Aurelia Micko - USAID Indonesia Clean Energy Development Programs

7/31/2019 Aurelia Micko - USAID Indonesia Clean Energy Development Programs

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USAID Indonesia Clean Energy

Development Programs

ADB Asia Clean Energy Forum

Manila, June 8, 2012

Business Opportunity In Small Scale Renewable EnergyDevelopment

(Hydro, Biogas and Biomass)



Topics

• Overview of Indonesia’s clean energy opportunities and

constraints

• Overview of USAID Indonesia Clean Energy Portfolio• Overview of USAID Indonesia Clean Energy Programs

Development (ICED)

• ICED approach in project assistance

• ICED Inventory & Pipeline of renewable energy projects

• Financing consideration in renewable projectdevelopment



Republic of Indonesia

• 17,500 islands, 33 provinces, 246 million people



Indonesia Condition – Abundance of renewable energy

resources (rivers, ag. waste, Solar etc)

– Electricity shortages, unservedcommunities – Rising cost of oil, natural gas and coal – Government targets for RE, EE and

GHG emissions reduction

CE Development Opportunities – Attractive feed in tariff rate – PLN as the single buyer – Standardize and clear Power Purchase

Agreement (PPA) terms and condition – Reduces subsidy to PLN by reducing

use of diesel – Banks, FIs and private equity financing

CE Development Challenges – Lack of Project Financing – Undercapitalized developers sponsors

with limited track record; – Limited operating projects as examples – Limited domestic capability in equipment

and services

USAID Project Approach – Assist in improveing policy framework at

national and regional level – Standardize PPAs & other agreements – Link financing sources with high quality

projects and companies – Show case success stories, share

lessons learned

Indonesia has opportunities and challenges in developing CE Projects



GOI Priorities in Energy Sector GOI Key Policies• Energy Security :

• Dependence on fossil fuels innational energy supply

• High growth of energy demand(7%/year) and electricity

demand (9%/year)• Limited access to energy:

electrification ratio in 2011 isstill around 73%.

• Energy Diversification to increase renewable energyshare in the National Energy Mix from 5% in 2011 to17% in 2025.• Energy Law No. 30-2007 – emphasis on new and

renewable energy.

• Electricity Law No. 30-2009 – allows greaterinvolvement of private sectors (Independent PowerProducers or IPPs).

• Feed-in tariffs for small renewable energy IPPsand excess power (<10 MW) and set PLN’s

obligation as buyer• New vision of 25/25 – 25% renewable energy in

2025

• Reduce carbon emissions fromenergy sector to meet GOIcommitment of 26%

• RAN-GRK – Presidential Regulation 61/2011 onNational Action Plan to Reduce GHG Emission (NAPGHG Emission).



GOI Priorities USAID Activities

• Increase renewable energy sharein the National Energy Mix from5% in 2011 to 17% in 2025.

• Increase electrification ratio from73% in 2011 to 95% in 2025

• Development of renewable energy sector (under 10MW) through:• Facilitate project implementation:

• Resource mapping in three geographic focusarea (Aceh, North Sumatra, Riau) using GIStechnology

• Technical assistance to small scale projectdevelopers in project implementation

• Match-making between project developers,investors and financiers

• Build local capacity:• Support local government’s programs on

renewable energy development• Capacity building for financial institutions on

project assessment for investment decision• Enabling environment:

• Gap analysis on current GOI policies andincentives

• Support PLN in PPA standardization

• Support improvement of coordination at locallevel (i.e. through energy working group)



USAID Indonesia Comprehensive Partnership

GCC/Clean Energy Portfolio

Programs Period of

Implementation

Implementing Partner Total Planned

Budget

CDCP - Private Financing Advisory Network(PFAN)*)

2010-2011 ECO Asia/Winrock $700K

Indonesia Clean Energy Development (ICED) 2011-2014 Tetra Tech ES. $16 million

Grant - Capacity for Indonesian Reduction of Carbon in Land use Energy (CIRCLE)

2011-2014 Winrock Intl. $1.4 million

Grant - Climate Change Mitigation (to beawarded)

2012-2014 TBD $1.1 million

University Partnership - GeothermalEducation Capacity Building Program

2011-2014University of SouthernCalifornia & ITB (with

support from Star Energy)$640K

TBD Energy Program/Credit Guarantee TBD TBD $2.2 million

Note: *) completed in June 2011; results: facilitated 4 projects (2 hydropowers, 2 biomass) to financialclosure with total capacity 77 MW and financing leveraged $88 million.



