking water and proper sanitation facilities.
The principal income sources for most villagers in this region are cash crops such as cacao and
coffee as well as income from being hired as day laborers. Villagers grow a variety of crops for
subsistence but not typically for sale including rice, potatoes, corn, and vegetables. The forests in
the region appear to be in good condition and relatively well managed. Females are often
marginalized in the region and they lack access to farmers groups and are discouraged from
speaking during village meetings. The power structure in the villages in the project area seems to
vary by village but with the common theme that existing village leaders, church leaders, elite
members, and family relationships yield much of the power and control over new projects in the
village.
The principle economic benefits of this project accrue to PLN and the IPP unless a community
development fund or other mechanism was implemented to provide benefits to local villagers.
The community development fund could address many of the needs identified such as improved
coffee and cacao cultivation, improved drinking water and sanitation access, and increased
electricity access. If the community development fund received an estimated 7% of project
revenue, this would provide roughly IDR 1.5 billion each year for community improvement
projects. This would be enough money to provide training to each cacao farmer.
The project would create a large number of local jobs during construction. A smaller number of
permanent local jobs, likely 510, in the O&M of the power plant would also be created. Active
engagement and involvement from the local community will be critical to the success of this
project. Initial engagement should include a series of stakeholder meetings to communicate
project plans. In proceeding with investments in this area, MCC/MCA-I could insist on including
women and any other minorities such as migrants or marginalized groups. These meetings will
allow the project sponsor to understand what aspects of the project are most important to the
community as well as identify social risks related to the project.
Conclusions
Overall the Bambang mini-HPP project seems to meet the goals of MCC/MCA-I for a Green
Prosperity project at this stage, if a community development fund is included. With or without a
community development fund, the project provides a reasonable return to an IPP so that private
sector interest in the project could be obtained and significant cost reduction for PLN could be
achieved. The overall project provides an ERR of 34% including overhead costs, which is well
above the set MCC/MCA-I 10% threshold making it an economically viable project.
The project supports poverty alleviation through the inclusion of a community development
fund. Such a fund could provide programs to increase the incomes of farmers who represent the
dominate occupation in the region. The project also encourages other economic development,
and thus poverty alleviation, by providing an increased supply of electricity that could be used
for new businesses and value added agricultural processing in the region. The project provides
all these benefits while maintaining the natural resource management in the area and providing a
reason for villagers in the catchment area to protect the hydrological resource. This, along with
the supply of renewable energy, ensures that carbon emissions are reduced and that the
environmental goals of the Green Prosperity program are maintained.
xi
While this prefeasibility study indicates positive potential, there are still many unknowns and
potential areas for additional study. The key risks for this project are the ability for an IPP to
obtain a PPA with PLN and the ability for PLN to export the generated power out of the Mamasa
region.
This project evaluation is intended to provide helpful guidance to sponsors developing similar
projects, and to evaluators of integrated energy/natural resources management/sustainable land
use project proposals submitted to MCA-I in application for Green Prosperity funding.
xii
Table of Contents
Preface ......................................................................................................................................................... v
Executive Summary .................................................................................................................................. vii
Project Overview .................................................................................................................................. vii
Technical Assessment .......................................................................................................................... vii
Community Development Fund ................................................................................................... ix
Economic Assessment ........................................................................................................................... ix
Environmental and Spatial Land Use Assessment ................................................................................. x
Social Assessment .................................................................................................................................. x
Conclusions ........................................................................................................................................... xi
1 Project Overview................................................................................................................................... 1
1.1 Project Location and Natural Features .......................................................................................... 1
1.2 Current Population and Economic Activities ................................................................................ 6
1.2.1 Mamasa ............................................................................................................................ 6
1.2.2 Bambang Sub-district ....................................................................................................... 8
1.3 Project Description and Rationale ............................................................................................... 11
1.4 Project Logic ............................................................................................................................... 11
1.5 Offtake or Market Plan ................................................................................................................ 13
1.6 Business Case and Financial Structure ........................................................................................ 14
1.6.1 Financial Feasibility of Project ...................................................................................... 14
1.7 Project Team ............................................................................................................................... 14
1.8 Project Site .................................................................................................................................. 15
1.8.1 Other Project Sites Considered ...................................................................................... 18
1.9 Permits and Licenses ................................................................................................................... 18
1.10 Project Implementation Plan ....................................................................................................... 19
2 Technical Assessment ....................................................................................................................... 22
2.1 Technical Approach .................................................................................................................... 22
2.2 Resource Assessment .................................................................................................................. 26
2.3 Current Energy Baseline ............................................................................................................. 30
2.4 Technical Feasibility ................................................................................................................... 34
2.4.1 Preliminary Design Specifics ......................................................................................... 34
2.4.1.1 Conceptual Design Details ................................................................................. 37
2.4.1.2 Capital Cost Estimate ......................................................................................... 39
2.5 Operational Feasibility ................................................................................................................ 44
2.5.1 O&M Requirements ....................................................................................................... 44
2.5.2 O&M Personnel.............................................................................................................. 44
2.6 Technical Risk Assessment ......................................................................................................... 45
2.6.1 Mitigation Plan for Identified Risks ............................................................................... 46
2.6.2 Monitoring and Evaluation Plan .................................................................................... 46
3 Community Development Fund ........................................................................................................ 47
3.1 Cacao Sanitation and Intensification ........................................................................................... 47
3.2 Coffee Intensification .................................................................................................................. 51
3.3 Electrification of Villages ........................................................................................................... 51
3.4 Other Interventions ...................................................................................................................... 52
4 Economic Assessment ...................................................................................................................... 53
4.1 Overview ..................................................................................................................................... 53
4.2 Assumptions ................................................................................................................................ 54
4.3 Project Benefit Streams ............................................................................................................... 58
4.4 Results ......................................................................................................................................... 59
4.4.1 Economic Analysis......................................................................................................... 59
xiii
4.4.3.1 IPP Financing and Return Sensitivity Discussion .............................................. 64
4.4.3.2 Community Benefit Sensitivity Discussion ....................................................... 67
4.4.3.3 PLN Generation Cost Sensitivity Discussion .................................................... 69
4.4.3.4 Other Input Sensitivity Discussion..................................................................... 70
4.5 Economic Risk Assessment ........................................................................................................ 71
4.5.1 Additional Risks ............................................................................................................. 72
5 Environmental and Spatial Land Use Assessment ......................................................................... 74
5.1 Environmental Impact Assessment ............................................................................................. 74
5.2 Compliance with Legal Requirements and Performance Standards ........................................... 76
5.2.1 Relevant Indonesian Laws ............................................................................................. 77
5.2.2 Application to the Proposed Project ............................................................................... 78
5.3 Greenhouse Gas (GHG) Emissions Impact ................................................................................. 79
5.4 Spatial Land Use Planning .......................................................................................................... 80
6 Social Assessment ............................................................................................................................. 82
6.1 Community Impacts .................................................................................................................... 82
6.1.1 Results from Community Demographic Assessment ..................................................... 82
6.1.2 Results from Impact Assessment ................................................................................... 84
6.2 Community Engagement Plan ..................................................................................................... 84
6.2.1 Community Engagement Activities ............................................................................... 84
6.3 Impact on Local Labor, Goods, and Services.............................................................................. 85
6.4 Social Risks ................................................................................................................................. 86
6.4.1 Mitigation Plan for Identified Social/Gender Risks ....................................................... 86
6.4.2 Monitoring and Evaluation Plan Ensuring Social/Gender Equity.................................. 86
7 Conclusion and Next Steps ............................................................................................................... 88
7.1 Conclusion................................................................................................................................... 88
7.2 Additional Analysis Suggested ................................................................................................... 88
7.3 Lessons and Findings Related to General Green Prosperity Operations and Implementation .... 89
7.4 Suggested Next Steps .................................................................................................................. 89
Appendix A: Geospatial Maps ................................................................................................................. 92
Appendix B: PLN PPA Chart .................................................................................................................... 94
Appendix C: Hydropower Technical Report ........................................................................................... 96
Appendix D: Details of Economic Calculations and Modeling............................................................. 97
Appendix E: PLN Information ................................................................................................................ 100
Appendix F: IPB Social Assessment Report ........................................................................................ 103
xiv
List of Figures
Figure 1. Representative images of Mamasa and the project site ................................................................. 1
Figure 2. Mamasa location within West Sulawesi ........................................................................................ 2
Figure 3. Mamasa sub-districts ..................................................................................................................... 3
Figure 4. The route to reach Mamasa district ............................................................................................... 4
Figure 5. Mini-HPP site area ........................................................................................................................ 5
Figure 6. Mambi River near mini-HPP site .................................................................................................. 6
Figure 7. Population and income from 2008 to 2012.................................................................................... 7
Figure 8. Bambang mini-HPP Project Logic .............................................................................................. 12
Figure 9. Road from Mambi to Bambang ................................................................................................... 15
Figure 10. Road, start of trail, and bridge near mini-HPP project site ........................................................ 16
Figure 11. Trail leading from river to the road and nearby rice paddies..................................................... 16
Figure 12. Bridge near project site .............................................................................................................. 17
Figure 13. Powerhouse location (Note rice terraces) .................................................................................. 17
Figure 14. Path on opposite side of bridge that follows along the river near which the waterway would
need to be built ....................................................................................................................... 18
Figure 15. Example of diversion hydropower system ................................................................................ 22
Figure 16. Relationship between power, flow, and head in a hydropower system ..................................... 24
Figure 17. GIS Analysis of potential system head ...................................................................................... 25
Figure 18. Hydropower turbine selection chart .......................................................................................... 26
Figure 19. River flow measurements Masoso Village ................................................................................ 27
Figure 20. FDC for Bambang mini-HPP from AWLR measure data in the Mamasa River ....................... 28
Figure 21. Comparison of observed monthly discharge (AWLR) and estimated monthly discharge using
the F.J. Mock Method for Bambang mini-HPP site ............................................................... 29
Figure 22. Comparison of AWLR and F.J. Mock Method estimated Bambang mini-HPP site FDC......... 29
Figure 23. Masoso micro hydropower installation ..................................................................................... 32
Figure 24. Topographic survey ................................................................................................................... 36
Figure 25. Conceptual layout of Bambang mini-HPP ................................................................................ 37
Figure 26: Hydroelectric cost charts from a variety of studies ................................................................... 42
Figure 27. Hydroelectric costs by country .................................................................................................. 42
Figure 28. Hydroelectric costs for developing countries ............................................................................ 43
Figure 29. Hydroelectric cost charts showing breakdown of capital costs ................................................. 43
Figure 30. Mambi cacao industry photos .................................................................................................... 49
Figure 31. Coffee sale and cultivation in the Mamasa district .................................................................... 51
Figure 32. Historical PLN generation cost by technology .......................................................................... 56
Figure 33. Number of generating units by technology ............................................................................... 56
Figure 34. Compound annual growth rates of generating units and generation cost by technology .......... 57
Figure 35. Net benefits ................................................................................................................................ 60
Figure 36. NPV for different time horizons ................................................................................................ 60
Figure 37. NPV of benefits by beneficiary group ....................................................................................... 61
Figure 38. Net benefits by beneficiary group over time ............................................................................. 62
Figure 39. Distribution of economic outcomes ........................................................................................... 63
Figure 40. Sensitivity parameter contribution to ERR variance ................................................................. 64
Figure 41. Tradeoff between IPP return and community benefit................................................................ 65
Figure 42. Sensitivity of IPP NPV to interest rate and leverage ................................................................. 66
Figure 43. Range of possible IPP returns.................................................................................................... 66
Figure 44. Sensitivity of IPP return to sensitivity parameters .................................................................... 67
Figure 45. Sensitivity of project ERR to community benefit multiplier and share applied ........................ 68
Figure 46. Range of possible community benefit NPV .............................................................................. 68
Figure 47. Sensitivity of community benefit NPV to sensitivity parameters.............................................. 69
xv
Figure 48. Sensitivity of project ERR to generation cost and cost growth ................................................. 70
Figure 49. Sensitivity of project ERR to capital cost multiplier ................................................................. 70
Figure 50. Sensitivity of project ERR to generator capacity factor ............................................................ 71
Figure 51. Weir and intake rendering ......................................................................................................... 75
Figure 52. Mamasa land use ....................................................................................................................... 81
Figure 53. Map of Mamasa district ............................................................................................................. 92
Figure 54. Topographic map of Mambi area that includes project site....................................................... 93
Figure 52. Electricity map of West Sulawesi ............................................................................................ 100
xvi
List of Tables
Table P-1. The Eight-Model Green Prosperity Projects .............................................................................. vi
Table ES-1. Comparison of AWLR and F.J. Mock Method Estimated Bambang mini-HPP Site Flow
Probabilities .......................................................................................................................... viii
Table 1. Income Distribution in Mamasa...................................................................................................... 7
Table 2. Percentage of Mamasa Residents below the Indonesian Poverty Line ........................................... 8
Table 3. Village Populations in Bambang Sub-district ................................................................................. 9
Table 4. Commodity Cash Crop Production in Bambang and Mamasa ..................................................... 10
Table 5. Fruit, Vegetable, and Grain Production in Mamasa...................................................................... 10
Table 6. Estimated Project Timeline ........................................................................................................... 21
Table 7. Comparison of AWLR and F.J. Mock Method Estimated Bambang Mini-HPP Site Flow
Probabilities ........................................................................................................................... 30
Table 8. Bambang Electrification Details ................................................................................................... 31
Table 9. Existing Micro Hydropower in Mamasa....................................................................................... 32
Table 10. PLN Growth Projections ............................................................................................................. 34
Table 11. Hydropower System Sizes and Flows Considered ..................................................................... 35
Table 12. Bambang Mini-HPP System Design Flow Parameters ............................................................... 35
Table 13. Bambang Mini-HPP System Design Values............................................................................... 35
Table 14. Bambang Mini-HPP System Conceptual Design Parameters ..................................................... 37
Table 15. Conceptual Design Component Details ...................................................................................... 38
Table 16. Construction Cost Estimate......................................................................................................... 40
Table 17. Cacao Hectares under Cultivation............................................................................................... 48
Table 18. Calculation of Weighted Average Generation Cost .................................................................... 55
Table 19. Average Sulawesi Selling Price and National Compound Annual Growth Rate........................ 57
Table 20. Mini-HPP Capital Costs (IDR) ................................................................................................... 58
Table 21. Economic Results ....................................................................................................................... 59
Table 22. Distribution of Benefits............................................................................................................... 61
Table 23. IFC Performance Standards ........................................................................................................ 77
Table 24. Relevant Indonesian Environmental Laws ................................................................................. 77
Table 25. GHG Emissions Reduction Potential from Bambang Mini-hydropower Plant .......................... 79
Table 26. Mamasa Land Use Area .............................................................................................................. 81
Table 27: Social IFC Performance Standards ............................................................................................. 87
Table 28. Model Input and Sensitivity Parameters ..................................................................................... 97
xvii
1 Project Overview
The intention of this prefeasibility study is to review the potential for a grid-connected mini-
hydropower project in Mamasa near the village of Bambang. The project would involve
construction of a mini-hydropower plant (mini-HPP) and the creation of a community
development fund so that the benefits of the project would be shared with the local population.
The report examines the potential for this project to address MCC goals for economic
development and poverty reduction. The report covers major areas such as background,
economics, technical analysis, social assessment, environmental assessment, and
recommendations. The report is not a full feasibility study and thus does not cover every topic in
depth. Further analysis may be needed in numerous areas in this report prior to making an
investment decision such as detailed system design, vendor quotes, further social assessment,
and verification of permits.
1.1 Project Location and Natural Features

The site for this hydropower project is located near the village of Bambang in the Bambang sub-
district. Bambang sub-district is located near the city of Mambi in Mamasa district in West
Sulawesi Province. A detailed map of Mamasa can be found in Appendix A. The area near the
project site and the majority of Mamasa district consists of rugged, hilly terrain with many rivers
and watersheds. A large portion of the available land is utilized for agriculture. The pictures
below show some examples including: the river going through the central part of Mamasa town,
the road between Sumarorong and Mambi during the rain, rice terraces near the mini-HPP
project site, and coffee growing near the project site.
Figure 1. Representative images of Mamasa and the project site

Source: Sam Booth, NREL
1
The following figures show the district of Mamasa, the sub-districts that make up the district,
and the main road in the region as well as the project location. Bambang is both a sub-district
and a village. Further references to Bambang will refer to the district and not the village unless
otherwise noted.
Mamasa District location
Figure 2. Mamasa location within West Sulawesi

Source: Desainas
2
3
Figure 3. Mamasa sub-districts
3
Mamasa Regency in Figures 2011, BPS, Statistics of Mamasa Regency, page 5.
3
Mamuju City
Bambang Mini-HPP
Mamasa City
Pana
Poliwali Mandar
Figure 4. The route to reach Mamasa district

Source: Desainas
Figure 5 shows the location of the proposed intake and powerhouse for the mini-HPP project,
nearby villages, catchment area, and forest designations. The intake is in the village of Masoso,
and the powerhouse is in the village of Bambang.
4
Figure 5. Mini-HPP site area
Source: Chris Bennett and Martin Hardiono, MCC/MCA-I
Figure 5 shows that the catchment area for the proposed mini-HPP system resides almost entirely
within the Bambang sub-district. The map also shows a substantial amount of forest cover with
the majority of this being protected forest.
A topographic map for the area near the proposed project site can be found in Appendix A.
Figure 6 shows the Mambi River near the proposed powerhouse site. The figure also shows
another good example of the forested and hilly terrain in Mamasa.
5
Figure 6. Mambi River near mini-HPP site
Bambang has 6,569 hectacres of forest land 4,738 hectacres of this is protected forest. This is
about 3% of the total forest in Mamasa and about 3% of the total protected forest in Mamasa.
1.2 Current Population and Economic Activities

The information in this section was provided by the 2010 Mamasa Census 4 conducted by the
Indonesian government, unless otherwise noted.
1.2.1 Mamasa
The total population of Mamasa regency was 140,082 (32,268 households) as of the 2010
census. The population is nearly equally divided between male and female residents with 51% of
the population male, 49% female. Of the 71,089 male residents, only 36,779 were reported as
over ten years of age and in the work force (approximately 52% of the male population). For
women this ratio was even lower, with 28,598 (or 41%) of the 68,993 female residents over ten
years old currently employed. Unemployment in Mamasa was reported as about 2%.
The per capita income and population of the Mamasa district from 2008 to 2012 can be seen in
Figure 7. This shows that the per capita income in Mamasa in 2012 was IDR 4,789,581.
Community income shows a positive trend from 2008 to 2012, where the average growth was
3% per year, although in 2010 it decreased 2%. The number of inhabitants in Mamasa Regency
was 146,292 people in 2012. The population also showed an average growth of 4% per year.
4
Mamasa Regency in Figures 2011, BPS, Statistics of Mamasa Regency
6
Figure 7. Population and income from 2008 to 2012
Source: IPB
The current average annual per capita income is IDR 4.8 million per household or IDR 400,000
per month (approximately USD 40 per month). The distribution of income by percentages of
households per month is shown in Table 1. This distribution is from the 2010 census, adding the
average inflation rate in Indonesia from 2010 to 2013 of 5% 5 would increase each of these
incomes by approximately 15%.
Table 1. Income Distribution in Mamasa

IDR Per
100,000 150,000 200,000
Month in <100,000 >300,000
149,000 199,000 299,999
2010
Percent 1% 9% 21% 38% 31%
Average monthly spending per capita in Mamasa in 2010 was IDR 291,085of this, IDR
182,792 was spent on food and leaving an average of IDR 108,293 available to spend on non-
food items such as energy.
Large portions of the population are living below the Indonesian poverty line, with percentages
of residents classified as poor ranging from 43% to 92% in the villages throughout Mamasa. The
specific percentages of almost poor, poor, and very poor are shown in Table 2. The village of
Bambang is highlighted in Table 3.
5
http://www.tradingeconomics.com/indonesia/inflation-cpi
7
Table 2. Percentage of Mamasa Residents below the Indonesian Poverty Line
Village Almost Poor Poor Very Poor

Sumarorong 29% 14% 6%
Messawa 33% 17% 7%
Pana 42% 20% 8%
Nosu 29% 12% 8%
Tabang 24% 27% 41%
Mamasa 20% 14% 9%
Tanduk Kalua 18% 22% 30%
Balla 32% 20% 15%
Sesenapadang 30% 21% 16%
Tawalian 26% 18% 13%
Mambi 23% 33% 26%
Bambang 30% 28% 23%
Ran.Timur 37% 22% 10%
Aralle 47% 40% 56%
Tabulahan 23% 22% 16%
The average education level in Mamasa is low. The maximum education level for 50% of the
population is elementary school, for 17% it is junior high school, for 15% it is high school. At
the two ends of the spectrum, 13% have no schooling, and approximately 7% have college or
beyond. About 60% of the residents in Mamasa do not have access to clean drinking water
sources.
1.2.2 Bambang Sub-district

