Final Report - P2EBT Task Force_EN

MINISTRY OF ENERGY AND MINERAL RESOURCES

Final Report ofthe Task Force for Accelerating the Development ofNew Renewable Energy and Energy Conservation

Sharpening the Focus towards Energy Sovereignty |

iLaporan Akhir Satuan Tugas Percepatan Pengembangan Energi Baru Terbarukan dan Konservasi Energi 2016

TABLE OF CONTENTFOREWORD ii

CHAPTER I:INTRODUCTION: STRENGTHENING THE FOUNDATION OF ACCELERATION

1

CHAPTER II:ACHIEVEMENTS AND MOVING FORWARD

5

A. Energy Resillience Fund (DKE) 6

B. Center of Excellence for Clean Energy (CoE Indonesia) 12

C. National Region for Clean Energy Bali (KNEB Bali) 18

D. Program Indonesia Terang (PIT) 22

E. Development of Sustainable Bioenergy Program 26

F. Safeguard and Biofuel Information System 30

G. Policy Breakthrough to Accelerate New and Renewable Energy 34

H. Energy Conservation Campaign 40

I. Situation Room: MEMR Decision Support 44

J. Mission Innovation 50

K. Involvement of Stakeholders in Accelerating the Development of NRE 54

CHAPTER IIISHARPEN OUR FOCUS IN CREATING ENERGY SOVEREIGNTY

61

RECOMMENDATIONS:

A. Policy Breakthrough 62

B. Financial Breakthrough 63

C. Technological Breakthrough 64

D. Capacity Building Breakthrough 65

ANNEX 66

Final Report of the Task Force for Accelerating the Development of New Renewable Energy and Energy Conservationii

Indonesias energy production must continue to meet the rise in energy consumption, in line with population and economic growth. Over a decade ago, Indonesia moved from being a net oil exporting country to a crude oil importing country. In the future, to achieve energy security, Indonesia must reduce its reliance on oil as the major source for the countrys escalating demand for energy.

The falling world oil prices benefited oil importing countries like Indonesia as it reduced the pressure on the current account and state budget. In addition, it reduced the urgency to move away from oil production and to finance the development, production capacity and distribution, and consumption of clean energy resources. While consumers enjoyed the low oil prices and their continued subsidy, consideration of the need for sustainable and efficient energy development remained off the radar.

The vast new and renewable energy (NRE) resources, ranging from sun, wind, geothermal, tidal, and biomass, available in Indonesia have not been developed as primary energy sources. Current exploration and production is focused on non-renewable energy sources and, given the global trend, should now be diverted to renewable energy development. For Indonesia, prioritizing an acceleration of the development of NRE will contribute to energy security in the long term which, in turn, will increase socio-economic development, and reduce the countrys level of greenhouse gas emissions (GHG).

FOREWORD

Final Report of the Task Force for Accelerating the Development of New Renewable Energy and Energy Conservationiii

Policy breakthroughs are required for the government to ensure the availability of energy access for all Indonesian citizens. To strengthen the nations energy security more effort is required to achieve energy efficiency and to increase the contribution of NRE in the national energy mix in accordance with local conditions and capacity. The government aims to increase the contribution of NRE in the national energy mix to 23 present by 2025 a four-fold increase based on its current contribution. Major breakthroughs must be achieved by the government and all stakeholders, both in terms of policy, funding, technology and human resource capacity building.

It is within this context that this report has been prepared. This report provides an overview of the various initiatives launched to realise the target of 23 percent NRE in the national energy mix by 2025. It explores the prerequisites to achieve these initiatives including, but not limited to: breakthroughs in policy and governance, innovative funding mechanisms, technology diffusion, and breakthroughs in the implementation of capacity building. Through this publication, readers will find information related to the commitments of the Ministry of Energy and Mineral Resources (MEMR) and the progress made from 2015 until today; the challenges, and recommendations for government intervention in 2017 to avoid obstacles and ensure NRE targets are achieved in the near future.

This publication is expected to inspire strategic planning and concrete programs that will contribute to the MEMR goal to provide energy access for all Indonesian people, and promote energy efficiency and the deployment of NRE nationwide. It is hoped that based on this report, business leaders, civil society, and our community of young people will respond to the challenge to accelerate the research, development, demonstration, and deployment of new and renewable energy.

Thank you and have a pleasant reading.

Jakarta, August 2016

Task Force for Accelerating the Development of New Renewable Energy and Energy Conservation (Satgas P2EBTKE)

CHAPTER I INTRODUCTION: STRENGTHENING THE BASIS OF ACCELERATION

Final Report of the Task Force for Accelerating the Development of New Renewable Energy and Energy Conservation2

Law No. 30/2007 on Energy and Government Regulation No. 79/2014 regarding National Energy Policy (Kebijakan Energi Nasional - KEN) emphasized the need to accelerate the development of new and renewable energy (NRE).

The relevant elements of these regulations include:

a. Prices, subsidies, and energy incentives;

b. Access to public infrastructure and energy industries;

c. Research, development, and application of industrial technology; and

d. Financial institutions.

In general, these four elements fall under the general categories of policy, technology, financing and human resource capacity building.

These categories correspond to the vision and mission of President Joko Widodo and Vice President Jusuf Kalla, as stated in Nawa Cita (2014), where the development of renewable energy is a major component of the realisation of energy sovereignty through:

a. tLong-term strategy: changing the purchase price of renewable energy in order that it accommodated the economic value of the investment risk associated with this sector; and

b. Short-term strategy: reducing energy subsidies must be incorporated into the economical calculation and accompanied by the development of geothermal and hydro power, biofuels and biomass along with efficient and effective governance of renewable energy. The establishment of a special entity, such as a Logistics Agency (Bulog), whose task is to strengthen the biofuel industry and ensure efficient biofuel trade through effective governance.

In terms of policy, some aspects of NRE development face significant challenges including, among others: securing an exploration license if the area, for establishing a geothermal power plant (PLTP), is on forested land; the provision of land for bioenergy due the lack of clarity regarding plantation land tenure for bioenergy; investment restrictions related to the development of many renewable energy resources; and the scarcity of domestic companies with the capacity to develop renewable energy on a large scale.

In terms of technology, the constraints faced include: limited facilities for certification and standardization; funding; research, development and monitoring of NRE; resource mapping of NRE across Indonesia; and limited infrastructure including the State Electricity Companys electricity network. To reach the NRE target of 23 percent by 2025, an estimated investment of IDR 1.600 trillion is required. Government funding remains very limited. In the case of private investment, there are issues in balancing the perceived high risk and the financial sectors constraints to guarantee the viability of NRE investments.

In terms of capacity building, due to the lack of development in the NRE sector, there is a significant lack of technical capacity for NRE in Indonesia. Despite an enormous work force, without an increase in the deployment of NRE nation wide, it remains difficult to attract talented human resources for the administrative, technical, financial, and legal requirements for large scale implementation.

Indonesias NRE potential is estimated to be around 800,000 MW. However, utilisation of this potential today has reached only one percent. Based on the ambitious targets outlined in the National Energy Policy (KEN) and the challenges

KINDS OF ENERGY WATER GEOTHERMAL BIOENERGY SOLAR WIND AND HYBRID TIDAL

Potential 75,000 MW 29,544 MW 32,654 MW 532,579 MW (4.80 kWh/m2/day) 113,545 MW (3-6 m/s) 17,989 MW

Installed capacity 5,024.2 MW 1,438.5 MW 1,671.0 MW 78.5 MW 3.1 MW 0.3 MW

Utilization (%) 7.0 5.0 5.1 0.01% 0.003 % 0.002 %


2 General Plan Draft of National Energy (National Energy Board, 2016), p. 14.

across all NRE sectors, it is imperative to transform the current paradigm into a more integrated and innovative solution, in terms of policy, technology, funding, and capacity building. This paradigm shift is essential and must be supported by accelerating NRE development in combination with energy efficiency programs.

The program for accelerating the development of NRE and improving energy efficiency has been implemented through a range of initiatives since August 2015. These initiatives include, among others: Revising regulations that have hindered the

development of renewable energy; develop incentive schemes to accelerate the development of renewable energy;

Setting up an Energy Resilience Fund (DKE) as a financing instruments to provide incentives for investment in the energy sector;

Developing a Centre of Excellence (COE) for Clean Energy as a conduit for a NRE revolution in information, financing, and technology development;

Establishing a pilot region with the capacity to support a total transformation to clean energy, like the National Region for Clean Energy (KNEB) program now established in Bali;

Supporting policy breakthroughs and accelerating national strategic programs;

Overseeing the development of the Sustainable Bioenergy Program (Bioenergi Lestari Program) as a pilot project in Central Kalimantan;

Implementing the Biofuel Information System (SIB) along with safeguards and governance mechanisms;

Conducting a major campaign for energy conservation;

Preparing the Rural and Remote Electrification Program (Indonesia Terang Program, PIT); and

Encouraging the active participation of Indonesia in various international fora on energy and the future development of NRE.

