InvestmentOpportunities_RenewableEnergy_Oct2014ed

INVESTMENTOPPORTUNITIES

Renewable Energy

INDONESIAInvestment Promotion CentreLondon - United Kingdom

Contact us atPhone: +44 207 387 8564

Email: [email protected]: www.bkpm.go.id1

PrefaceIndonesia is the largest economy in Southeast Asia and one of the emerging market economies of the world. Indonesia’s direct investment has grown significantly by 27.9% increase from 2012 to 2013 with the value of $42.2B and also the figure tripled in comparison to the amount in 2009 that was $15B. Foreign direct investment has also increased from USD 24.6B in 2012 to USD 28.6B in 2013, reflecting growing confidence in the economy amongst the investors.

Indonesia’s demographic is the fourth largest in the world with over 240 million people, supported by a youthful working population and also fortunate in being part of ASEAN countries with its population over 600 million people, which is growing rapidly. It is predicted that number of middle class will reach 135 million by 2030, as such it increases the domestic demand for various sectors and will ultimately boost Indonesian economy. Considering the decrease of fossil energy and having abundant sources of alternative energy on the other hand such as renewable ones, therefore Indonesia needs to find alternative ways and develop its potencies.

As deliberate commitment to create a low-carbon economy, the government has introduced a National Energy Policy to grow the contribution of new and renewable energy resources in the national energy mix by 23% in 2025, an increase from 7.95 MTOE in 2010 to 87.4 MTOE. Indonesia’s renewable energy is going to be diversely developed on geothermal, hydropower, biofuel, biomass, wind and solar PV.

In general, in order to attract more investment, the government has provided various incentives such as corporate income tax exemption or reduction, import duty exemption, greater share of ownership, fund facilities, competitive electricity Feed-in Tariffs (FITs) and biofuel usage mandatory. As an addition, the government also provides tax reduction for the sale of low carbon transports powered by renewable sources, including biofuel.

Moreover, the new President Joko Widodo and his “Working Cabinet” are committed to develop massive and fast infrastructural amenities across the country so as to transform Indonesia into the major economic player in the world. Therefore, it will open more opportunities to invest in infrastructure projects, including renewable energy.

Indonesia Investment Promotion Centre (IIPC) London’s office, as a representative office of Indonesia Investment Coordinating Board (BKPM), is always eager to provide excellent service in promoting various investment opportunities, along with responding any investment enquiries and facilitating prospective investors to land their investment in Indonesia.

IIPC London understands the increase of public and private interest in renewable energy development in Indonesia. Thus, we gathered the most important information on the renewable energy sector and compile them in-house to produce the 2nd edition of comprehensive guideline for those who would like to invest the renewable energy sectors in Indonesia.

Finally, we are always delighted to encourage people to invest in Remarkable Indonesia.

IIPC [email protected]

29th October 2014

INDONESIAInvestment Promotion Centre

London - United Kingdom


Email: [email protected]: www.bkpm.go.id

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Table of ContentPreface ............................................................................................................................................................................................... 1

Table of Content ........................................................................................................................................................................... 2

Introduction .................................................................................................................................................................................... 3

INDONESIA ....................................................................................................................................................................... 4

Remarkable INDONESIA ........................................................................................................................................................... 4

Key Statistical Figure of Indonesian Electricity .................................................................................................................. 5

Energy Policy Development Mechanism ............................................................................................................................ 6

Low Carbon Economy and Renewable Energy Development ..................................................................................... 7

Invest in Remarkable Indonesia Renewable Energy ........................................................................................................ 9

Investment Guidelines in Renewable Energy ............................................................................................................. 11

Hydropower and Micro Hydro ............................................................................................................................................... 18

Current Statistics and Future Trends ................................................................................................................................... 19

Potential Locations .................................................................................................................................................................... 22

Government Incentives ................................................................................................................................................... 23

Biomass ............................................................................................................................................................................................. 25

Current Statistics and Future Trends .................................................................................................................................... 26

Potential Sources ........................................................................................................................................................................ 27

Government Incentives ............................................................................................................................................................ 30

Potential Projects ........................................................................................................................................................................ 31

Existing Players.................................................................................................................................................................. 35

Solar PV ............................................................................................................................................................................................. 37





Onshore Wind ................................................................................................................................................................................ 43

Current Statistics ......................................................................................................................................................................... 44



Existing Players and Projects .......................................................................................................................................... 48

Geothermal ..................................................................................................................................................................................... 51




Potential Projects .............................................................................................................................................................. 59

Biofuel ................................................................................................................................................................................................ 61

Current Statistics ......................................................................................................................................................................... 62

Potential Sources ........................................................................................................................................................................ 65



Low Carbon Transport ............................................................................................................................................................... 69

Domestic Market Opportunities ............................................................................................................................................ 70

Regional and Global Market Opportunities ....................................................................................................................... 71

Government Incentives ................................................................................................................................................... 73

Useful Links ..................................................................................................................................................................................... 76




INTRODUCTION





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INDONESIA – an archipelago spanning over 14,300 islands on more than one tenth of the equator between Southeast Asia and Australia. While the islands alone cover an area of 1.9 million square kilometres, the territorial water covers an area of nearly four times the size of the mainland. The main islands of Sumatera, Kalimantan/Borneo, Sulawesi, Java (where the capital city of Jakarta is located), and Papua are home to the majority of the population. As the 4th most populous country in the World with more than 243 million citizens (40% of the ASEAN population), Indonesia is defined as a very diverse nation. Located between two distinguish bio-geographic groups (Asia and Australia) have made the flora and fauna living in Indonesia quite distinctive.

Remarkable INDONESIAPassing six decades of its independence, Indonesia has made tremendous progress-es in its economic development through expansion from traditionally agricultural-based economy towards manufacturing and service-oriented industry. The evolu-tion has successfully made Indonesia as the largest economy in South-East Asia and the 15th largest economy in the world.

Holding a significant role in the global economy, Indonesia will continue its significant involvement in not only regional and global forum, but also other bilateral activities. Had successfully overcome the 2008’s global economic crisis, Indonesia is an emerging global powerhouse that economically strong, politically stable, and reform minded. Economic progress has also brought improvement in prosperity, which can be reflected not only in increasing income per capita, but also in the improvement of various social and other economic indicators, including the Human Development Index (HDI) that was doubled from 1980 to 2010.




Key Statistical Figures of Indonesian ElectricityAs quoted from National Electricity Generation Plan (Rancangan Umum Penyediaan Tenaga Listrik or RUPTL) 2013-2022, the current capacity of power generation in Indonesia is 40.5 GW, which is produced and supplied by State Electricity Company (Perusahaan Listrik Negara or PLN) and Independent Power Producers (IPPs).

Source: RUPTL 2013-2022, PLN, 2013.

With rapid economy and population growth, the electricity demand will continuously increase as estimated around 386.6 TWh by 2022. It means that additional power generation capacity needs to be increased totally by 59,515 MW from 2013 to 2022. This is expected to be supplied by PLN and IPP (incl. unallocated yet), with the major role of IPP until 2022.

Source Year Total2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

PLN 2,518 2,908 2,013 2,919 1,869 1,234 55 90 2,003 1,244 16,852IPP 314 878 729 2,003 1,506 6,838 6,410 3,948 1,391 1,535 25,552Unallocated 96 1,026 2,084 2,555 2,689 3,435 1,954 3,274 17,112Total 2,831 3,786 2,838 5,948 5,459 10,627 9,154 7,473 5,348 6,053 59,515


Although the government has successfully increased the nationwide electrification ratio from 62.3% in 2008 to 75.9% in 2012, yet more power plants need to be built in order to meet the national electricity demand.


Region 2008 2009 2010 2011 2012 Indonesia 62.3% 65.0% 67.5% 71.2% 75.9% Java - Bali 68.0% 69.8% 71.4% 72.3% 77.9% Sumatra 60.2% 60.9% 67.1% 69.4% 77.4% Kalimantan 53.9% 55.1% 62.3% 64.3% 76.7% Sulawesi 54.1% 54.4% 62.7% 66.6% 67.5% Eastern Indonesia 30.6% 31.8% 35.7% 44.2% 54.0%

Region PLN IPP Total Java - Bali 26,815 MW 5,000 MW 31,815 MW Non Java – Bali • Sumatra • Eastern Indonesia

7,222 MW 1,496 MW 8,718 MW 4,533 MW 666 MW 5,199 MW 2,689 MW 830 MW 3,519 MW

Total 34,037 MW 6,496 MW 40,533 MW





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Energy Policy Development Mechanism

National Energy Council (Dewan Energi Nasional or DEN)DEN is chaired by the President and daily chaired by Minister of Energy and Mineral Resources (EMR) with main task to compose the National Energy Policy (Kebijakan Energi Nasional or KEN). Members of DEN consist of related ministers (Minister of Finance, State Minister of National Development Planning, Minister of Transportation, Minister of Industry, Minister of Agriculture, Minister of Research and Technology and Minister of Environment) and also other stakeholders, such as academicians, leaders of state owned businesses that are related to energy provision, consumer and technology experts. DEN is the body that holds authority of approving the General Design of National Energy (Rancangan Umum Energi Nasional or RUEN). The formation of DEN and its objectives are based on Government Regulation No. 30 of 2007.

National Energy Policy (Kebijakan Energi Nasional or KEN)KEN is the main policy of energy development in Indonesia which is composed and supervised by DEN. It provides targets of energy development across sectors and regions in Indonesia. Renewable energy is also covered in KEN, stating that New and Renewable Energy should contribute 23% by 2025 and 31% by 2050 of the target energy mix.




General Design of National Energy (Rancangan Umum Energi Nasional or RUEN)RUEN is a more specific guideline in developing the nation’s energy security. The design is based on KEN and composed by a dedicated drafting team led by Director Generals from various related ministries. The drafting team should also take input from general public, which are Energy Associations, Higher Education institutions and energy experts. The final draft of RUEN needs to be approved by DEN before being put into practice. RUEN formulation, as well as RUED-P & RUED-K (or Provincial and Municipal levels of RUEN), are regulated by President Regulation No. 1 of 2014.

*)Note that, the Directorate General of New, Renewable and Energy Conservation (DG NREC), which sits under the Ministry of Energy and Mineral Resources (EMR), is the chief regulator in the renewable energy sector.

Low Carbon Economy and Renewable Energy DevelopmentIndonesia is striving to create a low carbon economy and has taken a lead on committing to cut carbon emissions by 26% from business as usual case by 2020, without international support, and up to 41% with the help of international donors. Rising coal and oil prices and the commitment to green technology are driving the government’s national energy policy to increase the use of natural gas and renewable energy resources.

