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Energy and Mineral Resources for People’s Welfare MINISTRY OF ENERGY AND MINERAL RESOURCES OF REPUBLIC OF INDONESIA DIRECTORATE GENERAL OF NEW. RENEWABLE.

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Presentation on theme: "Energy and Mineral Resources for People’s Welfare MINISTRY OF ENERGY AND MINERAL RESOURCES OF REPUBLIC OF INDONESIA DIRECTORATE GENERAL OF NEW. RENEWABLE."— Presentation transcript:

1 Energy and Mineral Resources for People’s Welfare MINISTRY OF ENERGY AND MINERAL RESOURCES OF REPUBLIC OF INDONESIA DIRECTORATE GENERAL OF NEW. RENEWABLE ENERGY. AND CONSERVATION ENERGY Jakarta. June 5 th 2014 Presented on: Indonesia International Geothermal Conference and Exhibition (IIGCE ) By : Rida Mulyana Director General of New. Renewable Energy and Energy Conservation

2 Energy and Mineral Resources for People’s Welfare I.BACKGROUND3 II.GEOTHERMAL POTENTIAL 5 III.REGULATION AND POLICY 7 IV.MAIN CONSTRAINT ON GEOTHERMAL DEVELOPMENT AND THEIR MEASURES10

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4 1.Indonesia’s primary energy supply is mainly based on fossil fuels, but the reserves decreased significantly. 2.Located in the Ring of Fire, Indonesia is blessed with an enormous geothermal potential, more than 28 GWe and the locations are spread in almost all regions. Up to 2014, total installed capacity of geothermal energy is only 1,341 MW (< 5%). 3.The Government intends to accelerate and speed up the development of geothermal energy and achieve the targets of 9,500 MW in 2025 as stated in Presidential Decree No. 5/2006 on National Energy Policy; 4.Up to 2014, The Government has determined 58 GWAs. Nineteen of the GWAs were established before the issuance of Law No. 27/2003 while 39 of them were established afterwards. 5.Geothermal Energy cannot be exported which make it suitable to meet domestic energy needs, reducing the dependence of foreign fuel and provide added value in energy diversification; 6.Geothermal energy is clean, environmentally friendly and sustainable; 7.The Government have been issued crash program to accelerate electricity generation. Geothermal power plant is expected to contribute 4,965 MW; 8.To boost geothermal development and provide certainty of geothermal energy price, goverment re-structure the regulation related to the purchase of electricity from geothermal power plant. GEOTHERMAL ROLES TO MEET NATIONAL ELECTRICITY DEMAND

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6 PLTP SIBAYAK: 12 MW PLTP GUNUNG SALAK: 377 MW PLTP WAYANG WINDU: 227 MW PLTP KAMOJANG: 200 MW PLTP DARAJAT: 270 MW PLTP DIENG: 60 MW PLTP LAHENDONG: 80 MW Note: Production Phase Ready to Developed Detailed Survey Preliminary Survey Sources : Geological Agency. MEMR (2013) PLTP ULUBELU: 110MW PLTP ULUMBU: 5 MW PLTP MATALOKO: 2.5 MW GEOTHERMAL DISTRIBUTION MAP

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8 I.Law No. 27/2003 on Geothermal II.Law No. 30/2007 on Energy Artc. 20 (4) : Government and regional government in accordance with their authority obliged to increase the supply of new and renewable energy. III.Law No. 30/2009 on Electricity Artc. 6 : The utilization of primary energy sources for national electricity need should prioritize the sources of new and renewable energy. IV.Government Regulation No. 59/2007 on Geothermal Business Activities, as amanded in GR No. 70/2010 V.Presidential Regulation No. 04/2010 on Assignment to PT. PLN (Persero) to Accelerate The Development of Power Plant from Renewable Energy, Coal and Gas VI.MEMR Regulation No. 11/2008 on The Procedure for Determination GWA VII.MEMR Regulation No. 02/2009 on The Guidelines for Geothermal Preliminary Survey Assignment VIII.MEMR Regulation No. 11/2009 on The Guidelines for Implementation of Geothermal Business IX.MEMR Regulation No. 22/2012 on Assignment to PT PLN (Persero) to Purchase Electricity from Geothermal Power Plant and Geothermal Power Purchase Benchmark Price by PT PLN (Persero) X.Regulation related to Financial Support and Guarantee: Government Regulation No. 62/2008 jo No. 1/2007 provides Income Tax Facilities For Investment MoF Regulation No. 139/PMK.011/2011 which Guarantee The Feasibility Of PT PLN (Persero) To Develop Power Plant Through Public Private Partnership Mechanism MoF Regulation No.03/PMK.011/2012 provides Geothermal Fund For Exploration Activities In Order To Mitigate Upstream Risk MoF Regulation No. 177/PMK.011/2007 regulates The Exemption Duties On Imported Goods PMK No. 22/PMK.011/2011 states that Government Borne Value Added Tax On The Imported Goods For The Upstream Activities GEOTHERMAL REGULATIONS

