Renewable Energy Webinar · opportunities for FDI into Indonesia according to Canadian investors. ... Indonesia’s biomass sector 17.6% 5.0% 8.5% 71.2% 50000 MW Of primary energy

Renewable Energy Webinar November 1st, 2016

Dr. Henry Loewendahl, CEO WAVTEQ

Mr. Scott Bryan, Executive Director Client Services, ROI [email protected]

[email protected]

Indonesia Investment Coordinating Board

Contents• Introduction 3• Solar sector 9• Biomass sector 14• Hydroelectricity sector 20• Geothermal sector 24• Wave & Tidal sector 29• Indonesia’s competitiveness 31• About BKPM 41• Appendix 1: BKPM investor support 46• Appendix 2: FDI regulations 53• Appendix 3: Feed-in tariffs 59


Introduction


About Indonesia

Indonesia’s GDP will increase by over 150% to $2.2 trillion by 2025 –close to Canada’s

Indonesia has the 4th

largest population in the world (261 million as of August 2016)

Indonesia is one of the fastest growing economies in the world in the world (>5% p.a. 2012-16)

Access to the $2.5 trillion ASEAN market with a population of 620 million


Canadian investment in Indonesia

invested by Canadian firms

in Indonesia

of Canadian investors in Indonesia are

planning to re-invest in Indonesia

(WAVTEQ, June 2016 survey)

of Canadian investors in Indonesia would recommend other

Canadian companies to invest in Indonesia

(WAVTEQ, June 2016 survey)

Renewables was the sector with the best opportunities for FDI into Indonesia according to Canadian investors.


Why invest in the energy sector?

The government is targeting private sector energy investment of $80 billion by 2025

Up 60 gw of private power plants will be approved by 2025

Track record

$10 billionFDI in the energy related

sector in the last five years (2011-15)

Demand for energy

7.7% increase per annum

through to 2020


Demand for energy in Indonesia• Energy consumption increased by almost 150% from 2005-2014

• Electricity generation is forecast to increase by >50% from 2015-2020

Final energy consumption, thousand barrel oil equivalent, Indonesia, 2005-2020

Source: WAVTEQ based on Ministry of Energy and Mineral Resources- Handbook of Energy and Economic Statistics 2015 and EIU

0

500000

1000000

1500000

2000000

2500000

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

1000’s


Support for renewable energy

The government meet has a target of 25% of energy from renewable sources by 2025

BKPM is targeting $100 billion of green investment by 2019

In total, the Indonesian government has proposed 508 power projects (conventional and renewable) from 2015-19

Renewables


Solar sector


Indonesia’s solar sector

Growth in solar investment

$3.8 billion in solar energy projects targeted

from 2015 to 2025

Solar auction

90+ Solar PV / diesel hybrid projects

to be auctioned in 2018

Government support

1.4 GWnational target installed solar

photovoltaic capacity by 2025

An estimated US$3.8 billion of investment will be required from 2015 to 2025.


Solar investment potential in Indonesia

Most of Indonesian receives high intensity of solar radiation, with the average daily radiation about around 4 kWh/m.

Solar photovoltaic capacity and electricity generation target, Indonesia, 2015-2025

Source: BKPM http://www.all-energy.co.uk/__novadocuments/81855?v=635646359979030000 –

As an archipelagic country, thousands of islands do not have access to electricity (27% of the population is still off the grid)

http://www.all-energy.co.uk/__novadocuments/81855?v=635646359979030000


Planned solar projectsPLN’s Solar PV Development Program

Source PLN / Asian Development Bank 2015


Solar case studies

In January 2015, Canadian Solar Inc. (CSI) announced a 30 mw solar manufacturing plant in Indonesia with $70 million funding secured from the IFC.

At the end of 2015, construction was finished on Indonesia’s largest Solar Power Plant in Kupang, Oelpuah village. LEN Industri builds and operates the plant with its own funding of approximately US$11.2 million


Biomass


Indonesia’s biomass sector17.6% 5.0% 8.5% 71.2% 50000 MW

Of primary energy supply from biomass

Of primaryenergy supply from bio-fuel

Of industrial energyrequirements from biomass

Of household energyrequirements from biomass

Biomass power generation potential


Biomass – energy supply

240000

250000

260000

270000

280000

290000

300000

310000

320000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Primary energy supply of biomass, Indonesia, thousand BOE (2005-2014)

Source: Ministry of Energy and Mineral Resources- Handbook of Energy and Economic Statistics 2015


Government support

25% $100 bn 508 Feed-in-tariff

Target of energy from renewable sources by 2025

Investment in green energy by 2019

Proposed powerprojects from 2015 to 2019

To encourageinvestment in renewable energy

Waste to energy Partnership Incentives

Strong focus by government to encourage use of waste from domestic, agriculture and wood

Waste-to-Energyscheme in partnership with organisations including EU

Strategic Policies, incentives and regulations to promote use of solid waste from municipalities


Case studies

Sinar Mas, through its subsidiary Asia Pulp & Paper (APP), is investing around USD780 million to develop 10 biomass power plants over the next eight years with a total generating capacity of 1000 mw.

