Geothermal Indonesia Investment Opportunities 2015

Energy and Mineral Resources for People’s Welfare

GEOTHERMAL DEVELOPMENT IN INDONESIA

MINISTRY OF ENERGY AND MINERAL RESOURCES OF REPUBLIC OF INDONESIA DIRECTORATE GENERAL OF NEW, RENEWABLE ENERGY, AND CONSERVATION ENERGY

Jakarta, December 2nd, 2015

By :

Yunus Saefulhak Director of Geothermal

“The 2nd Asian Renewable Energy Workshop (AREW) 2015”


I. CURRENT CONDITION 3

II. POLICY & REGULATION 8

III. DEVELOPMENT PLAN 12

IV. INVESTMENT OPPORTUNITY 15

V. CONCLUSION 20

プレゼンター

プレゼンテーションのノート

Before I begin, I wanted to highlight exactly what we want you to take away from this presentation. First – WHAT is the legal basis for NREEC Development and the strategic role on NREEC in providing solution to our energy needs Second, WHAT are our NREEC targets Third, WHAT are the potential breakthrough policies and WHAT kind of strategy and effort undertaken Fourth, our existing and on-going program Last but not least, about the need for cooperation and synergy



1. Energy has become a basic needs;

2. The Indonesian economy grew by 5-6% per year with a population growth of 1,2% per year Energy Growth 7 – 8% per year;

3. Dependence on fossil energy is still high, while its reserves are limited;

4. Electrification ratio 2014 is 84,4%

5. The sources of new, renewable energy has not been optimized yet.

Oil 46 %

Gas 18 %

Coal 31 %

NRE 5%

INDONESIA AS A NET OIL IMPORTER

TOTAL OF PRIMARY ENERGY: 1176 MBOE

ENERGY MIX PRIMARY ENERGY (MBOE)

Oil 612

Coal 411

Gas 243

NRE 63

ENERGY: CURRENT CONDITION

Energy and Mineral Resources for People’s Prosperity

Oil 32.1%

Gas 22.1% Batubara

29.0%

Geothermal 7.9%

Bioenergy 5.5%

Other NRE 1.7%

Oil 39.1%

Gas 22.1%

Coal 29.0%

Geothermal 4.2%

Hydro 0.9%

Bioenergy 4.7%

Oil 25,0%

Gas 22,0% Coal

30,0%

Geothermal 7.1%

Hydro 2.8%

Bioenergy 9.8%

Other NRE 3.3%

NRE: 9.8%

NRE: 23.0%

NRE: 16.8% 2020: 290 MTOE

2025: 400 MTOE

Hydro 1.7%

2015: 215 MTOE

NRE TARGET IN NATIONAL ENERGY POLICY (KEN) (GOVERNMENT REGULATION NO. 79/2014 ON NATIONAL ENERGY POLICY)


Abundance geothermal energy more than 29 Gwe, distributed in more than 324 locations in almost all regions.

Total installed capacity 1,438.5 MW or Only less than 5% have been utilized.

The Government has determined 67 geothermal working (concession) areas for development, but only nine of them were already produced.

Under the previous regulations, geothermal operations were banned within restricted forested areas, which currently are home to an estimated 42% of Indonesia’s geothermal resources.

GoI’s target for renewable energy is 23 % of total national energy mix in 2025

Geothermal contribution is expected 7.1 % or about 6.3 GW of installed capacity.

With the additional capacity of 4.9 GW will lead Indonesia as the largest CO2 mitigation country in the world with reduction emissions by 29.36 million ton/ year.

The propose program will require an investment of at least US$ 20 Billion.

CURRENT GEOTHERMAL DEVELOPMENT



Direktorat Jenderal Energi Baru, Terbarukan dan Konservasi Energi Kementerian Energi dan Sumber Daya Mineral

1. Enhancement, harmonization of policies and regulation on geothermal following: Publishing Law No. 21/ 2014 regarding geothermal. Composing Government Regulation of Production Bonus; Direct Use Utilization; Indirect

use utilization. Completing related Ministry of Energy and Mineral Resources Regulation. 2. Geothermal contribution for 10,000 MW Fast Track Program Phase II in 52 projects as

much as 4,825 MW which is be confirmed on Presidential Regulation No. 04/2010 and Ministry of Energy and Mineral Resources Regulation No. 40/2014.

3. Government is providing fiscal incentives for geothermal developer including income tax facility (tax allowance and tax holiday) still for import duty facility and tax on import (Import Tariff, Value Added Tax/ VAT, Sales Tax on Luxury Goods, and Income Tax for Import).

4. To accelerate geothermal development, government is offering a Preliminary Survey Assignment to the third party (investor) who can provide “right to match”.

5. Adjustment geothermal electricity selling price against the economy by publishing Regulation of The Minister of Energy and Mineral Resources No. 17/2014 regarding Electricity Energy Purchase from Geothermal Power Plant and Geothermal Steam for Geothermal Power Plant by PT Perusahaan Listrik Negara (PLN).

