Renewable

Bio-energy
Development in North
Kalimantan Indonesia

1
 INDEX
Particulars Page No.

1) Company Introduction 4

2) Indonesias Electricity and Power Overview 5

3) PLN Commitment and Planned Energy Mix 6

4) Overview of North Kalimantan Region 7

5) Availability of resources in Indonesia 8-9

6) Info-graphic of types of downstream yield in Indonesia 10-11

7) Variety of renewable energy mix 12

8)Why do power projects do not become operational? 13

9) Why ASA? 14

10) Why biomass is better now? 15-16

11) Technology adopted by the group 17

12) Potential revenue for available downstream for the region 18

13) Potential electrification rate of North Kalimantan by ASA 19

 INDEX

Particulars Page No.

14. Financial Analysis 20-21

15. How can Renewable benefit from Indonesian Feed-in-Tariffs? 22

16. How can the ASA Group benefit the Indonesian Economy? 23

17. Future of ASA and immediate next step 24

 Company Introduction
PTA AVA SEJAHTERA ABADI (PT ASA) is a rapidly growing, all-Indonesian, global biomass producer that operates
on the forefront of green energy generation and infrastructure.

About us
An emerging leader in the Indonesian economy, which is one of the largest economies in the world.
Building strategic trading relationships with players in the global economy and helping to position Indonesia as a
major global energy producer.
Adding real value through an obsession with excellence.
Firm commitment to transparency, accountability, clarity, credibility, reliability and best business practice.
Evolving rapidly to refine processes to continuously improve efficiency and deliver win-win solutions to all
stakeholders.

The group is in prime position to serve the future growth plans of Indonesia as a crucial economic player in the
ASEAN region. In order to achieve the same, the group is seeking permits to operate power plants at multiple
locations so that it can help the economy in achieving its desired electrification rate in the coming period.

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 Indonesias Electricity and Power Overview
q Indonesias rich potential of energy resources, including oil, gas, coal, hydro and geothermal, has played a critical
role in the countrys economic growth and export revenues.

q Despite being rich in hydrocarbons, Indonesia remains an energy-poor country. It still depends on fossil fuels to
produce electricity. Air pollution from coal-fired power plants is already a major killer in Southeast Asia and that
death toll could more than triple in the next 15 years.
q Government has projected that demand for electricity will reach
457TWh by 2025.

q Plans are formulated to develop 35GW of additional electricity

generation capacity between 2015 and 2019, and a further 45GW
by 2025.

q By 2022, the country is expected to have approximately 98%

electrification ratio across the country, with IPP taking a significant
part of this growth

. https://endev.info/content/Indonesia
5
https://en.tempo.co/read/news/2016/05/24/056773691/Indonesia-Will-Face-Energy-Crisis-by-2020-Minister-Says
 PLN Commitment and Planned Energy Mix
The Indonesian government has charged PLN to help increase the national installed capacity of 50,000 MW by
35,000 MW over the next five years. PLN is accountable for achieving the governments accelerated generation
targets. PLN intends to contribute 10,000 MW. The RUPTL 2016-2025 also mentions that there is a need to increase
the capacity of bio-energy plant up to 5.5GW by 2025

Renewable Energy Targets included in RUPTL 2016-2025 and in MEMR: Revised KEN 2025

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 Overview of North Kalimantan Region
North Kalimantan is considered to have significant energy potential. In the wake of a plan to transform the North
Kalimantan into Indonesias newest industrial zone, the government has reminded the North Kalimantan
administration to create a market capable of absorbing the massive long-term energy potential of the province
having the population of more than 800,000 people.

In the first quarter of 2017, North Kalimantans economy grew by an impressive 6.17 percent, which is not only
higher than the 4.27 percent growth it recorded in the fourth quarter of 2016, but also higher compared to the
economic growth of the country and the rest of Kalimantan in the same period.

The geographical location of North Kalimantan Province has a very strategic location and advantageous, because
the area is passed by the various shipping channels. Further, as it shares international border with Malaysia, military
outpost support is the key.