Current estimates—below, compiled by Indonesia Ministry of Energy and Mineral Resources in 2013 and 2014—placed total renewable energy installed capacity at 8.1 GW. In contrast, it is calculated that the total renewable energy potential within the country is 154.9 GW, and thus the percentage of undeveloped renewable energy is approximately 95%.

The National Energy Council, led by the President, has created a master plan to lower the na-tion’s dependence on oil and to expand coal, along with new and renewable energy. Indone-sia has worked out the Target Energy Mix, which calls for increasing the contribution of new and renewable energy resources to 23% by 2025 of the overall energy mix. It is projected that the contribution of these sources would significantly increase from only 7.95 MTOE in 2010 to 87.4 MTOE in 2025.

Figures below represent the details of the Target Energy Mix in Indonesia.

Renewable Energy Sources in Indonesia

Source: 1Ministry of EMR, 2014. 2DG NREC, Ministry of EMR, 2013.

Source Capacity1 7.82%

1 4.63%2 17.22%

1 1.41%2 2/day2 0.94M W





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Target Energy Mix (2010 – 2025)

New and Renewable

Breakdown of New and Renewable Energy Contribution (2015-2025)

Source: National Energy Council, 2014.




Installed Capacity of Renewable Energy (2008 - 2012)

Source: DG of Electricity, Ministry of EMR, 2013.

Invest in Remarkable INDONESIA Renewable EnergyWith GDP reached almost US$ 1T and Foreign Direct Investment (FDI) rose by 16.5% to US$ 28.6B in 2013, Indonesian economy has grown steadily above the world average in the last 10 years.

Indonesia welcomes and encourages FDI from various business sectors such as infrastructure, renewable energy, value-added manufacturing industries, as well as tourism and creative industries. The main regulatory framework surrounding investment is Law No. 25 of 2007 on Investment.

As can be seen from graphs provided in previous page generated from data collected by Ministry of EMR, installed capacity of electricity generation from renewable resources is increasing steadily since 2010. Nevertheless, as demand for energy steadily increasing, for more than a decade, Indonesian economy is still highly dependence on carbon-based energy like oil, coal and natural gas, for its energy generation.

Therefore, many incentives have been introduced to attract investment in the renewable energy.





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Minimum Investment ProjectBased on Chairman of Indonesia Investment Coordinating Board (BKPM) Regulation No. 12 of 2013, minimum investment value for FDI is Rp 10 Billion (approx. US$ 1 Million) with minimum paid-up capital of Rp 2.5 Billion (approx. US$ 250,000.00).

Import Duty ExemptionBased on Minister of Finance (MoF) Regula-tion No. 76/PMK.011/2012, all green-field or expansion investment projects are grant-ed import duty exemption on imported machineries, equipment and raw materials (for 2 years) for the company usage during initial production period as long as they are not or inadequately produced in Indonesia.Share Ownership

As stipulated on Law No. 30 of 2009 on Electricity, both public and private sector are allowed to participate on power generation, transmission, distribution, sales of electricity. Based on the recent Presi-dent Regulation No. 39 of 2014 (popularly known as Negative Investment List), foreign investors are allowed to invest in small scale power generator (1-10 MW) projects with maximum share ownership of 49%. Meanwhile, for greater scale (>10 MW), 95% foreign share ownership (yet 100%, if under Public Private Partnership scheme during concession period) are allowed.

Biofuel industry is open 100% for foreign investors. Meanwhile, maximum share ownership of 95% is allowed if it is built integrated with its own plantation.

Tax AllowanceBased on Government Regulation No. 52 of 2011 and MoF Regulation No. 144/PMK.011/2012, investment in new and renewable energy is eligible for income tax facilities of:

Tax HolidayBased on MoF Regulation No. 130/PMK.011/2011, corporate income tax exemption for the period of 5 to 10 years from the start of commercial production is granted for company with minimum investment project value of Rp 1 Trillion (approx. US$ 100 Million) in 5 priority “pioneer industries” including renewable energy.

• A reduction in net income of up to 30% of the amount invested, pro-rated at 5% for six years of the commercial produc-tion, provided that the assets invested are not transferred out within six years.

• Acceleration of depreciation & amorti-sation for building and non-building.

• A reduction of income tax on dividends paid to non-residents to 10% or lower rate according to double taxation avoidance agreement.

• Extension of tax losses carry forwards for 5 years and up to 10 years (if meet certain criteria).Biofuel Usage Mandatory

Based on Ministry of Energy and Mineral Resources Regulation No. 20 of 2014, every trading company and user of gasoline and diesel are required to use locally-sourced biofuel for certain percentage gradually.

Geothermal Fund Facility (GFF) MoF Regulation No. 3 of 2012 stated that the Government provides GFF which is managed by the Centre of Government Investment (Pusat Investasi Pemerintah or PIP) to provide loans or financial support for data collection of new potential geothermal sites during preliminary survey, feasibility study or exploration activities.




Feed-in Tariff (FIT)FIT is a policy mechanism which obligates State Electricity Company (PLN) as the off-taker under a Power Purchase Agreement (PPA) to purchase the electricity—above the average consumer rates—generated from renewable sources (hydropower, biomass, geothermal, solar PV or wind power) owned by Independent Power Producers (IPPs). FIT under PPA can also be negotiated with PLN (subject to approval from Ministry of EMR) if IPP requires higher rates.

Investment Guidelines in Renewable EnergyThe diagrams in the next page are typical step by step investment guidelines designed for investors who would like to invest in renewable energy in Indonesia. Three guidelines under sections of Various Renewable Energy (applied to hydro, biomass, wind, solar PV), Geothermal and Biofuel are provided in the following page.





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HYDROPOWER & MICRO HYDRO





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Current Statistics And Future TrendsCurrently, one of Indonesia’s main electricity sources is generated from hydropower plants with total capacity of 4 GW. Independent Power Producer (IPP) and Private Power Utility (PPU) are contributing around 1/8 of Indonesia’s power generation from hydro power. More detailed figures can be seen on the following chart. Based on National Electricity Generation Plan (RUPTL) 2013-2022 published by PLN, Indonesia is planning to develop further 3.7 GW capacity of hydro power plant from 2013 to 2022, managed by PLN itself, IPP and PPU.

Hydro Power Plant Installed Capacity (2008-2012)

Source: Electricity Statistics 2008-2012, DG Electricity, Ministry of EMR, 2009-2013.

Apart from hydro power in medium and large scale, the government also encourages the development of smaller scales of hydro power, such as mini and micro hydro. The total capacity of mini and micro hydro soared tenfold from 2008 to 2012, from only 6.61 MW to 68.17 MW respectively, as illustrated on the following page. IPP and PPU contributed around half of the whole capacity in this sub-sector. Despite this rapid development, it is yet below the target of Ministry of EMR in which they are planning to expand micro hydro into 1.4 GW by 2025.




Mini & Micro Hydro Power Plants Installed Capacity (2008-2012)


Development Plan of Mini & Micro Hydro Power Plant (2010-2025)

Source: Ministry of EMR, 2012.

Year Units 2010 2011 2012 2013 2014 2015 2020 2025Capacity MW 245 279 314 348 383 417 760 1,425Production GWh 1,717 1,958 2,199 2,440 2,681 2,922 5,326 9,986Investment Million $ 735 699 785 696 765 834 1,140 1,781Production cost Million $ 258 294 330 366 402 438 533 749Emmision reduction Ton of CO2 192,815 219,888 246,961 274,033 301,106 328,179 598,120 1,121,475Eletrifed houses Units 1,470,000 1,674,000 1,884,000 2,088,000 2,298,000 2,502,000 4,560,000 8,550,000





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Potential LocationsIndonesia has approximately 75.6 GW electricity generation potential from hydro power. Yet, with only 4 GW installed capacity in 2012, Indonesia offers opportunities for hydro pow-er plant development in various locations in Indonesia. The table below shows electricity generation potential from large and small scale hydro power based on island/region, followed by mapping of hydro power potentials from various areas in Indonesia.

Electricity Generation Potential from Hydropower


Mapping of Hydro Power Potentials


Potential Implementation Potential Implementation Potential Implementation1 Sumatra 16,100.00 1,154.00 281.76 83.44 16,381.76 1,237.442 Java 12,050.00 2,012.50 222.02 212.32 12,272.02 2,224.823 Kalimantan 5,999.50 30.00 277.75 31.27 6,277.25 61.274 Sulawesi 14,550.00 352.00 167.56 118.05 14,717.56 470.055 Bali & Nusa Tenggara 4,900.00 0.00 31.64 12.25 4,931.64 12.256 Moluccas & Papua 21,057.00 23.00 32.78 4.67 21,089.78 27.67

74,656.50 3,571.50 1,013.51 462.00 75,670.01 4,033.50

Large Scale (> 10 MW) Small Scale (< 10 MW) Total (MW)IslandNo

Total




Government IncentivesFeed-in Tariff (FIT)State Electricity Company (PLN) is obliged to purchase electricity generated from hydro power plants under the Power Purchase Agreement (PPA), as regulated in Ministry of EMR Regulation No. 22 of 2014, with the following Feed-in Tariff (FIT):

Notes: 1. FIT for the purchase of electricity from power plants with capacity of more than 10 MW is negotiated with PLN and subject to approval from Minister of EMR.2. Utilising existing lake, dam and/or irrigation channel.3. MV = Medium Voltage (1000 Volts – 36 Kilovolts).4. LV = Low Voltage (50 Volts – 1000 Volts).

FTP-2 is PLN’s effort to rapidly build large scale geothermal, hydropower and coal power plants to address the increasing demand for electricity in Indonesia, as stated in President Regulation No. 4 of 2010 jo. No. 48 of 2011 and Ministry of ERM Regulation No. 15 of 2010 jo. No. 1 of 2012 jo. No. 21 of 2013. Under FTP-2 scheme, electricity generated by IPPs will be purchased by PLN as agreed on PPA. Moreover, the government will issue Business Viability Guarantee Letter (BVGL) stating that IPPs will be protected from payment default regardless the risk event.

Through FTP-2, Indonesia is expected to further elevate its electricity generation capacity by 17,918 MW by 2020, including 1,803 MW from hydro power plants. List of hydro power plant development projects are listed on the following table.

