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Overview of Indonesia’s Energy Sector Current Status & Development Plans

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. Updates in Energy Sector Production Consumption Prices Subsidies

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Overview of Indonesia’s Energy Sector Current Status & Development Plans

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  1. Overview of Indonesia’sEnergy SectorCurrent Status & Development Plans Indonesian Institute for Energy Economics East Asia Science and Security Meeting Beijing, 23-24 September 2010

  2. Presentation Outline • Updates in Energy Sector • Production • Consumption • Prices • Subsidies • Institutional Framework • Nuclear Plans • LEAP Work

  3. UPDATES IN ENERGY SECTOR

  4. Production (1) 2008 Include conventional biomass Exclude conventional biomass Source: MEMR, Hanbook of Energy and Eocnomics Statistics 2009

  5. Production (2) Outlook 2009: BAU: no significant change in energy policy Scenario Climate1: 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 Source: Center of Data and Information, MEMR 2009

  6. 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).

  7. Production (4) Emission by Energy Sub Sectors • 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.

  8. Production (4) Plan for Electricity Capacity Additions • 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

  9. 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

  10. 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).

  11. 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.

  12. Prices (1) GASOLINE • Price gap among consumer categories, incentive for mis-use

  13. Prices (2) KEROSENE Decline in prices and also price gap in recent years

  14. 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.

  15. Subsidies

  16. 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

  17. Institutional Framework (2) • New Institutions • National Energy Council • National Council on Climate Change • Directorate General of Renewable Energy and Energy Conservation

  18. 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

  19. 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)

  20. Nuclear Plans (2) Indonesia Energy Mix 2025

  21. Nuclear Plans (3) Target for New & Renewable Energy, 2030 Source: Center of Data and Information, MEMR 2009 Nuclear appears in Climate-2 Scenario between 2025 - 2030

  22. LEAP WORK

  23. Agenda • Data & Information Sources • Model Structure • Assumptions & Scenarios • Base Case (BC) • Nuclear Power (NP) • Interim Results • Conclusions & The Next Step

  24. 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

  25. 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

  26. 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

  27. General Assumptions Power Sector Highlight • Electricity Crash Program

  28. Power Sector Highlight (2) • New & Renewable Energy Utilization Capacity Addition in MW Total capacity from NRE: 8718.2 MW in 2025

  29. Scenarios • Base Case (BC) • Nuclear Power (NP) • Goal: to analyze the impacts of NPP implementation in Indonesia General Assumptions + No NPP until 2030 General Assumptions + 4 GW NPP operation in 2028

  30. Interim Results • Energy Demand by Final Energy Type

  31. Interim Results • Nuclear PP on Total Power Production

  32. Interim Results • Carbon Dioxide Emission by Scenarios

  33. 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

  34. 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

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