Louis Dreyfus Company has established a bio-fuel plant in Lampung province in Sumatra, with the capacity to produce 470,000 million tons of bio-fuel annually.


Biomass waste heat recovery firms


Hydroelectricity


Hydroelectricity

1. Potential for hydroelectricity•Installed capacity is 5.9 GW•Potential capacity is 75.6 GW

2. Growth in Hydroelectricity investment•Indonesia is targeted 26 new hydro power plants•11 hydro projects are in various stages of appointment or construction

3. Government support for Hydroelectricity•Feed-in tariffs have been introduced for Hydroelectricity•The government is targeting 8.3 GW of hydropower by 2024


Hydroelectricity consumption

1,068 1,101

1,456 1,479 1,5221,556 1,599

1,641 1,683 1,726

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Gross domestic energy consumption (KTOE)*, Indonesia, 2011-2020

Source: Economist Intelligence Unit Energy Indicators & Forecasts *Kilotonne of oil equivalent (KTOE)


Hydroelectricity case study

Vale Brazil)

• Responsible for the running of three hydroelectric power plants:– Larona- operations commenced in 1979, consists of three turbines with

power capacity of 165 MW

– Balambano- consists of two turbines with power capacity of 110 MW and operations began in 1999

– Kerebbe- newest of the three plants, began operations in 2011, with two turbines and capacity of 90 MW

• Main use of this energy is to increase nickel production by prioritizing cost efficiency

• Contributes 34% (10.7 MW) of their energy to Perusahaan Listrik Negara (PLN), the state owned electricity distributor


Geothermal


Geothermal sector in Indonesia

1. Indonesia has exceptional volcanic activity and is believed to harbour around 40% of the planet’s geothermal potential, with estimated resources and reserves totaling 28,000 megawatts (MW)

2. Sumatra holds most of these, followed by Java3. Current government planning is to boost installed

capacity to 6500 MW by 2025, up from some 1340 MW that were on stream in early 2014 (with projects for another 1500 MW in development)

4. Unlike most other forms of electricity generation, geothermal is dominated by IPPs (non-SOEs)


Geothermal sites

299 identified potential geothermal locations


Geothermal case studies


Wave and tidal


Wave and tidal energy

1. Indonesia has an ocean area reach out of 5,000,000 km22. This is biggest archipelago country in the world and has

great ocean energy potential3. Ocean wave energy had the theoretical potency 510 GW,

the technical potency 2 GW, and the practical potency 1,2 GW (BPPT, 2014)

4. The Energy and Mineral Resources Ministry of Indonesia has announced plans for the development of wave and current power plants in the country

5. Pilot projects started in 2015


Wave and tidal energy case studiesSabella, French tidal energy developer, signed an MOU with PLP and MEINDO to supply tidal turbines from 100 kW to 2.500 kW in capacity that would power remote areas of Indonesia

Akuo Energy and Pertamina have also signed an MoU for developing renewable energy projects, including OTEC plant, at various sites in Indonesia


Indonesia’s competitive

position


Size of market

0

500

1000

1500

2000

2500

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Indonesia

Philippines

Thailand

Malaysia

Vietnam

Singapore

Indonesia’s GDP 2025 forecast:• Increase >150% to $2.2 trillion• Larger than India’s in 2015• Nearly same size as Canada’s ($2.6 tn)• GDP/capita: $3370 (2015) to $7840

GDP 2011-2025, US$ billion (EIU forecasts)


Size of population

6

31

69

92

101

255

7

36

70

103

128

308

0 50 100 150 200 250 300 350

Singapore

Malaysia

Thailand

Vietnam

Philippines

Indonesia

Population projection (mid-2030, Millions) Population (2015, Millions)

Source: fDi Benchmark (IMF and Population Reference Bureau World Population Data Sheet)