The achievements of each of these initiatives during 2015 and 2016 should be followed up by strategic actions in the coming year. This includes, among others: encouraging the issuing of several regulations that accelerate the development of renewable energy; as well as the preparation of a legal umbrella for initiatives like DKE and PIT. The Sustainable Bioenergy Program is expected to be fully implemented and efforts then should be directed to its replication in other provinces. Related to the COE Indonesia, in parallel to the construction of its premises, the strengthening of its institutional framework and development of cutting-edge technology will be required.

In 2016 additional initiatives were implemented to bridge the gap between the Indonesian communitys awareness and support for energy efficiency. This was achieved through the energy conservation campaign Cut 10%, and bridging the investment gap and the support of the international community through the Bali Clean Energy Forum (BCEF). The BCEF will become the backbone for launching other initiatives for the national, regional and global NRE community.

Essentially, the main requirement in 2017 will be the commitment and greater support from all stakeholders to continue and realize the initiatives to accelerate the development of NRE.

Figure 1. Potential and Utilization of Indonesias Renewable Energy ResourcesSource: National Energy Plan 2016

KINDS OF ENERGY WATER GEOTHERMAL BIOENERGY SOLAR WIND AND HYBRID TIDAL

Potential 75,000 MW 29,544 MW 32,654 MW 532,579 MW (4.80 kWh/m2/day) 113,545 MW (3-6 m/s) 17,989 MW

Installed capacity 5,024.2 MW 1,438.5 MW 1,671.0 MW 78.5 MW 3.1 MW 0.3 MW

Utilization (%) 7.0 5.0 5.1 0.01% 0.003 % 0.002 %

CHAPTER II ACHIEVEMENTS AND MOVING FORWARD


Targeted to be established in 2016, DKE is planned to raise up to IDR 200 trillion by 2025 with potential revenues from the state budget,

fossil energy depletion premiums, grants, loans, fees for general services, return on investment,

and other legitimate sources.

A. ENERGY RESILLIENCE FUND (DKE)

1. OVERVIEW

A nations energy security is a development objective realized through the policies and programs of the energy sector. Energy security includes the availability of energy, access to energy sources, affordability, and the protection of the environmental. The state of the nations energy, at this time, is defined by a range of issues that threaten national energy security including: the decline in oil production; low utilization of domestic energy from gas and coal; a limited infrastructure for energy; fiscal pressure brought about by fuel imports; and low utilization of new and renewable energy.

To resolve these issues, policy breakthroughs are needed along with funding mechanisms facilitated by the government, especially funding for large-scale energy projects which can be prone to long-term risks. It is not plausible to rely on government budget to fund these projects considering the limitations of public funding, and the complex and rigid procurement mechanism. Energy security can only be achieved through a series of combined breakthroughs including, among others, policy improvements; incentives and innovative and appropriate facilities for fiscal and non-fiscal; development of technology; and related capacity development.

There are circumstances that hinder progress towards national energy security including, among others:

a. Uncertainty in signing Power Purchase Agreement (PPA) by PLN due to the limited funds available to cover the additional cost for NRE project development;

b. The position taken by the banking industry which hesitates to take the technical and financial risks arising from NRE projects;

c. Circumstances where national renewable energy projects do not meet industry best practice, making it difficult to secure financing;

d. The need to link investors with technology providers, financial institutions, project developers, PLN, and the government, to bridge and provide assurance to financial institutions regarding the risk of NRE technology deployment;

e. There are 12,659 villages without reliable and affordable electricity, with an estimated 2,519 villages completely without electricity; incentive mechanisms are needed to enable the private sector to provide energy services to these remote and rural areas;

f. Energy security through diversification of energy by maximizing NRE. 23 percent energy mix target of NRE requires IDR 1,600 trillion, while the state budget funds are limited;

g. NRE requires advanced technology, and Indonesia needs to develop the technical expertise and capacity to develop/deploy this technology;

h. Energy Reserves Buffer (CPE) through oil and gas exploration and stabilization of fuel prices.


The Energy Resilience Fund (DKE) is a pool of funds utilized to provide incentives and financing facilities for the development of oil and gas energy and NRE. Specifically aligned to achieving greater national energy resilience. Targeted to be established in 2016, DKE is planned to raise up to IDR 200 trillion by 2025 with potential revenues from the state budget, fossil energy depletion premiums, grants, loans, fees for general services, return on investment, and other legitimate sources.

Law No. 30/2007 on Energy and Government Regulation No. 79/2014 on National Energy Policy (KEN) mandated the need for funding facilities such as DKE. To be able to operate, DKE requires an appropriate institutional structure in order to receive, manage, and provides grants, loans, and equity, and forming bond with financial intermediaries for the use of financial products that are flexible and innovative. Recent analysis concludes that a Public Service Agency (BLU) is an appropriate institutional model for DKE.

Institutionally, DKE will cooperate with the Centre of Excellence (COE) for Clean Energy to provide analysis and technical recommendations for NRE projects that could obtain financial support from DKE. DKE also working with banks financial institutions and non-bank as intermediaries in channelling financing facility (e.g. to banks participating in Credit for Community Businesses). Besides financial products, such as viability gap fund, guarantees and interest subsidies, DKE

covers payments for Feed-in Tariff (FiT) gaps to ensure the viability of renewable energy projects.

Based on preliminary analysis, calculated from the Business Plan for the Supply of Electricity (RUPTL), the National Energy Plan (RUEN), and additional information from project developers, following is a list of funding requirements, both in the form of FiT gap payments and financing NRE power plants for selected technologies:

Based on the calculations in the table above, the total subsidy for the FiT gap payment, which can be facilitated by the DKE until 2019, is approximately IDR 1 trillion. This amount secures an output of an estimated 3,077 MW by 2019 for a 20-year Purchase Power Agreement (PPA) period, with projects commencing in 2017.

To accelerate the realization of investment in NRE projects, DKE may provide a product performance guarantee in the form of premium payments. The premium payment required until 2019 amounts to IDR 1.6 trillion, which could encourage investment of renewable energy projects with a value of approximately IDR 80 trillion to 2019. Apart from the on-grid project with PLN, the DKE facility will be utilized the Rural and Remote Electrification Program (PIT) in the form of the gap payment

Figure 2. Fund Source, Management Institution, and DKE Utilization

3 Other prevailing laws and regulations, namely: i) UU 17/2003; ii) UU 1/2004; iii) PP 1/2008 jo. PP 4/2011; iv) PP 23 of 2005 jo. PP 74/2012.

Utilization

Fuel Stabilization Fund

: clean energy fund: oil fund

Rural and Remote Electrification Program (PIT) for 12,659 villages

Energy supply diversification (maintaining energy mix)

NRE concession incentives

Human Resources and Research and technology including pilot projects

Energy Conservation Incentives

Feed in Tariff margin

Energy Buffer Reserves

Management Institution

Energy Resilience Fund

Fund Source

q StateBudget;q FossilEnergy(Depletion

Premium);*q Grants;q Loans;q Feesforgeneralservicesq Returnoninvestment;andq Other

Oil and gas exploration


subsidies, subsidized interest margin, assurance premiums, and other products in accordance with the business model of PIT.

2. ACHIEVEMENT IN 2015 2016

In 2015, the development of the DKE was completed by analysing issues and conducting discussions with key stakeholders of the energy sector, including businesses, financial institutions, and ministry/institutions. The DKE concept has been presented on various occasions, both domestically and internationally, including in a hearing with Commission VII of the House of

Representatives, at the Investment Forum ConEx 2015, Indonesia International Infrastructure ConEx, UN Women Workshop, and other various fora.

In addition to mainstreaming the DKE concept, another activity undertaken in 2015 was to prepare a Draft Government Regulation (RPP) for DKEs establishment which was submitted to President Joko Widodo to seek approval for the RPP to be examined in a cross-ministerial meeting led by the State Secretary. Subsequently, the ministerial meeting, led by Coordinating Minister for Economic Affairs, was held on 30 December 2015 with an agreement that a Government Regulation regarding DKE should be issued in early 2016.

