JUDIANTO HASANJOGYAKARTA 29 MARET 2012

DEVELOPING ESCOIN INDONESIA

CHALLENGE AHEAD

INTRODUCTIONMARKETING & LEGAL ISSUES

Energy Law No 30/2007

Gov Regulation no 70/2009

Presidential Instruction no. 13/2011

Climate Change : Indonesia to 26 – 41

GO GREEN

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OPPORTUNITIES

Current:

Lightings

HVAC Retrofits

Building Control Systems

Motors and Drives

Chiller and Boiler Upgrades

Trend :

Thermal Storage/Load Shaping

Generation Efficiency Improvement

On-site Power Generation (Distributed Generation, CHP, Cogeneration)

Power Quality

Industrial Processes (e.g., compressed air systems)

PHASES OF DEVELOPMENT:OPPORTUNITIES REALIZATION

Initial Phase

• corporate behavior

• Regulatory constraint

• Reactive • Results

are unimportant and not monitored

Transition Phase

• Implementation of policies that transform into business results

• Shift from reactive to proactive

• Economic benefits begin to emergeData → Information → Knowledge → Action

Time

BARRIERS

Energy Efficiency Market is Not Developed Enough to Motivate Local Banks to Invest in Setting up EEP Lending Infrastructure.

Legal frame work to safeguard contracts or indemnify against a breach in contract need to be developed.

Understanding of banking sector of EEP’s and their payback potential

Difficult to depart from conventional asset based lending (EEP is Project Cashflow-Based Lending for ESCO)

Fund with favourable rates and repayment terms

Low electricity tariff

Lack of knowledge of potential clients

Tendering process

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ESCO MUST MANAGE RISKS

Development

Construction

Technology

Operations & Maintenance

Performance (Savings)

RISKS

Savings Guarantee to Customer that the “turnkey” costs of implementing and financing the EEPs will be paid-from-savings.

The financial model of a classical Performance Contracting Solutions

POTENTIAL FINANCING MECHANISM

Equity Capital for ESCOs

RDPT (Special Purpose Mutual Fund Type)

Venture capital for corporate and/or project equity

Guarantee Fund

Leasing

Payment Security Mechanism

Mechanism to secure the cash flows from energy savings

for debt service

Streamlined (Program-based) approach for small projects

Development of standardised project approval parameters

that mitigate risks on a portfolio basis

ALT – 1 : PUBLIC SECTOR

International Institution

GOI

Exec Agency

EE Projects (large) -ESCO

Guarantee Mechanism

Small Projects

Lenders

PSM

PSM

loan

Repayment

loan

Repayment

LoanRepayment

ALT – 2 : PRIVATE SECTOR

International Institution

GOI

Exec Agency

EE Projects (large) -ESCO

Guarantee Mechanism (unfunded)

Small Project(s) (Borrower)

Lenders

PSM

PSM

loan

Repayment

loan

Repayment

Credit GuaranteeFees/int

GUARANTEE FUNDS

Objective: Encourage EE lending through subsidized credit risk of bank

Advantages: Alleviate barriers: collateral requirements, high risk of new

technologies, risk of long-term lending

Build bank capacity in EE loans

Work best: Banking sector well developed and liquid

Risk of EE loans is main barrier

Sufficient demand for loan financing

EQUIPMENT SUPPLIER CREDIT & EQUIPMENT LEASING

How it works:

Supplier designs and implements project & measures performance

Equipment supplier credit:

Customer owns equipment

Customer pays lump-sum or over time based on energy savings

Equipment leasing:

Supplier owns equipment until full repayment

Customer pays lease payments

ACTION LINES TO FOSTER ESCO MARKET DEVELOPMENT

Standardize contracts for ESCOs.

Standardize measurement and verification for ESCO projects.

Conduct ESCO demonstration projects.

Promote energy performance contracting in SOE’s and government buildings.

Develop a third-party financing network.

Establish an equipment-leasing organization.

Strategy to strengthen the ESCO industry

1. Promotion – Outreach and education to increase awareness of the benefits of performance contracting

financial institutions, energy end users (particular – associations) manufacturers and distributors

2. Strengthen the offer of ESCOs by

Establishing a Loan Guarantee Fund

Estblishing Special Fund (RDPT)

Help establish a financing mechanism that will allow ESCOs to bundle several projects and reduce transaction costs

Establish a line of credit to finance projects

STRATEGY TO STRENGTHEN CONT....

Foster establishment of strategic alliances toTo assist Indonesian ESCOs to access international financing more easily and increase their equity after sharing the debt with the international counterpart

Help build local capacity by transfer of know how

WASTE WATER FLOW CHARTS - PULP AND PAPER EE PROJECT *)

*) Subject to further Detail Study

Flocculation Primary Clarifier Cooling Tower Equalization Tank

Biogas Flare Conditioning Tank REACTOR

Anaerobic Effluent

to Aerobic

WASTE WATER INFLUENT

RIVER

BOILER

ENGINE

ELECTRICITY TO PROCESS

Aerobic Treatment

KEY POINT INFORMATIONS :