The mini-HPP project site is physically located in Bambang sub-district in the Mamasa district.
While not all data available at the district level were available for the sub-district, a significant
amount of information was found.
The population of the Bambang sub-district is about 10,300 people in approximately 2,650
households in 20 villages. Table 3 shows the villages in the Bambang sub-district and their
estimated populations.
8
Table 3. Village Populations in Bambang Sub-district
Approximate
Village Households
Population
Balatana 97 388
Bambang 242 968
Bambang Timur 189 756
Lembangmokallang 146 584
Limbadebata 166 664
Masoso 96 384
Minanga 243 972
Rantelemo 89 356
Rantetarima 89 356
Saluassing 219 876
Salubulo 94 376
Saludengen 116 464
Salukadi 132 528
Salukepopo 161 644
Salururu 57 228
Salutabang 67 268
Sikamase 89 356
Tanete Tomba 79 316
Ulumambi 134 536
Ulumambi Barat 142 568
6
TOTAL 2,647 10,588
There are 2,569 houses in Bambang, 491 below 19 m2 in size, 1,531 from 2049 m2, 547 from
5099 m2, and none larger than this. The modest size of homes in the region provides another
illustration of the level of development.
Bambang has one public health center, seven public health clinics, and one mobile public health
center. These health centers could benefit from the community development fund for this project.
The vast majority of people in Bambang are farmers. The farmers produce crops for subsistence
such as rice, corn, cassava, and vegetables. They also produce cacao and coffee (Arabica and
Robusta) crops for income. Planted areas in hectares (Ha) and production weights are shown in
Table 4 for Mamasa and Bambang.
6
The total population number uses a census average of four people per household in Bambang. The total population
differs slightly from the census total because this is an estimate; census total is assumed to be correct.
9
Table 4. Commodity Cash Crop Production in Bambang and Mamasa
Area Area with Area with
Total
with Old or no Number Bambang
Total District
Commodity Yielding Damaged Yielding 7 of Production
(Ha) Production
Crops Crops Crops Farmers (ton)
(Ha) (Ha) (Ha)
Cacao 3500 200 2500 6200 2550 5212 1750
Arabica
100 250 100 450 850 2176 60
Coffee
Robusta
150 300 150 600 950 871 75
Coffee
A number of the other crops are grown primarily for subsistence in the region; these are shown
below.
Table 5. Fruit, Vegetable, and Grain Production in Mamasa
Planted Harvested Production
Fruits
Area (aa) Area (Ha) (ton)
Passion Fruit 5.0 5.0 50.0
Avocado 2.0 0.5 1.7
Spinach 1.5 1.5 4.5
Spring Onions 0.8 0.8 1.2
Sweet
18.0 61.0 34.0
Potatoes
Cassava 22.0 99.0 45.0
Durian 5.0 3.0 50.0
Corn 2.0 2.0 7.2
Peanut 7.0 7.0 10.5
Rice 1032.0 1032.0 2993.0
Table 5 shows minimal production of fruits or vegetables. While the production of rice is large,
the majority of this is for household consumption.
Many households in this region struggle to produce enough food to properly feed their families,
and lack the income to purchase much additional food. As a result, poor nutrition is believed to
have led to stunted growth of children in West Sulawesi. It was estimated that about 42% of
children in the area are below their expected height due to poor nutrition and health care [1].
While the MCC/MCA-I Green Prosperity initiative is not directly focused on nutrition, the link
between it and economic development should be noted and opportunities to improve it
considered. The United Nations Childrens Fund (UNICEF) makes this link in the following
statement:
Childhood under-nutrition makes learning more difficult and ill health more likely,
which hinders a childs capacity to secure a job as an adult, and the cycle of
generational poverty and under-nutrition continues [2].
7
Current production hectares of Cacao are believed to be closer to 12,000 Ha in Mamasa by Cacao companies such
as Nestle and Mars, which have conducted recent field surveys in the region.
10
1.3 Project Description and Rationale
This project is centered on building a mini-HPP system that can sell power to the utility PLN.
This system provides green power to PLN as well as provides a potential revenue stream for
community development projects in Bambang. An IPP would be funded to build a mini-HPP
system with a loan from MCC/MCA-I. As part of this project, the sponsor would be required to
make payments to a community development fund from the revenue of the project. This aspect
of the project is required to ensure that the MCC/MCA-I goals of poverty alleviation are
obtained. Without this component, the only beneficiaries of the project would be the IPP and
PLN and the MCC/MCA-I goals for green prosperity would not be fulfilled. The community
development fund would consult with local villagers about needs related to green prosperity and
provide loans, grants, and capacity building in a variety of areas.
This area of Indonesia offers MCC/MCA-I a large potential to fund similar projects related to
both hydropower development and natural resource management. NREL has evaluated other
projects in the region including, Aggregated Micro Hydropower in Mamasa, Karampuang Island
Solar Photovoltaic Electricity and Community Agroforestry in Mamuju, and Cacao
Intensification in West and South Sulawesi. Other promising projects in the Mamasa area
include options for hydropower of all sizes, cacao intensification, coffee intensification, and
community forestry.
1.4 Project Logic

In an international development context, a project logic visually displays an impact analysis. It is
designed to link project interventions with intermediate outputs, longer-term outcomes, and
overall project goals. In this project logic, we examine the impacts the project will have on Green
Prosperity goals of reducing poverty and GHG emissions. At the prefeasibility stage of project
assessment, the project logic is less detailed than in its fully-developed form. As the project
becomes more defined, additional information that characterizes individual relationships in
quantitative and qualitative ways can be added, serving as a guide for monitoring and evaluation
activities. Where assumptions and risks deserve mention or require explanation, notes have been
added as clarification. The project logic for the Bambang hydropower project is represented in
Figure 8.
11
Figure 8. Bambang mini-HPP Project Logic
12
This list corresponds to the numbers in Figure 8.
1. Assumption/Risk: Generating system built according to design plans and is able to
secure all relevant approvals and permits to operate.
2. Assumption: the generating system IPP is able to negotiate an offtake agreement with
PLN.
3. Assumption: PLN is able to utilze the all the power produced by the system. This will
likely require successful power transfer to Mamuju or Poliwali; or a large amount of new
load in Mamasa.
4. Assumption: Avoided cost benefit and reduced emissions depend on exact grid mix that
is offset by this project. More research is required to know this mix with confidence
5. Assumption: IPP faithfully makes payments to Community Development Fund and all
proceeds directly benefit the community through a yet to be determined program
6. Assumption: Community Development Fund programs and payments are directed
towards activities that increase incomes such as farmer capacity building.
1.5 Offtake or Market Plan

The plan for this project is to sell the power to PLN under Indonesias renewable energy feed-in
tariff for hydroelectric power. During discussions, PLN said that a 46 MW mini-hydropower
project could be connected near Bambang if the power were used in Mamuju or Poliwali. Wider
use of the power is necessary because local demand in the Bambang area is not high enough to
support that level of production. See Section 2.3 for discussion of current energy use in Mamasa.
The hydropower plant owner would enter into a PPA with PLN. Indonesias Ministry of Energy
and Mineral Resources (MEMR) allows small IPPs to enter directly into a PPA with PLN
through a defined process under Regulation No. 14/2012. Power purchase prices are determined
on feed-in tariffs based on location and type of energy generation as defined in the Ministry of
Energy and Mineral Resources Regulation No. 4/2012. It is possible to negotiate a higher price at
the start of the project to levelize costs; however, overall payments cannot exceed the feed-in
tariff rates over the life of the project. The process involves multiple reviews and due diligence
by a local PLN unit, central PLN office, and the Ministry of Energy and Mineral Resources with
maximum time to obtain a PPA at 240 days. The PPA will establish payment and a period of
performance between 15 and 30 years. A U.S. Agency for International Development (USAID)
diagram on the PPA process for plants under 10 MW is available in appendix B.
The PPA would include an agreement to construct a power plant at a specific capacity and to
maintain availability of the power. There is no penalty if these specific requirements are not met.
A PPA is typically arranged prior to financing a power plant. Financing must be completed
within one year of executing the PPA. The utility PLN will not sign the PPA until 10% of the
project costs are in a bank account and a letter stating the capability to provide equity is in place.
The project must also obtain all permits and licenses within one year of securing the PPA. A
PPA requires that construction of the plant be completed within two years of obtaining financing.
The project must have insurance approved by PLN to cover equipment, construction, as well as
construction and operational staff.
PLNs responsibilities under a PPA include ensuring the reliability of the grid network and
purchasing the electricity generated at the mini-hydropower plant. At the transaction point where
13
the project ties into the grid, a meter will be installed to measure electricity delivered. This meter
will determine the payments required.
1.6 Business Case and Financial Structure

Hydropower projects are common in Indonesia and can often receive financing from Indonesian
banks. In order to receive financing, appropriate risk mitigation is needed. For example, a PPA
contract with PLN would be required, the catchment area would need to be in reasonably good
condition with a plan to keep it that way, and the team would need hydropower experience.
Typically projects require 2040% equity from the sponsor and could then receive 6080% debt
financing. Debt financing rates in Indonesia are high compared to those in the United States. The
current rate for an Indonesian hydropower project is about 12%. MCC/MCA-I said they were not
interested in financing projects that a standard bank would fund. If only the hydropower portion
of this project was developed and financed and MCC/MCA-I offered standard Indonesian
finance terms this would risk funding a project that a commercial entity could fund. The
inclusion of a community development fund makes this project unique and thus not something a
typical bank would likely fund. This could also allow MCC/MCA-I to offer more generous
financing in terms of rate and equity requirements than a standard bank. More generous terms
would make more revenue available to the community development fund.
1.6.1 Financial Feasibility of Project

This project is financially feasible because of the PLN feed-in tariff to purchase renewable
energy. The payment from PLN allows a project developer to recoup its investment in the
hydropower plant. This is a standard contractual mechanism that has already yielded numerous
successful projects in Indonesia. Additionally hydroelectric power is a mature and commercially
available technology in Indonesia. From a purely financial perspective, this is a simple and
straightforward project if power can be sold to PLN.
1.7 Project Team

A number of potential sponsors have expressed interest in this project site and have conducted
their own pre-feasibility studies on the site. An team comprised of IBEKA (Inisiatif Bisnis dan
Ekonomi Kerakyatan) and Andritz, as well as a government development company called
BUMD, have expressed interest. These entities have provided information and had discussions
with MCA-I about potential projects at this site. The intention of this proposal is not to evaluate
the specific players, but to illustrate the necessary components of a successful team for this
project.
A successful project team will have the following components:
Technical experts in the design and construction of hydropower plants. Experts will be
required in a variety of areas including civil engineering, hydrology, mechanical
engineering, and electrical engineering. These experts will be needed for the initial
design, construction, and commissioning of the mini-HPP.
Technical staff to operate and maintain the hydropower plant.
14
Legal and financial experts to develop organizations to receive the revenue payments
from PLN and divide funds for O&M and for community development. Ongoing
monitoring of the funds dispersion will be needed.
Community development experts with experience designing the benefits programs for the
local community as well as provide ongoing oversight and administration.
Forestry experts to monitor the status of the catchment area and to help ensure that the
hydrological resource is protected.
1.8 Project Site

The site for the powerhouse of the mini-HPP project is in the village of Bambang. Bambang
village can be reached easily from the main road that runs through Mambi and connects Mamuju
with Poliwali. The distance from Mambi to Bambang is approximately 2.8 kilometers. Figure 9
shows the conditions of the road during a site visit in May, 2013. The road is generally in good
condition and provides easy access close to the project site.
Figure 9. Road from Mambi to Bambang

Figure 10 shows the trail from the road in Bambang to the river and mini-HPP project site. The
trail extends approximately half a kilometer from the main road to the bridge at the project site.
The trail is a reasonable walking and motorcycle path, but would need to be upgraded to a road
during the construction of the mini-HPP in order to bring equipment to the project site. The trail
goes through rice paddies and near many cacao trees, some of these can be seen in Figure 11.
Some of these would need to be removed for the road and the owners compensated accordingly.
Additionally, the site for the proposed powerhouse is located on the opposite side of the river.
While there is an existing bridge (Figure 12), it would likely need to be upgraded or rebuilt in
order to accommodate truck access to the powerhouse site (Figure 13). The intake for the project
will be located approximately 2 km upstream from the powerhouse in the village of Masoso. A
trail and motor cycle path run from the powerhouse to very close to the intake site (Figure 14).
The full feasibility study should compare the costs and benefits of upgrading this trail to a road
versus transporting construction materials on the existing trail.
15
PLN provides power to some parts of the village of Bambang. The PLN line follows the road
from Mambi towards Bambang. The 20-kilo-Volt (kV) line ends approximately 1/3 of a
kilometer from the start of the trail to the project site. Building this project would require an
extension of this line to the trail head and down the road to be developed for the project site. The
total additional line needed would be approximately one kilometer.
Figure 10 through Figure 14 show the main road from Mambi to Bambang, the start of the
foot/motorcycle trail from the main road to the mini-HPP powerhouse site, parts of the trail, the
bridge at the site, and the trail near where the waterway to the project intake site would need to
be built.
Trail leading
to project site
Figure 10. Road, start of trail, and bridge near mini-HPP project site
Figure 11. Trail leading from river to the road and nearby rice paddies
16
Figure 12. Bridge near project site
Figure 13. Powerhouse location (Note rice terraces)

17
Figure 14. Path on opposite side of bridge that follows along the river near which the waterway
would need to be built
The coordinates of the key system components of the Bambang mini-HPP are Weir (2561.6
S; 1191250.1 E) and Powerhouse (25659.4 S, 119127.8 E).
1.8.1 Other Project Sites Considered

Mamasa has significant hydropower resources. Several other project sites were considered for
the pre-feasibility study prior to selecting this one. Sites in Aralle, Mahalaan, Mambi, and
Sumarorong were suggested by various project sponsors including the state energy development
company, BUMD, a team consisting of Andritz and IBEKA, and a local hydropower
entrepreneur, Pak Linggi. These other sites were not selected for various reasons including poor
road access, significant distance from the nearest PLN line, and smaller resource potential.
Several of these sites could be considered for additional MCC projects. The Bambang site was
selected for further analysis because it had good access, a nearby PLN connection, a significant
resource, and was suggested by multiple sponsors.
1.9 Permits and Licenses

Permits would be required to construct and operate the mini-HPP, civil works, and structures
plus power transmission lines. Permits will be required from a variety of sources including a
water use permit from the district governor or Bupati. The project must apply for a PPA with
PLN, additional information on the PLN PPA process can be found in Appendix B. The project
must apply to the Ministry of Energy and Mineral Resources for an electricity supply business
permit, which is required for electricity generation for public use. Environment feasibility studies
and permits (Upaya Pengelolaan Lingkungan Hidup dan Upaya Pemantauan Lingkungan Hidup
[UKL/UPL]) and operation permits (Sertifikasi Laik Operasi [SLO]) will also be required.
District and sub-district authorities will also likely need to approve and permit the hydropower
project.
18
The first step in obtaining the principal permits is to submit applications using standard forms
with a legal stamp, a small application fee, and project information. The information below
details the basic information needed in order to gain permit approval, it is intended to be
representative rather than comprehensive, and additional information may be required.
Identity card/company establishment certificate
Companys profile
Tax/revenue identification number
Layout drawings and site plan
Project Proposal
Feasibility study and detailed engineering report.
o Power plant capacity
o Construction and operation schedule
o Single line diagram
PPA agreement
Technical permit, which includes
o Water utilization permit
o Location permit
o Construction permit
Permit application for public concerns (izin Usaha KetenagaListrikan Untuk Kepentingan
Umum [IUKU])
Environment feasibility (UKL/UPL)
Operating (SLO)
After submitting the appropriate information for the permits as detailed above, the applicant
would be informed of approval or rejection. The permitting requirements and details for this
project should be the obligation of the project sponsor. However, obtaining the necessary permits
does not appear to be a major impediment to this project.
1.10 Project Implementation Plan

The development of a hydropower project in Indonesia can be a long and complicated process.
Typical projects take between 3 and 5 years. This section provides an overview of the key
variables for the project implementation plan, a rough timeline, and next steps. The actual project
implementation plan would need to be developed by a project sponsor in cooperation with other
stakeholders. While the actual project implementation plan would vary slightly according to the
specific project details, the key variables would likely remain the same. These key variables are
discussed below.
Site Access: The Bambang mini-HPP project site can currently only be accessed by a dirt trail.
This trail will likely need to be upgraded to a road to provide site access for construction
19
equipment, and mini-HPP equipment delivery. This would likely be the first step in site
construction. Additionally, control of the project site must be secured from the current
landholders and the existing village governments prior to the start of construction.
Procurement: To sustain the project most effectively over time during O&M, as many project
components as possible should be procured locally. Local procurement would help ensure a
reliable supply of spare parts and knowledge for planned and unplanned maintenance activities.
However, some pieces of equipment may not be available locally and may have have long lead
times.
Construction: Construction options in Bambang may be limited by the lack of infrastructure

such roads. The construction would likely require some heavy machinery as well as large
amounts of manual labor, extra machinery such as generators maybe required during
construction. Experts would need to be brought in to supervise construction and perform key
tasks; however, local residents could be hired for many construction taks. Key construction
requirements include:
Site layout
o Only basic tools and survey equipment are needed.
Civil works (weir, intake, waterway, forebay, penstock, tailrace)
o Heavy machinery such as excavators and road graders might be required to
construct the civil works along with cement trucks and reinforcing materials such
as rebar.
Mini-HHP equipment (turbine, synchronous generator, system control equipment)
o Cranes could be required to place heavy equipment such as turbines and
generators. However it could be beneficial to purchase or build cranes for the
project to support maintenance, this will need to be determined during design.
Electrical systems (transmission line and transformers)
o Construction teams would be required to place power poles and wires on the
existing road ways to connect the mini-HPP to the PLN system. This could
become the responsibility of PLN rather than the project sponsor however.
Discussions with PLN are needed.
Upon completion of the mini-HPP construction there will be a period of commissioning where
the system will be tested for acceptable and safe operation.
Mamasa and Mamuju are the nearest relatively large cities to Bambang. Construction equipment
and supplies would likely need to be procured from one of these locations and transported to the
project site at an additional cost. This would likely not be cost prohibitive but should be
accounted for in a full feasibility study.
Timeline: An approximate project timetable for development and construction is shown below.
The actual project duration could be longer or shorter based on numerous undetermined factors
such as sponsor preferences, equipment availability, and weather. Table 6 shows the basic steps
that would be required and approximate durations.
20
Table 6. Estimated Project Timeline
Activity Estimated Timeline
Request for proposal development and
39 months
award.
Full feasibility study and engineering design 12 months
Permitting 612 months
PPA with PLN 78 months
Depends on MCC/MCA-I Requirements (must be
Funding and financing
done within 1 year of PPA)
Construction 18 months (must be done within 2 years of PPA)
Testing and commissioning 1 month
Commercial operation Date 35 years from start of project
Information Adapted From: Renewable Energy Toolkit. Second Edition. USAID Indonesia Clean Energy
Development (ICED) Project. November 27, 2012.
Some of the activities could be performed in parallel to reduce the time required from the start of
the feasibility study to the completion of construction. For example, some permitting
applications could be submitted during the engineering design.
In order for construction to begin, site access must be granted and secured from Masoso and
Bambang villages for the mini-HPP project sites. Access must also be secured for the
transmission lines that will be built along the roadway as well. Some heavy equipment will need
to be secured in advance including cranes, cement trucks, electrical bucket trucks, and road
graders. Most construction equipment and materials could be procured locally in West Sulawesi.
However some specialty equipment such as synchronous generators might need to be imported
and could have long lead times.
21
2 Technical Assessment
The technology for hydroelectric energy generation is mature and readily available in Indonesia.
PT Desainas, an expert Indonesian hydropower technology company, was hired for this project
to help assess the technical hydropower potential of this project. Desainas visited the area in June
of 2013. This section provides an overview of the hydrological resource, technical analysis, and
risk. Additional technical information from the Desainas analysis can be found in Appendix C.
2.1 Technical Approach

Hydroelectric power plants have been common throughout the world since the early 1900s. The
three main types of hydroelectric plants include impoundment, diversion, and pumped storage.
Most common are impoundment facilities where a dam is used to block and store water in a
reservoir. For pumped storage, two reservoirs are created both above and below the hydropower
facility so that water can be pumped up to the upper reservoir during periods of cheap or excess
electricity and then used in the hydropower facility when needed. The water is stored again in the
lower reservoir. 8 The Bambang mini-HPP project is a diversion or run-of-the-river hydropower
system and no reservoirs are needed. Figure 15 shows an example of the type of system being
considered for Bambang.
9
Figure 15. Example of diversion hydropower system
Hydropower facilities are also classified by head, which is a net vertical height measurement of
the elevation difference of the between the intake point for a hydropower system and the turbine.
Head is an indication of the potential energy in the system. Low head systems are often less than
50 m, medium head between 50 m and 250 m, and high head above 250 m. The Bambang project
is in the medium head range.
8
Information Adapted from Water Power Program, U.S. Department of Energy.
http://www1.eere.energy.gov/water/hydro_plant_types.html Accessed on October 11, 2013.
9
Image from Practical Action. http://practicalaction.org/simple-ideas-micro-hydro Accessed October 11, 2013.
22
Another way to classify facilities is by power output size. These classifications vary by
organization. The United States Department of Energy classifies projects below 100 kW as
micro, projects between 100 kW and 30 MW as small, and projects above 30 MW as large. 10
Many organizations also include a mini hydro classification that includes projects between 100
kW and 1 to 10 MW. The 6,000-kW (6.0-MW) project at Bambang would be classified as small
or mini by most definitions. For the purposes of this report it will be referred to as mini because
that designation seems to best fit with Indonesian norms. Hydropower in the mini and small
range is usually associated with rivers with catchment areas of less than 200 km2; the Bambang
project has a catchment area of 118 km2.
Hydropower facilities can be utilized for a variety of benefits including electricity generation,
water distribution, flood prevention, irrigation, and recreation. The primary focus of the grid-
connected mini-HPP at Bambang is electricity generation.
For the diversion type project at Bambang several types of civil works are required to capture,
direct, and maintain the water flow for the hydropower plant. These include a weir, intake and
settling basin, forebay, penstock, and powerhouse. The powerhouse contains the additional
electrical and mechanical equipment such as the turbine and generator.
Power is derived in a hydropower system from the potential energy in moving water. The simple
equation below calculates the power that can be generated at a particular site.
P = *g*Q*H
Where:
P = power generation (kW)
= system efficiency coefficient (e.g., 85% efficient turbine and 96% efficient generator)
g= acceleration of gravity (9.81 m/s2)
Q= volumetric flow (m3/s)
H = net head = gross head - head loss (m)
The most important variables in determining power output and system potential are head and
flow. The relationship between these variables is shown in the Figure 16.
10
Information Adapted from Water Power Program, US Department of Energy,
http://www1.eere.energy.gov/water/hydro_plant_types.html. Accessed on October 11, 2013.
23
Figure 16. Relationship between power, flow, and head in a hydropower system
Source: Engineering Tool Box [3]
The system being considered for Bambang has design flow of 6.53 m3/s and a net head of 117 m.
The initial estimate of power output is 6,000 kW. Power would be provided by two 3.0 MW
turbines. Additional details are discussed in Section 2.4. NREL a conducted geographical
information system (GIS) analysis to confirm the estimate of head provide by Desainas. This
analysis can be seen in Figure 17 the NREL and Desainas estimates agree closely, and this
analysis also shows the potential to increase or decrease the system head if needed by changing
the location of either the intake or powerhouse and changing the length of the waterway.
24
Figure 17. GIS Analysis of potential system head
Source: NREL
The selection of a turbine type for a hydropower energy project is also highly dependent on flow
and head. A turbine is a machine that converts the kinetic energy of a fluid to rotational
mechanical energy. The main types of turbines utilized include impulse turbines (e.g., Pelton and
cross-flow) and reaction turbines (e.g., Kaplan and Francis). The U.S. Bureau of Reclamation
description of the basic operation of these two main turbine types is provided below [4].
A reaction turbine is a horizontal or vertical wheel that operates with the wheel
completely submerged, a feature which reduces turbulence. In theory, the reaction turbine
works like a rotating lawn sprinkler where water at a central point is under pressure and
escapes from the ends of the blades, causing rotation. Reaction turbines are the type most
widely used.
An impulse turbine is a horizontal or vertical wheel that uses the kinetic energy of water
striking its buckets or blades to cause rotation. The wheel is covered by a housing and the
buckets or blades are shaped so they turn the flow of water about 170 degrees inside the
housing. After turning the blades or buckets, the water falls to the bottom of the wheel
housing and flows out.
25
A range of materials is available to guide turbine selection based on site specific conditions. The
sample chart below shows possible turbine types based on head and flow, nozzle speed is also
sometimes shown on these charts.
Figure 18. Hydropower turbine selection chart

