Eu Gateway Market Study Green Energy Technologies Indonesia PDF

Green Energy Technologies
Indonesia Market Study
DECEMBER 2017
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EU Business Avenues in South East Asia
Central Management Unit
Indonesia Market Study
December 2017
Submitted to the European Commission

on 08 December 2017
Green Energy Technologies – Indonesia Market Study - Page 3 of 261

Table of contents
TABLE OF CONTENTS .............................................................................................................................................. 4
LIST OF FIGURES ...................................................................................................................................................... 7
LIST OF TABLES ........................................................................................................................................................ 8
TABLE OF ABBREVIATIONS .................................................................................................................................. 10
1. EXECUTIVE SUMMARY ....................................................................................................................................... 13
2. WHAT ARE THE CHARACTERISTICS OF INDONESIA? .................................................................................. 21

2.1 POLITICAL OVERVIEW ........................................................................................................................... 21
2.2 ECONOMIC OVERVIEW ........................................................................................................................... 22
2.3 TRADE OVERVIEW ................................................................................................................................. 24
2.4 M ARKET ACCESS .................................................................................................................................. 26
2.5 BUSINESS AND COMPETITIVE ENVIRONMENT .......................................................................................... 26
3. MARKET OVERVIEW & EU ENTRY OPPORTUNITIES IN INDONESIA ............................................................ 29

3.1 THE GREEN ENERGY TECHNOLOGIES SECTOR IN INDONESIA.................................................................... 29
3.1.1 Overview of the Green Energy Sector ............................................................................................ 29
3.1.2 Key Institutional Actors for Green Energy Technologies ................................................................ 33
3.1.3 Relevant Policy Initiatives to Accelerate GET ................................................................................ 35
3.1.4 Domestic Research & Development (R&D) on GET ...................................................................... 38
3.1.5 Key Associations ............................................................................................................................ 41
3.1.6 Entry Strategies .............................................................................................................................. 42
3.1.7 Challenges and Entry Barriers ........................................................................................................ 45
3.2 WIND ..................................................................................................................................................... 48
3.2.1 Market Overview ............................................................................................................................. 48
3.2.2 EU Entry Opportunities ................................................................................................................... 57
3.3 SOLAR ................................................................................................................................................... 63
3.3.1 Market Overview ............................................................................................................................. 63
3.4 AEROTHERMAL ....................................................................................................................................... 82
3.4.1 Market Overview ............................................................................................................................. 82
3.5 GEOTHERMAL ......................................................................................................................................... 83
3.5.1 Market Overview ............................................................................................................................. 83
Green Energy Technologies - Indonesia Market Study - Page 4 of 261

3.6 HYDROTHERMAL AND OCEAN ENERGY .................................................................................................. 103
3.6.1 Market Overview ........................................................................................................................... 103
3.6.2 EU Entry Opportunities ................................................................................................................. 107
3.7 HYDROPOWER ...................................................................................................................................... 114
3.7.1 Market Overview ........................................................................................................................... 114
3.8 BIOMASS .............................................................................................................................................. 130
3.8.1 Market Overview ........................................................................................................................... 130
3.9 LANDFILL GAS/ SEWAGE TREATMENT GAS / BIOGAS ............................................................................. 142
3.9.1 Market Overview ........................................................................................................................... 142
3.10 POWER GENERATION .......................................................................................................................... 158
3.10.1 Market Overview ......................................................................................................................... 158
3.10.2 EU Entry Opportunities ............................................................................................................... 168
3.11 ENERGY EFFICIENCY & CARBON SERVICES ......................................................................................... 173
3.11.1 Market Overview ......................................................................................................................... 173
3.12 BIOFUEL............................................................................................................................................. 183
3.12.1 Market Overview ......................................................................................................................... 183
3.13 COGENERATION TECHNOLOGY ............................................................................................................ 191
3.13.1 Market Overview ......................................................................................................................... 191
3.14 CARBON CAPTURE AND STORAGE ...................................................................................................... 201
3.14.1 Market Overview ......................................................................................................................... 201
3.15 ELECTRIC VEHICLES ........................................................................................................................... 210
3.15.1 Market Overview ......................................................................................................................... 210
4. REGULATIONS ................................................................................................................................................... 225

4.1 IMPORT PROCEDURES........................................................................................................................... 225
4.2 GOVERNMENT TENDERS ....................................................................................................................... 228
4.3 REGULATIONS AND AGENCIES RELATED TO GREEN ENERGY TECHNOLOGIES ......................................... 229