GOVERNMENT POLICIES FOR GEOTHERMAL DEVELOPMENT

プレゼンター


Adapun Roadmap dari pengembangan energi terbarukan sampai dengan tahun 2015 dapat dilihat pada tayangan. Untuk biomassa dapat dibagi menjadi 2, yaitu bahan bakar nabati (BBN) dan biomassa sampah. Kapasitas BBN pada tahun 2011 sekitar 0,4 Juta KL dan akan dikembangkan mencapai 11,8 Juta KL pada tahun 2015. Sedangkan biomassa sampah pada awal tahun ini sebesar 520 MW, akan dikembangkan mencapai 1.287 MW. Adapun kapasitas panas bumi pada tahun 2011 sekitar 1.226 MW dan akan dikembangkan mencapai 3.516 MW pada tahun 2015. Sedangkan kapasitas energi air pada tahun 2011 sebesar 5.915 MW, akan dikembangkan mencapai 7.488 MW pada tahun 2015. Disamping itu, kapasitas energi laut pada tahun 2011 sekitar 0,002 MW dan akan dikembangkan mencapai 2,2 MW pada tahun 2015. Sedangkan kapasitas energi matahari pada tahun 2011 sebesar 24 MW akan dikembangkan mencapai 773 MW pada tahun 2015. Untuk energi angin dan Energi Terbarukan lainnya, kapasitas pada tahun 2011 sebesar 3 MW dan akan dikembangkan mencapai 737 MW pada tahun 2015.


Indonesian government and House of Representatives are officially publishing the Law No. 21/2014 on geothermal in a drive to open the way for accelerating geothermal projects development. The new law is expected provide a stronger legal basis for upstream geothermal business, clear direction, and able to overcome some problems that become barrier of geothermal development.

Overlapping Area with Forestry Geothermal is excluded from mining activities, which enable geothermal activity is allowed in forest conservation. Price Price of geothermal electricity was determined by Government. Pricing policy based on economic

price just recently changed by MR No. 17/2014. The regulation offered energy prices ranged between 11.8-29.6 cent US$/kWh

Incentives The government provides fiscal and non-fiscal incentives and also gives special treatments extended to Business Entity which involved in geothermal business.

Tender process Tender for geothermal projects currently issued by Central Government. Tender rules will create more detail, clear, transparent, and accountable, which also regulating

funds placement as exploration commitments.

GEOTHERMAL LAW (1/2)


Government and Local Government Authorization Because management strategic requires centralized and integrated, the authority to regulate

geothermal for power plant is under the Central Government. Authority of permit for geothermal development and tender of geothermal concessions, as well as

controlling and surveillance also on Central Government. Authority of direct use geothermal utilization in Central Government and Local Government.

Local/ Regional Government Expectations Instead of participate which can cause the local government become high-risk investment, Local

government will get Production Bonus, partially derived from gross revenue starting from the first unit has produced.

GEOTHERMAL LAW (2/2)




Development Plan

Installed Capacity

(MW)

Development Plan (MW)

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Additional Capacity (MW) 1.438,5 60,0 37,0 279,0 293,5 808,5 960,0 495,0 354,0 1.084,0 640,0 175,0 565,0

Total Development Capacity (MW)

1.438,5 1.403,5 1.440,5 1.719,5 2.013,0 2.821,5 3.781,5 4.276,5 4.630,5 5.714,5 6.354,5 6.529,5 7.094,5

Geothermal development road map to 2025 described on the table:

GEOTHERMAL DEVELOPMENT PLAN TO 2025

プレゼンター


Adapun Roadmap dari pengembangan energi terbarukan sampai dengan tahun 2015 dapat dilihat pada tayangan. Untuk biomassa dapat dibagi menjadi 2, yaitu bahan bakar nabati (BBN) dan biomassa sampah. Kapasitas BBN pada tahun 2011 sekitar 0,4 Juta KL dan akan dikembangkan mencapai 11,8 Juta KL pada tahun 2015. Sedangkan biomassa sampah pada awal tahun ini sebesar 520 MW, akan dikembangkan mencapai 1.287 MW. Adapun kapasitas panas bumi pada tahun 2011 sekitar 1.226 MW dan akan dikembangkan mencapai 3.516 MW pada tahun 2015. Sedangkan kapasitas energi air pada tahun 2011 sebesar 5.915 MW, akan dikembangkan mencapai 7.488 MW pada tahun 2015. Disamping itu, kapasitas energi laut pada tahun 2011 sekitar 0,002 MW dan akan dikembangkan mencapai 2,2 MW pada tahun 2015. Sedangkan kapasitas energi matahari pada tahun 2011 sebesar 24 MW akan dikembangkan mencapai 773 MW pada tahun 2015. Untuk energi angin dan Energi Terbarukan lainnya, kapasitas pada tahun 2011 sebesar 3 MW dan akan dikembangkan mencapai 737 MW pada tahun 2015.