Source: International Renewable Energy Agency [5]
The turbine selected for this project by Desainas is a normal speed Francis turbine. This is
consistent with the recommendation for a 6.53 m3/s design discharge and an 117-m head in the
chart above. However, the chart above also indicates that other turbines could work under these
site conditions. Other hydropower projects in Indonesia utilize Francis turbines. Francis turbines
can be sourced from international companies as well as Indonesian companies. The full
feasibility study and detailed design should continue to examine the best turbine option for this
project.
2.2 Resource Assessment

Hydrologic analysis is required for mini-HPP development and feasibility analysis. A good
analysis will detail the availability of water, the stability or variation in water flow, the location
of the mini-HPP building in relation to flood zones, and the impacts of turbine discharge. Data
from this analysis will determine if the site resource meets the eligibility criteria for a proposed
mini-HPP project.
The hydrologic analysis depends on climatology, topography, land use, direct measurement of
river flow, and flood discharge. In the ideal case, a minimum of 10 years of actual river
volumetric flow would be available to draw conclusions on river flow, variability, and flood
potential for the project. However, this many years of data is rarely available, especially in the
more remote regions of Indonesia where this project is located. For Bambang, no direct flow data
was available so an estimate of river flow data was made. The estimate used two different
methods: scaling data from a neighboring water shed and water balance calculations based on the
F.J. Mock evapotranspiration model. By using two methods, the veracity of the result can be
26
confirmed by comparing the results. In addition to these modeling methods, river flow was
measured during the site visit.
The Bambang watershed area being studied for the mini-HPP project is 118 km2. Based on
Schmidt and Ferguson climate classification, the area is generally climate type A with some type
B, which is a wet, tropical region with less than two dry months per year. In this area, it rains
nearly every day. Total rainfall is 2,000 mm to 3,500 mm per year. The dry season is typically in
August and September. Local villagers report that the river flow does not vary much during the
year, which indicates that land use practices have not significantly degraded the watershed and it
is still in good condition. Land use in the catchment area for this project consists of primarily
protected forest and village area (Figure 5).
The flow of the Mambi River was measured during the Desainas site visit in June 2013 at the
proposed weir location near Masoso Village. At this point, the river is 18.47 m wide and depth
varies from 0.5 m to 1.75 m. A flow meter was used to measure water velocity. These
measurements were combined with length and depth measurements to estimate volumetric flow.
From this analysis, flow was estimated at 10.64 m3/s. Figure 19 shows the view upstream during
measurements and the measurement activity.
Figure 19. River flow measurements Masoso Village

Source: Desainas
The onsite measurement was then compared with the two modeling methods. In the first
modeling method (scaling data), it was assumed that the watersheds are similar for the Mamasa
River and the Mambi River. The available monthly river flow data from the Mamasa River was
scaled based on watershed area to give an estimate of river flow at the Mambi River mini-HPP
site. It was also assumed that the evapotranspiration characteristics of the two watersheds are
similar enough that the debit data may be scaled by watershed area and annual rainfall to
approximate the flow in the river in question. This assumption was checked by utilizing the F.J.
Mock evapotranspiration model as the alternative flow estimation method. The Mamasa River is
in a neighboring watershed and has an AWLR that automatically measures the river water levels
(i.e., river flow) at Sikuku Village. The catchment area above the measuring station is 908 km2.
This means that a factor of 118 km2/908 km2=0.131 can be used to scale water flow
measurements at Sikuku Village to derive estimated flows and an estimated flow duration curve
(FDC) for the proposed Bambang mini-HPP based on 14 years of complete data (1990 to 2009).
The FDC derived from the AWLR data is shown in Figure 20.
27
80.00
Discharge m3/s
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
13
17
21
26
30
34
38
42
46
51
55
59
63
67
71
76
80
84
88
92
96
1
5
9
Probability of Exedeence %
Figure 20. FDC for Bambang mini-HPP from AWLR measure data in the Mamasa River
To establish a comparison with the ALWR data FDC, water balance calculations were performed
using the F.J. Mock evapotranspiration method. The method was invented by F.J. Mock in 1973.
The method is based upon natural phenomena specific to Indonesia. With this method, the flow
can be calculated from: rainfall data, hydrologic characteristics of the drainage area, and
evapotranspiration. The principal behind this method is that the rain that falls in the catchment
area can be accounted for through three avenues:
Lost as evapotranspiration
Converted into run off (direct run-off)
Infiltration into the ground where the infiltration will first saturate the top soil, then
become percolation that forms ground water, which will come out into the river as base
flow.
The general form of the water balance equation is:
= + +
Where:
P = Precipitation
Ea = Evapotranspiration
GS = Change in ground water storage
TRO = Total runoff
The derivation of values for the variables in the above equation requires climatological data such
as rainfall, temperature, wind speed, humidity, and solar radiation. Climatological data used in
calculations came from the Majene Rain Station 35 km from the Bambang mini-HPP site.
Details of the derivation of the F.J. Mock variables and accompanying calculations are included
28
in the P.T. Desainas Hydro Energy Project Feasibility Study located in Appendix C. Rainfall at
Bambang was estimated to be 1.67 times higher than the rainfall at the Majene Rain Station
according to the World Metrological Organization data. Thus, the measured rain data at the
Majene Rain Station was multiplied by 1.67 for the modeling analysis.
The two methods were used to generate FDCs and average monthly flow profiles. Comparisons
of the estimated flow at the Bambang mini-HPP site from the two methods described above are
shown in Figure 21 and Figure 22 and Table 7.
20.00
15.00
Discharge (m3/s)
10.00
5.00
0.00
Jan Feb Mar Apr Mei Jun Jul Ags Sep Okt Nov Des
Month
Observed Discharge Estimated FDC FJ. Mock
Figure 21. Comparison of observed monthly discharge (AWLR) and estimated monthly discharge
using the F.J. Mock Method for Bambang mini-HPP site
60.00
50.00
Debit (m3/s)
40.00
30.00
20.00
10.00
0.00
1
4
8
11
15
18
22
26
29
33
36
40
43
47
51
54
58
61
65
68
72
76
79
83
86
90
93
97
Probability Of Exceedence (%)
Observed FDC Estimated FDC FJ. Mock
Figure 22. Comparison of AWLR and F.J. Mock Method estimated Bambang mini-HPP site FDC
29
Figure 21 shows data based on an average month from the period 1990 to 2009 when flow data
were available. Figure 22 shows flow probabilities based on the entire data set, which includes
annual variability. Table 7 shows a comparison of the data and the deviation between the
methods.
Table 7. Comparison of AWLR and F.J. Mock Method Estimated Bambang Mini-HPP Site Flow
Probabilities
Observed
Observed Simulation Difference
Discharged
Discharged Discharged Observed
Probability (%) Bambang
Mamasa F.J. Mock Simulation
3 mini-HPP 3 3
River (m /s) 3 (m /s) Discharge (m /s)
(m /s)
10 158.00 20.71 20.75 -0.04
20 112.29 14.72 16.39 -1.68
30 93.10 12.20 13.75 -1.54
40 82.00 10.75 11.02 -0.28
50 68.00 8.91 8.71 0.20
60 56.50 7.40 7.02 0.38
70 42.10 5.52 4.89 0.62
80 32.10 4.21 3.21 1.00
90 25.80 3.07 1.12 1.95
100 25.80 0.91 0.22 0.69
In Table 7, the first column shows the percentage of time the flow is expected to meet or exceed
this amount, the second column shows the measured flow from the nearby river used for
calibration, the third column shows the estimated flow for the Bambang mini-HPP using the
measured data, the fourth column shows the calculated flow utilizing the F.J. Mock method, and
the fifth column shows the deviation between the two calculated values. From Table 7, we see
there is reasonable agreement between scaled flow data from the neighboring watershed and the
F.J. Mock water balance calculation method. The result of this resource assessment is that F.J.
Mock calculated flow values will be used in design feasibility analysis. Additionally the
10.64 m3/s measured by Desainas in June 2013 is consistent with the monthly average flow
expected in Figure 21.
2.3 Current Energy Baseline

Basic data for electricity supplied by the Indonesian national utility, PLN, in West Sulawesi is
2010 is shown in the bullets below. 11
Total households electrified= 89,678

Electrification ratio: 39.5%
Peak load: 30 MW
PLN estimated annual growth rates
11
Data provided by PLN.
30
o Electricity sales is 12.7%
o Peak load 12.6%
o Number of customers 8.3%
Electrification in Mamasa from PLN was reported at 15%, which is substantially lower than the
39.5% reported for West Sulawesi above. The PLN electrification rate for Bambang is even
lower at 4%. However, the overall electrification rate in the Bambang sub-district is quite high
because the majority of the households are electrified utilizing village level micro hydropower
turbines. Table 8 shows the electrification details for Bambang.
12
Table 8. Bambang Electrification Details
Households Households Total %
%
Village Name Households electrified by electrified but electrified Electrified
Electrified
PLN not by PLN households by PLN
Bambang 242 39 127 166 69% 16%
Bambang
189 0 189 189 100% 0%
Timur
Rantelemo 89 0 83 83 93% 0%
Ulumambi 134 0 134 134 100% 0%
Saludengen 116 0 115 115 99% 0%
Minanga 243 73 53 126 52% 30%
Sikamase 89 0 39 39 44% 0%
Lembangmokal
146 0 146 146 100% 0%
lang
Masoso 96 0 96 96 100% 0%
Saluassing 219 0 206 206 94% 0%
Salubulo 94 0 94 94 100% 0%
Salukadi 132 0 132 132 100% 0%
Salukepopo 161 0 150 150 93% 0%
Ulumambi
142 0 27 27 19% 0%
Barat
Limbadebata 166 0 128 128 77% 0%
Tanete Tomba 79 0 10 10 13% 0%
Salutabang 67 0 67 67 100% 0%
Salururu 57 0 55 55 96% 0%
Rantetarima 89 0 89 89 100% 0%
Balatana 97 0 17 17 18% 0%
TOTAL 2647 112 1957 2069 78% 4%
For example, the village of Masoso, which is very close to the intake site for the proposed mini-
HPP, currently has a 20-kW micro hydropower system. This system was installed and paid for
by the local development agency Program Nasional Pemberdayaan Mandiri (PNPM). The system
12
Data provided to NREL by MCA-I
31
provides only enough power for lighting and televisions for the local villagers and is managed by
a village group. The figure below shows the powerhouse, turbine, and penstock for this site.
Figure 23. Masoso micro hydropower installation

The size and location of micro hydropower systems in Mamasa reported by PLN are shown in
Table 9. However, the PLN data is believed to be incomplete and out of date, because during
NRELs site visit in 2013 the team visited micro hydropower systems in Sumarorong, Pana, and
Masoso that were not listed in the PLN data. The PLN data is provided as an additional reference
illustrating the large number of micro hydropower systems in the Mamasa region.
Table 9. Existing Micro Hydropower in Mamasa

Existing Micro Hydropower at Mamasa District 2011
Sub-district Unit Capacity (kW)
Sumarorong 0 0
Mesawa 2 10 and 15
Pana 0 0
Nosu 0 0
Tabang 2 10 and 15
Mamasa 2 10 and 15
Tanduk Kalua 2 10 and 15
Balla 2 10 and 15
Sesena Padang 3 10 up to 15
Tawalian 2 15 and 20
Mambi 2 10 and 10
Bambang 2 15 and 15
Rantebulahan Timur 1 10
Arale 2 10 and 10
Tabulahan 1 15
TOTAL 23
Source: State Electricity Company (PLN)
32
While many of the villagers in the project area have a micro hydropower system, there is still a
need for more electrification in the area. Villagers reported that the micro hydropower systems
did not provide enough power for all of their needs and they would like increased power for
additional appliances and business. Also, not all the houses are supplied by the micro
hydropower systems and not all villages have a micro hydropower system. Increasing the
availability and quantity of electricity are options for the community development fund.
The PLN office in Mamasa also provided specific data for that district during the NREL site visit
regarding power demand and usage in the region. This information is listed below and could be
useful in determining the potential for interconnection of the mini-HPP.
Peak demand in the region is 2 MW.

It is not possible to isolate and power the Mamasa district independently from the rest of
the PLN grid, the generation and switches to do this do not exist. The PLN system in
Mamasa is currently dependent on power feed from the lines going to Mamuju and
Poliwali.
5,000 households or 20,000 people are connected to PLN in Mamasa. This is about 15%
of the total population.
1,500 of the connected households are in Mamasa City.
With current resources, PLN can connect approximately 5001,500 new houses annually.
PLN plans for 9001,300-W capacity per household connection.
Bills for customers range from IDR 40,000 to 400,000 per month and usage ranges from
60 kWh to 600 kWh per month. The average is 60 kWh per household per month.
The power in Mamasa goes out about 5 times per month on the main line. Fixes take
from 1 hour to 3 days. The distribution system has many more outages.
PLN has a 4-MW mini-HPP near Bonehau in Mamuju. Its primary use is to maintain
voltage to North Mamuju.
PLN Bala is a 750-kW hydropower plant in Mamasa that currently provides some
generation for the region.
The city of Mamuju only has a 4-MW demand so additional power might need to be sent
even further.
The average household in Mamasa has lights, TV, and an iron. Only a few households
currently have rice cookers, water dispensers, refrigerators, and other appliances.
Computers are found only in offices.
Additional graphics and information provided by PLN can be found in Appendix E.
Census data showed the production and sale of 5,578,243 kWh in Mamasa in 2010. This would
correlate to an average demand in Mamasa of 637 kW. It would also correlate to 279 kWh per
household per year or 23 kWh per month. This is consistent with the PLN information from the
site visit. The census also estimated that 20% of the people in Mamasa had power from PLN,
33
54% had power from another source like micro hydropower, and 25% did not have power. If
PLN were to provide power to all the households in Mamasa at the minimum standard
connection level of 450 VA, approximately 13 MW of generation would be required. This
estimate is likely too low because many households would want 900 VA or 1300 VA
connections. This indicates that if PLN were to pursue an aggressive electrification program in
Mamasa, a large amount of additional power would be needed. Discussions with PLN indicated
increased electrification in Mamasa was limited by a lack of funds and that adding a large
number of new customers was unlikely. However if the mini-HPP were built, PLN might have
additional reason to connect new customers in Mamasa because they could be supplied with
power from a local clean energy source.
Using PLNs growth rates, future demand and generation requirements were projected for West
Sulawesi by Desainas. These can be seen in Table 10. Based on Desainas analysis, demand will
outpace supply in 2015 and PLN will need new power plants in West Sulawesi. This could be a
good rational for PLN to purchase the power from the Bambang mini-HPP and increase supply
now to prepare for increasing demand in the region.
Table 10. PLN Growth Projections

Production
Year Sale (GWh) Peak Load (MW) Consumers
(GWh)
2011 138.7 162.0 33.3 109,590
2012 165.2 193.0 39.6 121,099
2013 196.7 229.8 47.2 133,013
2014 227.6 265.8 54.5 145,856
2015 250.8 292.9 60.0 156,372
2016 275.7 322.0 66.1 167,747
2017 302.5 353.3 72.4 180,059
2018 331.4 386.9 79.1 193,390
2019 362.4 423.1 86.7 207,834
2020 395.8 462.0 94.6 223,490
Growth (%) 12.7% 12.6% 12.6% 8.3 %
2.4 Technical Feasibility

2.4.1 Preliminary Design Specifics
The hydropower resource for this project was outlined in Section 2.2. After the resource has been
determined, the potential power output can be calculated. Table 7 above shows the flow
probability estimate. A variety of potential system sizes, design flows, and average flows were
examined for this project. The options considered are shown in Table 11.
34
Table 11. Hydropower System Sizes and Flows Considered
Design Flow Average Flow
No. Capacity Discharge Probability
3
(m /s) (%)
1 2 x 2000 kW 4.36 79.40
2 2 x 2500 kW 5.45 74.60
3 2 x 3000 kW 6.53 71.30
4 2 x 3500 kW 7.62 66.30
5 2 x 4000 kW 8.71 62.10
To determine the optimal size for this project, increased flow probability (which results in more
efficient utilization of the generation equipment because capacity factor is higher) must be
balanced with increased total capacity or project size (which results in more annual energy and
thus increased revenue). However, increasing capacity also results in increased capital costs.
Desainas determined that the best system size to optimize both capacity and flow was 6 MW or
two 3-MW turbines. It should be noted that during the dry season any of the systems analyzed
will likely produce a reduced amount of power or no power for a period of several weeks
because the river flow is not large enough to meet the minimum design flow for even one
turbine. Since this is a grid connected project and PLN can obtain power from other sources this
should not pose a problem unless the Mamasa region was electrically isolated from the larger
PLN grid due to other unrelated system outages. Details of the proposed system are provided
below and further analysis is recommended in a full feasibility study.
Table 12. Bambang Mini-HPP System Design Flow Parameters
Discharge Probability
Description 3
(m /s) (%)
Design Discharge (Qd) 6.53 71.25
Discharge max (105%Qd) 7.20 60.42
Min Discharge (40% Qd) (Two Turbines) 2.61 82.92
Qres (Ecological discharge,20% Qd) 0.50 95.00
Table 13. Bambang Mini-HPP System Design Values

Description Value
3
Annual Mean Discharge (m /s) 5.04
Net Head (m) 117
2
Gravity (m/s ) 9.81
Turbine Efficiency 0.80
Availability Factor 0.90
Time in Year (hours) 8760
Annual Energy (kWh) 36,484,050
Annual Energy Potential for 6,000 kW (kWh) 52,020,000
Capacity Factor 69%
35
A topographic site survey was performed to determine other key variables for power production
and site layout. These include forebay location, powerhouse location, and gross head. A picture
from the survey is shown in Figure 24.
Figure 24. Topographic survey

Source: Desainas
36
A conceptual project layout was developed from the topographic survey, as shown in Figure 25.
Figure 25. Conceptual layout of Bambang mini-HPP

Source: Desainas
2.4.1.1 Conceptual Design Details

Some additional details of the conceptual design can be found in Table 14 and Table 15.
Table 14. Bambang Mini-HPP System Conceptual Design Parameters

Turbine Type
Net Head 117.38 m
3
Discharge (Q) 6.53 m /s
Turbine Capacity 6147.57 kW
Turbine Number 2.00 unit
3
Turbine Discharge 3.27 m /s
Trial Speed (ns) 215.43 rpm
Turbine Rotation 1296.70 rpm
Turbine Rotational Correction 750.00 rpm
Specific Speed 124.60 rpm
37
Turbine type Francis Normal Speed
Tailrace Elevation 678.00 m
Atmospheric Pressure 90709.80 Pa
Thoma Capitation Number () 0.05
Suction Head (Hs) 2.63 m
2
Turbine Inertia (WR2) 2253.72 Nm
2
Generator Inertia (WR2) 1845.36 Nm
Turbine Runaway Speed (nr) 1240.24
Turbine Dimension
3 0.53
D3 0.64 m
D2 0.64 m
D1 0.77 m
Turbine Weight (W) 8272.88 kg
Turbine Shaft Size 167.52 mm
Table 15. Conceptual Design Component Details