Table 1. Projection of FiT Margin Subsidy Needs Calculation

Year Capacity (Hydro energy, micro hydro, solar, wind, biomass power plant)FiT Margin Subsidy

(in USD)2017 469 MW $25,770,957

2018 685 MW $54,327,101

2019 1923 MW $82,250,962

2020 562 MW $96,262,067

2021 448 MW $101,653,577

Figure 3: DKE Design

FiTmargin

o smart building and smart city incentives

ENERGY CONSERVATI

ON

DOMESTIC AND FOREIGN GRANTS

AND LOANS

FOSSIL ENERGY DEPLETION

PREMIUM

APBN(State budget)

Clean EnergyFund

o Rural and Remote Electrification Program

o Solar Energy Power Plant 5,000 MW

o Wind power planto biomass and biogas

power plantso waste to energy micro

hydro power plantso KNEB

ONGRID(SEMI COMMERCIAL):

o Sustainable Bioenergy Development Program (biomass, biodiesel, bioethanol)

BIOFUEL

o Centre of Excellence, Sustainable Bioenergy

RD & DOFFGRID

o Rural and Remote Electrification Program

o Solar Energy Power Plant 5,000

o KNEB

ENERGY RESILIENCE FUNDCenter of Excellence

Bank/Non Bank

FiT

DKE Products: VGF, Loan, Grant, Equity,

Credit Guarantee Facility

OilFund o Energy buffer reserve (30

days)o Oil Fuel Stabilization Fundo Oil and gas exploration


In 2016, formal meetings on RPP DKE, with representation from the Ministry of Finance, Ministry of Justice and Human Rights, and the State Secretary, were conducted on several occasions. An outcome of these meetings was that the DKEs legal basis would be based on a Presidential Regulation in accordance with Law No. 30/2007 on Energy part 5, article 20-22, 25, and 30, as well as Government Regulation No. 79/2014 on National Energy Policy article 22 and 27.

Table 2. Simulation of DKEs general services

SIDE GOALS PROGRAM MECHANISMDemand Decreasing demand through an

increase in energy efficiency.1. Energy saved

through the Public Streets Lighting Program

Form: Loan

Recipient: Government City or District Government

KPI: Energy elasticity decreases less than one percent in 2025 and energy intensity decreases one percent per year.

2. Support program for Developers of Energy Saved Tools

Form: Equity or Mezzanine debt

Recipient: Developers

3. Loans and guarantees program for Energy Conservation

Form: interest rate subsidy

Recipient: Micro, Small and Medium-Scale Enterprises (UMKM) through Credit for Community Businesses; Medium industry through PT SMI or Banks

Access/ Supply Electricity supply increases through renewable energy alternatives

4. Renewable Energy Enterprise Guarantee Program

Form: Performance Guarantee

Recipient: Industry through loan application to Bank

KPI: NRE development of 8,800 MW until 2019

5. Loan program for NRE and loan program for Sustainable Bioenergy

Form: Interest rate subsidy

Recipient: Micro, Small and Medium-Scale Enterprise (UMKM) through Credit for Community Businesses; Medium industry through PT SMI or

Increasing electricity access evenly

6. PLN Network Expansion Program

Form: Public Service Obligation Service (PSO)

Recipient: PLN

KPI: Electrification ratio of 96.6 percent by the end of 2019

7. Rural and Remote Electrification Program (Program Indonesia Terang, PIT)

Form: Interest Rate Subsidy, Assurance, Grant

Recipient:1. Community/Cooperation through

Credit for Community Businesses for PIT

2. IPP through Credit for Community Businesses for PLTMH < 1 MW

Research and Development

Capacity increase, information and technology

8. COE Indonesia development program

Form: Grant, loan

KPI: Kapasitas institusi CoE Indonesia

Recipient: COE Indonesia

3. CHALLENGES

Challenges in the preparation of DKE include the following:

a. Coordination across ministries/institutions for harmonisation of revenues, expenditures, and to ensure the DKE has flexible mechanisms;

b. Regulation related to DKEs operations were fragmented across various ministries/institutions and many of these regulations were being revised with different dates of expected


On 7 April 2016 the Plenary Cabinet Meeting approved the budget allocation of IDR 1.6 trillion for DKE and Energy Reserves Buffer (CPE). The budgetary allocation was divided into IDR 800 billion for clean energy and IDR 800 billion for CPE. The potential impact resulting from the clean energy budget allocation include the following:

1. Implementation of the Rural and Remote Electrification Program (PIT) which aims to produce an estimated 58 MW for approximately 200,500 households without electricity;

2. Tariff subsidy for the Phase 1 of the 5,000 MW solar power program which aims to produce 250 MW; and

3. Incentives to support energy efficiency projects.

It is proposed that the DKE established quickly with initial funding from the State Budget Amendment (APBN-P) 2016 as this would enable the implementation of a range of strategic programs including the governments NRE targets and energy services for rural and remote populations.

Table 3. Energy Resilience Fund (DKE) Work Plan 2016

No Output Activities 1 Issuance of Government Regulation

on the Energy Resilience Fund (DKE)1. Discussions between Minister of Energy and Mineral Resources, Minister

of Finance, Coordinator Minister of Maritime, Coordinator Minister of Economy

2. FGDs and meetings with:a. Government: Director General of Treasury (BLU), Director General of

Risk Management, BPHN, Ministry of Law and Human Rights, PIP, PLN, OJK; and

b. LKB and LKBB including LPEI, Askrindo, and others; and3. Harmonization and policy issuance on fossil energy depletion premium.

2 DKEs operational preparation 1. Finalisation and issuance of DKEs implementation and technical regulations.

2. Preparing SOPs for the DKE institution - a General Service Agency (BLU).3. Arranging strategies for funding mobilization.4. Collecting data for pipeline portfolio.

3 How to integrate DKE with other initiatives/institution?

Integration of COE Indonesia and DKE

issuance. For example, the Revision of the Law on Oil and Gas, Revision of the Law and Government Regulation on Non-Tax Revenues, Revision of Government Regulation for Public Service Agencies (BLU), and several regulations from the Ministry of Finance; and

c. Difficulty to access data and information on oil and gas projects and NRE to calculate the funding needs and potential income for DKE.

4. NEXT STEPS

To ensure DKE is established as a provider of institutional facilities and financing incentives that are solid, transparent, accountable and professional, the government regulation for establishing DKEs legal basis and supporting technical regulations need to be finalised and issued. These regulations are critical to DKEs establishment and its implementation mechanisms required to achieve the targeted impact.

WORK PLAN 2016

In 2016, to achieve the establishment and operation of DKE, has designed a work plan as outlined in Table 3.


To ensure DKE is established as a provider of institutional facilities and financing incentives that are solid, transparent, accountable and professional, the government regulation for establishing DKEs legal basis and supporting technical regulations need to be finalised and issued. These regulations are critical to DKEs establishment and its implementation mechanisms required to achieve the targeted impact.


COE Indonesia was established with a different approach to other COEs around the world because in that it is not

only a laboratory for researching new and innovative technologies, but also as an investment and business

support centre designed to accelerate the development of clean energy in Indonesia.

B. CENTER OF EXCELLENCE FOR CLEAN ENERGY (COE INDONESIA)

1. OVERVIEW

In relation to technology breakthroughs and capacity building, there is a need to develop an infrastructure to consolidate national and international efforts to develop and deploy clean energy resources. This infrastructure is expected to facilitate the development of methods and techniques for applying innovative technology in accordance with the conditions, characteristics and capacity of each region.

The establishment of Indonesias Centre of Excellence for Clean Energy (COE Indonesia) aims to provide such an infrastructure for the countrys transition to sustainable energy. The design of Indonesias Centre of Excellence focuses specifically on accelerating resource mapping, financial and institutional facilities, and technology development. Broadly, and unlike more traditional research and development laboratories, the Centre will aim to encompass the complete cycle of clean energy development and deployment in order to contribute to national, regional and international social and economic development by supporting access to a reliable, affordable and sustainable supply of energy for all.

This general design of the COE translates into several underlying objectives, including: decision support;

collaborative learning; and project support. These underlying objectives are designed to support a multi-sector and multi-stakeholder environment through: 1) developing a capacity within the MEMR for consolidation and analysis of quality data and information (decision support); 2) establishing an environment within the COE for enhancing collaboration between stakeholders from the public and private sectors (collaborative learning); and 3) supporting and facilitating stakeholders in project planning and implementation (project support). These objectives serve as fundamental principles underlying the Centres more specific objectives which include, among others, the following:

1. International technology diffusion, addressing barriers to technology diffusion and sustainable goods and services, and improving international technology cooperation and agreements;

2. Human resources and community-based services, strengthening human resources and community-based extension services, and focusing development financing on capacity development;


3. Investment and risk mitigation, accelerating investment and mitigating risk in clean energy deployment, and supporting market creation policy and competitive advantage;

4. Innovative market-based mechanisms, pioneering innovative policy and regulatory frameworks, and working together on strengthening sustainable energy polices and agreements; and

5. National, regional and international collaboration, facilitating collaboration between national, regional and international communities, and participating in global clean energy innovation initiatives.