Population by country, 2015-2030

Indonesia’s population is the 4th largest in the world and will increase to over

300 million people


Skilled workforce

Source: fDi Benchmark (Global Competitiveness Report, World Economic Forum, Switzerland, 2015-16 )

Availability of Scientists and Engineers – out of 7 (2015)

3.9

4.0

4.2

4.3

4.5

4.6

3.4 3.6 3.8 4 4.2 4.4 4.6

Vietnam

Philippines

India

Thailand

China

Indonesia


Available workforceUnemployment rate, 2015-2020

3.6%

6.0%

4.1%

3.2%

2.4%

2.0%

0.8%

5.9%

8.4%

6.0%

4.0%

2.9%

2.9%

1.9%

0.8%

6.3%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9%

India

Philippines

China

Malaysia

Vietnam

Singapore

Thailand

Indonesia

Forecast Unemployment Rate in 2020 (%) Unemployment Ratein 2015 (%)

Source: fDi Benchmark (Economist Intelligence Unit March 2016 & International Monetary Fund 2016)

Indonesia’s has the least tight labour force in ASEAN


Low taxes

Total Tax Rate (% profit) in 2015

61%

68%

43%

40%

39%

28%

30%

0% 10% 20% 30% 40% 50% 60% 70% 80%

India

China

Philippines

Malaysia

Vietnam

Thailand

Indonesia

Source: fDi Benchmark (World Bank Doing Business 2016)

Indonesia’s has low effective tax rates


Labour costs for production positionsLabour costs by country for production positions, USD, 2015*

$10,277

$807

$7,672

$6,938

$5,562

$4,963

$5,748

$8,301

$5,156

$5,294

$4,807

$4,938

$4,422

$4,493

$5,814

$3,465

$2,947

$1,424

$2,273

$2,297

$2,490

$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000

China

Malaysia

Thailand

India

Philippines

Vietnam

Indonesia

Production Operative (Unskilled) Production Operative (Skilled)

Production Operative (Highly Skilled)

Source: fDi Benchmark. Note: Singapore labour costs are $13,323 for unskilled, $26,086 for skilled, and $32,907 for highly skilled). *Includes wages and statutory social insurance costs paid by employer

Indonesia’s has highly competitive

labour costs


Labour costs for engineering positions

Labour costs by country for an engineer, USD, 2015*

Source: fDi Benchmark

Indonesia’s has highly competitive

labour costs

57537

24030

15893

15840

15552

13801

12000

11029

0 10000 20000 30000 40000 50000 60000 70000

Singapore

China

India

Malaysia

Thailand

Indonesia

Philippines

Vietnam


InnovationTotal of Patent applications, non-residents (foreign investors) (2014)

3255

3960

6267

6924

9009

7321

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000

Philippines

Vietnam

Malaysia

Thailand

Singapore

Indonesia

Source: fDi Benchmark (World Bank World Development Indicators)


Low cost of living

Cost of Living Index, 2015*

Source: fDi Benchmark *Rating 0-10 (0=lowest cost of living; 10=highest cost of living) (2014)

5.7

3.28

2.22

2.14

1.86

1.82

1.4

1.79

0 1 2 3 4 5 6

Singapore

China

Malaysia

Thailand

Philippines

Vietnam

India

Indonesia


About BKPM and support services

for investors

The Indonesia Investment Coordinating Board (BKPM) 42

BKPM The Indonesia Investment Coordinating Board

As the primary interface between business and government, BKPM is

mandated to boost domestic and foreign direct investment through creating a conducive investment climate.

BKPM was restored to Ministerial status in 2009, and reporting directly to the President of the Republic of Indonesia.

This investment promotion agency’s goal is not only to seek more domestic and foreign investment, but

also to seek quality investments that improve

social inequality and reduce unemployment.

The agency works as a proactive advocate for investments as well as a matchmaker for investors.

Who we are

ABOUT BKPM


About BKPM

What We Offer to Investors? Simplification of business start up and licensing procedures, including

the “one-stop shop” (PTSP) licensing provision at BKPM, 60% reduction of application forms (from 38 to 15 forms).

Establishing an Investor Relation Unit at BKPM for information, facilitation and queries handling from existing and potential investors.

Rolling-out of Electronic Information Services and Investment Licensing (SPIPISE) in 105 PTSP throughout Indonesia.

Helping contain various obstacles and giving consultation on problems investors face in the conduct of investments.

Facilitating foreign workers permit.

Launching of investment tracking system and followed by its

implementation in other Ministries and Regional Governments.