Civil Works
Weir width = 4.5 m
Weir height =2m
Weir elevation = 1515 m
Flushing gate width = 0.5 m
Total flushing gate = 1 gate
Weir materials masonry covered with concrete
Type of weir Spherical
Bambang Electrical System Overview
Main Transmission Voltage : 20 kV
System Frequency : 50 Hertz
Alternator General Specification
Number of Generator : 2 units
Type of Generator : Synchronous Generator
Design Standard : NEMA, IEC, etc
Rotational Speed : 750 rpm ( 8 Poles, 50 Hertz )
Rated Capacity : 3750 kVA
Outpot Voltage : 6600 V
Number of Phase : 3 Phase
Power Factor (Cos ) : 0.8
Excitation : Brushless
Isolation Class : Class F
Cooling System : Forced Air Cool
Step Up General Specification
38
Number of Power Transformer : 1 units
Design Standard : IEC
Low Voltage : 6600 V
High Voltage : 20 kV
Frequency : 50 Hertz
Isolation Class : Class E
Vector : YnD 5
Cooling System : ONAN
Type of Power Transformer : Outdoor
Distribution Line General Specification
: 12 m Steel Pole with cross
20 kV Transmision Pole
arm
2
20 kV Conductor : AAACS , 150 mm
400 V Distribution Pole : 9 m Steel Pole
400 V Conductor : Twisted Cable
Local Use Transformer
Number of Power Transformer : 1 units, Type outdoor.
Design Standard : IEC
Low Voltage : 400 V
High Voltage : 20 kV
Frequency : 50 Hertz
Isolation Class : Class A
Vector : Dyn 11 or Dyn 5
2.4.1.2 Capital Cost Estimate

The construction costs were estimated for the Bambang mini-HPP.
Civil works construction cost estimate consists of:
Preparation works, including: permit from authorities, mobilization and demobilization of

material and manpower, staking out, warehouse, and site office.
Weir construction, including: masonry weir with concrete lining, flushing gate, railing,
and trash rack.
Intake and settling basin, including: intake gate (1 unit), open channel from masonry with
concrete lining, settling basin from masonry and concrete lining, and flushing gate with
side spillway.
Waterway (open channel) from masonry with thin concrete lining.
39
Fore-bay, including: masonry structure with side spillway, flushing gate, steel trash rack,
intake gate for penstock inlet, open channel for flushing and spill discharge, and
expansion joint.
Penstock, including: steel plate rolled at site, welding, painting and coating, saddle
support from masonry with plate clamp, and concrete anchor block.
Powerhouse and tail race, including: turbine and control room, turbine foundation from
rebar concrete, operator room (bedroom, kitchen, guest room, and bathroom), transformer
room and tail race from masonry with concrete lining, brick wall, local wood roof.
structure.
The access road, dirt road not paved.
Mechanical construction cost estimate consists of:
Turbine set, including : runner, spiral casing, draft tube, guide vane, base plate
Main inlet valve
Expansion joint
Governor
Spare part, including: fast moving part, runner, backup and lubrication.
The Electrical construction cost construction estimates consist of:
Electronic load control panel

Transformer
Distribution line
Ballast load
Generator
A summary of the estimated construction costs is in Table 16.
Table 16. Construction Cost Estimate
No. Work Description Total Price

(IDR)
I Design Work 2,566,875,000
FS-DED 1,958,300,000
Pre-FS 608,575,000
II Construction Work 91,630,441,111
II.A Civil Work 65,543,382,870
Preparation Work 134,154,800
Weir Work 4,491,978,116
Intake Work 1,981,330,348
Penstock And Support Work 1 30,401,740,106
Surgetank Work 2,004,664,031
40
Penstock And Support Work 2 8,941,810,041
Powerhouse Work 6,115,763,029
Operator House 213,817,108
Guard House 50,864,854
Access Road Work 7,841,321,531
Fence Work 215,938,907
Land Acquisition 3,150,000,000
II.B Mobilization And Demobilization 16,186,531,732
Penstock Plate Jakarta Mamasa 13,635,344,639
Heavy Equipment 250,000,000
Material 1,476,187,094
Mechanical And Electrical Equipment 600,000,000
Personnel 225,000,000
Iii Mechanical And Electrical 26,087,058,241
TOTAL CONSTRUCTION COST 110,383,847,843
IV Operational Certificate 100,000,000
V Operator Training 236,000,000
Vi Working Capital 0
TOTAL PROJECT COST 110,719,847,843
Vii Contingencies 10,781,697,284
TOTAL INITIAL INVESTMENT 121,501,545,127
The capital costs for this project would amount to approximately USD 2,000/kW. This is well
within the normal range for a hydroelectric power plant. Capital costs for hydroelectric plants are
largely driven by civil works costs, which tend to vary substantially due to site-specific
conditions. Costs are also typically higher for a project located far from major suppliers of parts
and construction equipment, which is the case for this project. The International Renewable
Energy Agency (IRENA) completed a report that documented the average costs for hydroelectric
projects around the world. Several charts from this report are presented below for comparison.
41
Figure 26: Hydroelectric cost charts from a variety of studies
Source: IRENA [6]
Figure 27. Hydroelectric costs by country

Source: IRENA [6]
42
Figure 28. Hydroelectric costs for developing countries
Source: IRENA [6]
Figure 29. Hydroelectric cost charts showing breakdown of capital costs

Source: IRENA [6]
43
The IRENA charts show that the approximately USD 2000/kW costs for this project are in the
middle of the cost estimate range. This seems reasonable for a relatively small project in a
remote location in a developing country.
2.5 Operational Feasibility

2.5.1 O&M Requirements
The requirements for O&M will vary slightly based on the specific decisions of the IPP and
specific types of equipment chosen for the final design. Routine maintenance of the mini HHP
and distribution lines will require mechanical and electrical skills specialty items or tasks might
require outside expertise. Sample maintenance items and tasks include:
Turbine overhaul approximately every 5 years

Lubrication of parts and changing of oil
Electrical wire and connection replacement within the mini-HPP
Replacement, repair, and reprograming of broken control system components such as
gauges, program logic controls, and computer systems
Replacement and repair of transmission system wires
Minor and major civil works repairs
Mini-HPP building maintenance
2.5.2 O&M Personnel

Operation of the hydroelectric plant by an IPP will require a variety of staff members. Some of
the staff members will need specific training and skills that might not be available currently in
Bambang and outside technical and management expertise could be required. However many
jobs such as operator and administrator could be staffed with local personnel provided they are
properly trained. Sample personnel requirements are shown below.
Mini-HPP Operations Manager: Day-to-day operations management of the power

plant. Experience operating hydroelectric power plants.
Accountant and Finance Manager: Planning and budgeting; accounts receivable,
billing, payroll, and cash flow management.
Maintenance Technicians: Maintenance and repair of hydropower system components
such as turbine, controls, and generator. Basic electrical and mechanical skills.
Power Plant Operators: Power plant operations and monitoring. Knowledge of how to
operate a power plant to maintain a stable utility system.
Administrative Assistant: Record-keeping, service confirmation, correspondence;
Interpersonal, computer, and communication skills.
Overall the mini HHP and associated operations would probably generate 510 permanent,
relatively high-paying jobs in Bambang. Many more part-time jobs would be generated during
the construction period.
44
2.6 Technical Risk Assessment
Technical risks for this project include the design, operations, and maintenance of the
hydropower facility. These risks need to be managed by hiring experienced personnel and
through proper oversight. Several key risk areas are identified and discussed below.
Flow:
The ability to maintain water flow for a hydropower system can be a key risk. Damage to the
watershed for a project can impact flow in a variety of ways. Increased deforestation can lead to
increased water runoff during storms and more variability in flow. For a run-of-the-river
hydropower system, flow variability can be a key risk because systems are designed for
particular flow rate in terms of m3/s. Energy from flows above the design maximum cannot be
captured, so increasing flow during certain time periods could result in decreased flow during
others and a lost opportunity to capture energy.
Landslides:
A key risk for hydropower energy projects identified during our discussions in Indonesia was
landslides. While it is not possible to identify exactly where landslides will occur, it is possible to
mitigate this risk though proper sitting and design of system components. Careful consideration
must be taken to avoid constructing the waterway in areas with high landslide risk.
Floods:
Another key design consideration is to ensure that the system intake and waterway have been
properly sized to have sufficient structural integrity and capacity to handle seasonal floods. The
engineering team, with input from MCC/MCA-I, must determine acceptable design criteria for
floods i.e., the system must be designed to withstand at least a 50-year flood.
Silt and Sediment:

Silt and sediment were identified during discussions as another key reason for the failure of
hydropower systems. Failures appeared primarily to result from turbine damage from silt and
sediment. Proper design is needed to minimize these components in the water stream though the
use of traps and filters and through watershed management. Increased deforestation in the
catchment area can result in an increased amount of silt and sediment in the water.
Operations and Maintenance:

Regular preventative maintenance needs to be done to ensure that the system does not experience
numerous unscheduled outages. This type of outage in a remote area such as Mamasa can be
particularly problematic because it can take days or weeks to obtain spare parts.
PLN Grid:
The PLN grid in Mamasa is subject to frequent outages from landslides that disrupt power
distribution in the 20-kV lines. If this project plans to sell power to PLN and have that power
used in Mamuju, the frequent outages could be a significant risk. Outages would reduce revenue
for the plant because it could not sell as much power without the ability to distribute the power
elsewhere. This is a key risk that is not under the control of the hydropower project team.
45
Land Aquisition:
Construction of the hydro energy system components such as the wier, powerhouse, waterway,
and access road will require land acquisition or control. Indications are that part of the land that
would be required for this project is owned or controlled by private indiviudals and part of the
land is owned or controlled by the villages of Bambang and Masoso. A successful project will
require acquisition or use of this land at a minimal cost. A risk for this project is that the land
needed for the project cannot acquired at reasonable rates. A full feasibility study will need to
further determine current land ownership and the potential acquisition costs.
2.6.1 Mitigation Plan for Identified Risks

The key option to mitigate technical risk is to hire a qualified engineering team to design, build,
and operate the hydropower system. MCC/MCA-I should also hire an expert to review various
components of the design prior to funding, such as the civil works, equipment specifications and
selection, O&M plan, and contractors selected. Incremental funding could be allocated for the
project based on successfully passing the reviews above. Reviews should also be conducted of
key technical areas in the feasibility study, such as hydrological modeling to determine if the
resource was estimated properly, civil works to determine if the design is sufficient to reduce the
risk of technical failure from landslides, mechanical systems assessment to determine if the
turbine type selected is appropriate, and electrical systems review to determine if the utility
interconnection requirements are met.
2.6.2 Monitoring and Evaluation Plan

Monitoring and evaluation of the installed system and catchment area should be performed
quarterly during the first year, semiannually during the first five years, and annually after that.
The system should be evaluated for power production, downtime, proper O&M, and energy
conversion efficiency. The IPP should be evaluated for financial stability and adequate
maintenance reserve funds. The catchment area should be evaluated to determine the status of
forest, the success of any protection programs, and the level of erosion. The evaluations should
be carried out by MCC/MCA-I or by experts hired by them, and an annual report should be
issued.
46
3 Community Development Fund
This project includes the creation of a community development fund with surplus revenue from
the mini-HPP project. This fund could help fulfil the MCC/MCA-I goals of poverty reduction
and economic development in the local region by funding efforts to increase the income of local
farmers. Without this fund or a similar mechanism to provide benefits from this mini-HPP
project to the local community, the MCC/MCA-I goals will not be achieved and direct benefits
will only be provided to the IPP and to PLN. Additionally, MCC/MCA-I have stated that they
only wish to fund projects that would not be funded by a standard Indonesian bank. Hydropower
projects in Indonesia are relatively mature and many can receive bank funding. The community
development fund differentiates this project from a standard bank-funded hydropower project.
Thus the creation of the community development fund is an essential part of this project to
ensure that the goals of the Green Prosperity program are fulfilled. Full analysis of the options
for a community development fund in this area was beyond the scope of this prefeasibility study.
The principal focus of the study was hydropower project feasibility. However, some initial
information and analysis is provided in the sections below.
During the analysis for this project and during the site visits, many areas of potential need in the
community were identified. These are summarized below.
81% of residents in Bambang are classified as very poor, poor, or near poor in terms of
income.
About 60% of the residents in Mamasa do not have access to clean drinking water
sources.
Many houses in the region lack access to proper sanitary toilets.
50% of the population Mamasa has only an elementary school education and 13% have
no formal education.
42% of the children in West Sulawesi have stunted growth due to poor nutrition and lack
of health care.
The primary income source for most people in the region is cacao cultivation. However
recent disease of the cacao trees has dramatically reduced yields and this income loss has
forced many people to also become day laborers to earn extra income.
Access to credit for farmers and people interested in starting small enterprises is limited
and the community could benefit for microfinance related activities to provide more
direct access to credit under cheaper terms.
The potential needs of the community near Bambang are great and many of them are good fits
for achieving MCC/MCA-Is goals of Green Prosperity in the region. The direct goals of poverty
reduction and economic development can be met by programs to increase the incomes of farmers
through capacity building and training provided by the community development program.
3.1 Cacao Sanitation and Intensification

This prefeasibility study did not focus specifically on cacao intensification in Bambang because
the opportunities for improvements in the cacao sector in Sulawesi were been assessed in the
47
NREL Cacao Intensifcation report. Some basic details of the cacao cultivation in the region and
the potential opportunities are summarized below. Interested parties should refer to NRELs
Cacao Intensification study for MCC/MCA-I for more detailed information.
Bambang is the second leading cacao producing district in Mamasa with 6,650 Ha and 1,750
tons of production in 2011. 13 West Sulawesi is probably the sixth most productive province in
Indonesia. Estimates of the cacao area under cultivation in Mamasa vary between sources with
the industry reporting 13,000 Ha in Mamasa and the government data reporting 22,000 Ha.
Estimated West Sulawesi land area planted in cacao is available in Table 17. The sub-district
production while significant is not large enough to have a dramatic impact on Indonesias total
cacao production or world cacao markets. However improving productivity in the cacao sector
could potentially reduce poverty in the region and increase the incomes of the 1,000 cacao
farmers in the project area.
During site visits to the Mamasa region, information about various commodities was obtained.
Key facts are listed below.
Farmers are paid IDR 12,000-18,000/kg of cacao depending on the level of dryness (from
discussion in Mambi). Payments reported at two other locations in the region were all
very similar to the information from Mambi: IDR 17,000/kg (remote village Pana in
Mamasa) and IDR17,000/kg dry or IDR 13,000/kg wet (Lumika in Mamuju).
Middlemen sell cacao in Poliwali for IDR 20,500 per bag. The middleman we met must
supply 65 75-kg bags per week. The price he is paid is not dependent on quality. Mambi
has six middlemen of this type.
In Mambi, Cacao is harvested once per year during a 3-month season typically May to
August.
In Mambi, there are about 1,000 cacao farmers on 20 to 30 landholders properties.
14
Table 17. Cacao Hectares under Cultivation
West Sulawesi Hectares
Mamuju 47,000
15
Mamasa 20,000
North Mamuju 20,000
Polewali 20,000
Majene 12,000
Total 119,000
Figure 30 shows the cacao middlemen, the roadside point for purchasing and packaging cacao,
the poor quality of cacao, and a cacao tree.
13
Natural Resource Management and Sustainable Land Use: Mamasa District, West Sulawesi. Prepared for NREL
by Bogor Agricultural University (IPB). November 2013.
14
Swiss contact
15
This is slightly less than the 28,000 Ha reported in the Mamasa census.
48
Figure 30. Mambi cacao industry photos
Over 93% of cacao land is owned and farmed by smallholders with the remaining land split
between government and private companies [7]. Average income for a cacao farmer with 1.12
Ha of land in 2010 in Poleman in West Sulawesi was reported as USD 850 or about IDR 8.5
million [8]. This would be about USD 758/Ha. This income per hectare is very similar to the
income calculated using production numbers from farmers: average annual income of about USD
680/Ha or USD 1,360 to a farmer with two hectares of land.
Average yields are about 500 kg/Ha of cocoa. However yields of up to 1 ton/Ha are possible with
interventions such as grafting, replacing aged trees, pruning, and phytosanitation. To reach yields
of 2 ton/Ha and beyond, it is necessary to use fertilizer and pesticide. Additional details on
possible cacao interventions are provided are below:
Cacao tree production falls dramatically sometime between 20 and 25 years of age. If a
tree has become unproductive, it can be replaced with a high-performing clone
(seedling and clone are used interchangeably in cacao farming). If the tree is old but
still producing, side grafting is a viable technique that involves cutting a tree and
inserting a bud from a top-performing clone; two buds are grafted on each side of the
tree, resulting in increased production approximately 15 months after they are applied.
The advantage of grafting is that it allows the farmer to continue to harvest pods from old
branches as the new branches grow in. Training could be provided to farmers to learn
grafting techniques and nurseries could be set up to sell materials for grafting.
49
Pruning is important because having fewer leaves allows more light for the
photosynthesis process, leading to higher production of cocoa pods. More light privides
the added benefit of disrupting the reproductive cycle of cocoa pod borer, a problematic
pest. It is a technique that must be taught because many farmers believe a healthy tree is
one with many leaves. Training could also be provided to teach farmers better pruning
techniques.
Phytosanitation involves removing diseased pods, leaves, and branches from the area,
thus containing pests. Farmers could be taught phytosanitation methods to help decrease
the impacts pests have had on local production yields.
Pesticides and fertilizer are required to reach yields over one ton per hectare. Farmers in
Sulawesi stated that these inputs are available and they knew where to buy them, but they
rarely have the money at the time they need to purchase them. Access to capital and or
credit is rare because few farmers have land certificates or anything else to offer as a
guarantee. There are some small-scale pilot projects attempting to address this issue, but
it is a significant hurdle. The focus tends to be on fertilizer and no assistance for
pesticides. Providing access to capital through microloans for fertilizer, insecticide, or
other purchases to improve yields could also be a function of the community
development fund.
Additionally the community fund could help the farmers get land certificates in order to
obtain increased borrowing capacity.
The opportunities for these interventions in the Bambang region must be studied further.
However if the approximately 1,000 cacao farmers in the region were able to double their
incomes, as is possible with the techniques discussed above, significant poverty reduction would
be achieved. Typically costs for these types of programs are as little as a few hundred U.S.
dollars per farmer per year for a multiyear program. The excess revenues from the hydroelectric
project could easily provide this type of program for the villagers if they were interested and the
project sponsor obtained the right expertise.
An additional key element of any cacao-based program should be partnering with the global agro
business and non-government organizations working on programs to support farmers elsewhere
in both West and South Sulawesi. Candidates for partnerships could be explored with
organizations such as Nestle, Swisscontact, Mars, and Cargill.
Other options for cacao intensification were considered but dont appear to be good fits for the
community development programs, these are discussed briefly below.
Fermentation of cacao was considered but did not appear justified by the market
conditions. Companies offer an IDR 1,200 to 2,000/kg premium for fermented beans over
the market price for unfermented beans. However, many farmers view this as a risk for
holding inventory over the five days required for fermentation.
Sustainable certifications for farmers were considered, but did not appear justified by
market conditions for price premiums to farmers for certified chocolate compared to the
costs of obtaining certification.
50
3.2 Coffee Intensification
Coffee is the second largest cash crop produced in the Bambang sub-district. While the number
of hectacres of coffee cultivation is significantly lower than the number of hectacres of cacao it
does present a possible source of increased income through similar programs. Bambang produces
only about 3% of the Arabica coffee and 9% of the Robusta coffee in Mamasa.
Coffee training and capacity-building programs to improve the incomes of coffee farmers have
been successful elsewhere in Indonesia and could likely be replicated in Bambang. For example
the Hanns R. Neumann Foundation and the J.M. Smucker Company are working in Sumatera to
double the incomes of 5,000 coffee farmers. They expect to do this by doubling yields through
training and capacity building to develop good agricultural practices, improved access to
markets, improved access to higher producing coffee plants, and a variety of other programs.
This program is projected to cost USD 2,500,000 over 5 years and reach 5,000 farmers or spend
approximately USD 100 per farmer per year [9]. Additionally Source Trust is developing similar
programs in the Indonesian Coffee sector to help farmers by providing training, developing
certified coffee, improving phytosanitation, testing soils, providing access to credit, and
generating organic fertilizer [10].
Pictures of green coffee beans for sale in a market in the Mamasa district (Sumarorong Village)
and coffee cultivation in Masoso near the hydropower project site are shown below.
Figure 31. Coffee sale and cultivation in the Mamasa district

Additional analysis is needed to determine the specific coffee interventions appropriate for the
Bambang region. However, there is certainly the potential to increase the incomes of the coffee
farmers by utilizing the excess revenue from the hydroelectric plant.
3.3 Electrification of Villages

Another potential use of the community development fund could be to provide increased and
improved electrification to the villages in the catchment area for this project. Currently many of
the villages are already electrified mostly with micro hydropower turbines. Villagers have been
successfully operating and maintaining these turbines for several years. The turbines have
improved the quality of life in many of the villages by replacing kerosene lighting, replacing
diesel generators, and providing added power for other potential appliances and applications.
51
One example is electric rice hulling machines. Before these machines were introduced, female
villagers performed this task by hand. The machines have saved time and allowed these villagers
to devote their time to other activities.
The access, quantity, and quality of electricity for villagers could be improved by either adding
turbines to villages that do not have them, increasing the size of existing turbines, or connecting
the villages to the PLN system. The best option to provide this benefit was not clear from site
visits and further analysis is needed. Connecting the villages to the PLN system faces several key
challenges. Many of these villages are accessible only by motor cycle or on foot. Without road
access, it will be difficult to provide and maintain electrical distribution lines over the many
kilometers between villages. PLN power is also more expensive than the existing micro
hydropower systems, and PLN charges a connection charge to each household of between IDR
100,000 and IDR 300,000. Because of these challenges, connecting the villages to PLN and the
Bambang hydropower system was not perceived to be the best option.
Villagers appeared to prefer adding generation capacity from new mini-HPP installation and/or
the expansion of the existing micro hydropower systems. Further village meetings and
discussions are needed to determine the relative priority of interventions from a community
development fund. Initial discussions seemed to favor increased incomes from capacity building
for cacao and coffee rather than electrification. However it was beyond the scope of this
prefeasibility study to fully explore the costs and benefits of these options.
3.4 Other Interventions