There are 4 (four) ways for new investor for becoming a geothermal developer, namely: 1)Obtain Geothermal Permit (IPB) through GWA tender mechanism. 2)Preliminary Survey Assignment or Preliminary Survey & Exploration Assignment 3)As Lender 4)Services Company

Eksplorasi Exploration

Survey Pendahuluan

Preliminary Survey

3G (Geophysic,Geochemical, Geologic)

Sumur eksplorasi (Wild Cat)

Sumur deliniasi

Sumur pengembangan & injeksi Dev’t & Injection well

Eksploitasi Pemanfaatan Exploitation Utilization

Pemb. fasiltas lap & penunjangnya Steamfield & supporting facilities

Operasi produksi Production operation

Studi Kelayakan

Feasibility Study

Paling lama 5 tahun + 1 tahun + 1 tahun Maximum 5 years + 1 year + 1 year

Paling lama 30 tahun/Maximum 30 years

Potensi Panas Bumi Geothermal

Potential

Pemerintah (Government)

WILAYAH KERJA HASIL SP/PSP DAN EKSPLORASI

Eksplorasi Exploration

WILAYAH KERJA HASIL SP ATAU PSP

2) Penugasan/Assignment (BUMN atau BLU)

1) Izin Panas Bumi/Geothermal Permit (BUMN, BUMD, Swasta)

Pemerintah Daerah (Local Government)

Badan Usaha (Business Entity)







GEOTHERMAL BUSINESS STAGES (ELECTRICITY)



Development of 4.825 MW electricity from Geothermal in 10,000 MW Fast Track Program Stage II will require an investment of at least US$ 20 Billion.

To achieve the targets, international supports are needed in terms of finance, technology, human resources and technical assistance.

Foreign’s shares ownership in Geothermal Business is allowed up to 95%.

Options for new investor to become geothermal developer: Preliminary Survey Assignment or Preliminary Survey & Exploration Assignment Obtain Geothermal Permit (IPB) through GWA tender mechanism Financial Institutions Services Company

INVESTMENT OPPORTUNITY


Income Tax Facility (Corporate Income Tax)

Import Duty and Tax on Import Facility

Tax Allowance

1. Net income tax reduction of 30% of the investment value for 6 years (Investment Tax Credit)

2. Depreciation and amortization is accelerated 3. Imposition of Income Dividend 10% 4. Compensation losses 5 -10 years

Incentives schemes

1

Import Duty

VAT & Sales Tax on Luxury Goods

Income Tax on Imports

FISCAL INCENTIVES POLICY IN GEOTHERMAL SECTOR

2



Year of Commercial Operation Date (COD)

Ceiling Price (sen US$/kWh)

Region I Region II Region III

2015 11,8 17,0 25,4

2016 12,2 17,6 25,8

2017 12,6 18,2 26,2

2018 13,0 18,8 26,6

2019 13,4 19,4 27,0

2020 13,8 20,0 27,4

2021 14,2 20,6 27,8

2022 14,6 21,3 28,3

2023 15,0 21,9 28,7

2024 15,5 22,6 29,2

2025 15,9 23,3 29,6

Note: 1. Region I : Sumatera, Java, and Bali 2. Region II : Sulawesi, West Nusa Tenggara, East Nusa Tenggara, Halmahera, Maluku, Papua, and Borneo 3. Region III : Region that located in region I and II, with isolated transmision system and fulfillment of electricity is

generated by fuel oil

THE PRICE OF GEOTHERMAL ELECTRICITY By MEMR Regulation No. 17/2014


27 GWAs TO BE TENDERED 2015 - 2017



1)Indonesia has a huge geothermal reserves as one of the greatest potential in the world. Unfortunately the utilization remains very low whereas the potential is more than 29 GW.

2)The government has set an ambitious target in which renewable energy is targeted 23% of Indonesia’s energy mix, while geothermal energy is expected to contribute 7.1% of it.

3)Despite the huge potential, geothermal development is still not as expected. The most obstacles that faced by the geothermal development is caused by environment constraint, unattractive energy tariff, unclear and disharmonized policies.

4)Previous Law is considered unable to overcome those barriers, therefore the government has revise the Law. The new Law is expected will answer the challenges so that geothermal development can be accelerated to achieve the target.

5)The government has a strong commitment to increase geothermal utilization in order to support fulfillment of energy security, reduce dependency of fossil fuels, increase the national electrification ratio as well as contribute to the global issue of reducing GHG.

CONCLUSION

Energy and Mineral Resources for People’s Welfare www.ebtke.esdm.go.id

Jalan Pegangsaan Timur No. 1A Menteng, Jakarta Pusat 10320; Telp/Faks : 021-31924540

KEMENTERIAN ENERGI DAN SUMBER DAYA MINERAL REPUBLIK INDONESIA DIREKTORAT JENDERAL ENERGI BARU, TERBARUKAN, DAN KONSERVASI ENERGI

Date post:	10-Jan-2017
Category:	Documents
Upload:	frank-mercado
View:	74 times
Download:	2 times

Geothermal Indonesia Investment Opportunities 2015

Documents