5. ANNEX ................................................................................................................................................................ 235
5.1 LIST OF USEFUL CONTACTS .................................................................................................................. 235
5.2 STARTING A BUSINESS IN INDONESIA..................................................................................................... 237
5.3 USEFUL STATISTICS ............................................................................................................................. 245
5.4 BIBLIOGRAPHY ..................................................................................................................................... 252

List of Figures
Figure 1: Map of Indonesia .........................................................................................................................................21
Figure 2: EU-Indonesia Trade in Goods & Services, 2014-2016 ...............................................................................25
Figure 3: Total NRE Investment Needs until 2025 .....................................................................................................29
Figure 4: Current and Targeted Energy Mix in Indonesia ..........................................................................................31
Figure 5: Key Institutions for NRE and EE&EC Policy ...............................................................................................35
Figure 6: Clean Energy R&D Focus Areas and Budget (US$), 2016 and 2017 .........................................................38
Figure 7: Wind Currents throughout Indonesia ...........................................................................................................48
Figure 8: Wind Power Facility in Nusa Penida ...........................................................................................................49
Figure 9: Wind Map developed via Danish-Indonesian Cooperation – Power Density at 50 m. ................................53
Figure 10: Wind Map developed via Danish-Indonesian Cooperation – Average Wind Speed at 50 m. ...................53
Figure 11: Development of PLTB Bayu Power Plant..................................................................................................57
Figure 12: The First Ever 2.5 MW Wind Turbine Components Arrive in Indonesia in August 2017 ..........................59
Figure 13: Vestas’ V126 Turbines at the Jeneponto 1 Site ........................................................................................60
Figure 14: WES50, WES80, WES100 & WES250 Turbine Models ...........................................................................62
Figure 15: Global Horizontal Irradiation ......................................................................................................................64
Figure 16: Sulawesi’s Largest Solar Power Plant in East Sumalata District ..............................................................66
Figure 17: 1,000 Island PV Development Programme ...............................................................................................68
Figure 18: Indonesia’s Largest Solar Power Plant by PT Len Industri in East Nusa Tenggara .................................73
Figure 19: Status of the 67 Geothermal Working Areas .............................................................................................86
Figure 20: The Sarulla Geothermal Power Plant ........................................................................................................89
Figure 21: PT Medco Ijen Project at the Exploration Stage .......................................................................................90
Figure 22: Drill site at Muara Laboh Project, West Java ............................................................................................91
Figure 23: Patuha Geothermal 1 x 55 MW Power Plant in Bandung, operated by PT GDE .....................................94
Figure 24: Karaha Project Site for Karaha Plant by Alstom for Pertamina ...............................................................101
Figure 25: Kamojang Geothermal Complex, West Java, Indonesia .........................................................................102
Figure 26: Bombora mWave Converter ....................................................................................................................106
Figure 27: Potency of Wave Energy in Indonesia ....................................................................................................108
Figure 28: Potency of Tidal Energy in Indonesia’s Marine Territory .........................................................................109
Figure 29: Potency of OTEC in Indonesia’s Marine Territory ...................................................................................110
Figure 30: First MeyGen Turbine Deployment .........................................................................................................113
Figure 31: Hydropower Potential in Indonesia ..........................................................................................................115
Figure 32: Construction of Upper Cisokan Hydropower Plant ..................................................................................116
Figure 33: Wampu Hydroelectric Power Plant in Indonesia .....................................................................................117
Figure 34: Mini Hydro Plant Location in Lau Gunung ...............................................................................................123
Figure 35: Biomass Potential in Indonesia (MWe) ...................................................................................................130
Figure 36: Biomass Sources in Indonesia ................................................................................................................131
Figure 37: Maris Projects Research to Investigate the Potential of Algae Biomass ................................................140
Figure 38: Market Size of the Biogas Industry, 2022................................................................................................143
Figure 39: The first IPP Biogas Power Plant in Indonesia ........................................................................................144
Figure 40: Bantargebang Landfill Gas Plant .............................................................................................................147
Figure 41: 1.5 MW Sewage Gas Cogeneration Power Plant ...................................................................................148
Figure 42: PLT Biogas with Covered Lagoon Technology in Pagar Merbau ...........................................................150
Figure 43: Market Potential & Project Sizing in Indonesia: Palm Oil Mil Industry in Indonesia, 2010 ......................153