The villagers in the Bambang region have many other needs that do not appear to fit directly into
the MCC/MCA-I goals and thus might not be eligible projects for community development fund
financing. This is because the other potential interventions are not directly related to poverty
reduction or green prosperity. However many of the interventions would be indirectly related so
additional analysis might be prudent if MCC/MCA-I determined that they were potential
projects. For example, most people in the region lack access to clean drinking water sources and
suitable places to go to the bathroom. If investments were made in these areas to provide toilet
facilities or clean drinking water systems for the villagers, incomes would likely increase
indirectly through improved productivity and education due to reduced health problems.
Investments in these facilities could also create jobs if villagers were able to charge for use of the
facilities and the revenues were used to operate and maintain them. This would also improve
incomes for some villagers that obtained these jobs as well as help ensure the longevity of the
investments. These other possible interventions were not analyzed since they were beyond the
scope of this prefeasibility study, but they could be considered for further analysis or for
investment.
52
4 Economic Assessment
An economic assessment evaluating the outcome of this project was performed and presents both
the NPV and ERR as well as detailed economic figures that highlight relevant elements of the
analysis. The method for evaluating the impact of this project proposal involves comparing the
cash flows of a counterfactual (CF) scenario (also referred to as the base case or business-as-
usual) to the cash flows if the project proceeds (the with-project [WP] case). 16 Evaluating the
project in this way ensures that the project delivers incremental returns that meet the required
10% ERR hurdle rate.
This economic assessment considers the projects impact on the local economy instead of
considering its impact only on the project sponsor. Expanding the project boundary allows a
better understanding of how the value created by the project is distributed among stakeholders.
This has a dual purpose: to demonstrate that the Green Prosperity goal of poverty alleviation is
met and to ensure that funding is provided to projects that otherwise would not attract a private
investor.
Cash and value flows for both the CF and WP cases are based, wherever possible, on data
collected during site visits or from comparable projects in Indonesia if site-specific data are not
available. For electrification projects, there may be many cases where the most appropriate
benefit stream is cost avoidance. This applies to both grid-connected and off-grid projects. Cost
avoidance can refer to a reduction in the cost to generate electricity, reduction in electricity
expense to consumers, or a reduction in the cost of a service, such as lighting by fuel-switching.
In addition, electricity can enable new value creation by powering small businesses and
increasing productivity, improving health conditions, and providing for better education
opportunities.
A full explanation of methods for calculating CF and WP benefit streams is forthcoming in a

separate comprehensive document detailing the electrification economic model, which would
describe methods, model structure, and procedures for use in evaluating similar projects.
4.1 Overview
This project performs very well from an economic perspective. The NPV created by the project
is IDR 284 billion (USD 26.9 million), with an ERR of 32.4%. The primary benefit to the project
is created by avoided PLN generation cost. In Sulawesi, PLNs weighted average generation cost
is IDR 1,596/kWh, compared to a hydropower feed-in tariff of IDR 787/kWh. The total benefit
to PLN for this cost reduction is IDR 289 billion (USD 27.4 million). This 6-MW mini-HPP
would produce 36.5 million kilowatt-hours annually at half the cost to PLN and a levelized cost
of IDR 124/ kWh. The system would cost IDR 20,250/W to build, totaling IDR 121.5 billion
(USD 11.5 million). A seven percent share of IPP revenue would be paid to a community
development fund, and would deliver net present value of IDR 11.4 billion to the local
community.
The economic returns of the project are large and relatively stable across large input ranges. The
sensitivity analysis performed reveals that the project delivers economic returns well above 10%
16
The counterfactual is what would happen in the project area if the project was not built.
53
even at very conservative input values. The input with the largest impact on project returns is
PLNs cost of avoided generation. PLN annual reports provide generation costs for most
technologies with the exception of rented diesel and purchased power. An analysis using the full
range of possible input values for these was conducted to ensure that the deterministic value used
was reasonable or at very least conservative. A double-variable sensitivity analysis was also
conducted to examine the impact of the full range of this value and the growth rate over the
project period. At low growth rates and avoided generation costs, the project delivers a return
well above 10%.
The risks associated with project performance pertain mostly to project execution rather than to
input variables. Most inputs are known with certainty, and project returns are not particularly
sensitive to those that are not. Rather, the more significant risk is whether the system can be built
to the designed specifications, obtain appropriate permits and offtake agreements, and be
managed effectively over the full project period. Despite these risks, this is still an attractive
project from an economic perspective.
4.2 Assumptions
This assumptions section is intended to provide background that will help inform the economic
results presented below. Brief descriptions of economic factors that influence both the baseline
(CF) and the with-project (WP) case are presented in turn.
4.2.1 Baseline Case (CF)

This section discusses the CF case for PLN generation in the Sulawesi interconnection region,
followed by a discussion of the proposed project. The text below simultaneously provides inputs
and assumptions used in economic modeling and a narration of the baseline case to facilitate a
better understanding of the approach used and results of the project.
The mini-HPP installation will connect directly to the regional PLN interconnection grid, which
requires an assessment of PLNs cost of generation for CF economics. The model assumes that
PLN would have produced the power supplied by this project, which implies that revenue is
equal in both the CF and WP cases. Under this assumption, PLN incurs generation costs in the
CF and feed-in tariff (FiT) costs for the electricity in the WP case. Revenue is not considered in
this situation both because the exact composition of unit sales among consumers cannot be
known and because it would be the same in both cases, thus canceling out.
PLN produces an annual report that details generation and cost information by technology and by
regional interconnection grid. This document is helpful for understanding what it costs PLN to
generate electricity, and thus the benefit that this project delivers for the Indonesian economy by
providing less expensive electricity. The PLN Statistic presents comprehensive data for each
interconnection region for a given year, and historical data on a national level. The generation
cost and growth rate data used in this analysis are also only presented on a national level in the
PLN Statistic.
The weighted average of all technology types is used as a cost per kilowatt-hour for offset PLN
generation. This approach provides a reasonable approximation because hydropower generation
systems of this size are considered base-load and therefore offset at all times of the day across
generation types. With better information on dispatch time by technology type on an annual
54
basis, one can get closer to the real cost of generation offset by hydropower and this project
specifically. Using a weighted average likely underestimates the actual offset generation cost if it
could be known that dispatching hydropower offsets the most expensive forms of generation at
any point in a given day or year. For example, with the supplemental supply of hydropower PLN
could avoid diesel generation on the margins. On the other hand, using a weighted average may
be more accurate in cases where there is a lack of reliability and frequent system outages.
Table 18 shows the Sulawesi PLN production and average generation cost by technology. To
calculate the weighted average, the share of total production is applied to each technologys
generation cost. This interconnection region is heavily supplied by hydropower, rented diesel,
and purchased power. Generation costs for rented diesel and purchased power are not provided
in the PLN Statistic, so placeholders are used in the model. The reported diesel generation cost
per kilowatt-hour is used in place of the missing rented diesel generation cost; and the weighted
average of the other technologies is calculated for the missing purchased power generation cost.
The resulting weighted average generation cost is IDR 1,596/kWh.
Table 18. Calculation of Weighted Average Generation Cost

Average Generation
Production (GWh) Share of Total
Cost
Hydropower 947.49 21% 155.79
Gas Turbine 85.79 2% 2,260.96
Diesel 313.63 7% 3,069.57
Rented Diesel 1,196.17 27% 3,069.57 [1]
Purchased 1,910.45 43% 1,117.32 [2]
Weighted Average Generation Cost 1,596.62
[1] No cost data presented for rented diesel; diesel price is used as placeholder
[2] No cost data presented for purchased power; weighted average of other technologies used
Figure 32 shows national average generation costs by technology from 2006 to 2011; Figure 33
presents the count of generating units by technology type from 2003 to 2011; and Figure 34
displays the compound annual growth rate (CAGR) of both generating unit count and generation
cost from 2006 to 2011. These figures were created to help inform the growth rate of PLN
generation cost in the economic model. While a better indicator of future growth rates would be
a combination of fuel futures prices and planned new generation, an assessment of recent
generating unit investment and generation cost growth can provide a reasonable proxy.
The compound annual growth rate of generating units from 2006 to 2011 is 0.9% while average
generation costs grew over the same period by 8.29%. Hydropower accounts for 21% of
Sulawesi production, but has a relatively low CAGR for both generation units and generation
cost. There was no steam production reported for 2011 in Sulawesi, though it accounts for a large
share of both generating units and generation cost growth nationally. Gas turbine generation
costs increased by almost 14% from 2006 to 2011, but gas turbines only account for 2% of total
Sulawesi production. Diesel and rented diesel account for 34% of Sulawesi production and have
moderate production growth rates below 3%. There is unfortunately no information presented on
cost per kilowatt-hour or growth rates for purchased power. The model uses a generation cost
growth rate of 4%, which the economics team believes is conservative given the information
presented in the PLN Statistic. Using a lower input value than the 8.29% presented by PLN will
55
have the effect of lowering PLNs CF costs, which will lead to lower incremental avoided costs
and a lower ERR for the proposed project. This input value is also equal to the inflation input
value, thus keeping generation costs constant on a real basis.
4,500.00
4,000.00
3,500.00
Generation Cost (IDR/kWh)
3,000.00 Hydro
Steam
2,500.00
Diesel
2,000.00 Gas Turbine
1,500.00 Geothermal
Combined Cycle
1,000.00
Average
500.00
0.00
2006 2007 2008 2009 2010 2011
Year
Figure 32. Historical PLN generation cost by technology
250
Number of Generating Units
200
Hydro
150 Steam
Gas Turbine
100 Combined Cycle
Geothermal
50 Diesel Gas
0
2003 2004 2005 2006 2007 2008 2009 2010 2011
Figure 33. Number of generating units by technology
56
16%
14%
12%
10%
CAGR
8%
6%
4%
2%
0%
Hydro Steam Gas Turbine Combined Geothermal Diesel
Cycle
Gen Units Gen Cost Average (Gen Units) Average (Gen Cost)
Figure 34. Compound annual growth rates of generating units and generation cost by technology
Table 19 presents the 2011 Sulawesi price per kilowatt-hour by customer type along with the
national average CAGR from 2003 to 2011. This table is included to show that recent historical
prices have grown at a slower average rate (3.30% CAGR) compared to the average generation
cost (8.29% CAGR). PLN loses a large amount of money annually, thus providing an
opportunity for low-cost generation to offset costly sources of electricity generation.
Table 19. Average Sulawesi Selling Price and National Compound Annual Growth Rate
Sulawesi
CAGR
Price
(20032011)
(IDR/kWh)
Residential 580.00 2.12%
Industrial 688.51 3.45%
Business 941.22 4.64%
Social 645.82 2.32%
Government Building 1,023.69 3.28%
Public Street Lighting 815.94 3.63%
AVERAGE 782.53 3.30%
4.2.2 Proposed Project

The proposed 6-MW mini-hydropower project would supply power through a PPA with PLN. In
this PPA, PLN will purchase all electricity produced by the system at the regulated FiT of IDR
787/kWh. This value is calculated using the regulated medium voltage value of IDR 656/kWh
and the Sulawesi regional multiplier of 1.2. The model assumes that the PPA will be renegotiated
at the end of the original contract, and that there is no escalator applied to the FiT.
57
This project would be financed with a commercial loan from the MCA-I funding window. The
IPP will contribute a 20% equity stake, and the remaining 80% will be debt at a 5% interest rate
with a ten-year term and monthly compounding interest. Table 20 shows the project construction
elements and associated capital costs. These amounts correspond to capital costs per watt of IDR
20,250.
Table 20. Mini-HPP Capital Costs (IDR)

Additional Pre-Feasibility Studies 608,575,000
Feasibility Study and Detailed Engineering Design 1,958,300,000
Civil Works 65,543,382,870
Construction Mobilization and Demobilization 16,186,531,732
Mechanical and Electrical Equipment 26,087,058,241
Operational Certificate 100,000,000
Operator Training 236,000,000
Contingencies (10% of total) 10,781,697,284
Total Installed Capital Cost 121,501,545,127
Feed-in tariff payments are the sole source of revenue for the IPP. At a capacity of 6 MW and a
capacity factor of 69%, the system can produce 36.5 million kilowatt-hours annually. At this
production, the IPP will earn IDR 26.5 billion in annual revenue. Because there is no escalator in
the FiT, operating revenue is adversely impacted by inflation in the economic model. O&M
expenses are split into annual and periodic. Annual O&M costs are set at 2.5% of capital costs,
and periodic maintenance is 0.17% of capital costs. 17
In addition to O&M costs, the IPP would pay 7% of its revenue to a community development
fund. This stream of cash flows represents a direct benefit to the community where the mini-HPP
project will be built. The economic model does not account for any additional value that this
fund could create, and accounts for the benefit to the community on a one-to-one basis (instead
of including a multiplier effect for leveraged funds). Several possible programs could be pursued
by the community development fund to increase the ecomic value to the community of
investments by the fund. For example, the surrounding area is home to coffee and cacao farms.
The cash flow could be used to fund a capacity-building program for intensification of these
crops. A more detailed discussion of the impact this would have on project economics is
contained in the sensitivity analysis section below.
4.3 Project Benefit Streams

The only benefit stream that provides economic value in this analysis comes from PLNs avoided
generation cost enabled by the mini-HPP. The share of revenue paid to the community
development fund could represent another benefit stream by funding additional value-creating
activities described above. The total benefit from PLNs avoided cost is IDR 289 billion.
17
The model increases the estimate for annual O&M provided by Desainas to 2.5% to be more conservative, and
uses the periodic maintenance value provided by Desainas to calculate the model input of percent of capital costs for
periodic O&M.
58
4.4 Results
This section presents economic results, distribution of benefits, and sensitivity analysis of the
proposed mini-HPP project. Reference case assumptions used to produces these results are
shown in Appendix D in Table 28.
4.4.1 Economic Analysis

MCC seeks to ensure that benefits produced by the compacts it funds are greater than the cost of
the compact. The cost of the compact includes the direct costs of facility-funded projects, as well
as the related Green Prosperity Activities and broader compact administration costs, such as the
staffing of MCA-I. Therefore, the economic analysis presented includes a 35% overhead applied
to the direct project costs. The exact overhead structure for the Green Prosperity Finance Facility
was not determined at the time of writing. The 35% overhead figure approximates an overhead
such that if all Facility money were spent and all projects met the 10% ERR hurdle, benefits
attributable to Green Prosperity projects would outweigh all costs attributable to activities
necessary to enable facility operations. Note, however, that this 35% figure does not include the
cost of any additional technical assistance that would be needed to bring the project to a fundable
stage. This ultimately should be accounted for as well, but because it can be tracked on a project-
by-project basis, there is no need to roll it into a general overhead.
In borderline cases where application of the overhead leads to a project not passing the hurdle
rate, results are also presented to show whether the project is at least viable without overhead
loading. If it is, it is not out of the question that such a project will be fundable (pending
decisions about facility operating procedures). However, all projects should strive for a cost-
effectiveness that allows them to pass the ERR threshold, while bearing full overhead.
This project, however, exceeds the 10% hurdle rate both with and without MCA-I overhead
burden. The project delivers a 32.4% ERR including overhead, which is well above the required
10% ERR. This translates to IDR 284 billion in NPV to the regional economy. Table 21 shows
the NPV and ERR for each village and for the combined project.
Table 21. Economic Results

With Overhead Without Overhead
ERR 32.4% 45.4%
NPV (Million
284,000 322,000
IDR)
NPV (US Dollar) 26,900,000 30,600,000
Figure 35 shows CF and WP benefits and the net incremental benefits over time. Periodic
maintenance costs are so small relative to overall costs that their impact cannot easily be seen in
the figure below. Additionally, PLNs generation cost growth is set equal to inflation, which has
the effect of keeping long-term annual benefits and costs flat.
59
80,000
IDR Millions
60,000
Project Value Flows (Real)

40,000
20,000
0
(20,000)
(40,000)
(60,000)
(80,000)
(100,000)
(120,000)
1 3 5 7 9 11 13 15 17 19 21 23 25
Project Year
Net Project Benefits CF System Benefits WP System Benefits
Figure 35. Net benefits
Figure 36 shows how the project economics fare when considered over varying time horizons.
From an NPV perspective, the project breaks even in year five. Hydropower systems can last
much longer than 25 yearsin some cases up to 40 years. So, if the time horizon were extended,
the economics would continue to improve, though it appears as though it begins to taper in later
years. The first dip in year two corresponds to the second year of construction capital costs.
350,000
IDR Millions
300,000
250,000
200,000
150,000
100,000
50,000
0
(50,000)
(100,000)
(150,000)
1 2 3 4 5 6 7 8 9 10111213141516171819202122232425
Project Year
Figure 36. NPV for different time horizons
4.4.2 Beneficiary Analysis

Figure 37 and Table 22 show the economic impact of this project on various stakeholders. NPV
values are calculated at the social discount rate of 10%, and returns that are undefined, because
there is no negative cash flow in the first year, are listed as n/a. The respective NPV values
provide a glimpse of how well these beneficiaries fare in the current project design. There are
60
relatively few levers that change the distribution of benefits. A few of the most significant levers
will be discussed below in the sensitivity analysis. The fact that PLN is a significant benefactor
of this project is merely a function of how values are accounted for in the model. As a result of
this project, PLN could charge lower prices or reduce government subsidy thus ultimately
benefiting consumers. The community development fund and the IPP benefit inversely in the
sense that one benefits at the expense of the other. This tradeoff is also discussed in greater detail
in the sensitivity analysis section.
Beneficiary NPV (at r = 10%; Million IDR)
Independent Power Producer 15,500
PLN 289,000
MCA-I Finance Window (32,000)
Community Development Fund 11,400
Figure 37. NPV of benefits by beneficiary group
Table 22. Distribution of Benefits

Beneficiary Analysis Return NPV (IDR) NPV (USD) % of Project NPV
IPP 14.69% 15,450,000 $1,464,530 5.4%
PLN n/a 289,000,000 $27,395,459 101.8%
MCA-I Finance Window 2.33% (32,001,000) ($3,033,538) -11.3%
Community Development Fund n/a 11,391,000 $1,079,754 4.0%
Figure 38 displays the incremental benefit to each stakeholder over time. Most beneficiary
incremental benefits behave as expected. These net benefits compare cash flows in the CF to the
WP case. The large negative cash flow in year two occurs because 50% of capital costs are
incurred in the second year. The MCA-I funding window disburses the debt in year one, which
the IPP receives as cash flow from financing while incurring the first 50% of construction capital
costs. PLN benefits on a net basis by avoiding generation of its costly technologies. The IPP has
low net cash flows in early years because of financing payments, but cash flows increase from
year 11 onward. Inflation erodes revenue over time and discounting of these cash flows leads to
a lower return and NPV for the IPP. The community fund benefits modestly over time from
payments from the IPP.
61
60,000
IDR Millions 40,000
20,000
0
Net Benefit (Real)
(20,000)
(40,000)
(60,000)
(80,000)
(100,000)
(120,000)
(140,000)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Project Year
Independent Power Producer PLN

MCA-I Finance Window Community Development Fund
Figure 38. Net benefits by beneficiary group over time
4.4.3 Sensitivity Analysis

The sensitivity analysis presented below shows the range of possible economic results given a
range of input values. Where possible, data were researched and collected in site visits to
minimize the uncertainty range or eliminate variables as sensitivity parameters. Figure 39 shows
NPV and ERR results from a 10,000-trial Monte Carlo simulation using sensitivity parameters
and uncertainty distributions. The analysis shows that the combined project would deliver a
positive NPV and an ERR above 10% with 100% certainty at the current sensitivity input ranges.
62
Figure 39. Distribution of economic outcomes
Figure 40 shows the relative contribution to project ERR variance from various inputs that have
been defined as sensitivity parameters. Where additional data were unavailable to inform the
range of possible values the ranges were defined at +/- 10% for consistency and to enable a
comparison across parameters. The only exception is for the placeholder input for PLN
purchased generation cost. In this case, the upper bound is set at the diesel generation cost and
the lower bound is set at the hydropower generation cost. As mentioned above, the deterministic
value is the weighted average of all other technology generation costs. Table 28 in Appendix D
shows all deterministic inputs and sensitivity parameters used in the model. Normally capital
costs would be presented as a single input variable, and therefore as a single sensitivity
parameter. In this case, a more detailed breakdown of capital costs was available and therefore
each was used as separate model input. This implies that collectively, they will have the greatest
impact, but individually they do not. To account for this, a multiplier of 1.0 is applied to each
component to ensure that the cost elements are correlated and to show one sensitivity parameter
(Scalar in Figure 40).
63
The tornado chart below shows that the purchased generation cost per kilowatt-hour is the most
sensitive input. This is likely because it figures prominently in the calculation of weighted
average generation cost and because it has a very wide range of possible values. The impact of
this variable is discussed in further detail below. As expected, smaller IPP operating cost
elements such as annual and periodic O&M have negligible impact, while transfer payment
variables have no impact at all. The capacity and capacity factor are relatively sensitive because
together they influence how much electricity is sold to PLN and therefore how much PLN saves
on generation cost. The scalar is also relatively sensitive because it applies to capital costs that
are incurred in year one and two, and are not subject to as much discounting.
Figure 40. Sensitivity parameter contribution to ERR variance
Single- and double-variable sensitivity analyses of the most sensitive variables identified in
Figure 40 reveals that most behave predictably. This analysis calculates an economic result as
one or two input values are changed while all other inputs are held constant. The input ranges for
each were adjusted to show under which conditions the project does not meet a 10% ERR, most
of which were well out of the range of possible or realistic values. Individual analyses were
performed for IPP financing variables, community benefit variables and PLN generation cost
variables.
4.4.3.1 IPP Financing and Return Sensitivity Discussion