In order for the Centre to achieve its objectives, a range of functional structures have been considered and, based on discussions with key stakeholders, the current concept is to establish three principle units within the Centre which will focus primarily on 1) Information; 2) Finance and 3) Technology. In addition, it is envisaged that these units will function based on a matrix design

that facilitates the horizontal and vertical flow and interaction of expertise and information. In this matrix structure experts from different functional disciplines from within the Centre and from other institutions, including the public and private sector, will work together as a team on specific research assignments or planned projects or programmes. This arrangement will facilitate an open and collaborative environment for developing solutions for the advancement and deployment of clean energy technologies and innovation.

As described in the above Figure, each of the three basic units: information; finance; and technology, will be divided into various sub-units. The Finance Unit will be central to all activities of the Centre focusing on: feasibility assessments related to RE development and deployment; the acceleration of (patient) investment and facilitating business mobilisation; and market-based mechanisms supporting a transformation of policy instruments and the clean energy value chain. The Information and Technology Units will support these specific

DECISION SUPPORT COLLABORATIVE LEARNING

PROJECT SUPPORT

Consolidation and analysis of quality data and information.

Collaboration between stakeholders from the public and private sectors.

Facilitation of project planning and implementation.

International technology diffusion

Addressing barriers to technology diffusion and sustainable goods and services; and

Improving international technology cooperation and agreements.

National, regional and international collaboration

Facilitating collaboration between national, regional and international communities; and

Participating in global clean energy innovation initiatives.

Innovative market-based mechanisms

Pioneering innovative policy and regulatory frameworks; and Working together on strengthening sustainable energy polices and

agreements.

Investment and risk mitigation Accelerating investment and mitigating risk in clean energy

deployment; and Supporting market creation policy and competitive advantage.

Human resources and community-based services

Strengthening human resources and community-based extension services; and

Focusing development financing on capacity development.

Access to a reliable and affordable supply

of energy

Sustainable social and economic development

Figure 4. COEs Key Objectives


activities of the Finance Unit. Following is a brief description of the areas of focus of the proposed sub-units:

INFORMATION Spatial Analysis, collaborating with MEMRs

Centre for Data and Information (Pusdatin) and multi-sector geospatial departments both private and public, the Centres spatial analysis focuses on consolidating tabular and spatial data to establish resource maps related to, among others: socio-economic profiles; energy-demand modelling; and renewable energy sources;

Data Modelling, combining a suite of methodologies and applications for the purpose of determining broad level speculative analysis on temporal energy demand and supply; least-cost network analysis, and socio-economic and cultural analyses to assist in regional development and deployment of new and renewable energy; and

Monitoring and Reporting, reporting on clean-energy programmes both national, regional and international for the purpose of managing and maintaining an advanced knowledge base related to the expansion of, and transition to, clean energy, and to ensure accurate and near real time data and programme evaluation can be delivered to decision and policy makers.

FINANCE The Finance Unit is central to the COEs

operations, bringing ideas generated from the information and technology units, which tend to be nascent and require further development to be commercially viable, to the private sector - a process that involves:

Feasibility Assessments, conducting feasibility assessments following a range of screening processes including probable technologies, constraint mapping and environmental impact analysis, and data and network modelling to determine which combination of renewable technologies most effectively meet the energy requirement and goals, and achieve least cost for the consumer;

Investment and Business, facilitating investment by assisting in mitigating financial barriers to investments in small-to-large scale renewable energy projects and businesses, assisting in identifying indigenous renewable energy resources and translating those potential resources into a technical and economic feasible pipeline of projects that attracts the interest of potential investors and financiers; and

Market-based Mechanisms, supporting government initiatives to develop market-based mechanisms that accelerate the development and deployment of clean energy, including policy instruments that provide financial incentives for consumers and/or producers adopting new and renewable energy technologies, focusing on reliable, cost-effective supply chains

Figure 5. Work Scope of COE Indonesia

CENTREOF

EXCELLENCE COLLABORATIVELEARNING

PROJECTSUPPORT

DECISIONSUPPORT

TECHNOLOGY BasicScienceStandards

andCertification

CleanEnergy

Innovation

PROJECT IMPLEMENTATION MONITORING

FINANCE FeasibilityAssessmentsInvestment

andBusiness

Market-BasedMechanism

INVESTMENT AND BUSINESS DEVELOPMENT

INFORMATION SpatialAnalysisData

ModellingMonitoring

andReporting

DATA AND INFORMATION MANAGEMENT


and promoting the diffusion of clean energy technologies, and supporting the development of appropriate core infrastructure including supporting infrastructure for the harvesting of renewable energy, and renewable energy assets.

TECHNOLOGY Basic Science, developing a basic science

capacity that will focus particularly on renewable electricity production and use and renewable fuels formulation and use which will form the foundation for applied research and development of advanced technologies;

Standards and Certification, pursuing non-discriminatory national standards that apply to all distributed power technologies and assures that these systems are properly integrated into the grid in a manner that addresses critical safety, reliability, and power-quality issues, and the development of a certification process for distributed power and interface equipment; and

Clean Energy Innovation, facilitating clean energy innovation through building strong interdisciplinary research and education partnerships, enhancing the technology development interfaces between basic science and applied research, between integrated energy systems and the marketplace, and by identifying, analysing, and developing solutions to reduce institutional and infrastructural barriers to the development and commercialisation of distributed power systems.

2. ACHIEVEMENTS IN 2015 2016

As an initial step in the development of Indonesias COE, a Data Analysis Centre has been setup in MEMRs Research and Development Agency (Balitbang). This facility focuses on resource mapping given the Research, Development and Demonstration (RD&D) facilities of the Agency. This initial achievement will form the basis of the COEs Decision Support facilities which, through development support and assistance from the Asian Development Bank (ADB), World Resources Institute (WRI), and others, are being expanded in order to consolidate a broader range of institutional research concerning Indonesias potential renewable energy sources.

In addition to focusing on the development of the Data Analysis Centre, other activities that have been initiated during 2015 include the following:

a. Preparation of COE Indonesia Development Strategy and Business Plan;

b. Strategy Preparation of Information Communication Technology (ICT Strategy) for COE Indonesia;

c. Competition of COE Indonesia eco friendly building design concept, which will be followed

PHOTO: COE Booth, Bali Clean Energy Forum 2016


by a feasibility study and detailed engineering design (DED) in 2016;

d. Public website for COE Indonesia;

e. Prototype monitoring system for investment in new and renewable energy and geospatial-based energy conservation.

3. CHALLENGES

The challenges experienced in establishing Indonesias COE concern access and availability of data. In this respect, the Centre will need to expand its cooperation with experts and specialists from various government organizations, academia, the private sector, and civil society organizations from various fields of science related, both national and regional, and global. In Indonesia, the availability of spatial information and local characteristics require the involvement of the Ministry / Agencies, such as the Ministry of Environment and Forests (KLHK), Ministry of Agriculture, Ministry of Agricultural and Spatial Planning (ATR / BPN), National Institute of Aeronautics and Space (LAPAN), Geospatial Information Agency (BIG), the Meteorology, Climatology and Geophysics (BMKG), and the Centre for Energy Technology at the Agency for the Assessment and Application of Technology

Table 4 Work Plan of COE Indonesia 2016

No Output Activities1 A non-business-as-usual institution that

works towards the energy sector reform required to accelerate the development of new and renewable energy in Indonesia

1. Identifying function and structure of similar COE institutions abroad.2. Formulating COE function and structure3. Compiling presidential decree drafts with related institutions and

ministries.4. Designing timeline of COE activities until 2025.5. Identifying legal foundation of an institution establishment. 6. Making of physical masterplan of COE which based on passive energy

building

2 Roadmap:The achievement of 23 percent NRE in the national energy mix by 2025

Facilitating the design of NRE programs in Indonesia included:1. The technical study application of NRE technologies;2. Design of key performance indicators to monitor implementation of the

program;3. Modelling of energy systems based on various scenarios to achieve the

target of 23 percent renewable energy by 2025.