Figure 44: Installed Power Capacity and Electricity Generation, 2015 ....................................................................158
Figure 45: Current and Targeted Energy Mix in Indonesia ......................................................................................159
Figure 46: Fast Track Programmes (FTP): Additional Capacity by Plant Type, 2015-2019 ....................................160
Figure 47: Projections of Electricity Generation in RUPTL, 2016-2025 ...................................................................161
Figure 48: Electrification Ratio in Indonesia (2014) ..................................................................................................163
Figure 49: First Unit of 330 MW Sarulla Geothermal Power Plant ...........................................................................167
Figure 50: Indonesian Final Energy Use by Sector, 2000 and 2015 ........................................................................175
Figure 51: Policies and standards on transport energy efficiency across the South East Asian region ..................177
Figure 52: The installed FuelMatic GSX 3 equipment ..............................................................................................190
Figure 53: 2x100 MW Tarahan Coal Fired Cogeneration Plant ...............................................................................191
Figure 54: Annual Cogeneration Capacity Additions ................................................................................................192
Figure 55: MWM TCG 2032 Gas Engines in Power Plant at Indonesian Industrial Site Panbil ...............................193
Figure 56: 1.5 MW Sewage Gas Cogeneration Power Plant ...................................................................................194
Figure 57: The 14 Containerised MWM TCG 2020 V20 Natural Gas Gensets of the Rawa Minyak CHP Plant .....199
Figure 58: Business-as-usual Emissions Projections up to 2030 .............................................................................201
Figure 59: CCS Gundih Pilot Project Status since 2012 ..........................................................................................203
Figure 60: CO2 Storage Capacity Estimates in Depleted Oil and Gas Fields ..........................................................207
Figure 61: CO2 Storage Capacity in Geological Formations ....................................................................................208
Figure 62: CCS Milestones in Indonesia & Cooperation over the Years..................................................................209
Figure 63: Domestic Research Initiatives to Develop Prototype EVs .......................................................................211
Figure 64: BYD Fully Electric Bus in Indonesia ........................................................................................................215
Figure 65: The Travellers on Motorbikes on Jalan Raya Bekasi km 22, Cakung, Jakarta.......................................215
Figure 66: Electric Two-Wheel Vehicles Sales by Country in Asia Pacific (except for China), 2012-2018..............216
Figure 67: Viar Q1 Model on Display in Bilai Kartini, Jakarta ...................................................................................218
Figure 68: Zbee Model by Clean Motion ..................................................................................................................222
Figure 69: An Italjet Ascot e-bike at the 23rd Indonesia International Motor Show .................................................223
List of Tables
Table 1: GDP & GDP Growth Rates by Region .........................................................................................................23
Table 2: Ease of Doing Business in Indonesia ...........................................................................................................27
Table 3: NRE Potential in Indonesia ...........................................................................................................................30
Table 4: NRE Installed and Potential Capacity by Grid Connectivity .........................................................................31
Table 5: Indonesia’s NRE Targets and Committed Capacity as of 2017 ...................................................................32
Table 6: Potential Energy Savings per Sector by 2025 ..............................................................................................33
Table 7: Clean Energy R&D Funding in 2016 and 2017 by Sub-categories ..............................................................39
Table 8: Foreign Ownership Restrictions for Power Generation ................................................................................43
Table 9: Wind Resources in Indonesia .......................................................................................................................50
Table 10: Potential Locations for Commercial Scale Wind Energy in Indonesia .......................................................51
Table 11: Java and Sulawesi Wind Energy Potential by Location .............................................................................51
Table 12: Government Planned Additions for Wind Power Plants between 2015-2019 ............................................52
Table 13: Solar Energy Potential in Indonesia ...........................................................................................................63
Table 14: Solar On-Stream Development Plan (in MW) prepared in 2014 ................................................................65
Table 15: Planned Distribution of 5 GW of solar PV in Indonesia ..............................................................................69