This project involves few elements, yet two of the most important economic outcomes (IPP
return and community benefit) are inversely related. The higher the contribution to the
community benefit fund, the lower the return for the IPP. Figure 41 shows how both the IPP
return (right axis) and net present value (left axis) decline as the percent of revenue paid to the
community fund increases. The IPP return is displayed by a light red line, and the IPP NPV is
displayed with a dark red line. This chart enables project designers to adjust the percentage
payments to a level that produces an acceptable return for the IPP, subject to other financing
inputs discussed below. No IRR is shown for the community fund because there is no capital
contribution, and the value is therefore undefined. A percentage contribution of 7% is chosen in
64
the model to deliver a real return to the IPP of 14.7%. With no contribution to a community fund,
the highest return the IPP could earn is just over 18% with an NPV of IDR 27 billion.
30,000 20.0%
IDR Millions
18.0%
25,000
16.0%
Internal Rate of Return

14.0%
Net Present Valut
20,000
12.0%
15,000 10.0%
8.0%
10,000
6.0%
4.0%
5,000
2.0%
0 0.0%
0% 1% 2% 3% 4% 5% 6% 7% 8% 9%
Contribution to Community Development Fund (% of Revenue)
Community NPV IPP NPV IPP IRR
Figure 41. Tradeoff between IPP return and community benefit

The only other variables that impact IPP return involve project financing terms. The return to the
IPP is subject to how levered the project is and the interest rate on that debt. The more heavily
levered the project, the more the IPP can spread its repayment of capital costs and rely on cash
flow from revenue to fund repayment. The lower the interest rate, the less interest it pays over
the debt term. Figure 39 shows the relationship between interest rate and leverage and the IPP
NPV. Each line represents a different amount of leverage (from 50% to 100%), and the x axis
shows different interest rates for this financing. The orange line and vertical green-dashed line
show the deterministic inputs that the model uses. So, at 5% interest and 80% leverage, the IPP
earns about IDR 20 billion in NPV (a return of 14.7%). As was mentioned above, the model also
assumes a debt term of 10 years with monthly compounding.
This analysis examines the project and IPP returns from a cash flow accounting perspective.
Depending on the accounting regulations in place, the IPP could benefit more under accrual
accounting by deducting interest expense and non-cash expenses like depreciation, thus lowering
its tax burden. In this case, the IPP return would improve, but lower taxes would be paid to the
Indonesian government thus lowering the economic return of the project to its current level.
65
60,000
Millions
50,000
40,000
30,000
20,000
IPP NPV
10,000
0
(10,000)
(20,000)
(30,000)
(40,000)
1% 2% 3% 4% 5% 6% 7%
Interest Rate
50% 60% 70% 80% 90% 100%
Figure 42. Sensitivity of IPP NPV to interest rate and leverage
Figure 43 and Figure 44 show the sensitivity of IPP returns to model sensitivity inputs. As
expected, the most sensitive variables are those that involve capital costs, financing, and
production. Surprisingly, the percent of revenue paid to the community development fund does
not have a very significant impact relative to other inputs.
Figure 43. Range of possible IPP returns
66
Figure 44. Sensitivity of IPP return to sensitivity parameters
4.4.3.2 Community Benefit Sensitivity Discussion

As was briefly described above, the cash flow to the community development fund could be used
to create additional value for the community and therefore increase overall project returns. These
benefits are not included in the results presented above because more information and specific
program design are needed. However, some discussion of the potential impact these types of
programs can have may be helpful. It should be noted that these activities do not need to be
included in the ultimate project design. They could represent opportunities for standalone
projects, particularly if the only form of integration in this project is by redirecting revenue from
the IPP. A truly integrated project might involve community use of the new electricity generated
by the IPP.
Supposing a program were designed with the use of these funds in mind, and that this program
created additional value for the community, Figure 45 shows the potential impact of this program
on overall project economics. Each line represents a different multiplier for the stream of cash
flows, and the x axis is the share of total community benefit cash flows on which this multiplier
is applied. This analysis assumes that the remaining share has a multiplier of one. Generally, the
higher the share of cash flow that goes to this activity, the higher the return. The same is true for
the multiplier value. By way of example, the red line represents the multiplier calculated using
program costs and returns of capacity-building exercises for coffee in Rantau Suli. If a capacity-
building program similar to the one proposed for Rantau Suli coffee farmers is implemented with
all of the funds, it would increase the project ERR by 2%. This example is not directly applicable
for any given project because this multiplier is calculated using assumptions that are particular to
Rantau Suli. Instead, a full analysis of the program costs, benefits, and related assumptions is
required before presenting results for the overall project.
67
44.0%
42.0%
40.0%
Project ERR 38.0%
36.0%
34.0%
32.0%
30.0%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Share of Community Benefit with Multiplier Applied
0 1 2 3 4 5
6 7 8 9 10
Figure 45. Sensitivity of project ERR to community benefit multiplier and share applied
Figure 46 and Figure 47 show the sensitivity of community benefit NPV to model sensitivity
inputs. The three most sensitive inputs are the share of revenue paid to the fund, the IPP capacity,
and the IPP capacity factor. This makes sense because the fund benefits in proportion to the
revenue earned by the IPP. The more the IPP produces, the more FiT revenue it collects and
therefore, the more it pays out to the community development fund.
Figure 46. Range of possible community benefit NPV
68
Figure 47. Sensitivity of community benefit NPV to sensitivity parameters
4.4.3.3 PLN Generation Cost Sensitivity Discussion

As was shown in the tornado chart in Figure 40, the purchased power generation cost per
kilowatt-hour to PLN is the most sensitive input. Figure 48 examines the impact of this variable
on project economics in more detail. Each line represents a different possible value for offset or
avoided cost per kilowatt-hour. These values range from the lowest to the highest possible value
for the calculated weighted average. The lowest value uses the hydropower generation cost for
the purchased power and results in a weighted average cost per kilowatt-hour of IDR 1,184. The
highest value uses the diesel generation cost per kilowatt-hour and results in a weighted average
cost per kilowatt-hour of IDR 2,434. In addition to changing the calculated weighted average
avoided generation cost, Figure 48 varies the growth rate of that generation cost. At low growth
rates there is less avoided cost. So, at a growth rate of zero and the lowest generation cost value,
the project delivers an ERR of 18%. The green dashed line and the orange line show the
deterministic values used in the economics results presented above, and the dashed red line
shows the 10% ERR threshold.
69
60.0%
50.0%
40.0%
Project ERR
30.0%
20.0%
10.0%
0.0%
0% 1% 2% 3% 4% 5% 6%
Generation Cost Growth
1,184 1,300 1,400 1,596 1,800

1,900 2,000 2,100 2,200 2,434
Figure 48. Sensitivity of project ERR to generation cost and cost growth
4.4.3.4 Other Input Sensitivity Discussion

Additional analysis of the capital cost multiplier and capacity factor were performed and reveal
that the project economics perform above the 10% threshold at the most conservative, and even
unrealistic assumptions. The project NPV goes below zero at a capital cost multiplier of 2.7,
meaning that original capital cost estimates would have to be higher by 170% in order for the
project to underperform economically. Similarly, at capacity factors below 35%, the project ERR
is undefined because there are multiple years of negative cash flows. These values are well
below even the most conservative assumptions for this input. Figure 49 and Figure 50 show how
the project ERR varies with different input values for capital cost multiplier and capacity factor.
140,000.00
IDR Millions
120,000.00
100,000.00
80,000.00
Project NPV
60,000.00
40,000.00
20,000.00
0.00
-20,000.00
-40,000.00
-60,000.00
-80,000.00
Capital Cost Multiplier
Figure 49. Sensitivity of project ERR to capital cost multiplier
70
50.0%
45.0%
40.0%
35.0%
Project ERR 30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
Generator Capacity Factor
Figure 50. Sensitivity of project ERR to generator capacity factor
4.5 Economic Risk Assessment

This report presents results for the best estimate of each of the input variables. Changes in these
parameters may strongly affect overall economic performance depending on the significance of
the variable changed. The sensitivity analysis presented above reveals the variables that would
have significant impact on the economic outcome of the project. This economic assessment used
the best available information to present these results, and inputs that were uncertain or
significant were individually subjected to single-variable sensitivity analysis to determine
whether any possibly value in a large range would jeopardize project returns. Although the
project delivers an ERR above 10%, even with very conservative inputs, there are risks to
economic performance that should be monitored and managed to prevent decline in project
return. Material risks that may result in significant changes to economic results are discussed
below.
Perhaps the most significant risk to the project is whether it is developed according to design at
all. The key risk for this project is the ability of a developer or company to secure a PPA with
PLN to purchase the power. A PPA is essential for this project to be feasible and it should not be
built or funded without a PPA from PLN. Securing this PPA will be difficult because numerous
discussions with PLN in both Mamuju and Mamasa indicated that the Mamasa region does not
need additional power, and that transmission of excess power out of Mamasa would be difficult.
Once a PPA is secured, the risk of default on the part of PLN is perceived as low because
hydropower has an established feed-in tariff and PLN is a government utility company.
Successful project development requires experienced personnel, an efficient construction
process, and an ability to secure the appropriate permits and offtake agreements. The mini-HPP
should be built to design specifications in order to qualify for certain permits, obtain financing,
and to strike a PPA with PLN. Additionally, a properly built system will help ensure long-term
reliable production of power. Even if the project is built properly and the feasibility study
confirms the resource potential in the catchment area, this could change over time from changes
in weather patterns and watershed forestry health.
71
Once the project is built and commissioned, its operational management should be in the control
of experienced hydropower operators. The facility managers and employees should be able to
operate and maintain the equipment, foster relationships with PLN and the community, and
handle unforeseen events that may jeopardize the long-term operational health of the system.
There must also be strong financial management of the business entity to ensure that financing
payments can be made and costs can be covered. Finally, the managers will need to renegotiate
an extension to the PPA to realize revenue well beyond the project period. Several potential risks
to the long-term power sales involve PLN. One potential risk is that PLN may not need
additional power capacity at the end of the first PPA term. Another risk is that PLN generation
costs decrease over time making the purchase of renewable energy through FiT payments not
cost-competitive. Yet another risk is that a change to renewable energy FiT policy could remove
the mandated purchase of this type of power.
Lastly, there may be risk to the benefit provided to the local community by this project. Some
assurance is needed that the IPP will faithfully make payments as a percent of revenue to the
community development fund. Furthermore, once payments are made, there is some risk that the
benefits are not distributed equitably or that the funds are put to some opposing purpose. All of
these risks are manageable with the appropriate measures in place, and there is sufficient buffer
in the economic results to accommodate changes to some of these variables.
4.5.1 Additional Risks

Additional project risks could arise that are not specific to the economic analysis at the
prefeasibility study level. These may be quantified during a full feasibility study, during
construction, or during the operations phase. For this type of project additional risks could
significantly affect economic returns. These are briefly discussed below.
Corporate Structure
The structure of the proposed company or organization must be detailed and illustrate which
partners own what fraction of the company, how voting for corporate decisions will work, and if
any ownership is from local or disadvantaged sources. Rules governing the sale or transfer of
corporate ownership, granting of voting rights, or allocation of assets must be reviewed for
problematic arrangements. MCC must understand and approve of corporate structure before
funding.
Legal Status
MCC must review and verify legal status before funding to ensure that for example, the company
setup for this project has the proper legal status and the company does not have a history of
bankruptcy, litigation, or pending legal action.
Team
MCC must ensure that the members of the corporate team have the appropriate experience and
skills for this project. At a minimum, team members should have experience with similarly sized
hydropower projects and experience with village-scale economic development.
72
Resource
A degradation of the water resource that lowers production presents a risk to the cash flows for
this project. This is likely a low risk because the majority of the forest is protected. It is still
important to maintain the water resource by monitoring development, forestry, or other potential
changes to the catchment area.
Operations and Maintenance

The cash flow for this project is subject to appropriate O&M of the hydropower system.
Qualified personnel must be selected so that the system produces power reliably over its lifetime
and outages are minimized. See technical risk section.
Insurance and Warranties

The project should be properly insured against hazards such as flooding and landslides. The
selected construction contractors should be insured. Key pieces of technical equipment should
have appropriate warranties and sufficient terms.
Project Costs
The costs estimated in the final proposal from the IPP should be reasonable. What is the
likelihood of a construction cost overrun and how will the need for additional funding be
addressed, e.g., will new equity be required or will additional debt be issued?
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5 Environmental and Spatial Land Use Assessment
As noted previously, all Green Prosperity program project investments must meet certain
technical, economic, environmental, and social expectations expressed in MCCs Compact with
Indonesia. Specific to environmental impacts, the Green Prosperity program is focused on
promoting the productive use of low-pollution renewable energy; the management of watersheds,
forests, and other natural resources; and the sustainable use of lands for agriculture and other
purposes.
This project focuses on developing grid-tied mini-HPP in Mamasa near the Bambang and
Masoso villages. Overall, the project appears to be consistent with the Green Prosperity
programs environmental goals. This chapter provides a preliminary assessment of
environmental impacts of this project, which would be further detailed in a full feasibility study.
Below, potential environmental impacts of the project are discussed, followed by consideration
of applicable Indonesian environmental laws and regulations, the GHG emissions impact of the
project, and spatial land use considerations.
5.1 Environmental Impact Assessment

Any project activity in Indonesia requires full disclosure of possible environmental impacts at
the earliest stages of project development. Projects also must ensure that these impacts are
addressed by taking measures to avoid them or mitigate them to the greatest extent possible.
Some impacts can be addressed by compensating those who are affected.
The Mamasa grid-tied mini-HPP project was identified by MCC as having the potential to
address MCC goals for economic development and poverty reduction while also posing minimal
environmental threat.
The largest environmental benefit of the Mamasa mini-HPP project providing generation of
electricity with very low GHG emissions. Small hydropower plants emit between .01 and .03
pounds of carbon dioxide equivalent per kilowatt-hour [11]. Hydropower systems are generally
one of the lowest GHG emitting sources of energy, second only to wind [12]. Furthermore,
increased hydropower generation may in some cases replace energy generated by diesel
generators. Diesel generators are common in small villages across Indonesia, contributing a high
concentration of GHG emissions as well as posing a threat to human health from air pollution
and fuel spills.
The Mamasa mini-HPP project will require the use of construction equipment that could present
some negative environmental impacts. Bambangs well-maintained access road will help reduce
environmental impacts related to transporting construction equipment to the site. Bambangs
close proximity to the PLN grid reduces the demand for land use change to accommodate the
construction of transmission lines. Environmental impacts from some land use change may still
occur, but these are all expected to be minimal.
Construction of the intake, canal, penstock, and powerhouse has the largest potential
environmental impact. These components will be constructed in and around the banks of the
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river. A diversion from the river, built with concrete, will be constructed to take water down the
canal to the intake, which will direct it into the penstock as shown in Figure 51.
Figure 51. Weir and intake rendering

Source: Desainas
A well-constructed intake and canal should prevent aquatic life from entering the penstock by
fitting the intake with a screen or grate. The canal will reconnect with the river allowing aquatic
life to return to the main channel. With a screen or grate, there still may be some impact on
aquatic life that manages to bypass the screen or grate. These fittings should be checked
regularly to ensure aquatic life is safe if it enters the canal.
A preliminary list of positive environmental impacts of this project includes:
Clean energy source that will be nearly carbon neutral.

An increase in renewably generated electricity contributing to Indonesias 2025
renewable energy target of 15% renewable power. 18
A decrease in issues of air quality and health by reducing diesel generation in the local
villages.
Potential negative environmental impacts include:
Construction-phase environmental disturbances that might include heavy construction

equipment impacting roads and adjacent land.
Longer-term impacts of added infrastructure (roads, power line connections to PLN and
local villages).
Land use changes to accommodate construction and construction-phase aquatic life
impacts.
18
http://www.icafrica.org/fileadmin/documents/Knowledge/GIZ/Legal Frameworks for Renewable Energy.pdf
75
Catchment area preservation is a need for a successful hydro energy project. Catchment areas
reduce the loss of vegetative cover through erosion. This can increase siltation of rivers,
reservoirs and irrigation canals, which can make the river flow variable impacting power
generation. Siltation also increases the chances of flooding. These all lead to a negative impact
on locals in Bambang. 19 Improved water catchment can also reduce the spread of water borne
diseases and water contamination.
If this project or one similar to it move to a full feasibility study, these impacts would need to be
studied, with the likely extent of their impacts explored and mitigations identified where
possible.
5.2 Compliance with Legal Requirements and Performance

Standards
Initiating any project in Indonesia will require permits and/or licenses from the government of
Indonesia. This includes an environmental permit for projects with potential for environmental
impacts. An environmental permit is issued following approval of an AMDAL or a UKL-UPL
documents. An AMDAL (Analisis Mengenai Dampak Lingkungan) is a full environmental
assessment, required for projects that are considered to have potentially significant
environmental impacts. An UKL-UPL is an environmental management and monitoring plan for
projects that are not expected to cause significant impacts. Small-scale activities may be required
to prepare a Surat Pernyataan Kesanggupan Pengelolaan Dan Pemantauan Lingkungan Hidup
(SPPL), which acts as a letter of commitment to manage the environment. The type of
environmental document required is governed by the Regulation of the Minister for Environment
No. 5 Year 2012 on Types of Projects and/or Activities that Require an AMDAL. 20
The use of water resources in Indonesia is governed by Law No. 7/2004, Government Regulation
No. 42/2008, and Ministry of Public Works Regulation No. 6/2011. The issuance of specific
permitting requirements, however, will come from regional, district, or local governments. The
environmental permit and approval of AMDAL or UKL-UPL documents for Green Prosperity
projects is likely to be the authority of the provincial or district-level government, depending on
the size and location of the project. The national government only issues environmental permits
for projects that cross provincial boundaries or are strategic in nature.
MCC also requires that Green Prosperity projects adhere to the IFC Performance Standards.
These standards support a process to ensure that any project is exercising due diligence of
environmental and social risks from start to finish. Table 23 provides a list of the IFC
Performance Standards related to environmental impacts.
19
http://documents.worldbank.org/curated/en/2003/07/2464522/indonesia-catchment-protection-project
20
http://www.lexology.com/library/detail.aspx?g=ef8a4775-49a1-445a-aae3-56c8f759f93c
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Table 23. IFC Performance Standards
IFC Performance Standard Description
Describes the importance of identifying environmental
Performance Standard 1: Assessment
and social risks and impacts, and of managing
and Management of Environmental and
environmental and social risks throughout the life of a
Social Risks
project. This standard applies to all projects.
Recognizes that increased industrial activity and
Performance Standard 3: Resource urbanization often generate higher levels of air, water,
Efficiency and Pollution Prevention and land pollution, and that there are efficiency
opportunities.
Recognizes that project-related land acquisition and
restrictions on land use can have adverse impacts on
communities and persons that use this land.
Performance Standard 5: Land Acquisition
Involuntary resettlement refers both to physical
and Involuntary Resettlement
displacement (relocation or loss of shelter) and to
economic displacement. For this particular project
there will be no land acquisition.
Performance Standard 6: Biodiversity Promotes the protection of biodiversity and the
Conservation and Sustainable sustainable management and use of natural
Management of Living Natural Resources resources.
5.2.1 Relevant Indonesian Laws

The government of Indonesia has many laws that could pertain to the proposed project activity.
Selected laws are listed in Table 24.
Table 24. Relevant Indonesian Environmental Laws

Green Prosperity
GOI Laws & Regulations
Application
Green Prosperity as Act No. 32, 2004 on Regional Autonomy
a whole Act No.7, 2004 on Water Resources
Act No. 32, 2009 on Environmental Protection & Management
Act No. 14, 2008 on Public Information Disclosure
Act No.39, 1999 on Human Rights
Act No.41, 1999 Forestry
Act No.18, 2004 Plantation
Act No. 5, 1990 on Conservation of Biological Resources &
Ecosystems
Ministry of Forestry 5-year Strategic Plan (RENSTRA) 2009
2014 with a program focus on Community-based Watershed
Management
Ministry of Forestry Decree, P.7/Menhut-II/2011 re Public
Information Service of Forestry Sector, 02 February 2011
Ministry of Forestry Decree on Information Transparency, 27
February 2006
Government Regulation 6 of 2007 on Forestry
Ministry of Forestry (2000), General Framework and Criteria &
Standards for Forest and Land Rehabilitation. Directorate for
Land Rehabilitation and Soil Conservation, Directorate General
for Land Rehabilitation and Social Forestry, Jakarta, 2000
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Presidential Instruction (INPRES) No.1 of 2000 on Gender
Mainstreaming
Participatory land- Law 26 of 2007 on Spatial Planning, specifically Article 48, (1),
use planning (a), on Empowerment of Local People through Spatial Planning
Ministry of Home Affairs Guidelines 27 and 28 of 2006 on village
boundary-setting
Spatial Planning Act 26 of 2007 and Spatial Planning Act 27 of
2007 for Coastal Regions and Small Islands
Government Regulation 15 of 2010 on Spatial Planning
Implementation
Green Prosperity Act No.30 Year 2009 on Electricity
Facility Ministerial Regulation of Agrarian Minister/ Head of National Land
Agency No. 2, 1993 on Procedures to Obtain Location Permit and
Land Use Rights for Investing Corporations Investing
Ministerial Regulation of Agrarian Minister/ Head of National Land
Agency No. 2, 1999 on Issuance of Location Permit for National
and Foreign Direct Investments
Presidential Regulation No. 5 Year 2006 on National Energy
Policy
Presidential Regulation No. 61 Year 2011 on National Action Plan
on Greenhouse Gas Emission Reduction
(Source: Draft Environmental and Social Management System Tier 2, I. Marifa and S. Feld, Aug 2013)
As projects of this type move toward implementation, MCA-Is Environmental Social