3 Virtual COEoperational COE TPP output; is required as real output and can be felt directly by the community as early as possible

1. Identify the information that needs to be incorporated into metadata;2. Make a legal basis draft for the implementation of spatial data in the

MEMR;3. Identify the required data and collecting data from relevant institutions;4. Collect metadata from data that has been or will be collected;5. Build a database structure that is integrated with a Media Centre and

populate the database with data already collected;6. Develop and design SEOM system;7. Identify the data that should/should not be accessed or downloaded by

the public;8. Collect data on projects of NRE which are ongoing, including project

progress status information;9. Identify the organization flow of NRE projects at the funding stage, pre-

FS, FS, and construction, along with the estimated time on each activity;10. Mapping the barriers faced by project developers in the implementation

of NRE projects; and11. Designing reporting lines in order to monitor projects of NRE.

(BPPT).

In terms of technology assessment, COE Indonesia requires support from academics and other educational institutions, both in Indonesia and from countries that develop NRE technologies, such as the United States, Japan, South Korea, or China. In addition to access and availability of data, COE Indonesia also needs the involvement of the private sector to develop the COEs business models, funding mechanisms, and renewable and clean energy technology dissemination through their field station to do ground truthing, project implementation, and monitoring and evaluation. These field station require interaction with local government. In essence, the development of COE Indonesia will be carried out with a phased approach that evolves with the implementation of national energy programs.

Challenges and obstacles faced in the acceleration of investment are different in each technology, but there are some similarities, including:

a. Tariffs: PLN cannot afford expensive NRE power plants;

b. Licensing: the length and complexity of the licensing process, especially for geothermal


COE

Figure 6. COE s Field stations across Indonesia.

projects which are generally located in forest areas;

c. Data: lack of data and information on NRE;

d. Regulations: under developed regulations and standards specific to NRE investment

e. Electricity Trading Regulation (PJBL): no PJBL standard for renewable energy;

f. Financial institutions funding: lack of capacity and interest of local financial institutions in financing renewable energy projects.

These barriers impact on the realization of new and renewable energy investments, and cause an increase in NRE costs which adversely impact on new and renewable energy investments.

4. NEXT STEPS

The Centres target for 2017 is to expand the Data Analysis Centre for new and renewable energy to ensure the availability of basic facilities for investors and the government in its consideration of policies in support of the transformation to new and renewable energy.

In addition, the following objectives will form a part of the 2017 work plan:

a. Setting up a Project Management Unit (PMU) and a team of researchers who can serve full time in MEMRs RD&D Agency (Balitbang) and a team in Bali to assist in coordinating the construction of the COEs premises while supporting the National Clean Energy Zone program (KNEB); and

b. Collaborative Learning and Project Support activities will continue to assist partners in the field, educational institutions, and other knowledge centres.

Development of a Virtual COE which concerns:

a. Sustainable Energy One Map (SEOM), a geospatial resource map;

b. Project Monitoring, to evaluate the progress of projects that support the acceleration of investment in new and renewable energy;

c. Clean Energy Marketplace, stakeholder engagement in order to accelerate investment in new and renewable energy.

PLANS IN 2016 2017

A taskforce for preparing the institutional structure of the COE was established on 1 April 2016, with a one-year tenure through to 31 March 2017. This taskforce is responsible for preparing basic tasks and functions of the COE. It consists of five working groups: Administration, Information, Investment, Technology, and Communications. The work plan prepared by includes the following activities:

COE Indonesia will have field station in various parts of the archipelago, to serve as disseminators of innovation and technology to a wide range of NRE initiatives in regional areas.

The design of Indonesias Centre of Excellence focuses specifically on accelerating resource mapping, financial and institutional facilities, and technology development. Broadly, the Centre will aim to encompass the complete cycle of clean energy development and deployment in order to contribute to national, regional and international social and economic development.


Bali as a National Region for Clean Energy (KNEB) is strategic for the implementation of regional NRE. It is well placed to

change the mindset and become a new standard for the community in the utilization of energy. The program is the

starting point for a national movement to realize the utilization of Indonesias sustainable natural resources for NRE.

C. NATIONAL REGION FOR CLEAN ENERGY BALI (KNEB BALI)

1. OVERVIEW

A part from being a pilot region for the development of the tourism sector, Bali is the designated pilot region for new and renewable energy as stipulated in MEMRs ministerial decree No. 3573.K/70/MEM/2015 dated 14 August 2015 regarding Bali as the National Region for Clean Energy (KNEB). This decision complemented Balis own declaration as a Green and Clean Province (Bali Green and Clean) which was announced by the Governor of Bali at the 11th Global Environment Forum in Nusa Dua in 2010. At this event the Clean and Green Bali Road Map was launched. With the establishment of Bali as the first National Region for Clean Energy, follows the need to develop the islands NRE potential in accordance with the needs of the community and in a sustainable manner. This program was developed as part of acceleration program meet the targets for NREs contribution to the national energy mix, as stipulated in the National Energy Policy (KEN), Government Regulation No. 79/2014.

The potential deployment of NRE in Bali is significant and includes:

a. Hydro power 79 MW;

b. Biomass around 18 MW with current production of 1.5 MW in Bangli;

c. Solar power 5,263 Wp/m2 which is greater than the average potential for Indonesia at an estimated 4,800 Wp/m2;

d. Ocean currents in Toyopakeh approximately 5 GW and 33 GW in the Lombok Strait; and

e. Wind energy which, in Nusa Penida, reaches speeds of 3-12 m/s.

Bali as a National Region for Clean Energy (KNEB) is strategic for the implementation of regional NRE. It is well placed to change the mindset and become a new standard for the community in the utilization of energy. The program is the starting point for a national movement to realize the utilization of Indonesias sustainable natural resources for NRE.

THE ENERGY PARADOX AND BALI

Energy and islands

a. Bali is an island province with a population of 4,104,900 million inhabitants;

b. Bali have not achieved energy independence - of the four gas power plants and a steam power plant owned by Bali, 100 percent of the energy resources come from outside the island of Bali, in the form of cable transmission from Java - Bali, or the supply of LNG.

Energy and Tourism

a. Bali Province is ranked the second highest in energy consumption per capita nation wide;

b. There is unequal distribution of electricity - based on data from BPS in 2015, households there are 133,673 households that do not have electricity, or 13.3 percent of the total number of families in Bali. 72 percent of energy used in the province is produced in Java, and 70 percent is consumed in south Bali.


ENERGY AND CULTURE

a. Tri Hita Karana, which is the essence of Balinese culture refers to the three principles of prosperity which involves maintaining a balance of the three elements of mans relationship God, fellow human beings and the environment;

b. 25% of the energy mix used in Bali is derived from fossil fuels which are not environmentally friendly.

Given this paradox and the context of the above issues, which is a phenomenon that often occurs in the area of administration of the islands in Indonesia, Bali seeks to achieve its vision as a pilot region of NRE.


During 2015, the KNEB program was developed in stages with the legal framework and cooperation between the MEMR Provincial Government of Bali, progressive implemented:

a. MEMR Ministerial Decree No. 3573.K / 70 / MEM / 2015 in August 2015;

b. The signing of the KNEB Memorandum of Understanding (MoU) between the MEMRs Minister and the Governor of Bali in August 2015;

c. MEMR Ministerial Decree concerning the KNEB development team issued in September 2015; and

d. Bilateral meetings between the Minister and the Governor of Bali, as well as relevant regional work units (SKPD) and representatives of civil society organizations in Bali in October 2015, as a follow-up of KNEB Bali Development NKB;

e. Handover of premises to the KNEB development team located in Renon, Denpasar, which was carried out by the Public Works Ministry of the Provincial Government of Bali and the Research and Development Agency of MEMR in November 2015.

In addition, the development team of KNEB Bali facilitated the formulation of principles, criteria and indicators of KNEB Bali which included:

a. Principle 1: KNEB Bali and Indonesia COE implemented by the human resources engaged in the government sector, community organizations, and businesses who are competent, have integrity, and aligned with the people;

b. Principle 2: KNEB COE Bali and Indonesia upholds the integration of Balinese cultural, social, and ecological as a key component of supporting the islands ecosystems. This is supported by a comprehensive cutting-edge information system;

c. Principle 3: KNEB Bali and COE Indonesia organized by policy and regulatory framework that does not have a negative impact on the social order, culture, and ecology in its implementation;

PHOTO: Solar energy power plant, Karangasem, Bali


Figure 7. Tier 1 3 KNEB Bali.