Table 16: Quotas and FiTs for Phase 1 of the 5 GW solar PV development, by Region...........................................70
Table 17: Geothermal Resources and Installed Capacity in Indonesia (2015) ..........................................................83
Table 18: Installed Geothermal Capacity as of 2015 by License Holder and Developer ...........................................85
Table 19: Government Plans for Additions to Geothermal Capacity, 2015-2019 ......................................................87
Table 20: Overview of Star Energy’s Operating Geothermal Portfolio .......................................................................93
Table 21: Auctions for 30 Geothermal Working Areas (2016-2017) ..........................................................................96
Table 22: Theoretical and Potential Power Generating Capacity of Ocean Energy In Indonesia ............................103
Table 23: Ocean Energy Pilot Projects in Indonesia as of 2016 ..............................................................................103
Table 24: Top 6 Countries by Unutilised Hydropower Potential ...............................................................................114
Table 25: Planned Government Development of Hydropower (in MW), 2015-2019 ................................................118
Table 26: Expected Projects to be Completed, 2015-2019 ......................................................................................118
Table 27: Biomass Energy Potential in Indonesia ....................................................................................................132
Table 28: Feed-inTariff for Purchase of Electricity by PLN from Biomass Power Plants .........................................134
Table 29: Feed-inTariff for Purchase of Electricity by PLN from Biogas Power Plants ............................................146
Table 30: New FiT for Waste-to-Energy Technologies.............................................................................................148
Table 31: Potential Projects in WtE Sector ...............................................................................................................155
Table 32: Indonesia’s Generation Expansion Needs, 2015-2019 (MW of Capacity Additions) ...............................160
Table 33: Base Cost Investment Requirements for PT PLN’s Network, 2015-2019 (US$ billion) ...........................161
Table 34: Institutional Mapping of Indonesian Energy Sector ..................................................................................165
Table 35: Potential Energy Savings per Sector by 2025 ..........................................................................................173
Table 36: Most Suitable Sedimentary Basins for CO 2 Storage in Indonesia............................................................207
Table 37: Top Ten Largest Markets for 2/2Ws in Asia and their Growth .................................................................216
Table 38: Targets, Policies and Regulation for Renewable Energy in Indonesia ....................................................231
Table 39 Summary of Regulation 12/2017 ...............................................................................................................233
Table 40: Tariff Determination of Renewable Energy ..............................................................................................234
Table 41: Major Industrial Areas in Indonesia ..........................................................................................................243
Table 42: Imports of Photosensitive semiconductor devices, incl. photovoltaic cells ..............................................245
Table 43: Exports of Photosensitive semiconductor devices, incl. photovoltaic cells ..............................................245
Table 44: Imports of Parts of non-electrical engines and motors, n.e.s.(Wind Turbine Blades) ..............................246
Table 45: Exports of Parts of non-electrical engines and motors, n.e.s.(Wind Turbine Blades) ..............................246
Table 46: Imports of Generating sets, wind-powered ...............................................................................................247
Table 47: Exports of Generating sets, wind-powered ..............................................................................................247
Table 48: Imports of Generating sets (excluding wind-powered and powered by spark-ignition internal
combustion piston engine) - Wave/Tidal power converter .......................................................................248
Table 49: Exports of Generating sets (excluding wind-powered and powered by spark-ignition internal
combustion piston engine) - Wave/Tidal power converter .......................................................................248
Table 50: Imports of Heat-exchange units (excluding instantaneous heaters, storage water heaters, boilers
and equipment) ........................................................................................................................................249
Table 51: Exports of Heat-exchange units (excluding instantaneous heaters, storage water heaters, boilers
and equipment) ........................................................................................................................................249
Table 52: Imports of Hydraulic turbines, water wheels, and regulators therefor (excluding hydraulic power
engines) ....................................................................................................................................................250
Table 53: Exports of Hydraulic turbines, water wheels, and regulators therefor (excluding hydraulic power
engines) ....................................................................................................................................................250
Table 54: Imports of Furnace burners for pulverised solid fuel or gas, incl. combination burners ...........................251
Table 55: Exports of Furnace burners for pulverised solid fuel or gas, incl. combination burners ...........................251

Table of Abbreviations
AFTA ASEAN Free Trade Area
APAMSI Indonesian Solar Module Manufacturers Association
API Import Identification Number
APLSI The Independent Power Producers Association of Indonesia
APROBI The Indonesian Biofuel Producers Association
ASEAN’s The Association of Southeast Asian Nations
B2B Business-to-Business
Bappenas Indonesian National Planning Agency
BKPM Indonesian Investment Coordinating Board
BOE Barrel of oil
BOO Build-Own-Operate
BOOT Build-Own-Operate-Transfer
BOT Build-Own-Transfer
BPH MIGAS Regulatory Agency for Upstream Oil and Gas
BPP Biaya Pokok Pembangkitan
BPS Badan Pusat Statistiks
BTTP The Agency for the Assessment and Application of Technology
CCS Carbon Capture and Storage
CDM Clean Development Mechanism
CHP or Cogen Cogeneration
CMEA Coordinating Ministry of Economic Affairs
DEN National Energy Council
DGCE Directorate-General of Customs and Excise
DGNREEC Directorate General of New and Renewable Energy and Energy Conservation
EBTKE New Renewable Energy and Energy Conversion
EE&EC Energy Efficiency and Energy Conservation
EFB Empty Fruit Bunch
EPC Engineering, Procurement and Construction
ERF Energy Resilience Fund
ESC Energy Sale Contract
ESCO Energy Savings Company
ESDM The Indonesian Energy and Mineral Resources Ministry
Evs Electric Vehicles
FiTs Feed-in Tariffs
FSRU Floating Storage and Regasification Unit
FTAs Free Trade Agreements
FTPs Fast Track Programmes
Gaikindo Association of Indonesian Automotive Industries
Gesits Garasindo Electric Scooter ITS
GET Green Energy Technologies
GFF Geothermal Fund Facility
GGCP Gresik Gas Cogeneration Plant