Management System should be consulted to ensure awareness of and adherence to all relevant
requirements of Indonesian law and MCC corporate practice.
5.2.2 Application to the Proposed Project

For the project under consideration, since it is an electricity generation project with capacity less
than 10 MW, the UKL-UPL is the only required environmental document. 21 The UKL is an
environmental management effort and the UPL is an environmental monitoring effort providing
an overview of potential environmental impacts with a focus on management and monitoring
efforts by the project owner. The UKL-UPL is provided to the appropriate authority, which may
be a Minister of Environmental Affairs, Governor, or Regent. Notice of the application must be
announced in the media within five days after submission.
The UKL-UPL is an important milestone in the projects development, because when it is

approved, the Environmental License is issued. An Environmental License is a new requirement
under Indonesian law GR 27/2012 and it restates requirements and obligations for a project as
described in the UKL-UPL. The Environmental License will also detail any other Environmental
Licenses required by the project. Requirements to maintain the Environmental License include
compliance with the terms of the permit, submitting a compliance report twice annually, and
providing a guarantee of funds for environmental mitigation. Approval of the UKL-UPL and
issuance of the Environmental License are prerequisites to obtaining a business license.
21
See Indonesian Law No. 23/1997 on Environmental Management, Government Regulation No. 27/2012, Ministry of
Environment Decrees No. 40/2000, No. 17/2001 and No. 86/2002.
78
5.3 Greenhouse Gas (GHG) Emissions Impact
The Bambang mini-HPP is anticipated to reduce GHG emissions relative to the baseline
scenario. Since the mini-HPP will be grid-tied, the baseline scenario is that the electricity
delivered to the grid by the proposed hydropowr system would otherwise have been generated
both by existing grid-connected power plants and by the addition of new generation sources to
the grid.
In accordance with internationally accepted GHG emission accounting methodologies for small-
scale grid-connected renewable energy projects, baseline emissions are the product of the
combined margin emission factor for the grid and the electricity (MWh) delivered to the grid by
proposed mini-HPP [13]. The combined margin factor accounts for both the operating margin
(existing power plants) and build margin (planned new generation sources). The combined
margin emission factor for West Sulawesi is 0.267 tCO 2 e/MWh. 22 Based on this factor and an
anticipated annual delivery of 36,484,050 kWh of electricity to the grid from the proposed mini-
HPP project, baseline emissions are 9,741 tons of carbon dioxide equivalent (tCO 2 eq) per year.
No GHG emissions are associated with renewable mini-HPP generation. Additionally, since the
proposed system is a run-of-the-river hydropower plant, no emissions will result from the
creation of a reservoir. Therefore, the emissions reduction anticipated from this project is
equivalent to the baseline emission estimate: 9,741 tCO 2 eq/yr. Table 25 summarizes this
preliminary estimate of GHG emission reduction potential.
Table 25. GHG Emissions Reduction Potential from Bambang Mini-hydropower Plant
Net annual electricity delivered to grid (MWh) 36,484
Combined margin emission factor for West Sulawesi (tCO 2 eq/MWh) 0.267
Annual baseline emissions (tCO 2 e) 9,741
Annual emissions from proposed mini-HPP (tCO 2 eq) 0
Total emissions reduction from Bambang mini-HPP (tCO 2 eq) 9,741
These calculations only account for the emissions reductions associated with generating grid-
tied, carbon-neutral hydropower. Secondary emissions impacts for this project might include
lifecycle considerations such as emissions from production and transport of materials, O&M
(e.g., auxiliary diesel generators and staff transportation), and dismantling. These secondary
effects are assumed to have relatively small emissions implications relative to offsetting
emissions associated with other generation supplying the grid. Literature estimates of lifecycle
emission factors that account for secondary effects of hydropower range between 4 to 14
gCO 2 eq/kWh, yielding approximately 130 to 450 tCO 2 eq/yr for the proposed Bambang mini-
HPP system (less than 5% of the emissions reduction potential estimated above) [14].
As a preliminary, high-level analysis, this emission reduction estimate is not appropriate for
estimating or verifying officially recognized GHG reduction offsets (or credits) for use in
22
2008 ex-post combined emission factor estimated using data from the Directorate General of Electricity and
Energy Utilization, Agency for the Assessment and Application of Technology, EcoSecurities, and Bionersis.
Source: Renewable Energy, Feed-in Tariff & Carbon Market. Retrieved 16 Oct 2013 from
http://thinkrenewables.wordpress.com/2010/04/30/updated-combined-margin-cm-of-grids-emission-factor-in-
indonesia/.
79
mandatory or voluntary emission reduction programs, including the Kyoto Protocols Clean
Development Mechanism. If the generation of carbon offsets is an objective of this project, a
thorough GHG reduction analysis can be performed during the feasibility and project
development stages. 2324
5.4 Spatial Land Use Planning

Spatial land use planning refers to the landscape approach for planning environments. This
means that a combined geographical and socio-economic approach to managing land, water, and
forest resources is taken to ensure that the goals of food security and inclusive green growth are
met. 25
Since 2007, spatial land use planning has been required in Indonesia for all terrestrial and coastal
resource planning. Any new project activity is required to create a spatial land use plan that
considers the social and environmental resources inside and outside the project area.
Bambang will experience some minor land use changes as a result of the construction phase from
both the development of the mini-HPP project and connection of new distribution lines from
PLN to the site. The increased electrification of Bambang by way of this proposed project may
lead to more commercial development over time, allowing locals to increase their productivity
and earning potential. It is not clear what land use changes or other environmental impacts will
result from the development of this project over the long term.
23
Note that the emissions reduction associated with adjunct project elements involving agricultural intensification
are expected to be marginal; depending on implementation details, there may be a modest increase or decrease in
emissions.
24
Detailed accounting methodologies for GHG reduction projects can be found in World Resources Institute and
World Business Council for Sustainable Developments GHG Protocol for Project Accounting
(http://www.ghgprotocol.org/standards/project-protocol); approved small scale methodologies for Clean
Development Mechanism project activities (http://cdm.unfccc.int/methodologies/SSCmethodologies/approved); and
the International Organization of Standardizations ISO 14064
(http://www.iso.org/iso/catalogue_detail?csnumber=38381), for example.
25
http://siteresources.worldbank.org/EXTSDNET/Resources/Landscapes-RIO-FAQ.pdf.
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Figure 52. Mamasa land use
Source: MCC/MCA-I
The majority of the land use in Mamasa district around the project site is for state forest,
plantations, and gardens. Historically there has been little land use change, but the most recent
data are not available.
Table 26. Mamasa Land Use Area

Land Use 2 % Land Cover
LAND USE Area (km )
(Translation) Type
Awan Cloud 21.16 0.7
Hutan Primer Forest 1,507.00 51.0
Hutan Tanaman Plantation Forest 6.60 0.2
Pertanian Lahan Kering Dryland Agriculture 1,112.91 37.7
Savana Savanna 13.24 0.4
Sawah Rice Field 60.94 2.1
Semak/Belukar Shrubland 230.74 7.8
Tanah Terbuka/Kosong Forest Clearing 1.73 0.1
Source: Desainas
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6 Social Assessment
6.1 Community Impacts
This social assessment is based on information gathered during the NREL and MCA-I team site
visits and information gathered by IPB, under subcontract to NREL. The full IPB report can be
found in Appendix F.
6.1.1 Results from Community Demographic Assessment

There are approximately 2,700 households and 10,600 people in the Bambang sub-district.
Mamasa has approximately 146,000 people. The ratio of men and women is nearly equal at 49%
women and 51% men. Only 52% of the men and 41% of the women are over 10 years old. 81%
of the population in Bambang sub-district is classified as very poor, poor, or near poor by
Indonesian standards. The average per capita income in Mamasa Regency in 2012 was IDR
4,789,581 per year or roughly USD 478 per year. This translates to an average daily income of
USD 1.25. Most villagers lack access to clean drinking water and proper sanitation facilities. The
principal income sources for most villagers in this region are cash crops such as cacao and coffee
as well as income from being hired as day laborers.
The villagers are primarily from Mamasa ethnic descent with relations to the Toraja ethnic group
and nearby Toraja district. Most of the villagers are practicing Christians and the church plays a
significant role in village life. This region is unique because the majority of Indonesians are of
Muslim faith.
Villagers grow a variety of crops for subsistence but not typically for sale including rice,
potatoes, corn, and vegetables. They also raise livestock for their own consumption such as
cows, pigs, chickens, and sometimes fish. Coffee and cacao crops are grown for sale for
household income. Coffee cultivation began in the 1930s but decreased when the price of coffee
decreased, and cacao cultivation became more profitable. Outbreaks of cacao pest and disease,
especially in Bambang village, has decreased cacao cultivation as a viable source of household
income. Because of this decrease in viable cacao cultivation, community members have returned
to subsistence farming, left the village, or become laborers.
The low productivity of cacao cultivation was caused by pest and disease outbreaks, lack of
knowledge and skill in cultivation, low purchasing power, and lack of credit to purchase inputs
such as fertilizer. The ability to generate income from coffee and cacao appears critical to the
villagers in this area. During meetings, one farmer stated We have a had better life since coffee
and cacao were introduced, since we could sell the harvested products for household
expenses. This mini-HPP project could help reduce poverty and promote economic development
in these villages by providing resources to improve the cultivation and yields of coffee and
cacao.
In villages, gender differences in labor are apparent. Typically females in the region do not have
access to farmers groups, training, or mentoring activities. Additionally females are not typically
involved in village meetings or expected to remain silent during the meetings. Day laborer wage
rates also reflect inequality; payment for female labor is IDR 20,000/day compared to IDR
30,000 to 40,000/day payment for male labor. Inheritance of land appeared to be shared equally
between males and females. Labor in the fields is divided between the men and women with the
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men doing much of the heavy labor and activities such as trading that require travel. Females are
responsible for activities such as harvesting and all household activities. The IPB report in
Appendix E provides numerous additional details on the specific labor breakdown between the
genders.
Currently, the forests in the Bambang region appear to be in good condition and relatively well
managed. Forest sustainability in Masoso seems to be preserved by the local wisdom in the area.
This village is adjacent to protected forest with customary forest (hutan adat) as the majority
area. Uru tree, pine tree, white teak, fruit trees (langsat, mango, durian, and mangosteen), and
shade trees for cacao (dadap and gamal) were the main vegetation in the customary forest.
Replanting trees after cutting trees (reforestation) is one of traditional rules that are still followed
by the community members. As stated by one of traditional leaders in Masoso:One of the
traditional rules that we obeyed is replanting trees after cutting some of them (reforestation).
The community members are allowed to cut the tree only to build their houses and they must
replant other trees after that.
Similar to Masoso, Bambang village also has its own local wisdom. The community of Bambang
has a local terminology of pang ngala ombo, which means prohibition of cutting down the trees
in the forest. The forest is a sacred place where humans could obtain their source of living.
Protection is already embedded in the daily life of the community, as stated by one of
community leaders in the village: cutting down the trees and ruin the forest is prohibited for us,
since our ancestral graves were located in the forest. There is also a local prohibition against
cutting down trees in the forest before the harvest time of rice, since rice needs water from the
forest. This is another local tradition that has helped preserve forest cover in the project area.
Maintaining catchment area forest is key to the success of this mini-HPP project. It is
encouraging that the communities in this region value the forest and are inclined to protect it and
replant it with our without the proposed mini-HPP project. The mini-HPP project should monitor
the catchment area forest and encourage conservation.
The power structure of the villages in the project area seems to vary by village. One common
theme is that existing village leaders, church leaders, elite members, and family relationships
have much of the power and control over new projects in the villages. Coordination with these
groups is viewed as essential for cohesion and stability, but access to benefits should be provided
beyond these already influential actors.
Social stratification in the study sites is determined by the ownership of resources (natural-,
physical-, social-, financial-, and human-resource). The ownership of natural resources (un-
irrigated field, garden, paddy field) of the community in the two villages is the main indicator of
the prosperity level of a community member. As stated by during meetings in Masoso and
Bambang villages, someone can be categorized as economically sufficient if he is capable of
generating income and food sufficient for his household from his land, ...The local people can
be categorized as economically prosperous if he already owns a large area of garden and many
paddy fields which produces high yields and thus generates lots of money... A villager in the
middle of the social and income strata would include a farmer know as ANT interviewed who:
possesses rice paddies and a cacao garden where he generates his main income and utilized
the income to fund his childrens school until high school and bought motorcycle. ANTs house is
a semi- permanent house (partially made of concrete and wood) and has electricity service from
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PLN. The household goods in his house include: sofa, spring bed, washing machine, television,
cupboard, and complete kitchen utensils. His house also has a bathroom and toilet. Not all
villagers are as lucky as ANT. Another farmer in Bambang stated our rice production could not
meet the food needs in this village. Moreover, there were only limited member of the community
who possess rice fields and thus many of the community member could not consume rice and
only consume sweet potato and taro. There appear to be several community level programs to
share food with those who do not have rice fields, especially for those able to help plant and
harvest the fields.
6.1.2 Results from Impact Assessment

The principal economic benefits of this project accrue to PLN and the IPP, unless a community
development fund or other mechanism is implemented to provide benefits to local villagers.
Without this fund, this project would not meet the MCC/MCA-I goal of poverty reduction by
simply providing benefits to PLN and an IPP. Without a community development fund, the
community benefits would be limited to the jobs added during the construction and operation
phase of the project.
With the community development fund, many of the needs identified (improved coffee and
cacao cultivation, improved drinking water and sanitation access, and increased electricity
access) could be addressed. If the community development fund received the proposed 7% of
project revenue, approximately IDR 1.5 billion would be provided each year for community
improvement projects. This would be enough money to provide training to each cacao farmer
(IDR 1,000,000 per farmer x 1,000 farmers = 1,000,000,000 = IDR 1 billion), 3 large micro
hydropower systems at IDR 500 million each, or many other community benefits. The current
Program Nasional Pemberdayaan Mandiri economic development program in the region
provides communities the option to choose what project they would like the program to fund
each year. This grid-connected mini-HPP program could operate in a similar manner and
community project preferences need to be further determined in a full feasibility study.
6.2 Community Engagement Plan

6.2.1 Community Engagement Activities
Active engagement and involvement from the local community will be critical to the success of
this mini-HPP project. Initial engagement should include a series of stakeholder meetings to
communicate project plans. MCC/MCA-I should insist on including women and any other
minorities such as migrants or marginalized groups. Such meetings should summarize how the
project will be structured and how the community will benefit. These meetings should discuss
hydropower electric generation, catchment area protection, community development programs,
and the benefits of increased electricity supply, as well as job opportunities both temporary and
permanent. A timeline should be provided highlighting construction activities that may impact
nearby villagers. Engagement meetings should provide all residents of the community the
opportunity to ask questions and provide input. This will allow the project sponsor to understand
what aspects of the project are most important to the community as well as identify social risks
related to the project. The project will need to provide documented responses to community
identified concerns and issues.
84
A project sponsor will need to develop relationships and trust for a successful project.
Community leadership should be engaged and women and other marginalized groups should be
reached. Any large landowners or other industries in the area should also be informed of the
project so they can provide valuable input. Community members should be given active roles in
public outreach meetings and their input to the project should be solicited to generate public
support.
Community members must be actively involved in developing key parts of the project including:
Securing site access and control prior to construction of key infrastructure such as
powerhouse, penstock, and weir
Securing right-of-way access and permission to construct transmission and distribution
lines
Reviewing and approving project permits for water use, construction, etc.
Providing recommendations for the community development fund
Developing a plan for catchment area protection
Developing a plan for agricultural capacity building and support based on community
interest and feedback
Ensuring that women villagers are actively involved and have equal access to project
benefits
Engaging nearby communities early and throughout the project will lead to greater social
acceptance of both the specific project and renewable energy generation in general. Successful
community development with a particular project may serve as an example for expansion to
other areas.
6.3 Impact on Local Labor, Goods, and Services

Local labor could be used for a large amount of the construction activities. Many materials such
as concrete could be sourced locally; however some specialty goods such as electric system
controllers would need to be procured from elsewhere in Indonesia or abroad. This is because
local manufactures for the components do not exist. Skilled labor from elsewhere in Indonesia
would likely be required for tasks such as system design and construction management. The
project would create a large number of local jobs during construction, perhaps as many as 100. A
smaller number of permanent local jobs, likely 5 to 10, in the O&M of the power plant would
also be created. Sample positions, their responsibilities, and the required skills are listed below.
Mini-HPP Operations Manager: Day-to-day operations management of the power

plant. Experience operating hydroelectric power plants.
Accountant and Finance Manager: Planning and budgeting. Accounts receivable,
billing, payroll, and cash flow management.
Maintenance Technicians: Maintenance and repair of hydropower system components
such as turbine, controls, and generator. Basic electrical and mechanical skills.
85
Power Plant Operators: Power plant operations and monitoring. Knowledge of how to
operate a power plant to maintain a stable utility system.
Administrative Assistant: Record-keeping, service confirmation, correspondence.
Interpersonal, computer, and communication skills.
6.4 Social Risks

The social risks for this project can be avoided if the community is properly involved, potential
conflicts can be mitigated, and marginalized groups are given fair access to benefits and job
opportunities. The following questions must be addressed.
Community Engagement
Has the community been properly consulted about this project? Does the local community
approve of this project and what concerns have been expressed in village meetings? Whose farm
land is being taken for this project and will they be properly compensated? Will the local
community benefit from this project? How have potential benefits been explained and who will
benefit?
Inter- and Intra-Village Conflict

Have potential and ongoing conflicts between local villages and villagers been mitigated to the
extent possible by ensuring that all villagers in the project area share in the benefits? Have the
access to jobs and the community development program been shared equally?
Marginalized Groups
Have marginalized groups in these villages been offered a fair share in the project benefits or
could project benefits largely accrue to the existing powerful and well-connected villagers?
6.4.1 Mitigation Plan for Identified Social/Gender Risks

The mitigation plan for the risks identified above need to be fully developed by the project
sponsor, but should include community meetings, equal access, and dispute resolution.
Additionally MCC/MCA-I should conduct regular reviews of the business plan and project
performance to ensure that these social risks are being mitigated.
6.4.2 Monitoring and Evaluation Plan Ensuring Social/Gender Equity

The project developer, sponsor, or cooperative will need to develop an effective Environmental
and Social Management System, which will establish a process to ensure equity among the
villagers, marginalized groups, and community development fund.
MCC requires that Green Prosperity projects adhere to the IFC Performance Standards. These
standards support a process to ensure that any project is exercising due diligence of
environmental and social risks from start to finish. While IFC performance standards somewhat
blend environmental and social performance standards, the table below references those
performance standards closely aligned with social risks 26.
26
Refer to section 5: Environmental and Spatial Land Use Assessment for environmental performance standards.
86
Table 27: Social IFC Performance Standards
IFC Performance Standard Description

Performance Standard 1: Assessment Describes the importance of identifying environmental
and Management of Environmental and and social risks and impacts, and managing
Social Risks environmental and social risks throughout the life of a
project. This standard applies to all projects.
Performance Standard 2: Labor and Recognizes that the rights of workers should be
Working Conditions protected during the pursuit of economic growth
through employment creation and income generation.
Performance Standard 4: Community Recognizes that project activities, equipment, and

Health and Safety infrastructure can increase community exposure to
risks and impacts. Also recognized is that climate
change may be accelerated and/or intensified due to
project activities.
Performance Standard 5: Land Recognizes that project-related land acquisition and

Acquisition and Involuntary Resettlement restrictions on land use can have adverse impacts on
communities and persons that use this land.
Involuntary resettlement refers to both physical
displacement and to economic displacement.
Performance Standard 7: Indigenous Recognizes that Indigenous Peoples, as social
Peoples groups with identities that are distinct from
mainstream groups in national societies, are often
among the most marginalized and vulnerable
segments of the population.
Performance Standard 8: Cultural Recognizes the importance of cultural heritage for
Heritage current and future generations. Consistent with the
Convention Concerning the Protection of the World
Cultural and Natural Heritage, this standard focuses
on protection of cultural heritage.
87
7 Conclusion and Next Steps
7.1 Conclusion
Overall, the Bambang mini-HPP project seems to meet the goals of MCC/MCA-I for a green
prosperity project if the project includes a community development fund to provide poverty
reduction. With or without a community development fund, the project provides a reasonable
return to an IPP. Therefore, private sector interest in the project could be obtained and significant
cost reduction for PLN could be achieved. The overall project provides an ERR of 34%
including overhead costs. This is well above the 10% threshold for an economically viable
project.
The mini-HPP project supports poverty alleviation by including a community development fund
out of project revenues. This fund could support programs to increase the incomes of farmers,
the dominate occupation of the region. The project will also increase the supply of electricity and
therefore encourage other economic development, such as new businesses and value added
agricultural processing in the region. The project provides all these benefits while maintaining
the natural resource management in the area and providing a reason for villagers in the
catchment are to protect the hydrological resource. This, along with the supply of renewable
energy, ensures that carbon emissions are reduced and that the environmental goals of the Green
Prosperity program are met. While this prefeasibility study indicates positive potential, there are
still many unknowns and potential areas for additional study. The key risks for this project are
the ability for an IPP to obtain a PPA with PLN and the ability for PLN to export the generated
power out of the Mamasa region.
7.2 Additional Analysis Suggested