Our services for investors

One-Stop Service

(PTSP) at BKPM

One place

22 ministries integrated

3-hourService

DirectConstruction

90%Regional PTSP formed. 61% regional PTSP

implement e-licensing.

Industry, power, oil & gas, tourismat one place

All sectors

162 permits are delegated

to BKPM One-Stop Integrated Services

Improvement of Investment Service

The Investment Coordinating Board of the Republic of Indonesia

45

Badan Koordinasi Penanaman Modal (BKPM)


Jl. Jenderal Gatot Subroto No. 44Jakarta 12190 - Indonesia

t . +62 21 525 2008

f . +62 21 525 4945

e . [email protected]

www.bkpm.go.id

Indonesia Investment Promotion Centre (IIPC)

Thank You


Appendix 1: BKPM support services for

foreign investors (detailed)

The Indonesia Investment Coordinating Board (BKPM)

47

BKPM

• Arrive at One-stop Integrated Service at BKPM directly from the airport.

• Consult with Director of Investment Service.

• Submit the required documents & data.

8 permits obtained + 1

Wait at the lounge while documents are processed by BKPM, in-house notary, ministries, & other government institutions.

Obtain eight documents & letter of land availability within three hours to start your business.

Certainty to work• RPTKA / Employment plan• IMTA / Working permit

Certainty to start a business• Investment license• Certificate of incorporation• NPWP / Tax registration• TDP / Company registration

Certainty to import capital goods• APIP / Import identification• NIK / Customs registration

Accurate land Information• Letter of land availability

Investment Service Reforms

3-hour Service (I23J)Available for investors with minimum (new

or expansion project) investment of IDR 100 billion (USD 8 million) and/or employing

1,000 local workers.

Or supplier of the existing manufacturing company with minimum investment of IDR

100 billion (USD 8 million) and/or employing 1,000 local workers.

No requirements for investment in infrastructure sector.

Source: Chairman BKPM Reg. No. 6/2015 on Priciple License


48

3-hour Investment Licensing Service for Infrastructure

No Minimum investment or workers requirement

Currently there are three sectors is eligible and one

documents can be obtained with

three-hour service.

Investment Priority Service

Ministry of Energy and Mineral Resources (MEMR) Regulation No. 15 of 2016 regarding three-hour license service in Energy and Mineral Resources. Sectors/license that is available:• Geothermal sector (IPB),• Electricity producer (IUPTL-S),• Electricity transmission sector (IUPTL-S),• Temporary downstream oil and gas business licenses.


49

Direct Construction (KLIK)No Requirements

•No minimum investments or workers is required.

•Available for selected industrial parks. •Construction permits can be obtained in parallel with construction process.

Investors can directly start their project construction before obtaining construction permits. This service is

supported by both Central and Regional Governments.

Obtain investment licence at One-stop Integrated Service (PTSP) at national or regional level.

• Survey a land within selected 14 industrial parks (in North Sumatera, Banten, West Java, Central Java, East Java and South Sulawesi).

• Acquire the land for your industry.

• Start the construction of your project. No other permits are required.

• Apply for building construction permit/IMB & environmental permit, and other regional licenses in parallel with construction process.

Priority Investment Service


50


51

No Industrial Estate Sell Price USD/M2

Lease Price USD/M2

Total Area(ha)

Available Area (ha)

1 Java Integrated Industrial and Port Estate 150 7.5/year 2,993.27 1,761.4

2 Kendal Industrial Park 110 3.5/month 2,700 860

3 Bukit Semarang Baru Industrial Estate 193 - 115 40

4 Wijayakusuma Industrial Estate 115 2.4 – 3.1/month 250 100

5 Karawang Industrial City (KIIC) Negotiable Negotiable 1,470 293

6 Bekasi Fajar Industrial Estate 269 5.76/month 1.500 300

7 Delta Silicon 8 Industrial Park 223 - 230 158

8 GT Tech Park at Karawang Industrial Park 170 – 220 - 400 100

9 Suryacipta City of Industry 170 7.25/month 1.400 100

10 Krakatau Industrial Estate Cilegon 150 - 200 3.5 – 4/month 1,152 563

11 Modern Cikande Industrial Estate 152 - 3,175 1,975

12 Wilmar Integrated Industrial Park 150-175 15-20 /year 1.748 800

13 Medan Industrial Estate 144 2.4/month 780 100

14 Bantaeng Industrial Park 4-15 - 3.000 3.000

Industrial Estate with KLIK Facilities (data maychange anytime , exclude 10% VAT)


Import Facility for Capital Goods

Acceleration and certainty in custom clearance processFaster & Certain•Capital goods do not require screening.•Cutting the processing time from 3-5 days to only 30 minutes.