9 Energy and Mineral Resources for People’s Welfare GOVERNMENT POLICIES FOR GEOTHERMAL DEVELOPMENT Improving and Harmonizing Regulations and Policies Crash Program II on Electricity Generation Provide Fiscal Incentive, Financing Support, and Guarantee Preliminary Survey Assignment to Third Party which Provide “first right refusal“ Memorandum Understanding between Energy and Mineral Resources Minister and Forestry Minister Control-Mechanism by UKP4 Preparing The Second Amendment of PP No. 59/2007 on Geothermal Business Activities Revise Law No. 27/2003 on Geothermal Drafting The Revision of MEMR Regulation No.11/2009 on Guidelines of Geothermal Activities and MEMR Regulation No.22/2012 on Electricity Price from Geothermal Energy Geothermal is expected to contribute 4,965 MW POLICIES For the projects that enrolled in Crash Program II

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11  Overlapping Area - Most of geothermal potential are located in the forestry. Among 299 existing locations, around 6,157 MW (21.5%) are located in the conservation forest and around 6,391 MW (22.33%) are located in protected forests. - Solution : Revise The Law 27/2003 on Geothermal It is expected at the Plenary Session of Parliament, 24 June The Revision of Geothermal Law could be approved. - In addition, Ministry Of Energy And Mineral Resources is currently coordinating with the Ministry Of Forestry on issues related to forestry for geothermal activities.  Energy Price - Pricing policies which previously set by the government does not provide a significant impact on geothermal development. The inability of the policies to encourage the use of geothermal is considered because they are not taking into account some crucial aspects. - Solution : Government is preparing a new tariff model to boost geothermal development Ministerial regulations which regulates new geothermal prices has been signed by the Minister of Energy and Mineral Resources, and is currently waiting to be promulgated by the Ministry of Justice and Human Rights. MAIN CONSTRAINT AND SOLUTIONS

12 Energy and Mineral Resources for People’s Welfare The terms of "Mining" in geothermal business will be removed in order not to have conflict with the Law of Forestry; Geothermal activities can be conducted in protected, production, and conservation forest areas; Regulate the utilization of geothermal energy for direct use and indirect use (electricity); IUP’s holders are obligated to offer 10% of Participating Interest to State- owned enterprises (BUMN) or local government-owned enterprises (BUMD) before exploitation stage taken place.

13 Energy and Mineral Resources for People’s Welfare 1.The government is currently developing a comprehensive pricing structure in order to provide legal certainty and overcome constraints which have caused many geothermal projects been delayed. 2.The government set the ceiling price for electricity purchase by PT PLN (Persero) based on Commercial Operation Date (COD) and divide into 3 regions. 3.The ceiling price is the basic price at the time of Commercial Operation Date (COD), exclude escalation and construction of transmission lines. 4.The Escalation in the PPA will take into effect on the Commercial Operation Date (COD) of First Unit. 5.Transmissions lines are undertaken by PT PLN (Persero). 6.The selling price of electricity as the result of GWA tender which refered to ceiling price and written in the PPA is non-negotiable price, valid for 30 (thirty) years from the Commercial Operation Date (COD) of unit I. NEW TARIFF FOR GEOTHERMAL ENERGY