Fast Track Programme Phase 2 (FTP-2)

Hydro Power Plant Development Projects based on FTP - 2


Province Owner Project NameCapacity (MW)

Operation

Nanggroe Aceh Darussalam

IPP Peusangan-‐4 83 2020

Upper Cisokan PS 4 x 260 2017

Jatigede 2 x 55 2017

Lampung IPP Semangka 56 2017

Bonto Batu 110 2019

Malea 90 2020

West Sumatra PLN Masang-‐2 55 2020

PLN Asahan III 174 2018

Hasang 40 2018

Wampu 45 2015

West Java PLN

South Sulawesi IPP

North SumatraIPP

Y1-Y8 Y9-Y20 Y1-Y8 Y9-Y20 Y1-Y8 Y9-Y20 Y1-Y8 Y9-Y20

1Java, Bali & Madura

967.5 675 1,143.00 693 1,075.00 750 1,270.00 770

2 Sumatra 1,064.25 742.5 1,257.30 762.3 1,182.50 825 1,397.00 847

3Kalimantan & Sulawesi

1,161.00 810 1,371.60 831.6 1,290.00 900 1,524.00 954

4West & East Nusa Tenggara

1,209.34 843.75 1,428.75 866.25 1,343.75 937.5 1,587.50 962.5

5Moluccas & North Moluccas

1,257.75 877.5 1,485.90 900.9 1,397.50 975 1,651.00 1,001.00

6Papua & West Papua

1,548.00 1,080.00 1,828.80 1,108.80 1,720.00 1,200.00 2,032.00 1,232.00

No Region

Feed-in Tariff (IDR /KWh) for Hydro Power Plant up to 10 MW1

Utilising Existing Structure2 Not Utilising Existing Structure

MV3 LV4 MV LV





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BIOMASS





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Current Statistics and Future TrendsInstalled capacity of electricity generation from biomass in Indonesia steadily rose from 935.51 MWe in 2005 to 1,709 MWe in 2010 as depicted in the following chart. Having thoroughly known the abundant potential of agricultural and forestry residues as well as municipal waste, electricity generation sourced from biomass is predicted to play a major part in energy mix. For this reason, the government, through its National Energy Policy, aims to increase the biomass contribution to the national energy mix by 5.1% or 19 MTOE in 2025. In other words, biomass will contribute more than 20% of electricity emanated from all new and renewable sources as shown on the following table.

Electricity Generation from Biomass (2005-2010)


Biomass Contribution towards National Energy Mix (2015-2025)

MTOE % MTOE % MTOE %

Biomass 4 2.00% 7 2.30% 19 5.10%Overall New and Renewable Energy

22 10.00% 49 17.00% 87 23.00%

National Energy Mix 215 100.00% 290 100.00% 380 100.00%

2015 2020 2025





Potential SourcesAs a country with large forestry and agriculture industry, Indonesia has a huge potential for harnessing biomass to produce electricity. According to the research by Agency for the Assessment and Application of Technology (Badan Pengkajian dan Penerapan Teknologi or BPPT) in 2012 on 5 sources: plymills, sawmills, sugar mills, palm oil mills and rice mills; biomass potential is estimated to reach 1,160 MWe. Another research by a German company, ZREU (presented on the following page) further showed that Indonesia can generate more than 460 GJ per year derived from 146.7 Million Tons of feedstock from various residues. Furthermore, in the light of a huge population (more than 240 million people), Indonesia could positively benefit from enormous municipal waste to generate immense amounts of electricity.

Below is the mapping of the potential source of agro-based biomass in Indonesia.

Potential Source of Agro-based Biomass in Indonesia

Source: Indonesia Agency for the Assessment and Application of Technology (BPPT), 2012.

Note: the Directorate General of New, Renewable and Energy Conservation has created an interactive map of biomass sources from various locations in Indonesia which can be accessed from this link:http://aplikasi.ebtke.esdm.go.id/biomass





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Sustainable forestry residues in Indonesia come from variable-sized wood from forests (i.e. natural forests, plantations and community forests that commonly produce small-diameter logs used as firewood by local people), rubber wood and wood residues from logging or wood industry wastes.

Forestry Residues

The major agriculture residues to be considered for power generation in Indonesia are from palm oil, sugar cane and rice. Currently, 67 sugar mills are in operation in Indonesia and eight more are under construction or planned. The mills range in size of milling capacity from less than 1,000 Tons to 12,000 Tons of sugar cane per day. Current sugar processing industry in Indonesia produces around 8 MT bagasse and 11.5 MT canes top and leaves daily.

Meanwhile, there are 39 palm oil plantations and mills currently operating in Indonesia, and at least eight new plantations are under construction. Most palm oil mills generate combined heat and power from fibres and shells, making the operations energy self–efficient. However, the use of palm oil residues can still be optimised in more energy efficient systems.

Agriculture Residues

Statistics of Biomass Sources from Forestry and Agriculture Industry

Biomass Sources

Main Region / Island

Production [million t/year]

Technical Energy

Potential [million GJ/year]

Remarks

Rubber wood

Sumatra, Kalimantan, Java

41 (replanting)

120 Small logs ∅ <10 cm, big and medium logs are used as fire wood in brick and roof tile industry: price 20,000 – 30,000 IDR/m³.

Logging residues

Sumatra, Kalimantan

4.5 19

Sawn timber residues

Sumatra, Kalimantan

1.3 13 Residues of the factories are often used as fire wood by local communities, residues available for free.

Plywood and veneer production residues

Kalimantan, Sumatra, Java, Papua, Moluccas

1.5 16

Sugar residues

Java, Sumatera, South Kalimantan

Bagasse: 10 cane tops: 4 cane leaves:

9.6

78 Bagasse is generally used in sugar factories (90 %). The use of cane tops and leaves needs to be investigated.

Rice residues

Java, Sumatra, Sulawesi, Kalimantan, Bali/Nusa Tenggara

Husk: 12 bran 2.5 stalk: 2

straw: 49

150 Stalk and straw are generated at the field and generally burnt, in some areas used for feeding or raw material for paper industry. Husks often burnt uncontrolled.




Source: ZREU, 2000.

Other potential source of biomass energy can also come from municipal wastes. The quantity of city or municipal wastes in Indonesia is comparable with other big cities in the world. Most of these wastes are originated from household. At present, the wastes are either burned by each household or collected by the municipalities and later transported to a waste disposal site.

Although the government is providing facilities to collect and clean all the wastes, due to the increasing number of populations, most of big cities in Indonesia had been suffering from the increasing problem of waste disposals. Inadequate number of waste treatment facilities and inadequate waste management technology open new opportunities for investment.

Estimated biomass sources potential from ten largest Municipal (City/Regency) wastes in Indonesia is as follows.

Municipal Wastes

Biomass Sources from Municipal Wastes

No City or Regency Biomass Potential from Municipal Waste

(MW) General Potential Technical Potential

1 Bandung 221.98 58.51

2 Bogor 166.3 41.77

3 Bekasi 161.07 122.49

4 Tangerang 139.79 14.25

5 Jakarta 128.08 -

6 Semarang 71.22 19.22

7 Surabaya 42.96 30.85

8 Medan 32.63 22.09

9 Palembang 15 12.33

10 Pekanbaru 13.9 6.9

Biomass Sources

Main Region / Island

Production [million t/year]

Technical Energy

Potential [million GJ/year]

Remarks

Rubber wood

Sumatra, Kalimantan, Java

41 (replanting)

120 Small logs ∅ <10 cm, big and medium logs are used as fire wood in brick and roof tile industry: price 20,000 – 30,000 IDR/m³.

Logging residues

Sumatra, Kalimantan

4.5 19

Sawn timber residues

Sumatra, Kalimantan

1.3 13 Residues of the factories are often used as fire wood by local communities, residues available for free.

Plywood and veneer production residues

Kalimantan, Sumatra, Java, Papua, Moluccas

1.5 16

Sugar residues

Java, Sumatera, South Kalimantan

Bagasse: 10 cane tops: 4 cane leaves:

9.6

78 Bagasse is generally used in sugar factories (90 %). The use of cane tops and leaves needs to be investigated.

Rice residues

Java, Sumatra, Sulawesi, Kalimantan, Bali/Nusa Tenggara

Husk: 12 bran 2.5 stalk: 2

straw: 49

150 Stalk and straw are generated at the field and generally burnt, in some areas used for feeding or raw material for paper industry. Husks often burnt uncontrolled.

Coconut residues

Sumatra, Java, Sulawesi

Shell: 0.4 husk: 0.7

7 Residues are generated decentralised and usually left on the plantation field Largely used as fire wood and for the production of charcoal.

Palm oil residues

Sumatra, Kalimantan, Sulawesi, Maluku, Nusa Tenggara, Papua

Empty fruit bunches: 3.4

Fibres: 3.6 palm shells: 1.2

67

Palm shells and fibres are common fuel sources, EFB are generally incinerated.

Notes: 1. General Potential refers to municipal waste that is yet scattered over various places.2. Technical Potential refers to municipal waste that has been gathered in designated areas, that is, landfill sites.

Source: DG NREC, Ministry of EMR, 2014.





30

Notes: 1. FIT for the purchase of electricity from power plants with capacity of more than 10 MW is negotiated with PLN and subject to approval from Minister of EMR.2. MV = Medium Voltage (1000 Volts – 36 Kilovolts)3. LV = Low Voltage (50 Volts – 1000 Volts)4. Zero Waste is waste management technology that allows the processed waste to be fully reused through the process of gasification or incineration. 5. Sanitary landfills are sites that are used to isolate waste so as to keep the environment safe.

Government IncentivesFeed-in TariffState Electricity Company (PLN) is obliged to purchase electricity generated from biomass power plants under the Power Purchase Agreement (PPA), as regulated in Ministry of Energy and Mineral Resources Regulation No. 4 of 2012 and No. 19 of 2013, with the following Feed-in Tariff (FIT):

No Region

Feed-in Tariff (IDR / kWh) for Biomass Power Plant up to 10 MW 1

‘Zero Waste' ‘Sanitary Landfill’ Crop or Forestry-based Biomass

MV LV MV LV MV LV

1 Mollucas and Papua 1,450.00 1,798.00 1,250.00 1,598.00 1,267.50 1,722.50

2 Sulawesi 1,450.00 1,798.00 1,250.00 1,598.00 1,170.00 1,590.00

3

West Nusa Tenggara and East Nusa Tenggara

1,450.00 1,798.00 1,250.00 1,598.00 1,170.00 1,590.00

4 Kalimantan 1,450.00 1,798.00 1,250.00 1,598.00 1,170.00 1,590.00

5 Sumatera 1,450.00 1,798.00 1,250.00 1,598.00 975.00 1,325.00

6 Java, Madura and Bali 1,450.00 1,798.00 1,250.00 1,598.00 975.00 1,325.00




Potential Projects

Solid Waste Treatment and Final Disposal Management in Bogor Area, West Java

Location West Java Province.

