Overview of Indonesia’s
Energy Sector
Current Status & Development Plans
Indonesian Institute for Energy Economics
East Asia Science and Security Meeting
Beijing, 23-24 September 2010
Presentation Outline
1.
Updates in Energy Sector






2.
Production
Consumption
Prices
Subsidies
Institutional Framework
Nuclear Plans
LEAP Work
UPDATES
IN ENERGY SECTOR
Production
(1)
2008
600
NRE
4%
500
Millio n B O E
C oal
400
C rude Oil
300
Natural Gas
Hydro P ower
200
NRE*
25%
Coal
25%
Oil
35%
Gas
15%
Coal
32%
Oil
45%
Gas
19%
Geothermal
100
Biomass
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source: MEMR, Hanbook of Energy and Eocnomics Statistics 2009
Include
conventional
biomass
Exclude
conventional
biomass
Production
(2)
Outlook 2009:
BAU: no significant
change in energy policy
Million Barrels of Oil Equivalent
5000
4700
6.3%
4500
Scenario Climate1:
4000
3850
3500
10.7%
52%
3500
14%
3000
48.3%
2500
30.5%
2000
1500
20.2%
989.4
1000
500
0
32%
19%
45%
2008
19.6%
30.4%
4%
21.4%
21.4%
25.6%
2030-BAU
2030Climate1
2030Climate2
Source: Center of Data and Information, MEMR 2009
NRE
Coal
Gas
Oil
Policy interventions:
energy conservation and
renewable energy
development
Scenario Climate 2:
GOI commitments in
emission reduction.
Measures include energy
conservation, RE
development, clean coal
technology, nuclear
Production
(3)
GHG Emission By Sector
1
Emission from peat fire from van der Werf et al (2008).
•Estimated by MoF (2009) and Bappenas (2009)
Source: MoE (2009).
Production
(4)
Emission by Energy Sub Sectors
Energy Sub-sector
Petroleum & gas refining
Transportation
Electricity & heat production
Residential
Manufacturing & construction
% to the total energy sector
emissions on CY 2000
(a)
(b)
51.5
18.2
23
12.2
25.6
7.4
5.9
10
(a) 2nd National Communication to UNFCCC, Nov.09;
(b) Environmental Statistics of Indonesia, 2006.
• Indicates very high inefficiency in the country’s existing 9 refineries
(total capacity around 1 Million barrel per day)
• Electricity sector is the 3rd largest emitter.
Production
(4)
Plan for Electricity Capacity Additions
Type of Power Plant
First
Commissioning
Year
Capacity
Addition
(MW)
2010
7078
2011
794
2012
1593
2016
1000
2017
1616
Gas PP [Crash Program 2]
2014
1440
Hydro PP [Crash Program 2]
2014
1174
Geothermal PP [Crash Program 2]
2014
4733
Coal PP [Crash Program 1]
Coal PP [Crash Program 2]
Crash Program 1:
• Only 600 MW by 2010
• Difficulties to secure
financing & coal supply
are significant factor
delaying the progress
Crash Program 2:
• Expect significant role of
private sector
• Ongoing effort to push
geothermal development
• Financing is still unclear
Consumption
(1)
• Industry has the most variety of
energy options
• Large share of household energy is
still met by conventional biomass,
exact figure not known
• Transportation is still heavily oil
dependent
Demand growth accelerates,
despite various effort to curb it
Consumption
(2)
Substitution from Kerosene to LPG
• To 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 areas
• To reduce burden in the State Budget (LPG subsidy < kerosene subsidy).
Activities
Package
Distribution
(Million
Package)
LPG Volume
(Thousand
Tonnes)
Kerosene
withdrawal
(Thousand
Kiloliters)
2007
2008
2009
2010
3,976
15,078
24,355
1,265
33
592
1,840
1,328
121
2,116
5,402
3,677
0.6
9.15
12.79
7.41
0.8
3.62
5.87
0.33
-0.2
5.53
6.92
7.08
Total distribution
until 30 June
2010
Target 2010
44,674
3,793
11,317
29.95
10.62
19.33
9,395
3,002
6,173
16.06
2.43
13.63
Year
Subsidy
Conversion
Nett Savings
Savings
Cost (Trillion
(Trillion Rp)
(Trillion Rp)
Rp)
Consumption
(3)
GOI plans to limit consumption of subsidized petroleum fuels
 A 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 vehicle
 By cylinder capacity of vehicle
 By year of vehicle production
Few and intermittent energy efficiency measures