In order to overcome the various factors generating inflation, such as the lack of infrastructure, huge investment is
needed. This is something the provincial administration has been trying to address. Thus, ASA will make sure that it
is able to provide a platform between incentivizing business downstream and power shortage in North Kalimantan
http://www.thejakartapost.com/news/2017/03/10/big-market-needed-to-absorb-north-kalimantans-energy-potential.html
https://www.pressreader.com/indonesia/the-jakarta-post/20170731/281642485248195
http://www.incas-indonesia.org/data/north-kalimantan/ 7
 Availability of resources in Indonesia
Indonesia possesses an extraordinarily large reservoir of oil palm plantations that span more than 10 million
hectares and account for half of the worlds palm oil production.

There is a total of 686 units of palm oil mills with an average capacity of 30-45 ton/hr of FFB (including 20% Palm
oil (CPO), 50% POME, 30% solid waste) processed in Indonesia.

Driven by increased global demand and higher yields, palm oil cultivation has been expanded significantly by
Indonesian farmers and conglomerates.

Indonesia's oil palm plantation and processing industry is a vital industry to the country's economy: the export
of palm oil is an important foreign exchange earner and the industry provides employment opportunities for
millions of Indonesians.

Almost 70 percent of Indonesia's oil palm plantations are located on Sumatra where the industry was started
during the Dutch colonial days. The remainder - around 30 percent - is largely found on the island of Kalimantan.
https://wiki.uef.fi/display/BIOMAP/%3CYinWah+Wong%3E+Biofuel+from+Palm+Oil+in+Indonesia
https://www.oxfordbusinessgroup.com/news/palm-oil-production-rise-indonesia

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 Availability of resources in Indonesia

The table above shows production of palm oil has grown rapidly in Indonesia over the past decade. The Indonesian
Palm Oil Association (Gapki) stated that its target is to see Indonesia producing at least 40 million tons of CPO per
year from 2020.

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Info-graphic of types of downstream yield in Indonesia

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 Info-graphic of types of downstream yield in Indonesia

Development of bio-energy has created a new

market for palm oil which has the potential to
dramatically increase global demand for this
commodity. In addition it can help such firms in:
Achieving profit margins, while the product is
simple to produce.
Large and increasing international demand
Higher rates of productivity compared to
other edible oil products

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 Variety of Renewable Energy Mix
Bio-energy Solar PV
Reduce permitting procedures and administrative costs for Simplify permitting procedures for ground mounted
interconnection of bioenergy power generation by industry. systems.
Increase awareness among industries about the potential that Provide additional compensation to excess electricity
bioenergy offers and stimulate the use of CHP-based bioenergy. sold to the grid from rooftop systems
MEMR could consider increasing the maximum size of bioenergy
power projects to qualify for the feed-in tariff to beyond 10 MW
to allow for economies of scale to reduce generation cost.
Hydropower
Strengthen capacity with local companies to ensure that
studies are based on industry best practice and are
bankable for project finance .
Geothermal Power The Indonesian Meteorological Agency (BMKG) could install
Engage in knowledge and capacity building with relevant additional monitoring equipment and collect information
stakeholders. regularly.
The GFF needs to be able to allow projects with a higher risk profile These data could be made openly available to any project
to be eligible for funding. developer to be used as the basis for project assessment.
Other options include government guarantees (on loans), or Highlight the large opportunity for local employment and
developing a revolving fund sharing the cost of the exploration and industry creation to local authorities to increase local
discovery/confirmation stages of a geothermal project. interest.
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 Why power projects do not become operational?
Although various power projects are issued but only few becomes operational due to the
following reasons:

Non realistic and overly ambitious project size

Complex Structures and loss of investments in exhaustive research
Improper planning, land disputes and repeated local settlements can make Indonesia appear
unreliable for foreign investors
Projects are extremely high tech and no local human support is available which makes training
duration too long
Longer gestation makes forecasting too ambitious and raises risk of defaults
Inadequate Infrastructure
 Why ASA?
Simple proven technology
High success rate
Supporting business growth
Negative carbon footprint
Zero pollution

Benefits to the Economy

Production of electricity via bioenergy will help in the development of downstream industries dependent on
regular power and will help create an industrial hub in the region.