Clean and Green 2018

TIER 1: On-grid Energy

0 - 18 month

Large-scale (100 MW and above) Conversion of diesel / coal to gas

(PLTG Pemaron, PLTG Gilimanuk PLTU Celukan Bawang)

Waste to energy Suwung

TIER 2: Off-grid Energy

12 - 36 months

Small and medium scale Water-based, biomass, trash, solar,

wind, rice husks, etc. Availability of energy locally Community-based orientation and

strengthening local institutions The planning process is bottom-up Aims to build self-reliance based

on the potential of local energy resources

TIER 3: Clean Energy

36 months ahead

Development of NRE Centre of Excellence

Oriented towards applied research for a clean energy future, especially marine-based like the waves, algae, OTEC, and other clean energy

The main attraction of Indonesian NRE scientists who are abroad

Being NRE monitoring centre field stations throughout Indonesia

Become a tourist attraction with the mission of education and increased awareness of the people on NRE

2015-2016

2016-2017

2017-2018

d. Principle 4: Implementation of the program and activities of the KNEB Bali and COE Indonesia are set through a participatory approach;

e. Principle 5: KNEB Bali and Indonesia COE organized with the support of a transparent financing and incentive system that ensures even distribution of prosperity; and

f. Principle 6: KNEB Bali and COE Indonesia provides appropriate demonstrations to advance understanding and awareness of clean energy utilization.

KNEB Bali will not be realized optimally without the support and approval of the people of Bali. This support is obtained through community participation in the study of political, economic, environmental, social, and cultural elements related to renewable energy development in Bali. So far efforts that have been done are the involvement of representatives from civil society organizations and young Balinese community groups so that it can be followed up with the establishment of youth forum and communities for NRE at the provincial level, and encourage similar movements at the national level.

ACHIEVEMENTS 2016

KNEB Bali continues to work successfully with civil society organizations in relation to legal frameworks, and energy and electricity stakeholders in Bali:

a. Debottleneck the process of converting large-scale plants, such as the Pesanggaran gas power plant and waste-to-heat in Pesanggaran power plant;

b. KNEB recruitment team based in Bali;

c. KNEB office in Renon, Denpasar, established and operational for KNEB Bali teams daily activities; and

d. Refinement of the work plan of KNEB Bali 2016-2017.

3. CHALLENGES

It is understood that the KNEB program cannot be realized in the short term. For this reason, there needs to be consistent effort to achieve KNEB through a three-tiered approach as described in the Figure below.

The challenge, therefore, for KNEB Bali include the following:

a. Debottleneck the process of converting large-scale plants, such as Final Disposal (TPA) Suwung, conversion of coal to gas in power plants Celukan Bawang, as well as the process of revitalization of wind power plant and solar power plant in Nusa Penida that need information and a comprehensive study as well as the cooperation of various parties;

b. Development of medium and small scale solar installations through the revitalization and restarting of solar power plants (SPP), which are already established in Bali; support and policy reform, particularly in order to overcome a long and complex process of asset hand over;

c. SPP construction of 1-10 MW scale, and to encourage the installation of a home solar panel system, there needs to be an integrated


approach involving the procurement of technology, human resources, and finance. Additionally, more active cooperation with PLN is required in order to encourage incentives that support the smart grid system, such as the implementation of net metering and implementation of competing feed-in-tariff;

d. Funding schemes that are transparent and fair and support a wide range of parties, including industry and financial institutions, require increased capacity and interest of local financial institutions in financing NRE projects, and in securing guarantors;

e. The increase in skilled human resources in the province of Bali requires close collaboration between academia, industry, and government, in particular with regional work units and village owned enterprise officials.

4. NEXT STEPS

TARGET 2016 2017

a. In order to support the conversion agenda of coal to gas, as well as NRE restoration projects in Bali, KNEB Bali recommends a range of measures and policies for the MERM, the Provincial Government of Bali, and stakeholders, through a series of research and academic papers based on the Principles, Criteria and Indicators of KNEB Bali;

b. Gain consensus and consolidation together through campaigning and socialization with the help of communication materials, in particular with the involvement of civil society organizations and youth community;

c. Small-scale pilot projects of solar panels on the roof and strengthening the capacity of the supply value chain with the involvement of local communities, industry, and academia;

d. Cadre of technical personnel, experts and business management of solar panels on the rooftops from experienced young people;

e. Assistance to the village government in planning; and

f. Develop funding schemes and innovative and sustainable financing mechanisms through cooperation between financial institutions, guarantee agencies, government, and the development of Cost Sharing Mechanism (CSM) with industry players.

WORK PLAN 2016-2017

The work plan of KNEB Bali 2016 is outlined in the Table below.

Tabel 5. Rencana Pengembangan Cakrawala 1 - 3 KNEB Bali

Action Plan Output (until 2017)Tier 1 - Fossil energy conversion to gas (Celukan Bawang)

- The utilization of waste to heat in PLTG Pesanggaran - Waste to Energy (TPA Suwung) - RE Investment Package - Nusa Penida

- 100% Clean Energy Bali - Clean Energy Airport - Reduction function landfill, - TPS revitalization - Investor for revitalization RE - Nusa Penida - gas fuel stations

Tier 2 - The clean energy village - Consortium for Academics - industry players - Energy Ambassadors (creation of technical personnel) - Scientific work competition - Business Plan competition (involving Village-owned Enterprises)

- Energy Management Workshops

- 8 NRE villages - Vocational training curriculum and SHS experts - White papers and policy briefs - Community-based Business Planning - 30 technical experts and 5 SHS experts

- Policy studies & market ecosystems - Monitoring and evaluation indicators and GIS platform - Market intelligence

- Database - Market perception surveys (baseline and progress report)

- TPS Revitalization (TPA function reduction) - TPS case studies - TPS-energy prototype

- Finance and CSM - Cooperation with banks, guarantee institutions and retailers of technology

Tier 3 - Prototyping and evaluation of appropriate technology - Appropriate NRE technology catalogue for strategic energy sectors.

- NRE Local Competence Centre


Tabel 6. Kondisi Ketenagalistrikan Desa

ELECTRICITY SOURCE VILLAGES NATIONAL (%)NON-PLN 2,009 3

NON-PLN & NO ELECTRICITY 8,041 10

NO ELECTRICITY 2,519 3

TOTAL 12,659 16

Source: Podes BPS 2014

D. PROGRAM INDONESIA TERANG (PIT)

Indonesias electrification ratio is 86%. There are still 12,659 villages across Indonesia that do not have access to reliable and affordable electricity. More than 9 million people spread across

remote villages, as well as border areas live without electricity. An acceleration program to increase the national electrification ratio is

required in order to bring reliable electricity access to villages and prosperity for all community members.

1. OVERVIEW

In harmony with National Medium Term Development Plan (RPJMN) 2015-19, and as a part of increasing the NRE portion in the national energy mix 23 percent by 2025, the government initiated a rural and remote electrification program aimed at increasing the current electrification ratio of 86 percent to 97 percent by 2019. This was to achieved through range of methods that incorporated off- and on-grid systems.

The areas outside the main electrical power network there are vast indigenous renewable resources available for providing off-grid systems, including solar power, micro-hydro, wind, and biomass. Based on data collected by the Central Bureau of Statistics (BPS) in 2014, there are 2.8 million households or more than 9 million people without electricity. There are 12,659 villages that do not have access to the national electricity grid, those that are completely without any form

of electricity, and villages burning fossil fuels to generate electricity (non-PLN), or a combination of both (without electricity and non-PLN). The villages are the target of Rural and Remote Electrification Program, which aims to increase the national electrification ratio to 97% by 2019, as described in Table 6 below.

INDONESIAS RURAL AND REMOTE ELECTRIFICATION PROGRAM (PIT)

PIT is an acceleration program for village electrification that focuses on off-grid systems by utilizing the countrys abundant renewable energy sources. This program is an initiative of the MERM that has become a national cross-sector program


involving other ministries/agencies, and local governments.

To achieve implementation and reach the target of a 97 present electrification ratio, the program will apply innovative measures including:

a. Shifting from a project concept into a national program to ensure sustainability;

b. Semi-commercial program management to enable and increase private sector involvement;

c. Allocate special funding (state budget, private investment, international grants, etc.); and

d. Focus specifically on the involvement of all stakeholders, especially the beneficiaries.

In preparation for PIT implementation, the MEMR has established a Program Implementation Unit for the PIT program (Unit Pelaksanaan-PIT, UP-PIT) through a Ministerial Decree No. 5672K/73/MEM/2016 concerning the Establishment of a Program Implementation Unit for PIT, which was launched in 4 May 2016. UP-PIT consists of representatives from the MEMRs Directorate General of EBTKE, Directorate General of Electricity, Research and Development Agency, the Implementation Unit of the National Electricity

Development Program (UP3KN), the Task Force for the Accelerating the Development of New and Renewable Energy and Energy Conservation (P2EBT), and PLN.