Government offices
 Some programs in the industry and commercial sectors
 Energy saving lamps for households
 Limited 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)
GASOLINE
8,000
6,000
Industry:
refer to market
Industry:
refer to market
Industry: fixed price
10,000
Industry: fixed max/min cap
Industry: 50% of market
12,000
Price (Rp/Lt)
Industry: 75% of market
14,000
4,000
2000
2,000
600
400
700
-
Apr01
Jan02
Jan03
Retail
Jan04
Jan05
Industry
Jan06
Jan07
Jan08
Singapore Market Price (MOPS)
• Price gap among consumer categories, incentive for mis-use
Jan09
Prices
(2)
KEROSENE
6,000
Industry & Retail: fixed price
8,000
Industry: fixed with max/min cap
Industry: 75% of market
Industry: 50% of market
Price (Rp/Lt)
10,000
Industry: not regulated
12,000
4,000
2,000
0
Apr01
Jan03
Jan02
Retail
Jan04
Industry
Jan05
Jan06
Jan07
Jan08
Singapore Market Price (MOPS)
Decline in prices and also price gap in recent years
Jan09
Prices
(3)
 Feed in Tariff
 Geothermal:
 Other renewable energy:


Microhydro as benchmark
Multiplier factor: Java = 1, other islands > 1
 The regulation stated that PLN is obliged to purchase electricity
from renewable energy. However, various hurdles in
implementation.
 Electricity Tariff
 Higher 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 benchmark
 Effective 1 July 2010. The first adjustment in more than 6 years.
Subsidies
Trillion Rp
300
30%
26.1%
250
21.4%
20.5%
20.6%
200
20%
19%
16.7%
150
15.7%
16.5%
13.6%
14.5%
100
15.2%
15%
11.7%
11.1% 10.5%
8.9%
11.0%
4.8%
2001
2002
11.5%
8.8%
10%
10%
7.5%
10%
50
2000
15%
14.2%
13.4%
-
25%
24%
2003
4.8%
2004
5%
5.6%
2005
2006
2007
2008
Fuel Subsidy in the State Budget
Electricity Subsidy in the State Budget
Electricity Subsidy Realization
Fuel Subsidy Realization
Percentage share of fuel and Electricity subsidies to state expenditure in the budget plan
Percentage share of fuel and Electricity subsidies to state expenditure in realization
Notes:
1) Realization in 2008 is estimation based on Financial Notes and the draft of state budget 2009
2) Electricity and fuel subsidies 2009 is based on state budget 2009 set by GOI.
Source: Indonesian Institute for Energy Economics
2009
2010
0%
Institutional Framework
(1)
 New Policies
 GOI commitment on voluntary emission reduction of 26% with
own budget and additional 15% with international support by 2025
 Many 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
 Regulation
 Law 4/2009 on Mineral and Coal Mining
 Law 30/2009 on Electricity
 Law 25/2009 on Public Service
 Government Regulations on forest designation, function and
utilization, spatial management
 Government Regulations on mining areas, mining business
Institutional Framework
(2)
 New Institutions
 National Energy Council
 National Council on Climate Change
 Directorate General of Renewable Energy and Energy
Conservation
Green/Low
Carbon
Economy
Policy ?
National
Roadmap
on CC
- MoF Green Paper
- National Action Plan CC
DEN
CoordMin Econ
Bappenas
Financing & Investment
Development Programs
DNPI
Mining
MinPublicWorks
MinEnv
Structure, Construction
Ecosystem Policy
Building
Local
Government
MinFinance
MinEMR
MacroEcon & Fiscal Policy
Min Industry
Process, Mfg
Energy & Mining
BP Migas
BPH Migas
Industrial
Equipments
MinTransportation
MinSoE
SoE Policies
MinForestry
Transport Policy
Forest-based
- resources
PLN
Pertamina
RenEnergy, CCS,
Supply Efficiency
Forestry
LULUCF, REDD Industry
Source: Adopted from Ecoperspective (2009), unpublished
Public
Transport
End-Use Efficiency
Nuclear Plans
(1)
 Legal references on Nuclear Energy
 Law 10/1997 on Nuclear Energy
 Law 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 implementation
 Unclear plan, lack of information for general public
 Many institutions are not involved during planning
process
 Inconsistent 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, etc
Lead to no sense of ownership, limited involvement and lack of
support
 Economic and financial





