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IndonesiaFiT:
Implementation andImprovement Challenges
Fabby TumiwaInstitute for Essential Services Reform
Renewable Energy Policy and Regulation:
Workshop on FiT Policy
ADB, Manila, 20-21 June 2011
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Indonesia Electricity Market at Glance
Vertically integrated state-owned utility (PLN) PLN has a monopoly power, control >98% of electricity market
38 million consumers (Social, Public, Residential, Business andIndustrial)
Electricity tariff is highly regulated by the government PLNs electricity production cost is varies among the region/provinces
Cross subsidy scheme (among consumers, among region)
PLN recovers about 60-65% of the cost from regulated electricity tariff,and the remaining comes from government subsidy
New Electricity Law in 2009 promotes new industry structure,encourage local government, and private sector to invest, andtheoretically ending PLNs monopoly
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National Electrification Ratio
NAD
90,85%Sumut
79,05%
Sumbar
71 13%
Riau
58,66%
Sumsel
56,39%
Kalbar
58,34%
Kalteng
57,07%
Kaltim
65,25%
Sulut
65,84%Gorontalo
46,79% Malut
63,84%
Sulbar
60 85%
Kepri
44,45%
Papua Barat
41,87%
Bengkulu
61,11%
Babel
68,73%
Lampung
61,25%
Jakarta
100%
Banten
67,29%
Jabar
69,04%
Jateng
70,42%
Jambi
75,71%
DIY
75,70% Jatim
65,54%
Bali
70,87%
NTB
31,20%
NTT
29,10%
Kalsel
70,53%
Sulteng
56,04%
Sultra
47,11%
Sulsel
65,93%
Maluku
72,62%Papua
31,61%
3
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47%
26%
6%
6%
15%
Coal
Natural Gas
Hydro
Geothermal
Diesel Oil
ENERGY MIX FOR
ELECTRICITY GENERATION (2010)
88% electricity generation come from fossil fuel (coal, natural gas, and
diesel oil), the remaining from geothermal and hydro. Total energy
generated was 172 TWh in 2010
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Additional Capacity Expansion Plan (2010 2010)
5.000
6.000
7.000
8.000
9.000
Total : 55,484 MWMW
6.248
4.5864.985
8.643
5.490 5.596
6.607 6.565
Additional capacity is
55,484 MW from 2010
to 2019) PLN: 31.958 MW
IPP 23.525MW
Average: 5,500
5
-
1.000
2.000
3.000
4.000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
PLTU PLTP PLTGU PLTG PLTD PLTA
4.156
2.608
Source: RUPTL 2010-2019
PLTU: Coal PP
PLTPL Geothermal PP
PLTG: Natural Gas PP
PLTD: Diesel PP
PLTA: Hydro (large/Mini Hydro)
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BasicFeed in Tarifffor RE
MEMR Regulation No. 31/2009 Applied for any RE power plant up to 10 MW and excess
power
On- rid connectivit
Mandatory for PLN to purchase using a standard PPAcontract (developed by PLN)
Fixed tariff, with two variables of differentiation: gridconnectivity and location
PLN can purchase another electricity from small, mediumRE plant and excess power with different tariff based onPLNs estimation cost, with the approval of tariff come fromthe minister
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Cont
Differentiation tariff rate based on grid connection andgeographical location, determined by a multiplayer F- factor
Connected to low-voltage grid: Rp. 1004 ($0.118)/kWh x F
Connected to mediumvoltage grid: Rp. 656 ($0.077)/kWh x F
= or ava a
F = 1.1 for Sumatra & Sulawesi
F = 1.2 for Kalimantan, NTB and NTT
F = 1.3 for Maluku and Papua
Formula is developed based on evolvement of purchasing tarifffor micro/mini-hydro
The differentiations are based on the electricity production cost
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Jawa, Madura & Bali (Jakarta)
Various electricity production cost (2008)
0 250 500 750 1000 1250 1500 1750 2000 2250 2500 2750 3000 3250
North Sumatra (Aceh)
East Kalimantan
Papua
Maluku LV
MV
HV
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FiTfor Geothermal
Government objective is to develop geothermalpower capacity up to 6000 MW by 2020.
MEMR Regulation No. 02/2011
Fixed rate: up to $ 0.097/kwh Connected to the high voltage-grid
Mandatory for PLN to purchase
Standardized PPA for all projects
Fiscal incentive for geothermal developer : VATexemption for geothermal equipments
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Challenges for implementing
Basic RenewablesFiT
Application of FiT: suitable for mini and small hydro, butnot for others technology and size for hydro (such solarPV, biomass/biogas, wind, etc). Applicability for the feed-stock based technology, such as
,
By default it creates a cap (up to 800 MW) for mini andsmall hydro-power
No review mechanism currently in place
Supporting Infrastructure: limit of grid availability to
reach potential projects site No grid priority determined
NoFiTsupport for off-grid application
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Cont
Market development: unclear how the market for RE can bedeveloped, and innovation is promoted
Participation of individual and small investors are questionable
Technology innovation is questionable
Financing: subsidized by PLN & government No specific funding available for FiT
PLN blends cost of purchasing RE into its production costcalculation, that will determine the level of subsidy fromgovernment
Public/consumer benefits
Excessive return on investment for mini-hydro investment (> 20%).
No direct link to the quality of services (improving reliability)
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Move from BadFiTto GoodFiT
LinkingFiTwith the broad national policy objective (e.g. renewable
energy target 25/25)
Develop/improve policy and regulatory capacity of the policy makerand energy regulator institution
Payment based on RE generation Differentiating the tariff prices to account for different technologies,
project sizes, locations, and resource intensities
Guaranteed grid access (investment for grid expansion)
Eligibility for all users and RE developers
A reliable purchase obligation Financing supports
Ensuring high degree of transparency and accountability, ensurepublic benefits.
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THANK YOU
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