14 Energy and Mineral Resources for People’s Welfare Notes:  Distribution of Regions:  Region I : Sumatera, Jawa and Bali;  Region II : Sulawesi, West Nusa Tenggara, East Nusa Tenggara, Halmahera, Maluku, Irian Jaya and Kalimantan;  Region III : Remote Areas within Region I or Region II in which most electrical power are generated from fired-fuels power plants  CP is applied at the time of COD, exclude escalation and construction of transmission lines  Transmission lines are undertaken by PT PLN (Persero) G W A (Next Tender) Assignment to Purchase Electricity Based on GWA Tendering Price Tendering Price Result (≤ CP) Signing PPA * No later than 6 months from the date of Assignment The PPA has not signed within 6 months due to IUP’s Holder  subject to administrative penalties Tendering Process Ceiling Price (Consist of 3 Regions Price based on COD) IUP The PPA has not signed within a year due to IUP’s Holder  assignment letter will declared void by the Law GEOTHERMAL POWER PURCHASE MECHANISM (1/2)

15 Energy and Mineral Resources for People’s Welfare IUP’s Holder The Signing of PPA/SPA no later than 12 months after the proposal is received  Capacity Development  Extension of PPA Concession, Permit, and Contract Holders (Existing GWA) Designation of an Independent Party when the PPA is not signed Agreed Decline Minister Agreement Approval of Independent Party Agreed Minister Agreement  Power Plant Cap. Dvlpmt  Extension of PPA  Price Adjustment * Based on Both Parties Agreement  Development of steam cap.  Extension of PPA  Steam Price Adjustment * Based on Both Parties Agreement GEOTHERMAL POWER PURCHASE MECHANISM (2/2)

16 Energy and Mineral Resources for People’s Welfare PPA must be signed before 31 December 2014 ; Price adjustment after exploration and feasibility study; If PPA not signed before on 31 December 2014, can’t submit a price adjustment. PPA must be signed before 31 October 2014 or return IUP (re-tender) Price adjustment after exploration and feasibility study; If PPA not signed before on 31 October 2014, can’t submit a price adjustment. PPA must be signed before 31 August 2014 or return IUP (re-tender) Price adjustment after exploration and feasibility study; If PPA not signed before on 31 August 2014, can’t submit a price adjustment. PPA must be signed before 30 September 2014 or return IUP (re-tender) Price adjustment after exploration and feasibility study; If PPA not signed before on 30 September 2014, can’t submit a price adjustment Price adjustment after exploration and feasibility study; If exploration and feasibility study haven’t been finished and COD target’s hasn’t reached, IUP’s holder given punishment base on PPA TRANSITIONAL PROVISIONS Criteria 1 TRANSITIONAL PROVISIONS Tender winner which hasn’t been obtained IUP GWA: Seulawah Agam & Gunung Ciremai Criteria 2 IUP’s holder which has hasn’t been assignment and hasn’t been signed the PPA GWA: Hu’u Daha & Suoh Sekincau Criteria 3 IUP’s holder which has been assignment and hasn’t been signed the PPA GWA: Telaga Ngebel, Batu Raden, Guci, Gunung Endut, Gunung Tampomas, Cisolok Sukarame, Tangkuban Perahu. Criteria 4 IUP’s holder which has been assignment for negotiation and hasn’t been signed the PPA GWA: Jaboi, Jailolo and Sokoria. Criteria 5 IUP’s holder which has been assignment and has been signed the PPA GWA: Muaralaboh, Rantau Dedap and Rajabasa Negotiation TenderIUP Assignment PPA Exploration FS

17 Energy and Mineral Resources for People’s Welfare COD Years Ceiling Price (cent USD/kWh) Region IRegion IIRegion III

18 Energy and Mineral Resources for People’s Welfare Jalan Pegangsaan Timur No. 1A Cikini. Jakarta Pusat 10320; Telp/Faks : MINISTRY OF ENERGY AND MINERAL RESOURCES DIRECTORATE GENERAL OF NEW. RENEWABLE ENERGY. AND ENERGY CONSERVATION

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21 *) Geothermal Potential in Conservation Forest is estimated around MW Geothermal Potential Location : 299Geothermal Potential : 28.6 GW


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