If this project moves forward additional analysis might be required. Several possible areas for
additional analaysis are discussed briefly below.
The key requirement for this project is for a PPA with PLN to be obtained to export
power outside of Mamasa. Additional discussions with PLN and system analysis are
required to fully determine the capability of the PLN system to receive and transfer this
excess power.
Additional discussions with the villages in the project area are required to determine the
best initial uses of the community development fund. Discussions are needed to
determine if resources should be focused on agricultural programs such as coffee and
cacao intensification, education, sanitation, loan programs, or other areas that would
benefit the community. Analysis should be conducted to determine which options that fit
with the Green Prosperity goals are also of most interest to the villagers. Meetings with
villagers should be held to prioritized these options.
Turbine selection for this project should continue to be examined during the full
feasibility study.
88
7.3 Lessons and Findings Related to General Green Prosperity
Operations and Implementation
This project provided several insights that might be useful to MCC/MCA-I in their general
activities and in evaluating other projects, these are discussed briefly below.
MCC/MCA-I should determine if it is interested in funding a single entity for this type of
project for simplicity and to reduce transaction costs or if they would prefer to fund
multiple smaller entities to maintain more direct control and efficiency.
This project has both a loan component and an equity requirement. Estimates were made
for these components to conduct a financial analysis, but project feasibility is dependent
on actual terms and requirements. MCC/MCA-I should determine the loan terms such as
duration, interest rate, collateral requirements, and insurance requirements. MCC/MCA-I
equity requirements should also be determined, such as amount of equity required.
7.4 Suggested Next Steps

The next step toward project implementation is a discussion with all stakeholders, including
potential sponsors, technical experts, villagers, the utility PLN, technology suppliers, and
government offices having jurisdiction. This report may inform these discussions to support
reaching a consensus. The following steps should be considered in moving toward a successful
project:
1. Project Identification and Planning:

A. Develop the full description of the project.
B. Summarize any issues that could impair the feasibility of the project.
C. Describe the proposed financial structure for the project.
D. Provide details of the proposed project team, additional technical assistance
needed, and documentation necessary to complete the project team (e.g., requests
for qualification, solicitation for letters of interest, and a market survey). Form
any legal entities needed for the project team.
E. Document site ownership, land use agreements, or other elements of site control.
F. Document all the permits and licenses needed and the status of securing each.
G. Document the proposed power consumers, their need for power, and ability to
pay.
H. Describe the proposed IPP, its structure and operations, ownership, and how it
would be managed, as well as what oversight would be required.
I. Develop a full implementation plan. This would include a description of the scope
of work, procurement and construction activities, required equipment for
installation, site access for delivery, staging area for equipment and construction,
limits on work times due to weather or holidays, milestones and timeline, and a
monitoring and evaluation plan with outcomes and indicators.
89
J. Ensure that all project risks are identified, analyzed in detail, and mitigation plans
are developed.
K. Detail the proposed structure and operation of the community development fund
including management, oversight, qualifications, and risks. Determine who will
decide how funding is dispersed.
2. Technical Plan:
A. Evaluate technical assistance companies, equipment, and construction companies
with experience in hydropower electricity projects.
B. Provide a detailed schematic design of the system, including minimum hardware
requirements, and evaluate potential equipment.
C. Ensure that the design properly accounts for flooding and landslide risks.
D. Develop a site plan to confirm that the system and civil works fit the site and that
there is adequate room and access for potential maintenance.
E. Prepare a detailed electric production estimate by month for input to the economic
model, and review and revise all other economic inputs.
F. Develop a detailed O&M plan. Describe the local capabilities including scheduled
maintenance, warranty management, response time, resources for unscheduled
maintenance, site security, spare part inventories, experience of the O&M
organization, and a training program for local support.
G. Refine the long-term technical risk assessment with regard to selected equipment,
access to parts, and reliability; assess the risk of errors in hydropower resource
estimates, O&M risks, construction risks.
H. Refine the risk mitigation plan, including a commissioning and system acceptance
plan and process it for periodic performance verification, review of equipment
quality, O&M response time, and system design.
3. Economic Plan:
A. Update and refine the economic model with new information from the full
feasibility study, including proof of proposed costs and revenues and strong
evidence (such as local surveys) for benefit streams from the community
development fund.
B. Provide separate plans for monitoring and managing variables that affect
economic return.
C. Document community surveys that show that benefits are distributed equitably
from the mini-HPP project.
D. Document how the community would like to benefit from the development fund,
how benefits will be distributed equitably, and the projected outcomes from
investments.
E. Document the creditworthiness of the borrower or grantee for the project, through
a credit check, and if applicable, collateral for the loan, loan insurance, and a plan
for default.
90
F. Refine the long-term economic risk assessment with updated and more complete
data, with a mitigation plan that addresses the economic risks identified.
4. Environmental Plan:
A. Conduct thorough baseline studies with quantitative data for compliance with all
identified laws and regulations.
B. Conduct the public consultations and scoping analysis required by the IFC and
others, if required, or develop the UKL-UPL.
C. Develop Terms of Reference for the environmental and social analyses.
D. Develop the Environmental Monitoring Efforts Reports, Environmental Impact
Assessment, and Environmental Assessment Application to ensure compliance
with Indonesian government regulations.
E. Complete the environmental license application.
F. Comply with the requirements of the IFCs Performance Standards.
G. Provide for a guarantee fund that will be used to rehabilitate the site in the event
of environmental damage.
H. Document that the communities impacted by the project plan support the
proposed environmental plans.
I. Refine the GHG impact analyses with more complete and up-to-date information.
5. Social and Gender Plan:
A. Provide more quantitative detail for project impacts on women, minorities, and
other vulnerable groups; impacts on land use and community resources; and
impacts on the local/community economy in terms of job creation, business
development, and new supply chains.
B. Complete stakeholder consultations and document community involvement. This
would include a list of who has been engaged; their level of support; plans for
further engagement, training, or methods for further behavioral change required;
and strategy for continued consultations and community feedback during project
implementation.
C. Develop lists of agreements, contracts, and other details that prove the benefits to
local stakeholders.
D. Refine the long-term social risk assessment with updated and more complete data
and mitigation strategies for any negative impacts on the community, such as job
training, small business startup funds, etc.
91
Appendix A: Geospatial Maps
Figure 53. Map of Mamasa district

Source: Desainas
92
Figure 54. Topographic map of Mambi area that includes project site
Source: Desainas
93
Appendix B: PLN PPA Chart
Source: Renewable Energy Toolkit. Second Edition. USAID Indonesia Clean Energy Development (ICED) Project. November 27,
2012. pp 88-89.
94
95
Appendix C: Hydropower Technical Report
Final_Bambang_MHP
P_Report_25112013.
(Double Click to Open)
96
Appendix D: Details of Economic Calculations and
Modeling
Table 28. Model Input and Sensitivity Parameters
General Variables
Descriptor Value Distribution Upper Lower
Start Year 2015
Social Discount Rate (%) 10%
Number of Periods (yrs) 25
National Inflation Rate (%) 4.00% Triangular 4.4% 3.6%
Exchange Rate (IDR/$) 10,549.2
Project Overhead Cost Premium 35% Triangular 38.5% 31.5%
Year 1 Capital Cost Phasing (%) 100%
CF Generating System Variables

PLN
Total Generation (GWh) Value Distribution Upper Lower
Hydropower Generation Cost (IDR/kWh) 947
Steam Generation Cost (IDR/kWh) 0
Gas Generation Cost (IDR/kWh) 86
Diesel Generation Cost (IDR/kWh) 314
Rented Diesel Generation Cost (IDR/kWh) 1,196
Purchased Generation Cost (IDR/kWh) 1,910
Generation Cost per kWh
Hydropower Generation Cost (IDR/kWh) 156
Steam Generation Cost (IDR/kWh) 588
Gas Generation Cost (IDR/kWh) 2,261
Diesel Generation Cost (IDR/kWh) 3,070
Rented Diesel Generation Cost (IDR/kWh) 3,070
Purchased Generation Cost (IDR/kWh) 1,117 Triangular 3,070 156
Generation Cost (IDR/kWh) 1,597
Gen Cost Nominal Growth Rate (%/yr) 4.0% Triangular 4.4% 3.6%
WP Generating System Variables

IPP
Capital/Operating Costs Value Distribution Upper Lower
Installed Capacity (kW) 6,000 Triangular 6,600 5,400
97
Capital Cost per Watt (IDR/W) 20,250,258
Capital Cost Scalar 1.00 Triangular 1.10 0.90
Total Installed Capital Cost 121,501,545,127
FS-DED 1,958,300,000
Pre-FS 608,575,000
Civil Work 65,543,382,870
MOBILIZATION AND DEMOBILIZATION 16,186,531,732
Mechanical and Electrical 26,087,058,241
Operational Certificate 100,000,000
Operator Training 236,000,000
Contingencies 10,781,697,284
O&M Percent of Capital Costs 2.50% Triangular 2.8% 2.3%
Annual O&M costs 3,037,538,628
Periodic O&M Percent of Capital Costs 0.17% Triangular 0.2% 0.1%
Periodic Operating Costs 202,197,667
Maintenance Frequency 5
Production
Capacity Factor (%) 69.41% Triangular 76.4% 62.5%
Degradation Factor (%/yr) 0.0%
Parasitic Load/Other Site Use (%) 0.0%
Other Losses (%) 0.0%
Other
Construction Time (months) 18
PLN
Feed-in Tariff (IDR/kWh) 787
FiT Nominal Growth Rate (%/yr) 0.0%
Community
Community Payments (% of Revenue) 7% Triangular 7.7% 6.3%
Community Benefit Multiplier 0.00
Community Benefit Share 50%
Financial Structure Variables

Value Distribution Upper Lower
Grant (0) / Loan (1)/ Combo (2) 1
WACC (%) 6.9%
Leverage (% of capital cost) 80% Triangular 88.00% 72.00%
98
Grant (% of capital cost) 0%
Equity (% of capital cost) 20%
Term (months) 120
Compounding Period (months) 1
Nominal Annual Interest Rate (%) 5.00% Triangular 5.50% 4.50%
99
Appendix E: PLN Information
The source of the information in this section is PLN.
ke
GI Silae
(Sulteng)
ACSR 2x240 mm2

45 km - 2014
Pasangkayu
SULAWESI
TENGAH
ACSR 2x240 mm2

200 km - 2018
PLTU Mamuju (FTP2)

2x25 MW - 2015
SULAWESI
U
SELATAN
Mamuju
PERENCANAAN SISTEM
PT PLN (Persero)
PETA JARINGAN PROPINSI SULAWESI BARAT
GI 500 kV Existing / Rencana U U PLTU Existing / Rencana

/ /
/ GI 275 kV Existing / Rencana G / G PLTG Existing / Rencana
PLTA Poko GI 150 kV Existing / Rencana
/ P / P PLTP Existing / Rencana
117 MW 2020 / GI 70 kV Existing / Rencana /
A A PLTA Existing / Rencana
/ GI 500/275 kV Existing / Rencana PLTGU Existing / Rencana
A GU
/ GU
/ GI 500/275/150 kV Existing / Rencana GB / GB PLTGB Existing / Rencana

/
/
GI 275/150 kV Existing / Rencana M / M
PLTM Existing / Rencana
GI 150/70 kV Existing / Rencana / PLTD Existing / Rencana
ke
D D
Polmas
T/L 70 kV Existing / Rencana Kit Eksisting
GI Pinrang /
/ T/L 150 kV Existing / Rencana Kit Rencana
Majene (Sulsel) / T/L 275 kV Existing / Rencana
/ T/L 500 kV Existing / Rencana Edit Mei 2011
27
Figure 52. Electricity map of West Sulawesi
West Sulawesi :
2007 2008 2009 2010
Number of Customers by Type of

87.523 90.147 92.893 101.091
Customers
Residential 81.161 83.364 85.705 93.491
Industrial 32 29 26 24
Business 4.014 4.262 4.552 4.838
Social 1.618 1.725 1.799 1.905
Gov.Office Building 601 660 697 713
Public Street Lighting 97 107 114 120
Energy Sold by Type of Customers

40 101 109 130
(GWh)
Residential (GWh) 25 65 73 88
Industrial (GWh) 1 4 2 2
27
Does not show new line from Poleman to Mamuju through Mambi.
100
Business (GWh) 9 19 20 24
Social (GWh) 1 2 3 4
Gov.Office Building (GWh) 1 3 4 5
Public Street Lighting (GWh) 3 7 7 7
Revenue by Type of Customers

24.066 64.190 71.423 87.755
(Million IDR)
Residential (Million IDR) 14.956 36.637 40.959 49.914
Industrial (Million IDR) 779 2.785 1.388 1.481
Business (Million IDR) 4.839 15.451 18.649 23.818
Social (Million IDR) 596 1.515 1.706 2.088
Gov.Office Building (Million IDR) 1.051 3.237 4.098 5.367
Public Street Lighting (Million IDR) 1.845 4.566 4.623 5.087
Average Selling Price of Electricity by

599 633 656 673
Type of Customers (IDR/kWh)
Residential (IDR/kWh) 589 562 563 565
Industrial (IDR/kWh) 721 652 767 747
Business (IDR/kWh) 569 818 929 976
Social (IDR/kWh) 602 617 602 592
Gov.Office Building (IDR/kWh) 796 931 1.008 1.093
Public Street Lighting (IDR/kWh) 634 637 640 704
Jambi West Sulawesi

Cost (IDR) 141.124.227.972 47.825.987.159
Subsidy (IDR) 77.426.050.208 15.293.121.323
kWh Produced 54.780 5.090
Cost of Produce (IDR/kWh Produce) 1.803.340 6.577.248
Cost of Sold (IDR/kWh Sold) 2.576.200 9.396.068
Cost of Fuel (IDR) 31.858.567.299 10.689.222.997
Fuel Consumption (kiloLitre) 4.894 1.689
Average Fuel Price (IDR/kL) 6.509.666 6.328.017
Average Selling Price (IDR/kWh) 713 673
101
Substation Planning in West Sulawesi
No Substation Voltage New/Extension Capacity Budget COD
(kV) (MW) (Million
USD)
1 Polmas 150/20 Extension 30 1,39 2014
2 Majene 150/21 Extension 30 1,39 2014
3 Pasangkayu 150/22 New 20 2,38 2018
4 Mamuju 150/23 Extension 30 1,39 2019
Total 110 6,5
Additional Distribution System in West Sulawesi

Year MV Lines LV Lines (kmc) Trafo Customers
(kmc) (MVA)
2011 138.1 138.4 38.8 8.474
2012 63.7 123 44.4 11.509
2013 119.2 127.3 37.6 11.914
2014 124.8 131 36.3 12.843
2015 129.1 133.6 37.2 10.516
2016 133.9 136.2 38.4 11.375
2017 140.3 139.5 39.9 12.312
2018 144.5 141.5 40.9 13.332
2019 150.7 144.3 42.3 14.444
2020 160.6 148.4 44.3 15.657
2011-2020 1304.9 1363 400.2 122.374
102
Appendix F: IPB Social Assessment Report
GSA_MAMASA_Mini
Hydro Bambang.pdf
(Double Click to Open)
103
References
[1] Increasing Cocoa Productivity through Improved Nutrition A Call to Action. Global
Alliance for Improved Nutrition
(GAIN). http://www.eldis.org/vfile/upload/1/Document/1307/GAIN%20-
%20CDI%20Increasing%20cocoa%20productivity%20through%20improved%20nutrition%20N
ov%202012%202.print%20.pdf . Accessed December 16, 2013.
[2] UNICEF. November 2009. http://www.unicef.org/media/media_51755.html. Accessed

December 16th, 2013.
[3] Hydro Power Potential. Engineering Tool

Box. http://www.engineeringtoolbox.com/hydropower-d_1359.html. Accessed October 31, 2013.
[4] Hydroelectric Power. U.S. Department of the Interior, Bureau of Reclamation. July
2005. http://www.usbr.gov/power/edu/pamphlet.pdf. Accessed October 15th, 2013.
[5] Renewable Energy Technologies: Cost Analysis Series. Volume 1 Power Sector.
International Renewable Energy Agency. June
2012. http://www.irena.org/DocumentDownloads/Publications/RE_Technologies_Cost_Analysis
-HYDROPOWER.pdf. Accessed October 15, 2013.
[6] Hydro Power, Renewable Energy Cost Analysis Series. International Renewable Energy
Agency. June,
2012. http://www.irena.org/DocumentDownloads/Publications/RE_Technologies_Cost_Analysis
-HYDROPOWER.pdf. Accessed October 23, 2013.
[7] Cocoa a Passionate Food for your Daily Start. Export News Indonesia.
BPEN/MJL/XX/04/2010.
[8] Increased incomes for Indonesian cocoa farmers in sustainable markets: NGO-private sector
cooperation on Sulawesi island Full case study. VECO. September 2011. http://www.veco-
ngo.org/sites/www.veco-ngo.org/files/blog/bijlage/indonesia-cocoa-case.pdf.Accessed June
2013.
[9] Hanns R. Neumann Foundation and the J.M. Smucker Company in Indonesia. Presentation to
the Millennium Challenge Corporation. Washington, DC. November 2012.
[10] Source Trust. Our Commitment to Arabica Coffee Farming in Indonesia.

http://www.sourcetrust.org/media/assets/file/6981_Source_trust_Indonesia_Arabica_art.pdf.
Accessed December 10, 2012.
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[11] IPCC. (2011) IPCC Special Report on Renewable Energy Sources and Climate Change
Mitigation. Prepared by Working Group III of the Intergovernmental Panel on Climate Change
[O. Edenhofer, R. Pichs-Madruga, Y. Sokona, K. Seyboth, P. Matschoss, S. Kadner, T. Zwickel,
P. Eickemeier, G. Hansen, S. Schlmer, C. von Stechow (eds)]. Cambridge University Press,
Cambridge, United Kingdom and New York, NY, USA, 1075 pp. (Chapter 5 & 9).
[12] Benjamin K. Sovacool. Valuing the greenhouse gas emissions from nuclear power: A
critical survey. Energy Policy. Vol. 36. 2008. p. 2950.
[13] United Nations Framework Convention on Climate Change (UNFCCC). (2011). Indicative
simplified baseline and monitoring methodologies for selected small-scale CDM project activity
categories. I.D./Version 17, Sectoral Scope: 01. EB 61. Retrieved 16 Oct 2013
from http://cdm.unfccc.int/filestorage/V/9/L/V9LRSXKP24Q7YT6HZDUBO3C0ING8AJ.1/EB
61_repan17_Revision_AMS-
I.D_ver17.pdf?t=a2h8bXVzNGE5fDDVBwvHZO2GYUxeT5hXrPAG.
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Mitigation. Prepared by Working Group III of the Intergovernmental Panel on Climate Change
[O. Edenhofer, R. Pichs-Madruga, Y. Sokona, K. Seyboth, P. Matschoss, S. Kadner, T. Zwickel,
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Grid-tied Mini-hydropower in

Sulawesi Barat: A Green

NREL is a national laboratory of the U.S. Department of Energy

Contract No. DE-AC36-08GO28308

NREL is a national laboratory of the U.S. Department of Energy

National Renewable Energy Laboratory Technical Report

Sam Booth at samuel.booth@nrel.gov or 303-275-4625

MEMR Ministry of Energy and Mineral Resources

mini-HPP mini-hydropower plant

NREL National Renewable Energy Laboratory

O&M operations and maintenance

PLN Perusahaan Listrik Negara (National Electricity Corporation of Indonesia)

PPA power purchase agreement

UKL/UPL Upaya Pengelolaan Lingkungan Hidup dan Upaya Pemantauan Lingkungan

Each study includes a project description; technical analysis; economic assessment;

Hydrologic analysis is required for mini-hydropower plant (mini-HPP) development and

Environmental and Spatial Land Use Assessment

A preliminary list of positive environmental impacts of this project includes:

Clean energy source that will be nearly carbon neutral.

Potential negative environmental impacts include:

1.1 Project Location and Natural Features

Figure 1. Representative images of Mamasa and the project site

Mamasa District location

Figure 2. Mamasa location within West Sulawesi

Figure 4. The route to reach Mamasa district

1.2 Current Population and Economic Activities

Table 1. Income Distribution in Mamasa

Village Almost Poor Poor Very Poor

1.2.2 Bambang Sub-district

1.4 Project Logic

1.5 Offtake or Market Plan

1.6 Business Case and Financial Structure

1.6.1 Financial Feasibility of Project

1.7 Project Team

A successful project team will have the following components:

1.8 Project Site

Figure 9. Road from Mambi to Bambang

Figure 13. Powerhouse location (Note rice terraces)

1.8.1 Other Project Sites Considered

1.9 Permits and Licenses

1.10 Project Implementation Plan

Construction: Construction options in Bambang may be limited by the lack of infrastructure

2.1 Technical Approach

Figure 18. Hydropower turbine selection chart

2.2 Resource Assessment

Figure 19. River flow measurements Masoso Village

The general form of the water balance equation is:

Observed Discharge Estimated FDC FJ. Mock

Probability Of Exceedence (%)

Observed FDC Estimated FDC FJ. Mock

2.3 Current Energy Baseline

Total households electrified= 89,678

Figure 23. Masoso micro hydropower installation

Table 9. Existing Micro Hydropower in Mamasa

Peak demand in the region is 2 MW.

Additional graphics and information provided by PLN can be found in Appendix E.

Table 10. PLN Growth Projections

2.4 Technical Feasibility

Table 12. Bambang Mini-HPP System Design Flow Parameters

Table 13. Bambang Mini-HPP System Design Values

Figure 24. Topographic survey

Figure 25. Conceptual layout of Bambang mini-HPP

2.4.1.1 Conceptual Design Details

Table 14. Bambang Mini-HPP System Conceptual Design Parameters