USAID Programs Key Deliverables by September 2014

• ICED • 120 MW clean energy generated• 4 million tons CO2-e emissions from energy sector avoided• 1.2 million people get access to clean energy• 20 clean energy projects installed• $120 million public and private funding leveraged• 20 institutions strengthened

• CIRCLE • 3 Palm Oil Mill Effluent (POME) – methane capture to powerprojects installed

• Feasibility study for another 8 POME-methane captureprojects

• Promote sustainable certification practices in palm oilindustries

• University Partnership – Geothermal EducationCapacity Building

• Strengthen ITB Master Degree program for GeothermalEngineering

• Help produce 40 graduates per year• Provide scholarship to 10 students• Initiate link between geothermal industries and education

program



Clean Energy Project Sites

Legends: ICED Project Sites

CIRCLE Project Sites

University Partnership



ICED offers a variety of services to stakeholders :

ICED

Governments / PublicClean Energy Project Dev.Assistance Facility

PLN

Clean Energy InformationExchange

Private Grants

Stakeholders ICED Services

National

Provincial Regional (Kabupaten) Communities

Project Developers Companies / Project Owners Banks / Financial Institution

PLN Headquarter PLN Regional Office

CE Project feasibility On-grid / Off-grid RE Project dev. Energy efficiency Project dev.

Community Based CE Projects Innovation application of CE Activities knowledge sharing

CE financing networks

CE project database and GIS Capacity building & awareness



ICED project takes a “project implementation driven” approach to increase investment and utilization of clean energy.

Viable CE

Projects

Adviseproject

developers

Buildcapacity of

banks

Addresspolicyissues

Increaseawarenessof CleanEnergy

ICED



Currently, ICED is assisting to 22 renewable energy projects and 1 energy efficiency project:

• ICED identified 95 CE Projects in Indonesia (mainly N Sumatera,Riau and Aceh) representing estimated 539 MW equivalent;

• Approximately 52% of identified projects are Mini Hydro Power Plantwhere mostly located in North Sumatera;

• Average size of mini hydro power plant and biomass power plant is 3to10 MW, while biogas power projects are below 3 MW;

• Average Investment for mini hydro power plant is in a range of US$1,500 to US$ 1,000 per Kilowatt install; Whilst for Biomass PowerPlant is in a range of US$ 900 – US$ 1,500/kW and Biogas PowerPlant is in a range of US$2400-2700/kW

• Average project development cycle is less than 1 year for

biomass/biogas, 2-3 years for mini hydro power projects



ICED Project Inventory categorizes CE projects into 5 stages of development

Planned

Project identified from primary data Some interest showed from project sponsor to developed CE Projects;

Preliminary Assessment has been done (Pre-feasibility Study)

Potential

Project identified from secondary data (PLN, BPS, local government) No study has been done No sponsor identified

UnderDevelopment

Final Feasibility Study has been done; Process of acquiring permits is started; Process of acquiring PPA is started

Operating

Construction completed Projects installed and commissioned

Energy produced/saved, GHG emissions reduced

I C E D

P R O J

E C T I N V E N T O

R Y

1

2

3

4 PPA and permits are completed Financing is established Start construction process

FinancialClosure

5



4

2 2

4

16

12

24

Hydro

42

Biomass

28

3

18

1

Biogas

24

1

7

ICED Project Inventory(Number of Projects)

Operating

Financial Closure

Under Development

Planned

Potential

2534

14

14

134

161

Hydro

343

Biomass

175

12

44

93

Biogas

17

3

Planned Financial Closure

Under Development Operating

ICED Project Inventory(In Megawatt Equivalent)



44

9

8

37

15

14

2

Hydro

42

0

1

Biomass

280

Biogas

25

1

ICED Project Inventory by Province(Number of Projects)

North Sumatera

Aceh

Rest of Indonesia

Riau

ICED Identified Projects Location by District (Kabupaten)



ICED supports viable CE projects to create replicable models for future development…

• Work with multiple partners with vested interest in successfulproject development (project developers, banks, industries,

PLN, local government) to create ICED portfolio.

• Provide critical “pre-financing” technical assistance and transfer

analytical tools to decision makers to ensure viability ofprojects.

• Integrate CE projects in order to meet energy and systemplanning, GHG emissions reduction, rural access, and privatefinancing objectives.

• Create “commercial” project development models, including

standard agreements, that can be applied and replicated

throughout Indonesia.



ICED Findings

CE projects moving from CDM to

commercial financing models; Sufficient financing available, but not

the right financing products;

Developers and banks/FIs do not fullyidentify, mitigate and allocate risks indeveloping, constructing and operatingprojects

Private equity sources looking forholding companies, not individualprojects

Developer/sponsor equity tied up in pre-financing studies and/or financing firstproject

Future Needs

Increase familiarity with non-recourse,

and limited recourse project financing Remove limitations on commercial bank

lending;

Build capacity in stakeholders to betterassess viability of CE projects, inparticular risks;

Channel “donor development funding” tocomplement commercial financing (e.g.,reduced interest rates, longer term)

Build inventory of “financeable” projects

and developer/sponsors

Additional incentives in tax treatment,infrastructure (e.g., transmission

interconnection)

Findings and future needs in financing for Clean Energy Projects:



For more information, please contact:

Aurelia Micko, USAID/Indonesia Environment Office Deputy

Director, [email protected]

Retno Setianingsih, USAID/Indonesia Environment Office,Energy Specialist, [email protected]

TERIMA KASIH

mailto:[email protected]

mailto:[email protected]

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Aurelia Micko - USAID Indonesia Clean Energy Development Programs