It will also help to increase the employment level which will result in increased income and investment levels
for the development of Indonesia. The project will have the potential to provide employment to hundreds of
citizens residing in North Kalimantan.

Moreover, government will also benefit from potential taxes (prevailing at the rate of 25%) from the power
producers. Within five years, a single power plant (of 5 MW operating at 65% capacity) can generate a tax
revenue of more than USD 250,000 for the government.
 Why biomass is better now?
Pyrolysis Gasification Combustion
Proven Track Record Less High High

Capital Cost Range for 15 MW $8000 - $11,500 per KW $7500 - $11,000 per KW $7,000 - $10,000 per KW
output
Minimal Waste Discharge Particulates, tars and Particulates and Particulates, tars and
compounds of chloride, compounds of compounds of
nitrogen and sulfur chloride, nitrogen chloride, nitrogen and sulfur.
and sulfur.
Air Required Normally no air Sub stoichiometric air Excess air
Exothermic/Endothermic Very exothermic
Volumetric flow-rate Only heat (external or internal) Lower total volumetric flow Higher volumetric flow-rate

Fly ash carry over Want liquid, gases not desired Lower fly ash carry over Fly ash carry over

Scale 10 tonnes/day 100 tonnes/day 1500tonnes/day

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 Why biomass is better now?
Pyrolysis Gasification Combustion
Total Emission The syngas typically has a net Typically, the gas generated The heat produced can be
calorific value (NCV) of from gasification will have a used to generate electricity
between 10 and 20 MJ/Nm3 net calorific value (NCV) of 4 - and the waste heat used for
10 MJ/Nm3 space or process heating.

Total combustion Relatively low temperatures Temperatures of above 650C Temperatures are required of
between 300C and 850C are are required 850C and above to prevent
needed. the formation of dioxin

Primary Products Higher Char Char at low temperatures Bottom ash

Vitrified slag at high
temperatures
Release of Pollutants Pollutants in reduced form Pollutants in reduced form Pollutants in oxidised form
(H2S, COS) (H2S, COS) (Sox, Nox, etc.)
Oxygen Requirement No additional oxygen (only Some additional oxygen (or Much additional oxygen (or
heat) air) air)

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 Technology to be adopted by the Group
ASA PT. AVA SEJAHTERA will concentrate on bioenergy technology to produce electricity.
Moreover, Indonesias rich endowment of bioenergy resources provides significant opportunities for reducing
fossil fuel use and adding economic value. According to the group, Pyrolysis would be a better process strategy.
Adoption of such technologies will let the group to achieve an Internal rate of return of 18% by 5 years.
There exists several providers from where the technology can be procured such as Organics, from UK active in SE
Asia, WP Green Energy, Thailand and Owner of Avonmouth Plant technology.

Merits of Small Power Plants

Small-Scale Biomass Power Plants Could Stabilize National Power Grid
Small-scale biomass plants could provide substantial benefits to the economies of rural areas. It can be notably
cheaper for rural areas to generate their own electricity rather than import it from urban regions via expensive
infrastructure.
Farmers already have access to a large amount of biomass material left over each year after harvests. If they have
access to small biomass power plants, they could become close to self-sustaining in terms of power.
Installation is fast and easy, saving both time and money

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 Potential revenue for available downstream for the region
The country has energy intensity of 565 toe per million $GDP. Therefore, a plant of 5 MW is
expected to then produce 22,000 MW of electricity in a year & will generate a GDP of more than
$3.5 Million a year.

In addition, ASA will buy approximately $430,000 of biomass for generating electricity for a single
5 MW power plant. By establishing similar small power plants, ASA group would be able to
benefit the palm oil producers in deriving a substantial income for their produce.