Simple requirements • Projects under construction • Obliged in reporting quarterly

investment activities (LKPM) • Recommendation from BKPM

CUSTOMS CLEARENCE

Four customs checking status:

•Red lane is for new

companies.Physical & document checks before transported from ports.

•Yellow laneDocument check before goods transported from ports.

•Green laneDocument check after goods transported from ports.

•Main Partner Priority for companies

with proven track record. No checking required.

New Facility:

Status upgrade from red to green lane for new companies under construction

Improvement of Investment Climate


Appendix 2: Foreign

investment regulations


54

Law No25/2007 on InvestmentPresidential Reg. No. 39/2014 on Negative Investment ListChairman BKPM Reg. No.14 & 15/2015 on Investment Licensings


55

56


56

TAX ALOWANCE

Based on Government Regulation No. 9/2016, MoF Regulation No. 89/PMK.010/2015 and Chairman ofBKPM Regulation No. 18/2015, investment in new and renewable energy as Power Producer (KBLI 35101) iseligible for income tax facilities of:a.A reduction in net income of up to 30% of the amount invested, pro-rated at 5% for six years of thecommercial production, provided that the assets invested are not transferred out within six years.

b.Acceleration of depreciation & amortization for building and non-building.

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

d.Extension of tax losses carry forwards for 5 years and up to 10 years (if it meets certain criteria).for 5 yearsand up to 10 years (if meet certain criteria).* Tax Allowance application is submitted to OSS-BKPM and will be processed in 25 days.

TAX HOLIDAY

Based on Government Regulation No. 94/2010, MoF Regulation No. 159/PMK.011/2015, and Chairman ofBKPM Regulation No. 19/2015, corporate income tax exemption for the period of 5 to 15 years from thestart of commercial production is granted for company with minimum investment project value of IDR 1Trillion (approx. USD 69 Million) in 9 priority “pioneer industries” including infrastructure not under PPPscheme, for example renewable energy power plant.* Tax Holiday application is submitted to OSS-BKPM and will be processed in 45 days.

IMPORT DUTY EXEMPTION

Based on Minister of Finance (MoF) Regulation No. 66/PMK.010/2015, , and Chairman of BKPM RegulationNo. 16/2015, all green-field or expansion investment of power plant for public usage (not includingtransmission, distribution and supporting services) are granted import duty exemption on importedmachineries and equipment (for 2 years) for the company usage during construcktion period, provided thatthey are not or inadequately produced in Indonesia.* Import Duty Exemption application is submitted to OSS-BKPM and will be processed in 5 days.

Feed-in Tariff (FIT) or Ceiling Price (CT)

FIT is a policy mechanism which obligates the State Electricity Company (PLN) under PPA withoutnegotiation and further price escalation to purchase the electricity generated from mini/micro hydro,bionergy (biomass/biogas), solar PV and municipal waste, at a regulated/incentivized price.

CP is another policy mechanism which regulates maximum offering price submitted by biddingparticipants (IPPs) during the procurement of hydropower and geothermal as well as coal-fired, gas,machine-gas power plants, before winning bidder to be awarded PPA with PLN.

Selling tariffs for electricity generated from other new & renewable energy sources like wind, marineenergy, OTEC, nuclear and others, which is (currently) not regulated under FIT or CP schemes, are basedon B2B negotiation with PLN.

INVESTMENT INCENTIVES FOR ELECTRICITY SECTOR


57

1. Right of Ownership (“Hak Milik”) Certificate; freehold, only applied for Indonesian individuals.

2. Right to Manage (Hak Pengelolaan or “HPL”) Certificate; leasehold, only applied for Indonesian state-owned or regionalgovernment-owned enterprises.

3. Right to Cultivate (Hak Guna Usaha or “HGU”) Certificate; leasehold• Entitled for Indonesian Limited Liability Company (local, foreign, JV) to cultivate, harvest and own agribusiness products on the

purchased land.• Granted for the period of 35 years, can be extended to another 25 years, and renewable to 35 years.

4.Right to Build (Hak Guna Bangunan or ”HGB”) Certificate; leasehold• Entitled for Indonesian Limited Liability Company (local, foreign, JV) to build and own all

buildings and facilities on the purchased land.• Granted for the period of 30 years, can be extended to another 20 years, and renewable to 30

years.