GHG Greenhouse Gas
GINSI Indonesian National Importer Association
HRSG Heat Recovery Steam Generators
HVDC High-Voltage Direct Current
IEA International Energy Agency
IIGF Indonesia Infrastructure Guarantee Fund
INDC Intended Nationally Determined Contribution
IPPs Independent Power Producers
ISF Indonesian Science Fund
ITPC Indonesian Trade Promotion Centre
ITS Institute of Technology
KADIN Indonesian Chamber of Commerce
KNEB Bali National Clean Energy Area
LAPAN National Institute of Aeronautics and Space
LCGC Low Cost Green Car
LEMIGAS Center for Oil and Gas Technology Research and Development
LKPP Indonesia National Procurement Agency
LPSE Electronic-Based Procurement Service
MEMR Ministry of Energy and Mineral Resources
METI Indonesian Renewable Energy Society
MOEF Ministry of Environment and Forestry
MoF Ministry of Finance
MOI Ministry of Industry
MOPWH Ministry of Public Works and Housing
MOT Ministry of Trade
MoU Memorandum of Understanding
MSOE Minister of State-Owned Enterprise
MTOE Million Tons Oil Equivalent
MV Medium Voltage
MW Megawatt
MWp Megawatt peak
NDC Nationally Determined Contribution
NGO Non Governmental Organisations
NPWP Taxpayer Identification Number
NRE New and Renewable Energy
O&M Operation and Maintenance
ORC Organic Rankine Cycle
OTEC Ocean Thermal Energy Conversion
P3TKEBT Research and Development Centre for Electricity and Renewable Energy
Technology
PENS Electronics Polytechnic Surabaya
PGN State-owned gas company (Perusahaan Gas Negara)
PIB Import Declaration Form
PKS Palm Kernel Shell
PLN The State-owned electricity company (PT Perusahaan Listrik Negara)

PLTB Wind Power Plant
PLTS Solar Power Plant
POME Palm Oil Mill Effluent
PPA Power Purchase Agreement
PPP Public-Private Partnerships
PSCs Production Sharing Contracts
PSO Public Service Obligation
PV Photovoltaic System
PwC PricewaterhouseCoopers
R&D Research And Development
RE Renewable Energy
RE4I Renewable Energy for Indonesia
REC Renewable Energy Corporation
RENSTRA Strategic Plan
RIKEN National Masterplan for Energy Conservation
RPJMN The National Medium-term Development Plan
RSPO Roundtable of Sustainable Palm Oil
RUPTL Indonesia’s Electricity Supply Business Plan
SIUP Business Trading License
SMEs Small and Medium-sized Enterprises
SOEs Ministry of State-Owned Enterprises
TDP Company Registration Certificate
UGM Gadjah Mada University
UNFCCC United Nations Framework Convention on Climate Change
UNS Sabelas Maret University
USAID United States Agency for International Development
USDA United States Department of Agriculture
WHyPGen Wind Hybrid Power Generation
WKP Working Areas
WtE Waste-to-Energy
WWF World Wide Fund

1. Executive Summary
Indonesia’s new and renewable energy (NRE) sector is slowly gaining momentum as a result of
the country’s aim to move away from diminishing fossil energy reserves. A latecomer to develop
its NRE market, Indonesia is rapidly shifting gears to accelerate the absorption of green energy
technologies. Blessed with more than 200 GW of total NRE potential, the country is in a favourable
position to become a global renewables and bio-economy leader of tomorrow. While much of its
NRE potential remains underutilised, the market is increasingly witnessing the entry of private
sector players, with projects ranging from small pilot studies to large-scale NRE power plant
development. The country’s strategic roadmap to increase the share of renewable energy in the
energy mix to 23% by 2025 is currently providing the right impetus for greater adoption of green
energy technologies in Indonesia across most of its renewable energy subsectors.
Wind
With a total coastline of more than 54,000 km, where the wind is available during the day (from
the sea) and the night (from inland to the coast), Indonesia appears to have what it takes to reap
the benefits of wind energy. Although the potential for large-scale wind energy is limited,
opportunities for small or medium-sized projects requiring low speed winds are available. While
current installed capacity remains at around 1.1 MW, the government has plans to develop small-
to-medium size projects with a view of having a total of 970 MW installed wind energy capacity
by 2025. In the future, offshore wind is likely to provide additional opportunities for wind energy
investments.
Solar
Solar energy is one of the most neglected forms of renewable energy in Indonesia with only
90 MW installed capacity when compared to its potential (around 50 GW). Blessed with strong
solar radiation, Indonesia plans to scale up solar capacity to 5 GW by 2020 with a particular focus
on remote outlying islands. Opportunities for solar technologies are plentiful given the
government’s increasing interest to scale up its rural electrification programme.

