Feed-in Tariff Solar Auction Indonesia Experiences of a local company during bid preparation PEP-Information Workshop Grid-connected Photovoltaic (PV) in Indonesia and Thailand Tuesday 4th March 2014 - GIZ-Representative Office Berlin

Horst Kruse - Advisor Renewable Energy Systems PT Kaltimex Energy (www.kaltimex-energy.com)

Feed-in Tariff Solar Auction Indonesia Experiences of a local company during bid preparation

Agenda

1. Brief Company Introduction

2. Conditions of FiT Online Solar Auction Program

3. Experiences during Bid Preparation

4. Lessons learned for bid preparation

5. Summary and Opportunities for German Companies

6. Q & A

KALTIMEX GROWTH … (in last 18 years)

Incorporated as foreign company in 1996.

Pioneer in IPP business in Indonesia.

Market leader for Dresser Rand Steam Turbines.

ESCO services in Australia, Shanghai & Indonesia.

One of the top three positions in Bangladesh for selling Gas Gensets (MWM).

Establishment of subsidiary in Philippines

Extending business range to RE technologies PV Solar/Hydro/WTE/Biomass

A Total Power Solution Company

Regions and system size defined by Ministry of Energy and Mineral Resources (ESDM)

Bid language “Bahasa Indonesia”

Quota : 140 MW for 80 locations (System Size 1 – 6 MW)

Bid Bond of 2% and Escrow Account of 20% of overall project price

PPA with PT Perusahaan Listrik Negara (PLN) for 20 years without price adjustments

Reverse bidding procedure - Bidding evaluation will consider lowest kWh selling price

as offered by participant

Highest benchmark price of 0.25 USD/kWh with incentive of 0.05 USD (USD 0.30/kwh) for locally made modules (local content ≥ 40%)

The kWh price still includes VAT (PPN) of 10% (25.0 22.73)

The purchasing price includes all cost from the power plant to the grid interconnection point

Payment only in IDR based on actual exchange rate prevailing at time of payment

FiT Solar Program – Basic Conditions

Example of price evaluation

Regions and Project Size

Tenders and bidding process solely via Internet platform (Bahasa Indonesia)

Website: http://lelang.ebtke.esdm.go.id)

Till end of February unrestricted access

Since beginning of March registration required for:

download tenders , Q + A sessions, bid evaluation

Tender documentation so far identical for all tendered locations: Administrative documentation

Financial documentation

Technical documentation

Conditions Draft PPA Agreement with PLN

Bids open to state-owned enterprises, local government-owned enterprises,

private Indonesian incorporated enterprises and bidding consortia

Participation of international companies requires establishment of a

KSO (Project Joint Operation), Consortium or JV with private Indonesian

incorporated or state-owned enterprises

Start of tender opening on 4th Nov. 2013 No advanced information by ESDM about upcoming tenders in terms

of date and location

FiT Solar Internet Auction - Procedure

14 days

2 – 3 weeks

15 days after winner announcement

60 days after winner announcement

Within 3 months after PPA

Latest 18 months after PPA

Tender Download

Upload of Bid

Bid Evaluation

Winner Announcement

Establishment of Escrow Account

Signature PPA

Grid Interconnection Study

Financial Close

Installation and COD

FiT Auction/Project Schedule

Bid Preparation

Tender published : 11 locations

Decision of Winner : 5 locations

Lowest Fit price : USD Cent 18.36/kWh (with imported modules) !

Without winner : 3 tenders (tender conditions not met by participants)

Volume/Locations left :124.5 MW – 72 locations

Tender Status and Bid Results (29 Feb. 2014)

NTT NTB Gorantalo KalBar NTT KalBar KalSel KalTim Maluk NTT NTT

KupangLombok

UtaraGorantalo Sintang Atambua Nanga Pinoh

Kota

Baru

Tanjung

SelorTual

Sumba

Timur

Maumere

Ende

Power 5 MW 3 MW 1.5 MW 1 MW 1 MW 2 MW 1 MW 1 MW 1 MW 1 MW 2 x 1 MW

Participants 12 17 13 6 3 1 3 1 1 7 6

FiT Price

(USD Cents)

25

(20)18.36

22.95

(17.95)

