Overview of IndonesiasEnergy SectorCurrent Status & Development Plans Indonesian Institute for Energy EconomicsEast Asia Science and Security MeetingBeijing, 23-24 September 2010

Presentation OutlineUpdates in Energy SectorProductionConsumptionPrices SubsidiesInstitutional FrameworkNuclear PlansLEAP Work

UPDATES IN ENERGY SECTOR

Production (1)Source: MEMR, Hanbook of Energy and Eocnomics Statistics 20092008Exclude conventional biomassInclude conventional biomass

Production (2)BAU: no significant change in energy policyScenario Climate1: Policy interventions: energy conservation and renewable energy developmentScenario Climate 2: GOI commitments in emission reduction. Measures include energy conservation, RE development, clean coal technology, nuclearOutlook 2009:Source: Center of Data and Information, MEMR 2009

Production (3)1 Emission from peat fire from van der Werf et al (2008). Estimated by MoF (2009) and Bappenas (2009)Source: MoE (2009).GHG Emission By Sector

Production (4)Indicates very high inefficiency in the countrys existing 9 refineries (total capacity around 1 Million barrel per day)Electricity sector is the 3rd largest emitter. Emission by Energy Sub Sectors

Production (4) Plan for Electricity Capacity AdditionsCrash Program 1:Only 600 MW by 2010Difficulties to secure financing & coal supply are significant factor delaying the progressCrash Program 2:Expect significant role of private sectorOngoing effort to push geothermal developmentFinancing is still unclear

Consumption (1)Industry has the most variety of energy optionsLarge share of household energy is still met by conventional biomass, exact figure not knownTransportation is still heavily oil dependentDemand growth accelerates, despite various effort to curb it

Consumption (2)Substitution from Kerosene to LPGTo decrease dependency on kerosene.To provide practical, clean, and efficient cooking fuel for household and small businesses. To improve access to modern energy to biomass users in rural areasTo reduce burden in the State Budget (LPG subsidy < kerosene subsidy).

Consumption (3)GOI plans to limit consumption of subsidized petroleum fuelsA Roadmap of Fuel Subsidy is being prepared, expected to be applied in 2011 2014.Targeted to save 40% of current budget for energy subsidy (Evita Legowo, 2010)Several mechanisms are under consideration:By type of vehicleBy cylinder capacity of vehicleBy year of vehicle production

Few and intermittent energy efficiency measuresGovernment officesSome programs in the industry and commercial sectorsEnergy saving lamps for householdsLimited impacts, since mostly are based on short term government programs. No support from the financial sector for those interested to continue EE implementation after GOI programs concluded.

Prices (1) Price gap among consumer categories, incentive for mis-useGASOLINE

Prices (2) Decline in prices and also price gap in recent yearsKEROSENE

Prices (3)Feed in TariffGeothermal: Other renewable energy: Microhydro as benchmarkMultiplier factor: Java = 1, other islands > 1The regulation stated that PLN is obliged to purchase electricity from renewable energy. However, various hurdles in implementation.Electricity TariffHigher tariff, except for customer in 450 VA, 900 VA and above 6600 VA. New scheme: flat tariff (Rp/kWh)Customer groups with non-adjusted tariff have to pay higher price for uses higher than the national average benchmarkEffective 1 July 2010. The first adjustment in more than 6 years.

Subsidies

Institutional Framework (1)New PoliciesGOI commitment on voluntary emission reduction of 26% with own budget and additional 15% with international support by 2025Many initiatives to encourage development of renewable energy Take into account future role of new energy (CBM, liquified coal, sometimes also nuclear)Central government distribute responsibilities on managing energy security towards local government

RegulationLaw 4/2009 on Mineral and Coal MiningLaw 30/2009 on ElectricityLaw 25/2009 on Public ServiceGovernment Regulations on forest designation, function and utilization, spatial managementGovernment Regulations on mining areas, mining business

Institutional Framework (2)New InstitutionsNational Energy CouncilNational Council on Climate ChangeDirectorate General of Renewable Energy and Energy Conservation