Moreover, in line with the governments target to reduce dependence on non-renewable form of
energy, ASA Group will make effective use of biomass waste to produce electricity and will
benefit the palm sector in generating desired income levels and will help in overall development.

https://www.adb.org/sites/default/files/publication/178039/ino-paper-09-2015.pdf

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 Potential electrification rate of North Kalimantan by ASA
In North Kalimantan, the electrification rate is hovering around 50-60% which is much lower than the national
average of 89%. Thus, ASA Group will help in providing electricity to the rural and un-accessed regions. It will also
help to achieve the governments objective of achieving the desired electrification ratio by 2019.

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 Financial Analysis
Below is the graphical representation of revenue figures (at 16 cents per kwh), which ASA Group expects in the
coming years.

Revenue generated from Return on equity

power plant 25% 23%
20%
$4.20 20%
$4.01
Millions

17%
$4.00 $3.86
15% 14%
$3.80 $3.71
11%
$3.57
$3.60 10%
$3.43
$3.40
5%
$3.20
$3.00 0%
Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5

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 Financial Analysis
$1,000,000.00 $735,061.25 14.00%
0 0 12.00%
$-
10 Cents 12 Cents 16 Cents 10.00%
$(1,000,000.00) 8.00%
per KwH Per KwH per KwH
Total Profit ROI Average
$(2,000,000.00) 6.00% (Considering
(Years 1 to 5)
4.00% Cashflow)
$(3,000,000.00) $(2,471,510.04)
2.00%
$(4,000,000.00) 0.00%
$(4,074,795.68)
$(5,000,000.00) -2.00%

Rate Per Unit 10 Cents per KwH 12 Cents Per KwH 16 Cents per KwH
Payback Period NA NA ~ 7 Years

At 16 Cents per Kwh, the group would be able to derive profitability at 12.14% ROI (average considering cash flow)
with a pay back period of 7 years. Thus, if the rate is below 16 cents, the firm will not be able to cover its fixed cost and
will lead to losses.
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 How can Renewable benefit from
Indonesian Feed-in-Tariffs
The Minister issued a new renewable energy regulation,
Regulation 12/2017 on the Use of Renewable Energy for
the Provision of Electricity (Regulation 12).
Regulation 12 will be an effective tool to encourage PLN
to issue tenders for renewable energy projects and
purchase more electricity from renewable sources.
Developers developing hydropower, biomass, biogas
and geothermal projects will be permitted to negotiate
with PLN on matters relating to the development of the
transmission interconnection between the plants and
PLN grid on a business-to-business basis.
There may be increased flexibility for business-to-
business negotiation on transmission matters.

https://www.dlapiper.com/en/australia/insights/publications/2017/03/new-indonesian-feed-in-tariffs/

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 How can the ASA Group benefit the Indonesian
Economy ?
The ASA group will make a substantial contribution in deriving the growth of this nascent industry in Indonesia.
It will aim to lower the pollution levels by producing energy from the renewable sources of energy.

Its simple proven technology, high success rate, supporting business growth, negative carbon footprint and zero
pollution will help government add more value into an all inclusive business scheme.

According to the briefings provided by Watson Farley and Williams in their report THAILAND SHIFTS FROM
RENEWABLE ENERGY ADDER RATES TO FEED-IN TARIFFS FOR VSPPs , the prevailing FiT rate for renewable
energy plant is 16 Cents whereas the ASA Group is seeking only 14 US cents/kw/h.

Thus, ASA Group believes that grant of licenses and other significant aids from the government will help in the
successful establishment of its multiple projects (of size 50-100 MW) across the region.

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 Future of ASA and Immediate Next Step
Future of ASA
Upon successful implementation, ASA will build multiple plants year on year to meet at least the deficient
consumer market and support trans-immigration efforts of the government. These will be linked together in a
central grid where all sorts of green power complements each other in a fail safe system.

Next Step:
Issuance of permit and PLN Collaboration
Aim to make the pilot project successful with growth in 2-4-6 small power projects year on year
Trans Atlantic (sea) power transmission
Make use of all kinds of bio-energy to balance profile, improve efficiency, leverage cost and guarantee backup
for whole system.
All linked Plants for transmission advantage.

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 ASA
Adding value

NORTH KALIMANTAN
THE MODEL OF THE FUTURE INDONESIA