A Panel Discussion moderated by Dr. Ing Evita H. Legowo (The Coordinator of Sustainable Energy and Environment at Swiss German University, formerly the Director General of Oil and Gas of Ministry of Energy and Mineral Resources of Republic of Indonesia 2008-2012)
After the lunch break, the first-panel session was started with Mrs. Evita Legowo as the chair of the session. The first-panel session covered the upstream sector of renewable energy which includes the electricity generation from renewable energy sources. The panels for this session were Mr. Harris from the Directorate General of New Energy, Renewable Energy and Energy Conservation, the Ministry of Energy and Mineral Resources, Mr. Gigih Prakoso as Director of Investment and Risk Management of Pertamina, Mr. Andre Susanto as the founder and senior VP of PT Inovasi Dinamika Pratama, and Mr. Damien Tournillon as the Smart Grid Engineer from Engie.
A Presentation by Gigih Prakoso (The Director of Investment Planning and Risk Management in PT Pertamina (Persero), Formerly Vice President of Corporate Strategy in PT Pertamina (Persero))
Dr. Gigih Prakoso mainly discussed Pertamina’s strategy for developing new and renewable energy (NRE) in Indonesia. While already dominating the geothermal market in the country (600 MW or about 80% of the total national geothermal installed capacity), PT Pertamina (Persero) still faces significant challenges in improving the economics of a project. Truthfully, if there is no capital injection from Pertamina’s headquarter, the project shall be in the state of a negative cash flow. Geothermal, in general, is a very complex business as it is basically a combination of the capital-intensive but high-risk upstream business and infrastructure business that generates a relatively smaller return that spans over a longer period.
The vision of PT Pertamina (Persero) is shifting from an oil and gas company to a world-class integrated energy company by 2025. Other than oil and gas sector, the national energy company is now targeting the NRE sector with strong economics principle, including solar PV, wind power, biofuel (biodiesel, bioethanol, and bioavtur), biomass, and energy storage. However, most of them are still intended for internal use, especially for Pertamina’s refinery operation, LNG liquefaction plant, and another area in the upstream business. Sooner than later, Pertamina will do a comprehensive evaluation to find out if increasing the NRE capacity for commercial use is possible in the near future.
According to Pertamina’s point of view, there are three key factors in implementing NRE:
- Price of electricity – The expectation is between 6 to 7 cents/kWh, while the average of Levelized Cost of Electricity (LCOE) is currently at 10-14 cents/kWh. The collaboration with funding agencies might be a solution to achieve lower LCOE while sharing risk through partnership and developing an optimal business scheme;
- Local regulations and B2B collaboration with PLN as the off-taker of electricity in Indonesia;
- Market condition – Global average installation growth is about 20% a year, but most of them are in the developed market. As economies of scale may apply, bigger scale projects might be more beneficial, and knowledge-sharing between developed and developing market on advanced technology can be helpful to reduce the capital and operating expenditure.
In the near future, key areas of focus for NRE development in PT Pertamina’s business are solar PV, wind, and biomass. The company will build portfolio and competence of its solar PV panel and wind power plant within this year and later on expand the implementation of smart-grid projects as an IPP until 2030. Biofuel products are currently in the feasibility study and demo trial plantation phase with a longer-term vision of being a biofuel producer. Aside from energy generation, PT Pertamina is also interested to develop energy storage as it is seen as the future replacement of conventional fossil fuel. Some strategic alignments are established between Pertamina and local universities to do research, while collaboration with existing major player in energy storage businesses will be initiated in the latter stage.
To conclude, technology readiness, government support through supportive regulation, and funding availability are among the enablers needed by Pertamina to commercially implement NRE projects. Only then, that Pertamina can ensure acceptance of offtake product with an attractive tariff. Even so, Pertamina has pledged to continuously explore opportunities for NRE investment in the country.