Aerothermal
Currently, Indonesia does not have a suitable market for aerothermal technologies.
The government has identified that traditional power generating sources will be complemented
with renewable energy and technologies in geothermal, hydro, solar, wind and bioenergy sectors.
The NRE mix, however, does not anticipate the demand for aerothermal technologies.
Geothermal
A country of exceptional volcanic activity, Indonesia is belied to harbour around 40% of the
planet’s geothermal potential, with estimated reserves totalling 28 GW. Currently, only a small
fraction of its geothermal potential is being utilised. Unlike other forms of electricity generation,
geothermal is dominated by Independent Power Producers (IPPs). Government plans for
significant scaling up of its geothermal capacities in the near-to-medium term.
Hydrothermal and Ocean Energy
With thousands of miles of coastline, the country is estimated to have between 10-35 MW of
available ocean energy per kilometre of coastline. Presently, only small pilot projects exist, but
future growth in the industry is likely as technologies become further commercialised and some
ocean energy projects are underway.
Hydropower
Hydropower and mini/micro hydropower potential is spread across Indonesia and it is predicted
to hold a total capacity of 75,000 MW of energy. It is currently the most harnessed source of
renewable energy in Indonesia, but its rate of utilisation reaches only 11%. While the sector has
been largely underutilised, there is a considerable opportunity for hydropower development in the
country.

Biomass
As the largest crude palm oil producer in the world, Indonesia holds the potential to generate up
to 32,000 MW of power via biomass energy resources. In 2015, however, electricity generated
from biomass amounted to 1,740.4 MW, consisting of 114.3 MW connected to the grid and
1,626.1 MW operating via off-grid systems. Agricultural residues, including rice husk, bagasse,
rubber and waste from the oil palm industry, as well as the residues from forestry activities hold
the best potential for biomass-to-energy projects.
Landfill Gas/ Sewage treatment Gas/ Biogas
Biogas power generation potential has recently resurfaced as a result of increasing incentive
schemes and the growing availability of feedstock resources. The government plans to scale up
the on-grid biogas plant development to 18.8 MW in the coming years, as compared to 3.6 MW
in 2016. The Indonesian biogas power generation market is expected to be in the leading position
in South East Asia by 2022, with a total market size of EUR 3.65 billion. POME-to-energy and
Waste-to-Energy (WtE) projects remain the most promising avenues for growth.
Power Generation
The Ministry of Energy and Mineral Resources estimates that domestic demand for energy will
rise by around 7% annually, with electricity demand projected to triple between 2010 and 2030.
Renewable energy sources are expected to play an increasingly important role in filling the need
for more power generation and are projected to contribute 23% to the power generation mix by
2025, and 31% by 2050. Opportunities for private sector engagement are plentiful given the fact
that around US$ 43.4 billion investment is needed for the period 2015-2019 to achieve the
government’s energy targets.
Energy Efficiency & Carbon Services
Indonesia is among the countries with the clear need for energy efficiency as the national utility
is struggling to supply the increasing demand for electricity. The country has set an ambitious

target to achieve 17% energy savings by 2025, giving rise to opportunities for energy efficiency
and energy conservation activities in all end-user segments.
Biofuel
Biofuels are gaining traction as Indonesia seeks to reduce oil imports and improve its ecological
credentials, while securing the country’s future transportation needs. Both ethanol and biodiesel
are produced in Indonesia, though the use of ethanol is limited to sectors outside transportation.
The government has set ambitious targets to reach 20% ethanol and 30% diesel blending in
industry, power and transport by 2025. Domestic demand for biofuels is increasing as vehicles
and infrastructure facilities are adapted and blending requirements are tightening.
Cogeneration Technology
Currently the share of cogeneration in the total installed power capacity is around 7.3%, having a
total installed capacity between 1,200 MW and 1,827 MW. In the past several years, projects with
more than 537 MW capacity have been identified in the country with more than 80% of which will
be implemented by power utilities, chemicals, pulp and paper, palm oil, rice and sugar industries.
Current cogeneration plants are characterised by old to very old technologies, but the renewed
interest from the private sector is bringing new technologies to the market. In addition to larger
industries, smaller sectors are pooling resources together to utilise cogeneration technologies.
Carbon Capture and Storage (CCS)
In addition to its abundant resources and power generation capacities, Indonesia struggles with
high levels of emissions of GHG, which come primarily from land use change and forestry
activities, energy generation, peak fires, waste, agriculture and industry. While the CCS
technology is very new to Indonesia, and only some R&D activities have taken place, the country
holds enormous potential to utilise such technologies.