2. ACHIEVEMENTS IN 2016

UP-PIT has been carrying out various activities to support the preparation of program implementation. These activities include:

a. Data collection (field visits, electricity data consolidation, and electrification program mapping by the (ministries/agencies);

b. Publications and communications (media gatherings, PIT declaration activities, and website design);

c. Stakeholder engagement (PIT regional offices establishment, intensive coordination with the ministries/institutions, and local government, provincial-level coordination meetings, focus group discussions);

d. Institutional setup (preparing the legal basis, implementation schemes, and financial schemes).

PHOTOS: Opening Ceremony of PLTS Daruba, District Morotai Island, North Maluku, April 2016


4. NEXT STEPS

2016 TARGET

The achievements which are expected to be completed by the end of 2016 include:

a. PIT Agency established (in the form of a Public Service Board) which will coordinate and manage the electrification program for border areas, outer islands, and areas that are difficult to access or not yet covered by the national electric power network;

b. PIT regional offices establishment in eastern Indonesia, in the city of Ambon, Maluku;

c. The mapping of PIT target villages based on a geospatial analysis and agreed to by relevant parties;

d. The distribution of solar lanterns or mini SHS as an aid to the community;

e. Revitalization and maintenance of NRE power plants built by the ministries/institutions and the regional government which are damaged or not operational;

f. Development of geospatial-based near real time monitoring system on the condition of NRE assets in the village that have been built by the

3. CHALLENGES

There are several challenges in the efforts to accelerate an increase of the electrification ratio in villages without electricity, these include:

a. Coordination with PLN in determining PIT working area;

b. Regular ministerial coordination for the support of the ministries/institutions in accelerating the implementation of PIT;

c. Rapid development of supporting data; consolidating this data through the assistance of ministries/institutions. This data includes:

1) PLNs 20KV Networks and 2016-20 Rural Electricity Roadmap;

2) Data electrification plan and a list of village-owned enterprises (BUMDes) from the Ministry of Rural, Rural Development and Transmigration (Kemendesa);

3) 3Data of the development planning of outer islands and the coastal areas through to 2019 from the Ministry of Maritime Affairs and Fisheries (MMAF); and

4) Data concerning plant management cooperatives from the Ministry of Cooperatives and SMEs (KemenkoUKM)

Figure 8. Illustration of Electrification Improvement 2016-2019.

Desa terlistriki 2016

86%

Desa terlistriki 2019

97%


Tabel 7. Indonesias Rural and Remote Electrification Program Work Plan 2016.

No Keluaran Aktivitas1 Data Collection 1. Mapping and updating the current status of national electrification;

2. Mapping and updating ministries/institutions electrification program planning;3. Mapping and updating NRE power plants assets as targets for revitalization;4. Development of clustering or grouping PIT target villages;5. The use of geospatial information for the monitoring and evaluation of PIT;6. Identification of target villages for distribution of solar lanterns and SHS;7. Identify the renewable energy assets belonging to ministries/institutions and

local governments that are not operational; and8. Development of real time monitoring system for renewable energy assets in

the village by using available geospatial data.

2 Dissemination 1. Launch of the programs website;2. Preparation of publication materials, both printed and digital;3. Developing branding material for PIT;4. Media road show; and5. National and local media Workshops.

3 Stakeholders engagement 1. The opening ceremony of PITs regional offices;2. Regular coordination meetings with ministries/institutions, Provincial/District/

City governments, and other stakeholders;3. FDGs continued;4. Village inspections to determine power plants assets which will be targeted

by PIT; and5. Marketplace Forum.

4 Institutional setup 1. Determination of the legal basis of PIT management body;2. Initiation of PIT pilot project to test effective business modelling;3. Finalizing PIT implementation plans and financial arrangements; and4. Issuance of PIT implementation guidelines.

ministries/institutions and local governments, or that will be built as part of PIT.

WORK PLANS 2016

In 2016, to achieve the establishment and operationalization of PITs targets, a work plan as described in the table above has been prepared.

RECOMMENDATION

Since various parties, including the government and also PLN, have been implementing the project of constructing NRE power plants at the village level, the program is expected to be a national program with the support from the Ministry of Rural, Rural Development and Transmigration, Ministry of Interior Affairs, Ministry of Maritime Affairs and Fisheries, the Ministry of Cooperatives, as well as collaboration with SOEs, private sector, civil society organizations, and local governments.


The sustainable bioenergy program will be established on 10 million hectares of degraded land in Indonesia. The program supports the

initiative to restore and rehabilitate the nations forests and degraded land, improve the economy of local communities, and encourage the

provision of national NRE, which will reduce Indonesias dependence on fossil energy and fuel imports. Degraded land utilization also supports the development of sustainable land-based energy and avoids competing use

of land for food security.

E. DEVELOPMENT OF SUSTAINABLE BIOENERGY PROGRAM

1. OVERVIEW

Over the past 18 years, Indonesia continuously has been dealing with the disaster from forest and land fires, and the smoke haze this causes. Indonesia has been urged to take systematic action in forest management. However, forest and degraded peat swamp governance has become a never ending debate because it cannot neglect the social aspect, or negatively impact on local peoples access to sustainable prosperity.

The Sustainable Bioenergy Program will be implemented on 10 million hectares of degraded land in Indonesia. The program supports the initiative to restore and rehabilitate the nations forests and degraded land, improve the economy of local communities, and encourage the provision of national NRE, which will reduce Indonesias dependence on fossil energy and fuel imports.

The availability of land is one of the issues encountered in the development of bioenergy in Indonesia. On the other hand, data from the Ministry of Environment and Forests (KLHK) in 2014 shows that Indonesia has about 70 million hectares of degraded land. Utilization of degraded lands is recommended to be combined with sustainable bioenergy development to open opportunity to support the development of sustainable land-based energy and avoid competing with land use for food security.


The MEMR and the Provincial Government of Central Kalimantan, together with the District Government of Pulang Pisau and Katingan, have achieved the first milestone in launching the Sustainable Bioenergy Development Program. On 13 July 2015, the four parties have signed a Memorandum of Understanding (MoU) and Agreement of Cooperation (MCC) to commit in developing sustainable bioenergy program on degraded land with an initial area reserved for bioenergy of approximately 63,000 hectares.

The agreement aims to realize various benefits including, among others:

a. Support the achievement of greenhouse gas (GHG) emissions reduction, the national target of which is 29 percent by 2030;

b. Meet local energy needs;

c. Rehabilitating degraded lands (including peat moss);

d. Provide sustainable prosperity for local communities.


The feasibility study that includes the development site area of approximately 63,000 hectares was completed in January 2016. Discussions and consultations have been conducted with the private sector, both producers of raw materials as well as off-taker (Pertamina and PLN), for biomass and biofuel regarding investment possibilities in the field of bioenergy in the proposed schemes with significant interest.

3. CHALLENGES

From the social aspect, it is important to increase knowledge and instil a solid sense of ownership regarding the sustainable bioenergy program through socialization so that the community will become active players in this program. Social and environmental protection, including the implementation of FPIC principles (free prior informed consent), an integral part of this program, especially in ensuring a sustainable supply chain. These principles include the concept that the voice of the people is higher than other powers and equality to all parties in deciding the implementation of programs in the field of sustainable bioenergy (equality before law), by recognizing community

PHOTO: Bioenergi/Jimmy Wilopo.

rights to land and territories to avoid conflict at a later date.

In general, the development of bioenergy faces four issues:

a. Licensing and land;

b. Economic feasibility;

c. Sustainable welfare for the community; and

d. Technical feasibility.

For licensing issues and land, the MEMR cannot work alone. This institution needs to work together with local authorities and other ministries/institutions, such as KLHK, to ensure the lands that have the potential for developing sustainable bioenergy are not constrained by the licensing and land status. Then, to ensure local access to sustainable prosperity, sustainable bioenergy development management mechanism, and capacity development at the village level to ensure the involvement of local communities and to avoid conflicts of land ownership.

Associated with the technical feasibility and economics, the land needed for sustainable


bioenergy development is quite extensive, the level of difficulty to realize the ambitious targets of this program in the future is very high, even if carried out jointly between the Ministry of ERM, KLHK, and other ministries/institutions. Therefore, this program must be very attractive from a business perspective. Availability of markets, incentives, business feasibility of the scheme, and the technical aspects, relevant local bioenergy species in accordance with the technical machinery, the most productive, efficient, resistant to disease / pests, and soil remediation, are considered important.