A Presentation by Elena Lalova (The Head of Mini-Grid Division of International Power Supply (IPS))
As the world’s largest island-country, Indonesia has a dual opportunity for off-grid power system application and solution. International Power Supply (IPS) is a company that develops and manufactures various off-grid products within its portfolio, but the leading product is truly the Exeron which is an energy conversion system for off-grid electrification system produced by IPS. IPS aims to enter the Indonesian energy market to support the government in realizing the ambitious but achievable electrification target of 100% by 2019.
Economic development goals always go hand in hand with accessibility, supply, and reliability of electricity. Principally, there is no economic growth without a reliable electricity, but each economic growth is energy intensive. Therefore, it is important to ensure that the economic growth is pursued in a sustainable way. The so-called mini-grid electricity system gives the opportunity to the consumer having control of their electricity consumption as well as generation. This is the modern way of managing energy use which is supported by a lot of innovative technologies with one of them being IPS’ Exeron system. In 2014, Exeron won the Intersolar World Innovation Award for EES (Electricity Energy Storage). The system was won because of the stringent modular design of the system, the hot-plug architecture, the advanced battery management system, and the reliability of system due to its redundancy and load sharing.
The goals of expansion of the renewable energy system in the energy generation mix are not only important from the environmental perspective, but also from the social perspective. Integrating more renewables into the energy mix gives the country the capability to be more geopolitically independent as it relies more on its own resources. Renewables are a more sustainable source of energy with a smaller footprint compares to fossil sources. These reasons only give the perspectives that renewables can positively benefit the lives of Indonesian people.
Electrification in Indonesia has gained its speed in the recent years. The government’s work so far has been admirable in achieving more than 95% electrification ratio in Indonesia. Regardless, the remaining non-electrified regions will be the most difficult to reach, considering its remote location and difficult accessibility. Even so, opening up electricity access for them should not be the only goal, but to also make sure that the installed energy system is reliable. This is when a reliable system such as Exeron comes into play that will not only satisfy the needs of the final consumer but offers electricity supply and generation in the most efficient and optimal way.
A Presentation by Harris (The Head of Various New and Renewable Energy of the Directorate General of New Energy, Renewable Energy, and Energy Conservation of the Ministry of Energy and Mineral Resources of Republic of Indonesia)
Among all Indonesia’s villages, there are still about 2,000 rural villages who are yet having access to electricity and most of the un-electrified villages are in Maluku and Papua (90%). Considering these facts, the current administration puts its focus on closing the gap to have 100% electrification by 2019.
There are either commercial or non-commercial approaches to improve the infrastructure capacity of renewable-generated power plants. The commercial approach is used for developing on-grid and off-grid communal systems using solar PV, mini/micro hydro, wind, marine, or biomass that are usually funded by private sectors. Meanwhile, the non-commercial approach is intended for the development of energy infrastructure for rural communities, outer islands, and border areas funded through either the state budget or Dana Alokasi Khusus (DAK).
Under the Ministry of Energy and Mineral Resources (MEMR) Regulation No. 39 of 2017, the government provides vast support for any party who wishes to develop the infrastructure of renewable energy generation in either remote, undeveloped, border, small and outer islands, post-disaster, and/ or post-conflict areas. In this case, the proposal and related technical documents should be submitted by the provincial government or any working unit within the ministry institution. Further process including the evaluation, stipulation, procurement, and construction process will be taken care of by the MEMR’s Directorate General of New and Renewable Energy and Energy Conservation (EBTKE). Following a successful result, asset transfer between EBTKE and local government will be conducted at the end of the process.
Financial support is given under the Special Allocation Funds (DAK) for small-scale energy generation projects in either underdeveloped areas, priority sites in the border district, island regions, or transmigration areas where there will be no PLN grid infrastructure planned for the next 3-5 years. The aforementioned budget is exclusively allocated for development of micro-hydro, solar PV system (centralized and decentralized), and biogas (household scale) as well as the revitalization of centralized solar PV and micro-hydro power plants. Again, the proposal should be submitted by provincial government level to EBTKE, Ministry of Finance, and BAPPENAS for assessment and budget allocation discussion. From 2011 to 2015, DAK has funded 12,602 units of small-scale renewable energy power plants or about a total of 2.7 MW installed capacity throughout the country.