Electric Vehicles
As the vehicle fleet is rapidly growing, Indonesia is evaluating its options for electric cars and
other electric vehicles. While electric car market is close to non-existent, and limited to domestic
efforts to develop a national electric car, the market for electric two-and-three wheelers is rapidly
growing. Some initiatives to utilise electric vehicle technologies in public transport infrastructure
are also showing signs of growth.
Opportunities
New and Renewable Energy (NRE) Project Development
Although the electricity production has increased at an annual rate of 13% in the last three years,
around 12 million households are still without electricity. The annual electricity consumption is
expected to increase to 375 Terawatt hour (TWh) in 2020 and the state-owned electricity
company, Perusahaan Listrik Negara (PLN), is planning to invest US$ 9.6 billion/year until 2020
to new energy projects. The Indonesian Energy and Mineral Resources Ministry (ESDM) has, in
late 2016, admitted that only 19,763 MW of power plant projects will be completed by end of 2019,
representing 56.5% of the target 35 GW by 2020.
Although the energy sector is centrally planned, private investors are expected to play an
increasingly significant role in large investments of renewable energy sources, such as
geothermal, bio-energy and hydropower, and smaller NRE sectors, such as wind, solar and ocean
energies. Only a small portion of these energy sources is utilised today. As a result, the market
offers significant scope for expansion. With the renewed interest from the government to
accelerate the use of renewable energy and increase Indonesia’s generating capacity, business
opportunities for European companies may therefore consist of investing in renewable energy
production and engineering, procurement and construction contracts, construction of new power
plants, as well as development of transmission and distribution network for NRE connectivity.

Export of Advanced Green Energy Technologies
Considering Indonesia’s aim to increase the share of NRE in the energy mix to 23% by 2025 and
31% by 2050, and improve energy efficiency by 17% until 2025, significant opportunities exist for
European companies to export their green energy and energy conservation technologies. As the
majority of turnkey solutions, equipment and parts are imported from abroad, international
companies enjoy a good stream of potential business opportunities. Experienced European
companies with turnkey solutions for clean energy implementation and energy efficiency
optimisation will find significant avenues in Indonesia. These opportunities lie either in the sale
and implementation of turnkey solutions and equipment for existing infrastructure, or in provision
of such systems for the expanding Indonesian green energy network.
Retrofitting, Refurbishment and Upgrade of Existing Energy Infrastructure
The replacement market in Indonesia is also booming as there is a constant requirement for
replacement parts and services for the ageing Indonesian power and electricity infrastructure.
The continuous maintenance, upgrading and expansion of existing power plants and electricity
production facilities to improve energy provision efficiency, the optimisation of energy
management network, and the efforts to improve energy elasticity via more optimal solutions are
driving the growth of opportunities.
In addition, there are also significant opportunities to provide technologies and solutions for
energy efficiency and energy conservation (EE&EC) projects in residential, transport, commercial
and industrial sectors. As electricity burnouts cause disruptions in industrial, business and
everyday activities, there is a growing understanding, and demand, for more efficient energy
elasticity. Thus, companies are likely to find market opportunities in addressing EE&EC needs.

Skills, Technology and Expertise Transfer
Additional avenues for entry are available via technology licensing and training of local skillset.
The Government of Indonesia aims to improve the domestic content of green energy and energy
efficiency technologies and expertise via its increasing commitment to R&D. European companies
willing to tap into the Indonesian green energy technology market may find success in entering it
via collaborative projects with knowledge and technology transfer, and local skillset training, in
mind. Particularly, collaborations between local and international partners are encouraged by the
government and, therefore, may prove as the best entry points for securing strategic energy
projects.
Regulations & Policies
Although the sector still remains heavily regulated with many challenges for New and Renewable
Energy (NRE) developers, the Government of Indonesia has been active in recent years to
promote a conducive policy and regulatory environment. With ambitious targets to increase the
power generation from the current levels of 55 GW to 137 GW by 2025; expand the share of New
and Renewable Energy (NRE) in the total energy mix up to 23% by 2025; reduce the energy
intensity by 17% over the same period; and decrease the carbon footprint by 26% in 2020, it has
been keen to attract investments in NRE sector via attractive Selling and Feed-in Tariffs for NRE,
financial support, tax incentives and easing of permitting and licensing processes.
With new regulations in place, private investors are now provided with guaranteed and consistent
revenue via FiT regimes, that can help make a viable business case for NRE projects.
Simplification of the public-private partnership and power purchase agreements as well as
expanded assistance on bureaucratic procedures is also helping to gradually remove obstacles
that hinder the development of NRE. The overarching policy framework for green energy
technologies is embedded in the National Energy Policy, with diversification, environmental
sustainability and maximum use of domestic energy resources as the main priorities.
The Government of Indonesia has subsequently released several roadmaps that guide NRE
development in the country, including the 2007 National Action Plan Addressing Climate Change