Participants

failed25

Participants

failed25

Participants

failed

RegionTotal

(MW)

19.5Bid evaluation

under progress

Challenges for bid preparation

Exact locations not defined by ESDM - only regions

Insufficient cooperation between PLN/ESDM for region/site selection

According to tender requirements, GPS coordinates about location need

to be specified in bid and location cannot be changed

Statement about availability of land for system erection is part of bid documentation

Grid conditions at site not specified Insufficient or even no information about grid capacity/load

Preliminary and detailed grid interconnection study required by tender

Capacity of solar system shall not exceed 20% of PLN grid capacity

During performed site surveys, grid capacity/load found insufficient for grid connection

Limited period of time of only 2 weeks available for bid preparation Time constraints in view of required comprehensive bid documentation

Questions by participants during Internet Q & A sessions not sufficiently

answered by Bidding Committee

Most precise bid evaluation – even minor deviations will result in bid rejection

Present “Draft Model of PPA” unacceptable and requires negotiation with PLN

Logistic challenges: Remote locations with long distances to reach the site

How to cope with challenges for bid preparation

1. Earliest selection of region for tender participation

2. Basic conditions for preliminary selection of region

a) Solar radiation at site

b) Availability of port and transport facilities

c) Distance from port to site

d) Closest airport

3. Detailed site survey after selection of region

4. Completion of bid documentation for selected

locations/project size prior to tender opening

a) Basic tender requirements identical for all locations

b) Advantage of available results of completed bid

evaluation and reasons for bid rejection

Solar Radiation in Indonesia

West East: Increasing intensity up to > 2200 kWh/sqm/year

Logistic Challenges

3.600 km

2.000 km

2.500 km 1.500 km 1.500 km

Logistics Challenges

Jakarta Port suitable for

20’/40’ container

Destination Port

40’ container: no

20’ container: ? What facilities are available for

materials delivery?

Site Survey and Requirements

1. Meetings with local representative offices of ESDM (Distamben), PLN

and local government (Pemkab) in selected region

a) Collection of information of suitable sites according to required land size

b) Site survey (together with local representatives)

c) Request for “Letter of Support” for land acquisition from Pemkab and/or

MoU with private owner

2. Conditions at location (site flood-proof)

3. Ownership/Land price (Property Certificate must exist!)

4. Closest port, handling facilities and distance to site

5. Availability of unloading/transport facilities to site

6. Conditions of access road (all over the year) from port to site

7. Closest town/village to site

8. Capacity/Load of PLN grid – planned future grid extensions

9. Distance to PLN grid and/or substation

10.Availability of civil companies in reasonable distance from site

1 x 2 MW

4 x 1.5 MW

2 x 3 MW

Conclusion:

Locations and system power not well

planned/cordinated by ESDM/PLN

Experiences of recent site surveys

Port only in Kendari

Distance Kendari – Kolaka: 10 hours

Town Kendari

Town Kolaka No port

Bali

Suggested new locations by ESDM (4 x 1.5 MW)

Land Size available : 2 ha for 1.5 MW

Distance to main road : up to 25 km

Distance to 20 kV PLN grid : up to 2 km

Location close to sea – Unsuitable for installation

Risk of flooding (High Tide/Tsunami)

Suggested locations by ESDM (1 x 2 MW)

Solar

System

PV Business Prospects in Indonesia

Annual energy growth 9.5%

RE share of 25% in 2025

High solar radiation potential (> 2,200 kWh/sqm/year)

Further rural electrification projects announced by ESDM/PLN

Grid connected projects by PLN and ESDM (up to 1 MW)

1000 islands project

(KfW financal support)

Phase II of EDSM FiT Program?

Opportunities for German Companies - ESDM FiT Tender

90% of locations with a total of 124.50 MW still to be tendered

- Insufficient know-how of local companies - Search for co-investors

Establishment of Partnership, JV or Consortium with local company for project cooperation

Subcontract for engineering, support for installation and material delivery - Tenders for all regions are identical - Bid evaluation of previous bids available to meet tender requirements - Advanced site selection, site survey and bid preparation for upcoming tenders possible (in cooperation with local partner) -

Summary and Conclusions

If you require any more information, contact us: Email: horst@kaltimex.co.id Mobile: +62-816 1710 7907

Thank you very much !