Project

Background

Solid waste management in final waste disposal site (TPPAS) in the Bogor City, Bogor Regency and Depok City is still using open landfill. Solid waste from Bogor City and Bogor Regency recently processed at TPPAS Galuga based on an agreement between Government of Bogor City and Bogor Regency. This agreement has already extended for many times and planned to be finished in 2015. Therefore, Government of West Java Province has planned to develop and

manage a newly TPPAS Nambo through PPP scheme. TPPAS Nambo is located in Nambo Village Kelapanunggal Subdistrict, Bogor Regency, with total area of 55 Ha (40 Ha owned by National Forest Company and 15 Ha owned by Local Government). The current waste composition processed at TPPAS Galuga as on the table above.





32

Scope of Works

The overall of this project implementation in TPPAS Nambo consisted of infrastructure development as follows: intermediate treatment facility (ITF) and sanitary landfill specification with air, water and land pollution control, insect vector and odour control. All infrastructures should comply with the prevailing environmental law.

Government Support

Land acquisition, access road, sanitary landfill, leachate treatment plant, supporting facility and building.

Capacity

Operational hours: 8 hours/day, 365 days/year. Operational capacity: 1000 Ton/day. Refuse derived fuel (RDF) with capacity of 1000 Ton consists of 3 modules. Compost processing unit with capacity of 100 Ton consists of 1 module. Output target:

- Compost 45.4 Ton per day. - RDF 408.6 Ton per day.

Estimated Project Cost and

Revenue

Investment cost: ± US $ 60 Million. Main income: Tipping fees and product sales.

- Tipping fees estimation: US $ 12/Ton. - EIRR: 41.94%, IRR: 12.5 %, with Government support 60 %. - Other potential operating revenues (waste/biomass to energy, recycling products).

Project Implementation

Schedule

H2 2013: Finalisation of Final Business Case. 2015: Pre-Qualification. 2015: Bidding & Evaluation. 2015: Negotiation with Preferred Bidders. 2015: Contract Award.

Contracting Agency

West Java Provincial Government PIC: Mr Uus Mustari Head of West Java Regional Solid Waste Management (BPSR Jawa Barat) Jl. Kawaluyaan Indah No. 4 Bandung 40286 West Java - INDONESIA Phone: +62 22 7332078, Fax: +62 22 7332078, Email: [email protected]




Solid Waste Treatment and Final Disposal Managementin Surakarta, Central Java

Location Surakarta City, Central Java Province.

Project

Background

The Final Waste Disposal Site (TPPAS) Mojosongo, Surakarta, is technically over-loaded. TPPAS Mojosongo consists of 17 Ha land, 13 Ha of the area are for waste disposal, 2 Ha for office and road infrastructure, 1 Ha for graveyard and 1 Ha for leachate treatment that have been operated since 1987. Government of Surakarta City is constrained by the difficulty of obtaining new location, financial limitation and also the service demand of society. Thus, Government of Surakarta City proposed PPP project to solve the city’s problem.

Scope of Works

This project plans to reduce the solid waste volume at the new TPPSA Putri Cempo and conduct proper waste management system. The concept is to integrate solid waste management (waste prevention, recycling and composting, and combustion and disposal in properly designed, constructed, and managed landfills) for Surakarta City. The private partner shall responsible to perform the solid waste project, including finance, engineering, design, construction, operation, and maintenance based on the cooperation agreement as well as prevailing Indonesian law. The technical profile of this project comprises of two options of waste management named Sanitary Landfill or

Anaerobic Digestion.





34

Scope of Works

This project plans to reduce the solid waste volume at the new TPPSA Putri Cempo and conduct proper waste management system. The concept is to integrate solid waste management (waste prevention, recycling and composting, and combustion and disposal in properly designed, constructed, and managed landfills) for Surakarta City. The private partner shall responsible to perform the solid waste project, including finance, engineering, design, construction, operation, and maintenance based on the cooperation agreement as well as prevailing Indonesian law. The technical profile of this project comprises of two options of waste management named Sanitary Landfill or

Anaerobic Digestion.

Estimated Project Cost US$ 30.00 Million

Project Implementation

Schedule

Pre-Qualification, Bidding & Evaluation, Negotiation with Preferred Bidders and Contract Award is scheduled to be undertaken in 2015.

Contracting Agency

City Government of Surakarta PIC: Mr Zubaidi HS Head of Investment and Financial Division, Surakarta Development Planning Agency Jl. Jenderal Sudirman No.2 Surakarta, Central Java, INDONESIA Phone: +62 271 655277, Fax: +62 271 655277, Email: [email protected]




Existing Players

Sara Rasa Bio Mass

SaraRasa specialises in providing industrial grade pellets to power plants worldwide. Its operation is located in Riau province, Indonesia and runs 24 hours, 7 days a week, producing 50,000 tons of pellets per annum. This strategic location and uninterrupted production gives SaraRasa a great advantage in the biomass markets.

Website : www.sararasa.comAddress : 161 Lavender Street, #02-04 Lavender Place, Singapore 338750Phone : +65 62927582Email : [email protected]

GE

In terms of renewable energy, last year GE has signed a Letter of Intent with PLN to develop a pilot biomass power plant in Sumba that will use wood chips as fuel. The power plant will use GE’s Integrated Biomass Gasification solution to generate 1 megawatt (MW) of electricity to remote areas in Indonesia.

Website : www.ge.com/id/in Address : BRI 2 Tower, 16 th floor, Jl. Jend. Sudirman Kav 44-46, Jakarta 10210 Phone : +62 21 573 0500Fax : +62 21 574 7117

PT. Indonesia Biomass Resources

PT Indonesia Biomass Resources distributes palm kernel shell. The company was founded in 2010 and is based in Jakarta, Indonesia. PT Indonesia Biomass Resources operates as a subsidi-ary of Bioenergy Resources Co., Ltd.

Address : 8th Floor, Suite 888, Palma One Building, Jalan H.R. Rasuna Said Block X-2 Kav 4, Jakarta, 12950Phone : +62 21 527 2562Fax : +62 21 527 2565





36




SOLAR PV





38

Current Statistics and Future TrendsIndonesian history of solar energy utilisation with solar photovoltaic (solar PV) technology has been introduced and developed since the end of 1970s, especially to meet the electricity demand in rural or remote areas which are not connected to national power grid owned by PLN. Consequently, power generation and distribution are operated by the so called Private Power Utility (PPU).

Installed capacity of electricity generation from solar PV in Indonesia was 4.09 MW in 2012, increased from 0.19 MW in 2010. During the same period, the number of electricity generated also grew from 0.50 GWh to 2.85 GWh originated from all solar PV operated by PLN. These figures can be seen on the charts below. With the potential of solar energy that Indonesia has, electricity generation from solar PV is expected to reach 1,016 GWh with the capacity of 580 MW, as shown in the following table. Pertaining to the facts above, Indonesia Solar PV energy, therefore, still has plenty rooms for development.

Solar PV Installed Capacity (2008-2012)

Notes: PPU: Private Power Utility.Source: Electricity Statistics 2008-2012, DG Electricity, Ministry of EMR, 2009-2013.




Electricity Generation from Solar PV (2008-2012)


Solar PV Capacity and Electricity Generation Target (2010-2025)


Year Units 2010 2011 2012 2013 2014 2015 2020 2025Capacity MW 245 279 314 348 383 417 760 1,425Production GWh 1,717 1,958 2,199 2,440 2,681 2,922 5,326 9,986Investment Million $ 735 699 785 696 765 834 1,140 1,781Production cost Million $ 258 294 330 366 402 438 533 749Emmision reduction Ton of CO2 192,815 219,888 246,961 274,033 301,106 328,179 598,120 1,121,475Eletrifed houses Units 1,470,000 1,674,000 1,884,000 2,088,000 2,298,000 2,502,000 4,560,000 8,550,000





40

Potential LocationsIndonesia is geographically located in the equatorial regions with relatively high solar radiation intensity of about 4.5 KWp/m2 per day in all parts of Indonesia. To put it simply, every 1 KWp solar PV can produce 4.5 KWh of electricity per day.

Mapping of potential source of solar PV, solar PV capacity and electricity generation target, and electricity generation from solar PV are as follows.


Government IncentivesFeed-in TariffState Electricity Company (PT PLN) is obliged to purchase electricity generated from solar PV power plants under the Power Purchase Agreement (PPA), as regulated in Ministry of EMR Regulation No. 17 of 2013, with the following Feed-in Tariff (FIT):

No Region

Feed-in Tariff (Cent USD / kWh) for Solar PV Power Plant

Max. Tariff > 40% local components

1 Moluccas and Papua 25.00 30.00

2 West Nusa Tenggara and East Nusa Tenggara 25.00 30.00

3 Kalimantan 25.00 30.00

4 Sulawesi 25.00 30.00

5 Sumatera 25.00 30.00

6 Java, Madura and Bali 25.00 30.00




Existing Players

PT. Surya Utama Putra

Located in Bandung (West Java), the Company has been producing solar panel and other re-newable energy products such as refrigerator, pats, off grid, grid connected and multimedia stall. With the vision to utilise renewable energy for people’s welfare.

Website : http://www.suryautamaputra.com/Address : Jl. Raya Bandung – Garut, Km. 23, Rancaekek, Kab. Bandung 40394Phone : +62 22 7798316Fax : +62 22 7792082

PT LEN Industri

LEN Industry has developed Solar Panels since 1997. Its products have been installed in re-mote areas of Indonesia with more than 3.5 MW generated. LEN is currently the only manu-facturer that is capable of producing solar panels in Indonesia, which is the main element of energy generation from solar energy.

Website : www.len.co.id Address : Jl. Soekarno Hatta 442, Bandung 40254Phone : +62 22 5202682Fax : +62 22 5202695

PT Solar Power Indonesia

Solar Power Indonesia is a foreign company based in Bali and established to provide affordable and economical renewable energy solutions for remote communities, resorts,villas, hotels, and businesses throughout Indonesia and Asia. Products provided are combinations of solar panels (photovoltaic panels), wind generators, hydro generators, energy storage sys-tem, water generators, backup power systems, and energy efficient products. These solutions, provided by SPI’s accredited ‘Renewable Energy’ engineers, uniquely optimise the environmental conditions in which we live; abundant sunshine, ample winds, and flowing streams.