Lack of information
Limited window to exercise independent assumptions
Various cost elements have never been estimated
Understatement of financial requirements
Lesson learnt: The First Fast Track Program
(development of 10,000 MW coal power plants)
Nuclear Plans
(2)
Million Barrels of Oil Equivalent
Indonesia Energy Mix 2025
6,000
5,000
4,000
DATA-1
Nuclear
1%
DATA-2
DATA-3
Nuclear
0.5%
Nuclear
0%
DATA-4
Nuclear
0%
Other NRE
Nuclear
3,000
Coal
Gas
2,000
Oil
1,000
BAU ALT
BAU
ALT
BAU
ALT
BAU
ALT
Notes:
Data-1: MEMR, Indonesia Energy Outlook 2006-2025, 20 October 2008
Data-2: MEMR, Perkembangan Pelaksanaan Bauran Energi Nasional , 20 November 2008
Data-3: MEMR, Blueprint Pengelolaan Energi Nasional 2010 -2025, 1 April 2009
Data-4: MEMR, Indonesia Energy Outlook 2008, May 2009
BAU: Business As Usual scenario
ALT: Alternative scenario
Nuclear Plans
(3)
Target for New & Renewable Energy, 2030
MBOE
500
-
450
400
350
300
-
-
50
-
113
150
100
-33
85
166
66
81
-
BAU
Coal Bed Methane
Wind
119
250
200
50
137
Other New &Renewables
67
11
168
Solar
Hydro
Biomass
Nuclear
Liquified Coal
Climate-1
88
Climate-2
Biofuel
Geothermal
Source: Center of Data and Information, MEMR 2009
Nuclear appears in Climate-2 Scenario between 2025 - 2030
LEAP WORK
Agenda
 Data & Information Sources
 Model Structure
 Assumptions & Scenarios
 Base Case (BC)
 Nuclear Power (NP)
 Interim Results
 Conclusions & The Next Step
Data & Information Sources
 Statistics of Indonesia (Bureau of Central Statistics)
 Population, family size, and Total GDP
 Urban – Rural population percentage
 Cooking fuel saturation in the Household branch
 Transportation Statistics (Ministry of Communications)
 Handbook of Energy & Economic Statistics of Indonesia
 Specific GDP numbers on Commercial and Other sectors
 Fuel share data for Commerce, Industry, and Other sectors
(Agriculture, Construction, and Mining)
 Transmission & Distribution losses of Electricity and Natural Gas
 State Electric Company Statistics
 Electrification ratio
 Blueprint of National Energy Management
 New & renewable energy utilization plan
 Outlook Report (Center of Data and Information – MEMR)
 General assumption for model scenarios
Model Structure
Transformation
 Natural Gas & Electricity
T&D Module
 Briquette Plant
 Electricity Generation
 LNG Production
 Oil Refinery
 Coal Mining
 Biofuel Plant
 Oil Production
 Natural Gas Production
Demand
 Household
 Urban
 Rural
 Electrified
 Non-electrified
 Commerce
 Industry
 Transport
 Passenger
 Freight
 Other Sectors
Assumptions & Scenarios
General Assumptions









Population growth 1.05% per year
GDP growth 6.49% per year
100% of electrification ration in 2030
Coal reserve 18.7 billion tones
Coal export 158 million tones per year
Natural gas reserve 116 TSCF
Oil reserve 8,4 billion barrels
Realization of Electricity Crash Program phase 1 & 2
Implementation of Kerosene to LPG substitution program
as in the Blueprint of Kerosene to LPG Substitution
 New & Renewable Energy utilization to produce power
General Assumptions
Power Sector Highlight
 Electricity Crash Program
Type of Power Plant
Year
Total Capacity (MW)
2010
7078
2011
7872
2012
9465
2016
1000
2017
2616
Gas PP [Crash Program 2]
2014
1440
Hydro PP [Crash Program 2]
2014
1174
Geothermal PP [Crash Program 2]
2014
4733
Coal PP [Crash Program 1]
Coal PP [Crash Program 2]
Power Sector Highlight (2)
 New & Renewable Energy Utilization
Year
Geothermal
Microhydr
o
Solar
2010
1.12
2011
10
2012
10
2013
10
2014
2015
290
2016
180
2017
240
2018
20
10
120
10.5
Waste
Wind
40
10.5
10
10.5
10
720
10.5
10
2019
240
10.5
10
2020
730
10.5
2021
1200
2022
60
170
Capacity
Addition in MW
40
10
10.5
10
1210
10.5
10
2023
1490
10.5
10
2024
890
30
10.5
10
2025
760
32
10.5
10
Total capacity
from NRE: 8718.2
MW
in 2025
Scenarios
 Base Case (BC)
General Assumptions + No NPP until
2030
 Nuclear Power (NP)
General Assumptions
+
4 GW NPP operation in 2028
 Goal: to analyze the impacts of NPP implementation
in Indonesia
Interim Results
 Energy Demand by Final Energy Type
2500
Million BOE
2000
Solid Fuels
1500
Oil Products
Natural Gas
1000
Electricity
Biomass
500
0
2010
2015
2020
2025
2030
Interim Results
 Nuclear PP on Total Power Production
600
Million MWh
500
400
Non-Nuclear
300
Nuclear
200
100
0
2026
2027
2028
2029
2030
Interim Results
 Carbon Dioxide Emission by Scenarios
Million Metric Tonnes CO2 Equiv.
350
300
250
200
BC
NP
150
100
50
0
2026
2027
2028
2029
2030
Conclusions and Next Steps
Conclusion
 Small contribution of NPP in total power generation
 Chance to reduce more CO2 emission in NPP
implementation
Next Steps
 Energy efficiency scenario as in Indonesia’s climate
change mitigation plan in energy sector
Thank You
Indonesian Institute for Energy Economics
Jl. Ciranjang No. 6, Kebayoran Baru
Jakarta 12180
Telp: +62-21-722 0007
Fax: +62-21-723 1064
www.iiee.or.id