5. Right to Use (“Hak Pakai”) Certificate; leasehold• Entitled for any Indonesian Limited Liability Company (local, foreign, JV), foreign individuals, foreign representative to use land

and own all buildings and facilities on the purchased land for office or house.• Granted for the period of 25 years, can be extended to another 20 years, and renewable to 25 years.

* The land titles are registered at the Regional Land Office (subordinate of the National Land Office, Badan Pertanahan Nasional or“BPN”).** Land transaction must be processed by a Land Deed Official (Pejabat Pembuat Akta Tanah or “PPAT). Most notaries are PPATofficials but PPAT officials need not be notaries. In rural areas, PPAT officials are often local government officials, such as the “camat”(a district head) or the head of the Regional Land Office, who has jurisdiction in the district in which the property is situated.

(Agrarian Law No. 5 1960)

LAND TITLE REGISTRATION

58Indonesia Investment Promotion Centre (IIPC) - Overseas Representative of Indonesia Investment Coordinating Board (BKPM) in London, UK

Law No 30/2009 on Electricity“Both public and private sectors are allowed to participate on power generation, transmission, distribution, sales of electricity as IPPs (Independent Power Producers), PPUs (Private Power Utilities) or CPPs (Captive Power Plants).”

* PPUs must hold a “Business Area Approval” (Penetapan Wilayah Usaha) to generate, transmit, distribute electricity to their owncustomer base (such as tenants of an Industrial Estate). PPUs may sell excess capacity to PLN or directly to end-customer, subjectto the approval of the relevant Minister, Governor or Mayor/Regent (which is likely in remote areas where customers are notconnected to the PLN’s grid). PPU may rent PLN’s grid (transmission & distribution) under “Power Wheeling” mechanism.

President Regulation No 44/2016(popularly known as Negative Investment List)Electricity Sectors Maximum Foreign Share Ownership Specific

Licences

Power Plant: IPP/PPU/CPP (KBLI: 35101)

< 1 MW Closed for FDI IUPTL-S & IUPTL-T (only

for IPP & PPU), PWU

(only for IPP), IO / SKT /

Laporan (only for CPP, SLO

1 – 10 MW 49 %

=< 10 MW 67 % (for Geothermal Power Plant)

> 10 MW 95 % (for non PPP project) or 100% (for PPP project during concession period)

Transmission (KBLI: 35102) 95 % (for non PPP project) or 100% (for PPP project during concession period)

Distribution (KBLI: 35103) 95 % (for non PPP project) or 100% (for PPP project during concession period)

Consultant (KBLI: 71102) 95% IUJPTL

Construction/EPC (KBLI: 42213) 95% (for Power Plant), 49% (for Transmission), Closed for FDI (for Distribution)

Operation & Maintenance/O&M (KBLI: 43211) 95%

Inspection & Testing (KBLI: 71204) 49% (for Power Plant & Transmission), Closed for FDI (for Distribution)

BUSINESS MODEL FOR ELECTRICITY


Appendix 3: Feed-in tariffs

60


Feed –in Tariff (FIT)Mini/Micro Hydro Power Plant (PLTM/PLTMH)

Source: MEMR Regulation No 19 of 2015.

No Region Feed-in Tariff (cent USD/kWh)

River Flow Using dam and/or irrigation channel)MV (up to 10 MW) LV (up to 250 kW) MV (up to 10 MW) LV (up to 250 kW)Y1-Y8 Y9-Y20 Y1-Y8 Y9-Y20 Y1-Y8 Y9-Y20 Y1-Y8 Y9-Y20

1 Java, Bali & Madura 12 7.5 14.4 9 10.8 6.75 13 8,12 Sumatra 13.2 8.25 15.84 9.9 11.88 7.425 14.3 8.913 Kalimantan &

Sulawesi14.4 9 17.28 10.8 12.96 8.1 15.6 9.72

4 West & East Nusa Tenggara

15 9.375 18 11.25 13.5 8.4375 16.25 10.125

5 Moluccas & North Moluccas

15.6 9.75 18.72 11.7 14.04 8.775 16.9 10.53

6 Papua & West Papua 19.2 12 23.04 14.4 17.28 10.8 20.8 12.96

Note: FIT is levelized base price on generation bus bar applied after Commercial Operation Date (COD); including interconnection cost; with contract duration of 20 years; and based on:

grid connectivity: to MV (Medium Voltage, 20 kV) or LV (Low Voltage, 220 V), and operating years: Y1-Y8 (year 1st until year 8th) and Y9-Y20 (year 9th until year 20th ).