Website : http://www.solarpowerindonesia.com/Address : Jl. Sunset Road No. 18X, Kuta, BaliPhone : +62 361 778802





42




ONSHORE WIND





44

Current StatisticsInstalled wind power plant capacity in Indonesia was 0.94 MW in 2012 as displayed in the chart below. To date, the biggest capacity of wind turbine installed is 100 KW implemented by PLN and Ministry of EMR in Selayar Island, South Sulawesi. With the wind speed roughly up to 7.5 m/s,Indonesia is suitable for small to medium scaled wind turbines. Based on National Electricity Generation Plan 2013-2022, Indonesia is seeking an additional capacity of 280 MW from 2013 to 2022.

Wind Power Plant Installed Capacity (2008-2012)

Note: PPU: Private Power Utility.Source: Electricity Statistics 2008-2012, DG Electricity, Ministry of EMR, 2009-2013.




Potential LocationsMapping of potential electricity generated from wind power per region and potential onshore wind locations are illustrated on the following diagrams.

Wind-Mapping based on Potential Electricity Generated

Source: Rachman, A., 2012.

Potential Onshore Wind Locations

No Village/Districts Provinces Period of Measurement

Average Speed at Elevation

of 24m (m/s)

Wind Turbine Size

1 Bulak Baru, Jepara Central Java 1995 4.6 Medium Scale

2 Karimunjawa, Jepara Central Java 1996 3.6 Medium Scale

3 Bungaiya, Selayar South Sulawesi 1996 4.9 Medium Scale

4 Station Inderaja Lapan Pare-pare South Sulawesi 1996 3.53

Medium Scale

5 Dongin, Banggai Central Sulawesi 1996 2.8 Small Scale

6 Bulungkobit, Banggai Central Sulawesi 1996 2.2 Small Scale

7 Palu Central Sulawesi 1991-1994 2.85 Small Scale

8 Paudean, Bitung North Sulawesi 1995 2.8 Small Scale

9 Libas, Minahasa North Sulawesi 1995 3.23 Medium Scale

10 Dsn. Doropeti, Dompu

West Nusa Tenggara 1995 3.7

Medium Scale

11 Bajo Pulau, Bima West Nusa Tenggara 1995 3.7

Medium Scale





46



of 24m (m/s)

Wind Turbine Size





Medium Scale








Medium Scale


Medium Scale

12 Sambela, East Lombok


Medium Scale

13 Dsn. Tember, East Lombok


Medium Scale

14 Dsn. Selayar, East Lombok

West Nusa Tenggara 1995 3

Medium Scale

15 Dsn. Giligede, West Lombok


Medium Scale

16 Dsn. Nangadoro, Dompu


Medium Scale

17 Pai, Bima West Nusa Tenggara 1996 3.7

Medium Scale

18 Kute, Central Lombok West Nusa Tenggara 1996 3.1

Medium Scale

19 Sajang, East Lombok West Nusa Tenggara 1996 3.3

Medium Scale

20 Nangabalang, Manggarai

East Nusa Tenggara 1995 3.3

Medium Scale

21 Nangalili, Manggarai East Nusa Tenggara 1996 4.5

Medium Scale

22 National Park Komodo, Manggarai

East Nusa Tenggara 1995 3

Medium Scale

23 Pasir Putih, Manggarai


Medium Scale

24 Maubesi, Kupang East Nusa Tenggara 1996 4.1

Medium Scale

25 Palakahembi, East Sumba


Medium Scale

26 Watumbelar, East Sumba

East Nusa Tenggara 1996 2.86 Small Scale

27 Sibowuli, Ngada East Nusa Tenggara 1996 3.2

Medium Scale

28 Dsn. Ujung, Manggarai


Medium Scale

29 Dsn. Papanggarang, Manggarai

East Nusa Tenggara 1996 2.8 Small Scale

30 Waingapu East Nusa Tenggara 1991-1994 2.6 Small Scale

31 Kaimbulawa, Buton Southeast Sulawesi 1996 3.95

Medium Scale




32 Gerak Makmur, Buton

Southeast Sulawesi 1996 2.81 Small Scale

33 Kalasuge, Sangihe-Talaud North Sulawesi 1996 3.2

Medium Scale

34 Kamangge, East Sumba


Medium Scale

35 Parang, Jepara Central java 1996 6 Large Scale

36 Jorang, Tana Laut South Kalimantan 1996 2.3 Small Scale

37 Semaras. Kota Baru South Kalimantan 1996 2.2 Small Scale

38 Masebewa, Sikka East Nusa Tenggara 1996 3.1

Medium Scale

39 Tomenas, South Central Timor

South Central Timor 1996 6.7 Large Scale

40 Netpala South Central Timor 1996 5.3

Medium Scale

41 Oil Bubuk South Central Timor 1996 7.6 Large Scale

42 Sakteo South Central Timor 1996 6.4 Large Scale

43 Oesao, Kupang South Central Timor 1996 3.1

Medium Scale

44 Hansisi, Kupang South Central Timor 1996 4.2

Medium Scale

45 Unkris (Rote) East Nusa Tenggara 1996 6 Large Scale

46 Mondu East Nusa Tenggara 1996 4.6

Medium Scale

47 Tuak Luba East Nusa Tenggara 1996 3.6

Medium Scale

48 Nusa East Nusa Tenggara 1996 4.3

Medium Scale

49 Paipaha, East Sumba East Nusa Tenggara 1996 3.3

Medium Scale

50 Wala Kiri East Nusa Tenggara 1996 4.8

Medium Scale

51 Napu East Nusa Tenggara 1996 5.2

Medium Scale



of 24m (m/s)

Wind Turbine Size





Medium Scale








Medium Scale


Medium Scale

Source: Statistics 2013, DG NREC, Ministry of EMR, 2013.





48

Government IncentivesFeed-in TariffState Electricity Company (PT PLN) is obliged to purchase electricity generated from onshore wind power plants under the Power Purchase Agreement (PPA), as regulated in Ministry of EMR Regulation No. 4 of 2012, with the following Feed-in Tariff (FIT):

No Region

Feed-in Tariff (IDR / kWh) for Wind Power Plant

Electric Capacity up to 10 MW1

MV2 LV3

1 Mollucas and Papua Rp 984.00 Rp 1,506.00

2 West Nusa Tenggara and East Nusa Tenggara Rp 852.80 Rp 1,305.20

3 Kalimantan Rp 852.80 Rp 1,305.20

4 Sulawesi Rp 787.20 Rp 1,204.80

5 Sumatera Rp 787.20 Rp 1,204.80

6 Java, Madura and Bali Rp 656.00 Rp 1,004.00

1. FIT for the purchase of electricity from power plants with capacity of more than 10 MW is negotiated with PLN and subject to approval from Minister of EMR.2. MV = Medium Voltage (1000 Volts – 36 Kilovolts).3. LV = Low Voltage (50 Volts – 1000 Volts).

Notes:

Existing Players and ProjectsIn 2012, few projects have been developed at several locations, such as:• Hybrid System Wind – PV and Diesel at Rote Ndao Regency, East Nusa Tenggara Province,

with 4 units of 10 KW wind turbine and 36 KW PV.• Hybrid System Wind-PV-PLN at Girisari Village, Bali, consists of 1 unit wind turbine of 2.5

KW and 4.8 KW of Photovoltaic, for powering Indosat BTS.• Small isolated grid connection at Nusa Penida Island, Bali, total installed of 735 KW

consists of 9 units and at Selayar Island (Sulawesi) installed of 2 units with output 200 KW.




UPC Renewables Indonesia Limited

In 2012, UPC Renewables Indonesia Limited and PT Binatek Reka Energi signed a Power Purchase Agreement (PPA) with State Electricity Company (PLN) whereby acting as the off taker of the 50MWh electricity produced located at Samas Beach in Bantul Regency, Yogyakarta Province on the island of Java. This PPA has a long term binding agreement of 30 years.

Website : http://www.upcrenewables.com Address : Pusat Niaga Duta Mas Fatmawati, Block C1 No. 2-3, Jl. RS Fatmawati No. 39, JakartaPhone : +62 21 727 90151

United Nations Development Program (UNDP)

In 2013, Indonesia cooperated with the United Nations Development Program (UNDP) to develop wind power generation projects at East Nusa Tenggara (NTT), Banten, Bali, West Java and Jogjakarta Provinces aiming to increase the use of renewable sources in power generation and reduce carbon emission in the areas. The joint program between Indonesia science and technology research of BPPT and UNDP called Wind Hybrid Power Generation (WhyPGen), is expected to improve electricity production from wind energy generation up to 19.27 GWh per year and reduce carbon emission by 17,071 Metric Tons per year by 2015.

Website : http://www.evwind.es Address : UNDP Indonesia, Menara Thamrin 8-9 Floor, Jl. MH Thamrin Kav. 3, Jakarta 10250 Phone : +62 21 3141308

Asia Green Capital Partners

In 2014, Singaporean investment firm Asia Green Capital Partners is planning to construct wind projects with expected electricity generation of 157.5 MWh in Indonesia through its subsidiary Indo Wind Power Holdings, it is negotiating Power Purchase Agreements (PPA) for the initial 62.5 MWh Jeneponto 1 and 75 MWh Jeneponto 2 wind farms in Sulawesi. Those wind farms will be located at the frontier region of Jeneponto Regency, South Sulawesi. The proposed site is located 2 km from the coast on a ridge which creates optimal conditions for wind turbines. The sites altitudes are ranging from 122 m to 320 m above sea level. The area’s infrastructure is well developed with 150 KV transmission lines passing near the site. In 2 or 3 years’ time, West Timor 1 and 2 will be developed, and are likely to be financed through a feed-in tariff (FIT) mechanism, which the government is expected to introduce later this year.

Website : http://www.asiagreencapital.com Address : Jl. TB Simatupang, Kav 22-26, Jakarta Selatan 12430Phone : +62 21 7599 9994





50




GEOTHERMAL





52

Current Statistics and Future TrendsGeothermal energy is predicted to be Indonesia’s key source of electricity generation in the future. In 2012, Indonesia generated 9,356 GWh of electricity from geothermal, a growth of 1,145 GWh from 2008 as can be seen from the following chart.

Although potential geothermal reserves of 28.6 GW is located in Indonesia (equal to 40% of the world’s reserves), it is still underdeveloped since the installed capacity was only 1.34 GW in 2012. Knowing this huge opportunity, private parties are encouraged to take part in any geothermal development stages from Preliminary Survey, Exploration, Feasibility Study, Exploitation and Utilisation.

Geothermal Development Stages





Electricity Production from Geothermal in 2008-2012

Source: 2013 Statistics, DG NREC, Ministry of EMR 2013

Based on Road Map of Geothermal Development (2006-2025) as stated on President Regulation No. 5 of 2006 on the National Energy Policy, Indonesian Government has set a targeted capacity of electricity production from geothermal with the total of 4.6 GW by 2016, 6 GW by 2020 and 9.5 GW by 2025.