The foremost priority for technology selection is given based on the local energy resources in a particular area. If there is enough potential, hydropower is favored as its technology needs less maintenance and operational management, readily available local-manufactured component, and generally easier for local people to understand. If solar PV is chosen otherwise, it should be equipped with a long-lasting battery technology (e.g., lithium battery) to improve the sustainability of the overall system. In any case, required, a hybrid system such as Diesel-Solar PV or Solar PV-Wind can also be implemented.
A good management organization is required to ensure the sustainability of renewable energy projects, especially in the rural areas. According to Millenium Challenge Account (MCA) Indonesia, there should be a differentiation between managing a mini-grid system (300 kW to 3,000 kW) with a small-scale project (less than 300 kW). In a mini-grid project, a Special Purpose Vehicle (SPV), owned primarily by village-owned enterprises, is the one taking responsibility for operation and management of the power plants. Meanwhile, such a body is not required in the small-scale project so the village-owned enterprises shall directly own, operate, and manage the project.
A Presentation by Andre Susanto (A Clean Energy Consultant, Founder and Senior VP of PT Inovasi Dinamika Pratama)
Mr. Andre Susanto opened his session by praising the impressive job that the Indonesian Government through the Ministry of Energy and Mineral Resources (MEMR) has done in developing energy system. To date, Indonesian MEMR is the single-biggest implementer of micro-grid in the world with no other single entity is capable of managing around 600 sites of solar PV systems.
In Indonesia, there are three key indicators to define sustainable off-grid electrification, namely the (i) financial sustainability, (ii) system sustainability, and (iii) environmental sustainability. Taking an example of batteries, a lithium-ion or zinc-air battery solution is not necessarily sustainable as it has almost no value in its recycle form. Lead-acid battery while only last for about 5-7 years, it is 98% recycle-able thus having a sustainability advantage. Will a project be financially sustainable in the long run if it is fully-funded by an external donor? How should the system be designed to improve reliability in meeting the projected demand? Such questions among others should be parts of the equation in discussing the sustainability of an energy project, especially in rural and remote areas.
A case study from an energy project in Mt. Fuji of Japan illustrates the complexity of balancing the sustainability trilemma. A hybrid solar PV system is implemented under the project to electrify a whole village. After a thorough observation, the system design allows diesel generators to always run, even in a small capacity when the energy generated from solar PV is at its peak. Overall, the system generates more power from diesel fuel than solar energy as daylight load demand is not high enough. While not essentially environmentally sustainable, it works for the local people as the power that they received are reliable and available around the clock.
There was also a Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) study that reported about 80% of the energy produced from the two specific micro-grid solar PV systems installed by MEMR are not currently being used. While the energy stored in the battery is used during the night, the load during the day is not comparable to use up all the solar energy generated. Now if the project was funded by a private company, financial sustainability is in question as to who should pay for the wasted energy.
A collaborative work with GIZ under the off-grid electrification project is aimed to assist the communities and local government in establishing a good management structure for an energy project. Local communities are to be involved and even better, in charge of the daily operation of the energy system. GIZ is also working with the telecommunication companies to pursue development of mobile signal to the site so that the performance of the energy system can be easily reported.
In December 2016, a GIZ study cited that among all of the energy projects initiated by MEMR, 82% are still working properly up to this date. For a community-led project, this number surely is astounding. Another study result is about funding availability for repair, in which 87% of the users understand where to get fund should any repair to the system is required. Another village-owned company was able to operate four solar PV sites for about two years. It has independent funding for their Operation and Maintenance (O&M) and even able to generate revenue from the business. As a closing remark, the speaker gave high appreciation to the MEMR for continuously initiate vast energy projects throughout the country and committed to them, so such success stories keep on repeating.