The State Electricity Company (PT PLN)—under Power Purchase Agreement (PPA)—is obliged to purchase electricity generated by Independent Power Producer (IPP) decided as “PLTMH Developer” by DG NREC-MEMR.IPP should refers to National Electricity Master Plan (RUPTL) 2016-2025.

61


Ceiling Price(CP)Geothermal Power Plant (PLTP)

Note: Region I: PLTP located in Sumatra, Java and Bali.Region II: PLTP located in Sulawesi, Nusa Tenggara, Halmahera, Mollucas, Papua and Kalimantan.CP is levelized base price on generation bus bar applied after Commercial Operation Date (COD); not including price escalation and interconnection costs; with contract duration of 30 years.The State Electricity Company (PT PLN)—under Power Purchase Agreement (PPA)—is obliged to purchase electricity generated by Independent Power Producer (IPP) winning IUP (Geothermal Mining License) through WKP (Geothermal Working Area) Open Tender mechanism held by MEMR, Governor or Mayor/Regent.IPP should refers to National Electricity Master Plan (RUPTL) 2016-2025.

Source: MEMR Regulation No 17 of 2014.

Year of Commercial Operation Date

(COD)

Feed-in Tariff (cent USD/kWh)

Region I Region II Remote areas which are situated in Region I & 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

62

The Indonesia Investment Coordinating Board (BKPM) Source: MEMR Regulation No 21 of 2016.

No Region Feed-in Tariff (cent USD/kWh)

Biomass (PLTBm) Biogas (PLTBg)

Capacity ≤ 20 MW>20 up to

50 MW> 50 MW

≤ 20 MW >20 up to 50 MW

> 50 MW

Grid Connection LV MV/HV HV HV LV MV/HV HV HV

1 Java Island 16.00 13.50 11.48 10.80 13.14 10.64 9.05 8.51

2 Sumatra Island 18.40 15.53 13.20 12.42 15.11 12.24 10.41 9.79

3 Sulawesi Island 20.00 16.88 14.35 13.50 16.43 13.30 11.31 10.64

4 Kalimantan Island 20.80 17.55 14.92 14.04 17.08 13.83 11.77 11.06

5 Bali, Bangka Belitung and Lombok Islands

24.00 20.25 17.22 16.20 19.71 15.96 13.58 12.77

6 Riau, Nusa Tenggara Other Islands

25.60 21.60 18.37 17.28 21.02 17.02 14.48 13.62

7 Maluku and Papua Islands

27.20 22.95 19.52 18.36 22.34 18.09 15.39 14.47

** As Excess Power 16.00 13.50 11.48 10.80 13.14 10.64 9.05 8.51

Note: FIT is levelized base price on generation bus bar applied after Commercial Operation Date (COD); including interconnection cost; with contract duration of 20 years (except as excess power max 1 year extendable); and based on:

capacity: up to 20 MW, above 20 MV up to 50 MW or above 50 MW grid connectivity: to LV (Low Voltage, 220 V), MV (Medium Voltage, 20 kV) or HV (High Voltage, ≥ 70 kV)

The State Electricity Company (PT PLN)—under Power Purchase Agreement (PPA)—is obliged to purchase electricity generated by Independent Power Producer (IPP) decided as “PLTBm/PLTBg Developer” by DG NREC-MEMR.

IPP should refers to National Electricity Master Plan (RUPTL) 2016-2025.

Feed –in Tariff (FIT)

Bio Energy Power Plant (PLTBm/PLTBg)

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Feed –in Tariff

Municipal Waste Power Plant (PLTSa)

Feed-in Tariff (cent USD/kWh)

Methane Gas Utilization using Sanitary Landfill,

Anaerob Digestion or Similar Technologies

Thermal Utilization using Termochemical Technologies

Up to 20 MW Up to 20 MWAbove 20 MW up to 50

MWAbove 50 MW

HV MV LV HV MV LV HV MV LV HV MV LV16.55 20.16 18.77 22.43 15.95 - - 13.14 - -

Source: MEMR Regulation No. 44 of 2015.

Note: Feed-in Tariff (FIT) is levelized base price on generation bus bar applied after Commercial Operation Date (COD);including interconnection cost; with contract duration of 20 years; based on grid connectivity: HV (High Voltage,above 20 kV), MV (Medium Voltage, 20 kV) or LV (Low Voltage, 220 V).The State Electricity Company (PT PLN)—under Power Purchase Agreement (PPA)—is obliged to purchase electricity generated by Independent Power Producer (IPP) decided as “PLTSa Developer” by DG NREC-MEMR from Open Tender mechanism held by Regional Government.