Indonesia is located on the Ring of Fire which provides 28.6 GW geothermal energy potential scattered across 299 locations. With only 4.5% of the whole potential are utilised, Indonesia opens up opportunities for development in the geothermal energy sector.

Within more than 17,000 islands, the islands of Sumatra and Java hold around 12.8 GW and 9.7 GW of electricity generation potentials from geothermal respectively, as can be seen from the table below. From those huge under and undeveloped potential reserves, only certain area has been developed after being declared by Ministry of EMR as Geothermal Working Areas (Wilayah Kerja Pertambangan Geothermal or WK). Complete list of 65 WKs, including 14 WKs managed by state-owned Pertamina Geothermal Energy (PGE), are illustrated in the next page.

Potential Locations





54

Geothermal Sources Located at 7 Big Islands in Indonesia

Source: Ministry of Energy and Mineral Resources, 2013.

The DG NREC, Ministry of EMR has also created an interactive map of geothermal reserves in various locations in Indonesia that can be accessed from this link: http://pabum.ebtke.esdm.go.id/gis/

Mapping of Geothermal Working Areas (WK) based on Province


Speculative Hypothesis Presumed Possible Proven1 Sumatra 90 3089 2427 6849 15 380 12760 1222 Java 71 1710 1826 3708 658 1815 9717 11343 Bali & Nusa Tenggara 28 360 417 1013 0 15 1805 54 Kalimantan 12 145 0 0 0 0 145 05 Sulawesi 65 1323 119 1374 150 78 3044 806 Moluccas 30 545 97 429 0 0 1071 07 Papua 3 75 0 0 0 0 75 0

299 7247 4886 13373 823 2288 28617 1341

Total Installed

12133 1648428617

Total

Potential Energy (MW)ReserveResourcesNo Island

Number of Location




No. Province Geothermal Working Area (WK)

Potential Capacity (MW)

1 Nanggroe Aceh Darussalam Jaboi 70 Seulawah Agam 130

2 North Sumatera

Sibayak - Sinabung 130 Sibual - Buali 750 Sipaholon Ria-ria 75 Sorik Marapi 200 Simbokon Samosir 155

3 Jambi Sungai Penuh 70 Graho Nyabu 200

4 South Sumatera Lumut Balai 250 Rantau Dedap 106 Danau Ranau 210

5 West Sumatera Gn Talang-Bukit Kili 65 Liki Pinagawan 400 Bonjol 200

6 Bengkulu Tmbg Sawah-Hululais 873 Kepahiang 180

7 Lampung

Gn. Rajabasa 91 Suoh Sekincau 230 Waypanas - Ulubelu 556 Danau Ranau 210 Way Ratai 105

8 Banten Kaldera Danau Banten 115 G. Endut 80

9 West Java

Ciater - Tangkuban Perahu 60 Cibeureum - Parabakti 485 Cibuni 140 Cisolok Cisukarame 45 Gn. Tampomas 50 Gn. Tangkuban Perahu 100 Kamojang - Darajat 1465 Karaha Cakrabuana 725 Pangalengan 1106 G. Ciremai 150 Gn. Gede Pangrango 85

10 Central Java

Baturaden 175 Dataran Tinggi Dieng 780 Guci 79 Gn. Ungaran 100 Candi Umbul Telomoyo 72 Gunung Lawu 195





56

No. Province Geothermal Working Area (WK)

Potential Capacity (MW)

1 Nanggroe Aceh Darussalam Jaboi 70 Seulawah Agam 130

2 North Sumatera

Sibayak - Sinabung 130 Sibual - Buali 750 Sipaholon Ria-ria 75 Sorik Marapi 200 Simbokon Samosir 155

3 Jambi Sungai Penuh 70 Graho Nyabu 200

4 South Sumatera Lumut Balai 250 Rantau Dedap 106 Danau Ranau 210

5 West Sumatera Gn Talang-Bukit Kili 65 Liki Pinagawan 400 Bonjol 200

6 Bengkulu Tmbg Sawah-Hululais 873 Kepahiang 180

7 Lampung

Gn. Rajabasa 91 Suoh Sekincau 230 Waypanas - Ulubelu 556 Danau Ranau 210 Way Ratai 105

8 Banten Kaldera Danau Banten 115 G. Endut 80

9 West Java

Ciater - Tangkuban Perahu 60 Cibeureum - Parabakti 485 Cibuni 140 Cisolok Cisukarame 45 Gn. Tampomas 50 Gn. Tangkuban Perahu 100 Kamojang - Darajat 1465 Karaha Cakrabuana 725 Pangalengan 1106 G. Ciremai 150 Gn. Gede Pangrango 85

10 Central Java

Baturaden 175 Dataran Tinggi Dieng 780 Guci 79 Gn. Ungaran 100 Candi Umbul Telomoyo 72 Gunung Lawu 195

11 East Java

Blawan - Ijen 270 Gn. Iyang Argopuro 295 Telaga Ngebel 120 Arjuno Welirang 185 Gunung Pandan 60 Gunung Wilis 50 Songgoriti 35

12 Bali Tabanan 276

13 West Nusa Tenggara Hu'u Daha 65 Sembalun 100

14 East Nusa Tenggara

Atadei 40 Sokoria 30 Ulumbu 199 Mataloko 63 Oka Lle Ange 40

15 Central Sulawesi Marana 35 Bora Pulu 123

16 Gorontalo Suwawa 110 17 North Sulawesi Kotamobagu 410

18 North Moluccas

Jailolo 75 Songa Wayaua 140 Gn. Hamiding 265 Telaga Ranu 85

19 Moluccas Tulehu 100





Government IncentivesFeed-in TariffState Electricity Company (PLN) is obliged to purchase electricity generated from geothermal power plants under the Power Purchase Agreement (PPA), as regulated in Ministry of EMR Regulation No. 17 of 2014, with the following Feed-in Tariff (FIT):

Year of Commercial

Operation Date (COD)

Feed-in Tariff (Cent USD / kWh) for Geothermal Power Plant

Region I1 Region II2 Remote areas which

are situated in Region I and II

2015 11.80 17.00 25.40

2016 12.20 17.60 25.80

2017 12.60 18.20 26.20

2018 13.00 18.80 26.60

2019 13.40 19.40 27.00

2020 13.80 20.00 27.40

2021 14.20 20.60 27.80

2022 14.60 21.30 28.30

2023 15.00 21.90 28.70

2024 15.50 22.60 29.20

2025 15.90 23.30 29.60

1. Geothermal power plant located in Sumatera, Java and Bali.2. Geothermal power plant located in Sulawesi, West Nusa Tenggara, East Nusa Tenggara, Halmahera, Moluccas, Papua and Kalimantan.

Notes:

Fast Track Programme Phase 2 (FTP-2)

FTP-2 is PLN’s effort to rapidly build power plants to address the increasing demand for electricity in Indonesia, as stated in President Regulation No. 4 of 2010 jo. No. 48 of 2011 and Ministry of ERM Regulation No. 15 of 2010 jo. No. 1 of 2012 jo No. 21 of 2013. Under FTP-2 scheme, electricity generated by IPPs will be purchased by PLN as agreed on PPA. Moreover, the government will issue Business Viability Guarantee Letter (BVGL) stating that IPPs will be protected from payment default regardless the risk event.

Through FTP-2, Indonesia is expected to further increase its electricity generation capacity by 17,918 MW by 2020, including 4,965 MW from geothermal power plants. List of geothermal power plant development projects are listed on the following table.





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Geothermal Power Plant Development Projects based on FTP – 2

Province Owner Project Name Capacity (MW) Operation Nanggroe Aceh

Darussalam IPP Jaboi 10 2019

Seulawah Agam 2 x 55 2021 -2022

Banten IPP Endut 55 2021

Rawa Dano 110 2019 Bengkulu PLN Hululais 2 x 55 2018 – 2019

Jambi PLN Sungai Penuh 2 x 55 2024

West Java IPP

Cibuni 10 2019 Cisolok - Cisukarame 50 2019

Gn. Ciremai 2 x 55 2017 Kamojang 5 30 2015

Karaha Bodas 30 2016 Karaha Bodas 55 2019

Patuha 3 x 55 2014 & 2017 Tampomas 45 2019

Tangkuban Perahu 1 2 x 55 2019 Tangkuban Perahu 2 2 x 30 2019

Wayang Windu 2 x 110 2019

Central Java IPP

Baturaden 2 x 110 2019 Dieng 55 + 60 2017 Guci 55 2019

Umbul - Telomoyo 55 2021 Ungaran 55 2019

East Java IPP Ijen 2 x 55 2019

Iyang Argopuro 55 2020 Wilis/Ngebel 3 x 55 2019 - 2020

Lampung IPP

Danau Ranau 2 x 55 2022 Rajabasa 2 x 110 2021 - 2022

Suoh Sekincau 2 x 110 2021-2022 Ulubelu 3 & 4 2 x 55 2016 - 2017

Wai Ratai 55 2022 Moluccas PLN Tulehu 2 x 10 2018

North Moluccas IPP Jailolo 2 x 5 2019

West Nusa Tenggara

PLN Songa Wayaua 5 2019

Sembalun 2 x 10 2020 IPP Huu 20 2021

East Nusa Tenggara IPP

Atadei 5 2017 Mataloko 5 2018 Sokoria 3 x 5 2018 - 2020

Oka Iie Ange 10 2020 Central

Sulawesi IPP Bora Pulu 55 2022

Marana/Masaingi 20 2022

North Sulawesi PLN

Kotamobagu 1 & 2 2 x 20 2022 Kotamobagu 3 & 4 2 x 20 2022

IPP Lahendong V & VI 2 x 20 2017 – 2018 West Sumatra IPP Bonjol 3 x 55 2022





Potential ProjectsBelow are existing assets and pipeline of planned and new developments projects from various WKs managed by Pertamina Geothermal Energy (PGE).

Existing Assets and Pipeline of Planned Projects and New Developments Managed by Pertamina Geothermal Energy (PGE)

Source: Pertamina Geothermal Energy, 2013.





60




BIOFUEL





62

Current StatisticsInstalled production capacity of biofuel in Indonesia steadily increased from 3,403,172 KL in 2008 to 5,976,543 KL in 2012 as portrayed in the following chart. It is evident that Indonesia at the moment is still dependent on imported crude oil, and thus biofuel offer a promising opportunity, not only as an additional mixture to fuel, but also as crude oil replacement in the future.

