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RI needs $3.7 billion to develop bioenergy power plants
The government is aiming to see around 1,000 to 1,200 megawatt (MW) in additional power generation from bioenergy resources within five years, also stating that the sector needs a huge amount of investment
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he government is aiming to see around 1,000 to 1,200 megawatt (MW) in additional power generation from bioenergy resources within five years, also stating that the sector needs a huge amount of investment.
The Energy and Mineral Resources Ministry's director general for renewable energy, Dadan Kusdiana, said the additional capacity would come from biogas and biomass resources.
'That figure [1,000 to 1,200 MW] is the target for a five-year period. For this year, I'm targeting 100 to 200 MW, which is very difficult to achieve,' Dadan said on the sidelines of a business forum on bioenergy held by German international cooperation agency GIZ and the German-Indonesian Chamber of Commerce and Industry (EKONID) on Monday.
Dadan said the development of biogas or biomass power plants would need ¤2.5 million (US$3.1 million) per MW. Given the government's target of adding 1,200 MW of biogas and biomass power, a total of $3.7 billion will be needed.
Currently, the total capacity of power plants fueled by bioenergy resources reaches 1,716.5 MW. Meanwhile, the country's total electrical capacity stands at 51,981 MW.
'All parties, including banks, remain reluctant to support bioenergy development. However, a recent regulation concerning feed-in tariffs for power produced from bioenergy resources will make this sector more attractive,' Dadan said.
According to the regulation, electricity produced by a biomass power plant is priced at a minimum of Rp 1,150 per kilowatt hour (kWh). The price rises depending on the location of the biomass and its connection to electricity firm PLN's transmission grid.
- Govt expects to develop 1,200 MW bioenergy-fueled power plants
- Each power plant will require $3.1 million in investment
- Indonesian firms called on to participate in investment
The base tariff is 7 percent higher than the initial tariff set in 2012.
The 7 percent increase will not directly stimulate development of bioenergy-based power plants, according to GIZ's senior advisor for the promotion of low-cost renewable energy in Indonesia, Rafael Wiese.
However, he said, the regulation gave more incentives to business, because for regions with a high consumption of fossil fuel, the regulation set higher factors to be multiplied with the base tariff.
'The improved tariff makes the investment climate better. Investors used to be reluctant to invest because of the financial situation in Indonesia, high inflation and the volatile exchange rate,' Wiese said.
EKONID's Jan Ronnfeld said the new tariff regulation showed the government's seriousness regarding the bioenergy for electricity program, which is aimed at reducing the country's dependency on fossil fuel.
'It's the best policy implemented in the last five years, and we hope it will be continued,' Ronnfeld said.
He added that development of biogas and biomass projects would also require the participation of local players.
'Biomass is much more decentralized as it is about developing smaller power plants of 1 MW. This means the investment is also less. Indonesian companies are expected to participate in this project; it is too expensive for foreign firms to invest in small projects,' Ronnfeld said.