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Feed –in Tariff (FIT)

Solar PV Power Plant (PLTS)

Source: MEMR Regulation No. 19 of 2016.

No RegionQuota Capacity

(MW) Feed-in Tariff (cent

USD/kWh)

1 DKI Jakarta

150,0 14,5

2 West Java 3 Banten

4 Central Java and DIY

5 East Java

6 Bali 5,0 16,0

7 Lampung 5,0 15,0

8 South Sumatera, Jambi, and Bengkulu

10,0 15,0

9 Aceh 5,0 17,0

10 North Sumatera 25,0 16,0

11 West Sumatera 5,0 15,5

12 Riau and Riau Islands 4,0 17,0

13 Bangka Belitung 5,0 17,0

14 West Kalimantan 5,0 17,0

15 South and Central Kalimantan

4,0 16,0

16 East and North Kalimantan 3,0 16,5

17 North and Central Sulawesi, Gorontalo

5,0 17,0

18 South, Southeast and West Sulawesi

5,0 16,0

19 West Nusa Tenggara 5,0 18,0

20 East Nusa Tenggara 3,5 23,0

21 Maluku and North Maluku 3,0 23,0

22 Papua and West Papua 2,5 25,0

Note: Feed-in Tariff (FIT) is levelized base price on generation bus bar applied after Commercial Operation Date (COD); including interconnection cost; with contract duration of 20 years.

Quota capacity in total of 250 MW as stated in the table on the left, is the first phase from the total quota of above 5,000 MW to be offered by the Goverment. FIT could be differed on each phases.

The procurement will be held online by DG NREC-MEMR (registration, initial verification, quota request, final verification on first come first served verification basis).

The State Electricity Company (PT PLN)—under Power Purchase Agreement (PPA)—is obliged to purchase electricity generated by Independent Power Producer (IPP) decided as “PLTSa Developer” by DG NREC-MEMR.


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Feed-in Tariff (FIT) for:

• Home System (rooftops) Solar PV (likely will be under the net metering system), • Windfarm (probably a combination of FIT for small scale windfarm and Ceiling Price

for high scale one)

are currently being prepared by the Ministry of Energy and Mineral Resources.

By then, tariff(s) should be negotiated between IPP and PLN.

Latest Updates on Feed –in Tariff (FIT)

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Negotiation with PLN ... PLN’s Basic Cost of Electricity Production as Proxy??

No PLN’s Local Unit (Area/Distribution) Basic Cost of Electricity Production (as of June 2015)

IDR/kWh USD cent/kWh

1 Maluku and North Maluku 3,126 22.33

2 East Nusa Tenggara (NTT) 2,988 21.34

3 West Kalimantan (Kalbar) 2,701 19.29

4 Aceh 2,683 19.16

5 Papua and West Papua 2,680 19.14

6 Bangka Belitung (Babel) 2,671 19.08

7 West Nusa Tenggara (NTB) 2,481 17.72

8 North Sumatra 2,341 16.72

9 North & Central Sulawesi and Gorontalo (Sultenggo) 2,185 15.61

10 East Kalimantan (Kaltim) 1,882 13.44

11 Riau and Riau Islands 1,711 12.22

12 South and Central Kalimantan (Kalselteng) 1,613 11.52

13 South, South East and West Sulawesi (Sulselrabar) 1,437 10.26

14 West Sumatra 1,353 9.66

15 Lampung Distribution 1,351 9.65

16 South Sumatra, Jambi & Bengkulu (S2JB) 1,340 9.57

17 East Java Distribution (Disjatim) 1,137 8.12

18 Bali Distribution (Disbali) 1,218 8.70

19 Central Java and Yogyakarta Distribution (Disjateng) 1,153 8.24

20 Jakarta and Tangerang Distribution (Disjaya) 1,113 7.95

21 West Java and Banten Distribution (Disjabar) 1,099 7.85

INDONESIA (AVERAGE) 1,272 9.09


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ELECTRICITY TARIFF (Oct 2016)Fact: Outside Java, PLN sells electricity to consumers less than their Basic Cost of Electricity Production

Equals to ~ USD 11 cents/kWh

Renewable Energy Webinar · opportunities for FDI into Indonesia according to Canadian investors. ... Indonesia’s biomass sector 17.6% 5.0% 8.5% 71.2% 50000 MW Of primary energy

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