Currently, there are 25 bio diesel producers and 15 bio-ethanol producers with the total production capacity of 5,646,199 KL and 3,922,500 KL per year respectively (presented in the following pages). Taking the growth of fuel consumption and government regulation on Biofuel Usage Mandatory into account, this sector clearly provides golden investment opportunities.

Biofuel Production Capacity

Source: 2013 Statistics, DG NREC, Ministry of EMR, 2013.




Bio Diesel Production Capacity by Biofuel Business License Holders

Note: Numbers provided above indicate locations of bio diesel production sites stated in the following table.

No. Province Company Name MT/Yr Kl/Yr Own Feedstock

In production

1. North Sumatra PT Sintong Abadi 30,450 35,000 No Yes 2. Riau PT Wilmar

Bioenergy Indonesia

1,050,000 1,206,897 Yes Yes

PT Pelita Agung Agriindustri

200,000 229,885 Yes Yes

PT Cemerlang Energi Perkasa

400,000 459,770 Yes Yes

PT Ciliandra Perkasa

250,000 287,356 Yes Yes

PT Musim Mas 850,000 977,011 Yes Yes PT Petro Andalan Nusantara

130,500 150,000 No No

3. Banten PT Indo Biofuels Energy

60,000 68,966 No Yes

PT Eternal Buana Chem, Ind

40,000 45.977 No No

PT Alia Mada Perkasa

9,570 11,000 No No

PT Oil Tanking Merak

504,000 579,310 No No

4. DKI Jakarta PT Primanusa Palma Energi

20,880 24,000 No No

PT Wahana Abdi Tirta Tehnika

11,484 13,200 No No

PT Tjengkareng Djaya

72,000 82,759 No No

PT Energi Alternatif

7,000 8,046 No No





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Source: Bio Diesel Technical Information, DG NREC, Ministry of EMR, 2013.

Bio Ethanol Production Capacity by Biofuel Business License Holders

Source: 2013 Statistics, DG NREC, Ministry of EMR, 2013.

No. Province Company Name MT/Yr Kl/Yr Own Feedstock

In production

1. North Sumatra PT Sintong Abadi 30,450 35,000 No Yes 2. Riau PT Wilmar

Bioenergy Indonesia

1,050,000 1,206,897 Yes Yes

PT Pelita Agung Agriindustri

200,000 229,885 Yes Yes

PT Cemerlang Energi Perkasa

400,000 459,770 Yes Yes

PT Ciliandra Perkasa

250,000 287,356 Yes Yes

PT Musim Mas 850,000 977,011 Yes Yes PT Petro Andalan Nusantara

130,500 150,000 No No

3. Banten PT Indo Biofuels Energy

60,000 68,966 No Yes

PT Eternal Buana Chem, Ind

40,000 45.977 No No

PT Alia Mada Perkasa

9,570 11,000 No No

PT Oil Tanking Merak

504,000 579,310 No No


20,880 24,000 No No


11,484 13,200 No No


72,000 82,759 No No


7,000 8,046 No No


20,880 24,000 No No


11,484 13,200 No No


72,000 82,759 No No


7,000 8,046 No No

5. West Java PT Multi Energi Nabati

20,000 22,989 No Yes

PT Darmex Biofuels

150,000 172,414 No Yes

PT Pasadena Biofuels Mandiri

40,000 10,240 No No

PT Sumi Asih Oleo Chemical

100,000 114,943 No No

6. East Java PT Wilmar Nabati Indonesia

690,000 793,103 Yes Yes

PT Anugerah Inti Gemanusa

40,000 45,977 No Yes

PT Eterindo Nusa Graha

40,000 45,977 No Yes

PT Damai Sejahtera Sentosa

120,000 137,931 No No

7. Central Kalimantan

PT Sinar Alam Permai

41,400 37,586 Yes Yes

8. East Kalimantan

PT Bioenergi Pratama Jaya

66,000 75,862 No Yes

Total Installed Capacity 4,912,193 5,646,199 Total Active Producing 3,887,850 4,468,793




Potential SourcesBiofuel (biodiesel, bioethanol and biokerosene/bio-oil) is renewable liquid fuel that can be produced locally, thus helping to reduce Indonesia’s dependence on imported crude. The processed biodiesel fuel can be derived from Palm Oil, Jatropha Curcas, Coconut Oil, or Soybean Oil. Bioethanol comes from anhydrous alcohol produced from the fermentation of sugar cane, cassava, or corn.

Mapping of potential sources of biofuel and estimated biofuel production potential are presented as follows.

Potential Sources of Biofuel in Indonesia

Source: Biopact, 2014.

Source: Biopact, 2014.

Indonesia Biofuel Production Potential





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Government IncentivesBiofuel Usage MandatoryBased on Ministry of EMR Regulation No. 20 of 2014, every trading company and user of gasoline and diesel are required to use locally-sourced biofuel (bio ethanol, bio diesel and bio oil) for certain percentage gradually with the details are in the following tables. Additionally, in 2012, the government sets subsidised prices at Rp 3,500.00 per litre for bioethanol and Rp 3,000.00 per litre for biodiesel.

BIO Minimum% )

SectorSept2013

January2014

January2015

January2016

January2020

January2025

0.50% 1% 2% 5% 20%

PSO 1% 1% 2% 5% 10% 20%

Commercial1% 2% 5% 10% 20%

Note: PSO: Public Service Obligation.

BIO )

Sector Sept2013

January2014

January2015

January2016

January2020

January2025

10% 10% 10% 20% 20% 25%

PSO3% 10% 10% 20% 20% 25%

Commercial 5% 10% 10% 20% 20% 25%

Electricity 7.5% 20% 25% 30% 30% 30%

BIO um %)

SectorSept2013

January2014

January2015

January2016

January2020

January2025

Industry 1% 5% 10% 20% 20% 20%

Transport 5% 10% 20% 20% 20%

Transport2% 3% 5%

Electricity 1% 6% 15% 20% 20% 20%




Existing Players

PT. Indo Biofuels Energy

Indo Biofuels Energy is one of the nation’s leading commercial biodiesel refiners, developing technology for cleaner air and energy independence. The company is operating a commercial-scale biodiesel refinery producing fuel that meets or exceeds SNI-04-7182-2006, ASTM D-6751, EN 14214 and DIN 51606 specifications.

Website : www.indobiofuels.com Address : RNI Building, Ground Fl., Jl. Denpasar Raya Kav. D – III Kuningan, Jakarta Selatan 12950Phone : +62 21 5291 4292Fax : +62 21 5291 4293Email : [email protected]

Wilmar Group

Wilmar’s business activities include oil palm cultivation, oilseed crushing, edible oil refining, sugar milling and refining, specialty fat, oleochemical, biodiesel and fertiliser manufacturing and grain processing. World’s largest processor and merchandiser of palm and lauric oils, as well as largest in edible oils refining and fractionation, oleochemicals, specialty fats and palm biodiesel, one of the largest oil palm plantation owners and the largest palm oil refiner in Indonesia.

Website : http://www.wilmar-international.com/ Address : B & G Tower, 7th Floor, Jl. Putri Hijau No. 10, Medan 20111Phone : +62 61 410 2777Fax : +62 21 415 4891

PT Musim Mas

PT Musim Mas is a fully integrated company with operations spanning the entire palm oil value chain: from upstream oil palm plantations to midstream and downstream operations, to producing value-added products such as specialty fats, oleochemicals, biodiesel, soap noodles, palm wax and functional products.

Website : http://www.musimmas.com/Address : PT. Musim Mas, Jl. K.L. Yos Sudarso Km 7.8, Tanjung Mulia, Medan 20241Phone : +62 61 6619866





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LOW CARBONTRANSPORT





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Domestic Market OpportunitiesIndonesia domestic auto production is ascending steadily during last 5 years with 161.74% increase from 461,612 (2009) to 1,208,211 (2013). Meanwhile sales also hit an all-time high with 154.37% increase from 483,548 (2009) to 1,230,011 (2013). Year 2013 marked the introduction of Low Carbon Emission Car (LCEC) and Low Cost Green Car (LCGC) policies and products to the Indonesian market.

Based on Indonesia Road Map of Automotive Industrial Cluster Development (Minister of Industry Regulation No. 123/M-IND/PER/10/2009), domestic auto production is targeted to grow to 2.59 Million by 2020 and further to 4.18 Million by 2025. Meanwhile, domestic auto sales are expected to grow to 1.97 Million by 2020 and further to 3.18 Million by 2025.

Domestic Auto Production by Category (2009 - 2013)

Domestic Auto Sales by Category (2009 - 2013)

Source: The Association of Indonesia Automotive Industries (GAIKINDO), 2014.

Source: GAIKINDO, 2014.




Japanese brands are majority in the Indonesia auto market with Toyota as the market leader, followed by Daihatsu, Suzuki, Mitsubishi and Honda. Ameri-can brands include Chrysler, Ford and Chevrolet. Asian (non Japanese) brands in-clude Hyundai, Geely, Tata and Proton. Eu-ropean brands include BMW, Peugeot, VW, Mercedes, Audi and Renault.

Source: Kompas Otomotif, 2013.

REGIONAL AND GLOBAL MARKET OPPORTUNITIESIndonesia auto products are exported globally to the closest destination of neighbouring ASEAN to farther areas such as East Asia, Middle East, Africa and America. The biggest Indonesia auto export destinations for Completely Build Unit (CBU) category in 2013 are Saudi Arabia and two ASEAN countries namely Thailand and Philippines.

Indonesia exported almost 100,000 cars last years to those 3 countries with Saudi Arabia became the biggest importer of 43,000 cars. Besides those 3 countries Indonesian cars also exported to Mexi-co, Peru, Lebanon, Algeria, Egypt, South Africa, Kuwait, United Arab Emirates, Oman, Yemen, Brunei, Singapore, Taiwan and Japan.

Auto Export by Category (2009-2013)

Source: GAIKINDO, 2014.





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ASEAN Countries are the closest export destination for auto companies that have great interest in setting up their production base in Indonesia. Observing the current auto products consumption and purchasing power patterns from ASEAN member countries, as can be seen from their GDP and GDP per Capita, the huge opportunities are still there.

Under the ASEAN Economic Community (AEC), a single regional common market of ASEAN countries will be created by 2015. The regional integration’s objective is to create a competitive market of over 600 million people in ASEAN. There will be free flow of goods, services, investment capital and skilled labour following the liberalisation. These will include tariff reductions and streamlining of certain administrative procedures.

Auto Sales in Major ASEAN Countries (2012)

Source: ASEAN Automotive Federation, 2013.