A Presentation by Damien Tournillon (A Smart-Grid Project Engineer of Engie)
The Engie’s methodology in designing and executing energy projects is highlighted by its sociological approach in studying the specific needs of the people in Southeast Asia. The key point has been an innovative design to beat diesel generators and convenient solutions for implementation in remote areas. The methodology adopts a step-by-step approach in diminishing the role of diesel generators through a scalable project. While mobile, Engie’s microgrid can be connected to the national grid and serve as the backup system should any such infrastructure comes into the area.
An innovative approach is not only about the technology, but the strategy to also raising awareness about renewable energy solutions and preparing local people to do the basic O&M procedure. The concept is to install renewable energy system into the community in remote areas and to work in collaboration where everyone is responsible for ensuring the sustainable success of the solution. However, as innovative as the business model is, supportive regulations and public grants are still required for implementation in poor communities.
Engie is currently working on the REIDS project in Singapore, which is the Renewable Energy Integration Demonstrator led by Nanyang Technological University. It is located specifically in Semakau Island, a remote off-grid island only accessible by boat to 8 km offshore the main Singapore island. REIDS project produced one of the first micro-grid in the region and the largest hybrid micro-grid in the tropics. The objective is to design, to demonstrate, and to test solutions for sustainable and affordable energy access for all the people across Southeast Asia. It is also specifically tailored to provide an emblematic R&D platform benefitting both private and public-sector entities to being a showcase of technologies for the future off-grid micro-grid.
The pilot phase was a micro-grid with solar panel and energy storage system connected to the existing generators. The next generation of the micro-grid was a completely off-grid system which was built through a partnership between Engie and Schneider Electric. Later on, there will be more interconnected micro-grids to be designed and tested, but still yet to be defined. Supporting agencies of the project include the Economic Development Board of Singapore, the Energy Market Authority, the National Environment Agency, and the National Research Foundation.
The approach to implementing a more sustainable solution is to combine and optimize all the local resources found in the area that might include solar panel, wind power, hydrogen (for storage and fuel), and biomass. A less diesel usage is wanted as it is considered as polluting and expensive, especially in remote areas where logistic cost is drastically increased. The solution offered is to better address local needs, such as electricity usage, mobility, clean cooking, and specific needs of the population for businesses (e.g., fish hatchery, cold storage).
The objective of the Sustainable Powering of Off Grid Regions (SPORE) project is translated into five points:
- To define relevant business and technological use cases.
While it is important to keep in mind that 100% renewable energy share might not be achievable, the concept is to rather keep on moving forward through a step-by-step process and make the best of local resources. Additionally, the concept is to also transform the waste into free energy with biogas for cooking, electrical production, or mobility.
- To set up a demonstrator and test microgrid equipment within a tropical environment.
The design of micro-grid involves an integrated power generation system of wind turbines, generators, and solar panels complemented with a hydrogen-based storage system, biogas system, and specific management system to be able to control the performance of each technology and to ensure an accurate consumption forecast.
- To test an industrial off-grid multi-fluid solution adapted to Southeast Asia.
The Energy Management System is capable of integrating all types of renewable energy and instructing the best performance.
- To support business development in different countries for developing and offering better solutions. This is achieved through conducting a pre-feasibility study and feasibility study to ensure that the sizing of the equipment is suitable for the micro-grid.
- To take a long-term commitment to Singapore and the rest of Southeast Asia by building micro-grid expertise hub in Singapore to support the region.
The business cases can be either of these three options:
- Community Brownfield, where some electricity is already in place.
- Community Greenfield, where the rural village is completely isolated and therefore, off-grid.
- Resort Brownfield/Greenfield, where the same cases of either no 1 or 2 are applied in resorts.