• Waste Water Quantity = 40,000 m3 per Day• Est. Biogas generated at 30,000 Nm3/day (max), (corresponding approx 810 GJ/day of Heat , eqv. to 240~360 ton LP steam/day.)• Est. Electricity Saving Gains = 20 MwH per Day• Est. New Electricity supply from Engine = 2000-2500 Kw• Est Electricity Cost = US$ 80 / MwH• Est. Steam Cost = 8~9 USD/GJ• Est CO2 Saving 100,000 Ton per Year – CDM , Est. price at 10~15 Euro per

ton• Est. Project Cost = US$ 15 – 20 Million *)

ESCO Conservation Benefit s :Case WWT-Plant No. 2 – IKSa. New Electricity Supply b. Saving electricity of Aerobic Treatmentc. Saving CO2 emission – CDM d. Etc

Facilities Operator(Esco Team , Joint Team w Client or

Outsource)

Service Contract

Payment of Service Fee

Facilities Installation Operator

ESCO (ESPC)

ENERGY SAVING

FACILITIES

Client Self Fin 30% as down payment, by progress claims, majoring drawn after commissioning *)

FINANCIAL INSTITUTIONS

Constructions Work Company

Equipment Manufacturer

Ownership of EE Main

Facilities

Financing

Repayment

Order PaymentProvision of Equipment and

executions of constructions work

ESCO FLOW CHARTS - PULP AND PAPER ESCO PROJECT

During The Contract Period

*) To Be Discussed, prior to shorter ESCO Period

OFFSHORE ESCO PARTNER

Incentive / Subsidies possible obtained from GOI (subject to Regulations) *)

Attractive IRR under International Agreement

Client Option for Earlier ESCO Period and Purchase ESCO Asset , such as with Bank Refinancing *)

Installment based on Shared Saving Model, secured by CAMA (Cash Management Agreement)

Measurement and Verifications

RESUME FEASIBILITY STUDY REKOMENDASI PENGHEMATAN ENERGI

NO. PABRIK GULAFEASIBILITY STUDY PARAMETER KEEKONOMIAN

KETERANGANJENIS KAPASITAS INVESTASI IRR PI POT

(tahun)

1 KREMBOONG JUICE HEATER 80 ton/jam NE 300 juta 14% 1,9 7,9 Layak; Direct contact juice heater

2 PESANTREN BARU BOILER 66 ton/jam uap 39 milyar 26 4,0 3,8 Layak.

3 LESTARI VACUUM PAN 40 ton/jam NK 9 milyar 21% 4,2 6,9 Layak; Penggantian VP no.1 dan 2

4 GEMPOLKREP SISTEM METERING 2 milyar 45% 9,9 2,0 Layak; Diseluruh stasiun

5 NGADIREJO ELMO 12% 1,3 9,0 Simulasi.

6 KEDAWOENG VSD PUTERAN 6 unit @ 100 kW 12,5 milyar 14% 1,9 7,9 Layak; Puteran high grade

7 ASEMBAGOES BOILER 80 ton/jam uap 50 milyar 24% 4,3 0,2 Layak; Ganti boiler TR ke boiler TM

8 PRADJEKAN BOILER 70 ton/jam uap 40 milyar 13,3 1,7 8,4 Layak; Boiler eksisting efisiensi rendah

9 PAGOTTAN BAGASSE DRYER 40 ton/jam bagasse 3,2 milyar 19% 2,6 5,8 Layak; Exclude pneumatic system

10 SOEDHONO BOILER 28 ton/jam uap 20 milyar 25% 3,7 4,1 Layak; Ganti boiler TR ke boiler TM

11 REDJOAGUNG BAGASSE DRYER 40 ton/jam bagasse 3,1 milyar 10% 1,3 10 Layak; Exclude pneumatic system

12 KREBET BARU BAGASSE DRYER 24 ton/jam bagasse 2,5 milyar 49% 14 1,7 Layak; Exclude pneumatic system

13 KARANGSUWUNG BOILER 40 ton/jam uap 12,3 milyar 17% 2,2 6,8 Layak; Ganti boiler TR ke boiler TM

14 JATITUJUH BAGASSE DRYER 20 ton/jam bagasse 2 milyar 29% 4,7 3,3 Layak; Exclude pneumatic system

15 TERSANA BARUEVAPORATOR 100 ton/jam NE 10 milyar 10% 1,4 12,8 Simulasi.

MESIN UAP KE TURBIN UAP 450 kW (BHP) $791.826 13 1,4 8,7 Layak.

MODEL PEMBIAYAAN

CONTRACT : Consortium + CLIENT

EXECUTION

SCENARIO 2 :1. DP : 30%2. Leasing 70 %Duration 3 - 5 Years

BUSINESS MODELPT. INDRA KARYA SCHNEIDER INDONESIA

Project Consultant Project Management and Implementation

SCENARIO 1 :Shared Shavings1. Client 20 - 25 %2. Consortium 75 - 80 %

ESCO CASE STUDYCLIENT : Textile CompanyTargeted Segment : Motor for Fan and PumpTargeted Saving : 25 - 30 %Saving : Rp.28.500,000 / Months

Client 30 % : Rp. 8.450,000 / Months , ESCO 70 % : Rp. 20.050.000Contract Duration : 36 Months

CONCLUSION

Many ESCO opportunities around, and becoming bigger and complex in the near future

Need to establish financial mechanism

Overcome barriers through sinergy

THANK YOU

www.apkenindo.com