4. NEXT STEPS

Some of the activities that should be conducted to ensure sustainable bioenergy development proceeds well from upstream to downstream are as follows:

a. Development of a policy package as enabling conditions for investment in sustainable bioenergy;

b. Business model development to put the program as an investment in a viable and profitable business;

c. Funding for local communities to increase their involvement in a comprehensive package of bioenergy plantations;

d. Assistance to local communities for capacity building in sustainable bioenergy plantation activities, the development of socio-economic institutions, creation of business models, and others; and

e. The study on bioenergy feedstock and market potential availability in targeted provinces.

In 2015, the development of bioenergy began in the Central Kalimantan province. Learning from this experience and the processes applied in Central Kalimantan, sustainable bioenergy development initiatives will be extended to other provinces in Indonesia. Some provinces targeted include was East Kalimantan, South Sumatra, Bangka Belitung, East Nusa Tenggara (NTT), West Nusa Tenggara (NTB), South Sulawesi, Papua and West Papua.

Degraded lands have potential to support sustainable land-based energy development and to avoid land utilization competing for food security.

Land utilization for community/village development: land availability for food, forest/peat moss function shift, land based energy, ecosystem, etc.

Tabel 8. Achievements in 201516 Sustainable Bioenergy Program.

No Achievements in 2015-161 Signing MoU and MCC between the MEMR and Central Kalimantan Provincial Government, Pulang Pisau District

Government and Katingan District Government on 13 July 2015; with an initial reserve area for bioenergy of approximately 63,000 hectares.

2 Establishment of a working group to facilitate the sustainable development of the bioenergy program in Central Kalimantan:1. Establishment of Pulang Pisau District Working Team based on a decree issued by the Pulang Pisau Regent No.

317/2015 in 31 August 2015;2. Establishment of a Katingan District Working Team based on a decree issued by the Katingan Regent No. 050/489 /

KPTS / IX / 2015, dated 10 September 2015;3. Establishment of a Central Kalimantan Facilitation Team based on a Decree issued by the Governor of Central

Kalimantan No. 188.44 / 581/2015 dated 25 September 2015.

3 Conducted a feasibility study concerning sustainable bioenergy development in Central Kalimantan.

4 Socialisation of the sustainable bioenergy development program in Central Kalimantan at the provincial level in September 2015, followed by socialization at the district level in the following month, and then at the sub-district level of Katingan and Pulang Pisau in mid December 2015.

5 Socialisation of the sustainable bioenergy development program at the village level in Katingan and Pulang Pisau in January 2016.

6 The preparation and finalization of MoU and MCC between the Ministry of Energy, KLHK, Provincial Government of East Kalimantan, district governments of East Kutai, Kutai Kartanegara, West Kutai, Paser, and Berau on sustainable bioenergy development program in East Kalimantan.

7 The preparation and finalization of the Joint Regulation of the MEMR and the Minister of Environment and Forestry on energy development in forests to support national energy security.

8 Development and investment coordination meeting on the sustainable bioenergy development program in Central Kalimantan in early June 2016 as a form of facilitating the development of the market potential and investment in the region.

9 Discussions and finalization of Community Forest Plantation backup map in Katingan and Pulang Pisau Districts between the MEMR and the Ministry of Environment and Forestry as a form of support to guarantee supply of bioenergy raw materials locally.

10 Establishment of the socio-economic institutions of community in Pulang Pisau as a form of active participation of local communities on the upstream side of bioenergy plantations.


70 million Ha lands are degraded exploiting degraded landsustainability land-based energy development.

Increase of local communitys prosperity, increase of national electrification ratio, Biofuel mandatory implementation, forest and land rehabilitation intensification, emission reduction/climate change mitigation, preventing forest fires.

WORK PLANS IN 2016

In order to achieve the target as described above, the work planned for 2016 include the following:

Figure 9. Sustainable Bioenergy Development Scheme on Degraded Lands.

Tabel 9. Work Plan 2016 for the Sustainable Bioenergy Program.

No Output Activities1 Development of a package

of enabling conditions for investment in bioenergy.

1. Collaboration between the MEMR and KLHK to allow the development of bioenergy in degraded forest lands and mine closure; and

2. Preparation of legal products that guarantee market or absorption of bioenergy feedstock.

2 Business model development to put the program as an investment in a viable and profitable business.

1. Collaboration with organizations / institutions in developing bioenergy investment business models;

2. Assessment of the potential bioenergy feedstock and economic feasibility at the local level; and

3. Preparation of bioenergy development implementation guidelines at the site level.

3 Funding for local communities to increase their involvement in a comprehensive bioenergy plantations package.

1. Synergy with Director General EBTKE in relation to perspectives and budgetary allocation strategies for the preparation of bioenergy programs in order to support funding for local communities;

2. Synergies with the related ministries/institutions to seek alternative sources of funding; and

3. Synergies with related organizations / donor agencies to seek alternative sources of funding.

4 Facilitate local communities in relation to strengthening capacity related to bioenergy plantation activity, the development of socio-economic institutions, creation of business models, and more.

1. Synergy with organizations / institutions at the national and local levels;2. Assistance to local communities in the development of social and economic

institutions; and3. Assistance to local communities in capacity building related activities on

bioenergy plantations.

5 Facilities for bioenergy feedstock and the market potential available in the target provinces.

1. Collaboration with the targeted provinces to identify lands for bioenergy development;

2. Collaboration with local governments (provincial, district, sub-district and village level) to ensure clean and clear land tenure status; and

3. Study of the cost of provision of fuel and / or electricity generation at the local level.

INCREASE LOCAL COMMUNITY WELFARE

INCREASE NATIONALELECTRIFICATION RATIO

BIOFUEL MANDATORY IMPLEMENTATION

EXPAND FOREST AND LAND REHABILITATION AREA

DECREASE NATIONAL EMISSION / CLIMATE CHANGE MITIGATION

PREVENT FOREST FIRE

REDUCE FOSSIL FUEL IMPORT

The development ofsustainable land-based energy

Being piloting in Central Kalimantan and East Kalimantan

Land utilization for the development of community/ village

Degraded lands have the opportunity to support the development of sustainable plant-based energy and avoid competing utilization of land for food security.

Land availability for food security

Forest/ peat swamp conversion

Land based energy

Ecosystem

And so on

70 million Ha land is degraded

Utilizingdegraded land

Target till 2025:

10 mio Ha


The success of the procurement and management of biodiesel will support the strengthening of national

energy security and will also support Indonesias efforts to contribute actively in reducing the causes and deal with

the impact of climate change.

F. SAFEGUARD AND BIOFUEL INFORMATION SYSTEM

1. OVERVIEW

The importance of NRE became clearer when the MERM set the policy on national mix of biodiesel and bioethanol as outlined in its Regulation No. 12/ 2015 on Biofuel Supply, Utilization and Trading System of alternative fuel. This regulation requires a mix of 15 percent biodiesel (B15) in 2015 with an increase to 30 percent (B30) by 2025. Through this regulation, it is expected to intensify the use of biodiesel to the amount of 5.5 million Kilo Litre (KL) per year by the end of 2015 and it is projected B20 KL will reach 6.48 million by the end of 2016. in addition, this regulation is also expected to monitor the increased availability of crude palm oil (crude Palm oil / CPO) in the global market including the increase/fall of the CPO price.

The success of the procurement and management of biodiesel will support the strengthening of national energy security and will also support Indonesias efforts to contribute actively in reducing the causes, and dealing with the impact, of climate change. Ensuring that the procurement and management of biodiesel is effective, efficient, transparent, accountable, and sustainable, safeguards are necessary in the overall social and environmental value chain of procurement and management of biodiesel. Another indicator is the Biofuel Information System (SIB) to manage the registration information, appointment, determination, procurement monitoring and verification of integrated biodiesel. The

monitoring system for the provision and utilization of biofuel types of biodiesel within the framework of Palm Oil Plantation Fund Management Agency financing is based on the authority of each region and in integrated manner. This is mandated in the MEMRs Regulation No. 29/2015, article 21, paragraphs 1 and 2, on the provision and use of biofuels (biofuels) types of biodiesel within the financing framework by the Palm Oil Plantation Fund Management Agency. The combination of safeguards and SIB framework is expected to support sustainable biodiesel management that will strengthen national energy security.

Until today, records of monitoring and verification of the procurement of Biodiesel B15 have not maintained clear standards, and remain manually managed, and fragmented in various databases across the MEMR, procurement actors and users of biodiesel, such as Pertamina and the Palm Oil Plantation Fund Management Agency. This causes difficulties in gaining data and information with high accuracy, rapid retrieval, precision timing (up to date), transparent, and integrated. Therefore, an online-based information system is needed to close the challenge.



During 2015, several

Final Report - P2EBT Task Force_EN

Documents

Transcript of Final Report - P2EBT Task Force_EN