Engie comes to Indonesia with the Electric Vine Industries (EVI) project that aims to provide energy for the whole Papua Province by 2022. The concept is to promote a new smart micro-grid architecture called the solar vines. The leaf is metaphorically represented by solar PV while the root is by batteries with one root is designated for each house. This new-design is claimed:
- To require less land as no centralized array is needed;
- To be easy to install and to maintain the O&M through a 20 years concession of incentive scheme;
- To require small logistic with one inverter per root and one inverter per leaf, so there is more reliability in case of inverter failure;
- To be modular if expansion is required;
- To be compatible with other hybrid energy generation;
- To provide around the clock reliable AC power supply independent of external factors;
- To allow additional solar PV or diesel generator at the root to fully exploit the capacity of the battery;
- To implement telecommunication infrastructure to help the village develop faster and for them to do the payment and monitoring.
The smart micro-grid demonstration project of 18 kWp Solar PV and 96 kWh energy storage was piloted in March 2015 and since then was able to serve 46 households in Papua in the village of Abar. Transactions are pre-paid using mobile phones.
|EH – Dr. Ing. Evita H. Legowo||GG – Dr. Gigih Prakoso|
|EL – Ms. Elena Lalova|
|H – Mr. Harris, ST, MT|
|AS – Mr. Andre Susanto|
|DT – Mr. Damien Turmilov|
|EL||As a representative of the government, what is the successful business model for implementing off-grid solutions in Indonesia based on your observation?|
|H||Good technology will not guarantee a sustainable project, but a good leadership within the project management will. One of the examples is our own Mrs. Tri Mumpuni who led the operation and management of renewable projects in rural areas.|
|EL||What do you value most in the technology vendors with whom you implement your products?|
|GP||The efficiency and the sustainability of the technology. As Pertamina is building its own Research and Development Center, it is seeking for a business partner that shares the same vision to develop renewable energy in Indonesia.|
|AS||As a consultant who works with different partners in energy industries, typically the most valued indicators would be the levelized cost of energy which considers efficiencies and reliability in the long run as well as the sustainability of the company itself (e.g., warranty, liability, etc.).|
|GP||Related to the SPORE project, what will be the obstacle to implement a similar project in Indonesia?|
|DT||While the same tropical climate, Indonesia presents a more problematic challenge due to its archipelagic geography and wild nature. It is definitely a different task of installing an off-grid system in mountainous areas and using animals to help to carry the logistics – something that Engie did not face in Singapore.|
|H||As one of the most challenging areas to electrify in the country, how will be the strategic solution your entity can propose for Papua? To be noted that social problems remain the core issue in Papua and therefore, the social approach is much valued to ensure the sustainability and acceptance of the project.|
|EL||First, the technological solutions are to be defined. This is the easiest part for IPS as a manufacturer who owns the technological solution. Then it comes, the strategy, the political will, and the visibility, which should be economical, social, environmental, and governmentally accepted. Basically, there is a need to build the optimal bridge between the government institutions and the business so that both parties have the motivation to go forward and to pursue the best strategy for local people.|
|GP||Papua is seen as a land of opportunities for renewable energy development. There is a limited existing grid, so the electricity supply will much rely on the off-grid system. Therefore, the unit cost should be cheaper than a grid-extension option. But of course, support from local government is critical for the business to kick-off renewable energy project in the area.|
|AS||All sectors need to work together, including donors, private sectors, governments, and manufacturers. Right now, technology solution is not the barrier but rather the economics. Good policy that allows private sectors to come in as either a full-investor, partial investor, or even just an operator of the system. Even with local players are educated and trained to handle the daily operation, there is still a bridge to be built by the government to connect local users with overseas manufacturers in any case of operation failure or requirement for advanced maintenance.|
|DT||The government support is also required by the private sectors to provide the security of return on investment. Additionally, seeing that the network communication is still lacking in Papua, a collaboration with telecommunication company to open up the access will be a great enhancer to development.|
|H||There is one good example of a village in Papua that is now fully-supplied by renewable electricity. The project was inaugurated last week, in which the 1.6 MW hydropower project was fully-funded by local government through bank-loan. This is a case study that shows the autonomy of local government in managing a sustainable project.|