ASEAN Countries

Population (Thousand)

GDP at current prices,

as of 31 Jan 2014 (US$ Million)

GDP per Capita at current prices, as of 31 Jan 2014 (US$ Million)

Indonesia 244,775.8 878,223.4 3,587.86

Philippines 97,690.9 250,542.7 2,564.64

Vietnam 88,772.9 141,669.1 1,595.86

Thailand 67,912.0 366,126.6 5,391.19

Myanmar 60,976.0 52,524.9 861.40

Malaysia 29,518.0 305,154.4 10,337.91

Cambodia 14,741.4 14,411.2 977.60

Lao PDR 6,514.4 9,083.1 1,394.30

Singapore 5,312.4 276,609.5 52,068.65

Brunei 399.8 16,969.7 42,445.50 ASEAN 616,613.7 2,311,314.7 3748.40

ASEAN Countries Statistics (2012)

Source: ASEAN Statistics, 2014.




Government IncentivesFiscal Incentives for Production and Sales of Low Carbon Emission Car (LCEC) & Low Cost Green Car (LCGC)With the growth of auto-sales that reached 154.37%, grew from 483,548 in 2009 to 1,230,011 in 2013, the consumption of fuel soared, leading to the significant increase of gas emission from public and private transportations. However, since low carbon transports, such as electric, hybrid, LCEC and LCGC cars were mostly imported, hence imposed with high import duties (15-50%) and high luxury-goods sales (10-75%), these vehicles were less attractive to customers due to the high selling price in the market.

Due to reasons mentioned above, the government introduced fiscal incentives for the production and sales of LCEC and LCGC. These fiscal incentives will help to increase the domestic auto production and sales of low carbon transports. In the future, Indonesia is expected to become the production hub of LCEC and LCGC for the ASEAN market which are growing in popularity in the region due to the economic growth and increasing number of population.

Government Regulation No. 41 of 2013 on Luxury-Goods Sales Tax (PPNBM) for Auto Products Government Regulation No. 41 of 2013 on “Luxury-Goods Sales Tax (Pajak Pertambahan Nilai Barang Mewah or abbreviated as PPNBM) for Auto Products” applied fiscal incentives (reduction or exemption of PPNBM) imposed for sales of all auto products categorized as LCEC & LCGC. This incentive expected to make LCEC & LCGC more affordable for Indonesia consumers as well as to stimulate production and sales of such car for supplying regional and global markets.





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PPNBM Rate Auto Products Imposed

10% - Any auto products which able to carry 10-15 people, with spark ignition (SI) or compression ignition (CI or diesel & semi-diesel) engines for all cylinder capacities.

- Besides sedan and station wagon which able to carry less than 10 people, with spark ignition (SI) or compression ignition (CI or diesel & semi-diesel) engines, single axle (4x2) system and cylinder capacity up to 1,500 cc.

20% - Besides sedan and station wagon which able to carry less than 10 people, with spark ignition (SI) or compression ignition (CI or diesel & semi-diesel) engines, single axle (4x2) system and cylinder capacity above 1,500 cc up to 2,500 cc.

- Double cabin pickup vehicles which able to carry more than 3 people, with spark ignition (SI) or compression ignition (CI or diesel & semi-diesel) engines, single axle (4x2) or double axel (4x4) systems, for all cylinder capacities, with total weight below 5 Ton.

30% - Sedan and station wagon which able to carry less than 10 people, with spark ignition (SI) or compression ignition (CI or diesel & semi-diesel) engines with cylinder capacity up to 1,500 cc.

- Besides sedan and station wagon which able to carry less than 10 people, with spark ignition (SI) and compression ignition (CI or diesel & semi-diesel) engines, double axel (4x4) system and cylinder capacity up to 1,500 cc.

40% - Besides sedan and station wagon which able to carry less than 10 people, with spark ignition (SI) engine, single axle (4x2) system and cylinder capacity above 2,500 cc up to 3,000 cc.

- Sedan and station wagon, or besides sedan and station wagon with double axel (4x4) system. Both able to carry less than 10 people, with spark ignition (SI) engine and cylinder capacity above 1,500 cc up to 3,000 cc.

- Sedan and station wagon, or besides sedan and station wagon with double axel (4x4) system. Both able to carry less than 10 people, with compression ignition (CI or diesel & semi-diesel) engine and cylinder capacity above 1,500 cc up to 2,500 cc.

50% - Golf vehicles. 60% - Two-wheel vehicles with cylinder capacity above 250 cc up to 500 cc.

- Special purpose vehicles like snowmobile, beach vehicle, mountain vehicle and such.

75% - Sedan and station wagon, or besides sedan and station wagon with single axle (4x2) or double axel (4x4) systems. Both able to carry less than 10 people, with spark ignition (SI) engine and cylinder capacity above 3,000 cc.

- Sedan and station wagon, or besides sedan and station wagon with single axle (4x2) or double axel (4x4) systems. Both able to carry less than 10 people, with compression ignition (CI or diesel & semi-diesel) engine and cylinder capacity above 2,500 cc.

- Two-wheel vehicles with cylinder capacity above 500 cc. - Trailer, semi-trailer and caravan.

Below are PPNBM rates imposed to sales of various types of auto products.




The Government Regulation No. 41 of 2013 gives reduction or exemption from aforemen-tioned PPNBM for LCEC & LCGC Programs as can be seen from the table below

Minister of Industry Regulation No. 33/M-IND/PER/7/2013 on Production Development of Four Wheel Vehicles for Energy Saving and Affordable Prices

Indonesia Minister of Industry Regulation No. 33/M-IND/PER/7/2013 on “Production Development of Four Wheel Vehicles for Energy Saving and Affordable Prices” provided more technical specification that must be met by LCGC in order to qualify for PPNBM exemption. This regulation applies to LCGC manufacturers and component manufacturers. Below are the required technical specifications.

Gasoline (spark ignition engine) type LCGC

Diesel (compression ignition engine) type LCGC

- Cylinder capacity of between 980 cc and 1,200 cc.

- Cylinder capacity of up to 1,500 cc.

- Minimum fuel consumption of 20 km/litre using Research Octane Number (RON) 92 gasoline or its equivalent.

- Minimum fuel consumption of 20 km/litre using Cetane Number (CN) 51 diesel or its equivalent.

- To satisfy additional technical specifications (turning radius, ground clearance, etc.). To be outlined in forthcoming technical guidelines.

- To affix approved Indonesian branding, model and logos. - The sale price (off the road) must not exceed Rp 95 Million (approx. US$ 9,500). To be

adjusted, subject to macroeconomics situation (to be verified with data/survey) or if LCGC is embedded with additional automatic transmission or safety features (plus 15% or 10% additional prices adjustment).

PPNBM Reduction

or Exemption

Auto Products Imposed

LCEC Program 75% x PPNBM - Any auto products using advance diesel/petrol engine technology, dual

petrol gas engine (converter kit CNG/LGV), biofuel engine, hybrid engine, CNG/LGV dedicated engine, with fuel consumption of 20-28 km/litre or its equivalent.

50% x PPNBM - Any auto products using advance diesel/petrol engine technology, biofuel engine, hybrid engine, CNG/LGV dedicated engine, with fuel consumption above 28 km/litre or its equivalent.

LCGC Program 0% x PPNBM - Besides sedan and station wagon, with spark ignition (SI) engine, cylinder

capacity up to 1,200 cc and minimum fuel consumption of 20 km/litre or its equivalent.

- Besides sedan and station wagon, with compression ignition (CI or diesel & semi-diesel) engine, cylinder capacity up to 1,500 cc and minimum fuel consumption of 20 km/litre or its equivalent.





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Useful LinksGovernment InstitutionsInvestment Coordinating Board (Badan Koordinasi Penanaman Modal or BKPM)http://www.bkpm.go.id

Ministry of Energy and Mineral Resources (Kementrian Energi dan Sumber Daya Mineral or Kementrian ESDM)http://www.esdm.go.id

Directorate General of New, Renewable and Conservation Energy, Ministry of Energy and Mineral Re-sources (Direktorat Jenderal Energi Baru, Terbarukan dan Konservasi Energi, Kementerian Energi dan Sumber Daya Mineral or Ditjen EBTKE, Kementrian ESDM)http://www.ebtke.esdm.go.id

Directorate General of Electricity (Direktorat Jenderal Kelistrikan or Ditjen Kelistrikan)http://www.djlpe.esdm.go.id/

Directorate General of Public Private Partnership Development, National Planning Agency (Direktorat Jenderal Pengembangan Kerjasama Pemerintah dan Swasta, Badan Perencanaan Pembangunan Nasional or Ditjen PKPS, BAPPENAS)http://pkps.bappenas.go.id/

Directorate General of Cipta Karya, Ministry of Public Works (Direktorat Jenderal Cipta Karya, Kementerian Pekerjaan Umum or Ditjen Cipta Karya, Kementrian PU)http://ciptakarya.pu.go.id

State-owned EnterprisesState Electricity Company (Perusahaan Listrik Negara or PLN)http://www.pln.co.id

Pertamina Geothermal Energy (PGE)http://pge.pertamina.com

AssociationsThe Association of Indonesia Automotive Industries (Gabungan Industri Kendaraan Bermotor Indonesia or GAIKINDO) http://www.gaikindo.or.id

The Association of Automotive Parts and Components Industries (Gabungan Industri Alat-alat Mobil dan Motor or GIAMM) http://giamm.org

Interactive ApplicationsMapping of Potential Biomass Sourceshttp://aplikasi.ebtke.esdm.go.id/biomass/index.php/geochart/index

Mapping of Potential Geothermal Reserveshttp://pabum.ebtke.esdm.go.id/gis/

Representative London Office:Indonesia Investment

Promotion Centre (IIPC)St. Martin’s House

16 St. Martin’s Le GrandLondon EC1A 4EN

United KingdomT: +44 (0)20 7397 8564F: +44 (0)20 7397 8565

E: [email protected]

Head Office:Indonesia Investment

Coordinating Board (BKPM)Jl. Jend. Gatot Subroto. No. 44,

Jakarta 12190, IndonesiaT: +62 21 5252 008 (hunting)

F: +62 21 520 2050W: www.bkpm.go.id

For investment inquiriesPlease contact:

Investor Relations Unit (IRU)T: +62 21 5292 1329-30 +62 21 5292 1334-35

E: [email protected]

Indonesia Investment PromotionCentre (IIPC) overseas offices:

UAE (Abu Dhabi), United Kingdom (London)Singapore (Singapore), Australia (Sydney)

USA (New York), South Korea (Seoul)China (Taipei), Japan (Tokyo)

For contact details:Please See Contact Us at www.bkpm.go.id

www.bkpm.go.id

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