Nuclear Plans (1)Legal references on Nuclear EnergyLaw 10/1997 on Nuclear EnergyLaw 30/2007 on Energy (nuclear is listed amongst sources of new energy)Presidential Decree 5/2006 on National Energy Policy (nuclear included in the national energy mix target 2025)Challenges in implementationUnclear plan, lack of information for general publicMany institutions are not involved during planning processInconsistent support from Government

Nuclear Plans (2)Role of various institutions are unrecognized No explicit statement on the role of Min of Education, MoF, Min of Industry, PLN, Local Government, etcLead to no sense of ownership, limited involvement and lack of supportEconomic and financialLack of informationLimited window to exercise independent assumptionsVarious cost elements have never been estimatedUnderstatement of financial requirementsLesson learnt: The First Fast Track Program(development of 10,000 MW coal power plants)

Nuclear Plans (2)Indonesia Energy Mix 2025

Nuclear Plans (3)Target for New & Renewable Energy, 2030Source: Center of Data and Information, MEMR 2009Nuclear appears in Climate-2 Scenario between 2025 - 2030

LEAP WORK

AgendaData & Information SourcesModel StructureAssumptions & ScenariosBase Case (BC)Nuclear Power (NP)Interim ResultsConclusions & The Next Step

Data & Information SourcesStatistics of Indonesia (Bureau of Central Statistics)Population, family size, and Total GDP Urban Rural population percentageCooking fuel saturation in the Household branch Transportation Statistics (Ministry of Communications)Handbook of Energy & Economic Statistics of IndonesiaSpecific GDP numbers on Commercial and Other sectorsFuel share data for Commerce, Industry, and Other sectors (Agriculture, Construction, and Mining) Transmission & Distribution losses of Electricity and Natural GasState Electric Company StatisticsElectrification ratioBlueprint of National Energy ManagementNew & renewable energy utilization planOutlook Report (Center of Data and Information MEMR)General assumption for model scenarios

Model StructureTransformationNatural Gas & Electricity T&D ModuleBriquette PlantElectricity GenerationLNG ProductionOil RefineryCoal MiningBiofuel PlantOil ProductionNatural Gas ProductionDemand HouseholdUrbanRuralElectrifiedNon-electrifiedCommerceIndustryTransportPassengerFreightOther Sectors

Assumptions & ScenariosGeneral AssumptionsPopulation growth 1.05% per yearGDP growth 6.49% per year100% of electrification ration in 2030Coal reserve 18.7 billion tonesCoal export 158 million tones per yearNatural gas reserve 116 TSCFOil reserve 8,4 billion barrelsRealization of Electricity Crash Program phase 1 & 2Implementation of Kerosene to LPG substitution program as in the Blueprint of Kerosene to LPG SubstitutionNew & Renewable Energy utilization to produce power

General AssumptionsPower Sector HighlightElectricity Crash Program

Type of Power PlantYearTotal Capacity (MW)Coal PP [Crash Program 1]201070782011787220129465Coal PP [Crash Program 2]2016100020172616Gas PP [Crash Program 2]20141440Hydro PP [Crash Program 2]20141174Geothermal PP [Crash Program 2]20144733

Power Sector Highlight (2)New & Renewable Energy UtilizationCapacityAddition in MWTotal capacity from NRE: 8718.2 MWin 2025

YearGeothermalMicrohydroSolarWasteWind20101.1220111020121020131020142010201529012010.540201618010.51020172406010.510201872010.510201924010.510202073010.540102021120017010.5102022121010.5102023149010.51020248903010.51020257603210.510

ScenariosBase Case (BC)

Nuclear Power (NP)

Goal: to analyze the impacts of NPP implementation in Indonesia

General Assumptions + No NPP until 2030General Assumptions + 4 GW NPP operation in 2028

Interim ResultsEnergy Demand by Final Energy Type

Interim ResultsNuclear PP on Total Power Production

Interim ResultsCarbon Dioxide Emission by Scenarios

Conclusions and Next StepsConclusionSmall contribution of NPP in total power generationChance to reduce more CO2 emission in NPP implementation

Next StepsEnergy efficiency scenario as in Indonesias climate change mitigation plan in energy sector

Thank YouIndonesian Institute for Energy EconomicsJl. Ciranjang No. 6, Kebayoran BaruJakarta 12180Telp: +62-21-722 0007Fax: +62-21-723 1064www.iiee.or.id