and National Action Plan for GHG Emission Reduction, the 2011 National Energy Conservation
Masterplan, the 2014 National Energy Plan, and the 2015 Roadmap for Accelerated Development
of New and Renewable Energy 2015-2025.
Some of the key remaining obstacles from the regulation and policy standpoint include the
difficulty in obtaining land-use permissions, sometimes unclear regulatory environment with roles
divided between multiple government agencies, and the legal status of the Perusahaan Listrik
Negara (PLN) as the sole provider of electricity through the power grid, which complicates the
incentives for foreign developers and often limits the profitability of projects.

2. What are the characteristics of Indonesia?
Indonesia is home to over 250 million people and is the world’s 4 th most populous country. It is
one of the most geographically dispersed countries in the world. Its total territory includes
1.9 million square km of land that consists of 17,840 islands, ranging from the large islands of
Sumatra and Java in the west, through Sulawesi in the centre, to the territory of Irian Jaya in the
east. Its territory also includes Kalimantan (which is part of the island of Borneo, the 3rd largest
island in the world) and the Molucca Islands. Being located along the equator, it has a tropical
monsoon climate, with distinct hot and wet seasons.
Figure 1: Map of Indonesia

Source: International Enterprise Singapore
2.1. Political Overview
Indonesia is a unitary state, with political power organised around the executive, legislative and
judicial branches of government. It is the world’s 3rd largest democracy, the largest economy in
South East Asia and a member of the G20. It is politically stable and has a President led system
of democracy. A comprehensive push for decentralisation has seen much power transferred to
the regions. The executive branch is headed by President Joko Widodo, who became president
in October 2014. Presidential elections are held every five years in Indonesia.

2.2. Economic Overview
Indonesia is the world’s 10th largest economy in terms of purchasing power parity, with an
estimated GDP of US$ 941 billion in 2016. Indonesia’s economy alone comprises nearly half of
ASEAN’s economic output. According to the Statistics Indonesia (also known as Badan Pusat
Statistiks Indonesia), Jakarta, Banten and West Java contributed 33.6% of GDP in 2015, despite
only having 2.4% of Indonesia’s land mass.
With a higher economic growth rate compared to the more developed regions of Jakarta and
West Java, Central and East Indonesia are catching the attention of investors.
Region Key Figures
Central Java (including Population: 37.4 million

Key Cities / Regencies: Semarang, Kendal, Solo, Yogyakarta (Special
DI Yogyakarta) Region)
Capital: Semarang
GDP: US$ 60.6 billion
GDP Growth: 5.4%
CAGR 2010 – 2015: 5.3%
Population: 38.8 million
East Java
Key Cities / Regencies:
Surabaya, Gresik, Sidoarjo
Capital: Surabaya
GDP Growth: 5.4%
CAGR 2010 – 2015: 6.0%
Kalimantan
Key Cities / Regencies: Balikpapan, Banjarmasin, Pontianak
GDP Growth: 1.3%
CAGR 2010 – 2015: 4.1%
Sulawesi
Key Cities / Regencies: Makassar, Manado, Bitung 
GDP: US$ 39.4 billion
GDP Growth: 8.2%

Region Key Figures
CAGR 2010 – 2015: 5.3%

Bali and Nusa Tenggara
Key Cities / Regencies: Bali, Lombok
GDP Growth: 10.3%
CAGR 2010 – 2015: 5.8%
Table 1: GDP & GDP Growth Rates by Region
Source: Badan Pusat Statistiks (BPS) Indonesia
Service and industry are the main economic drivers in Indonesia, accounting for 46% and 40% of
GDP respectively, with the remaining 14% attributable to agriculture. Both the private sector and
the government play an equally large role in the country’s economic development.
The Indonesian government has implemented a long-term development plan for the future of the
country, known as the Masterplan for Acceleration and Expansion of Indonesia’s Economic
Development (MP3EI)1 in order to stabilise economic growth. Its main goals are to reduce poverty,
promote the quality of human resources, improve science and technology, and strengthen
economic competitiveness. Major sectors of the economy include manufacturing (tobacco, food
and beverages, transport equipment and machinery), mining, construction, transport and
communications, finance and real estate.
Indonesia’s young demographic profile, growing middle class and rising income levels have led
to strong demand for consumer goods and services. According to the World Bank, this favourable
demographic profile serves as one of the powerful drivers of growth in the country, with private
consumption being the backbone of the economy.
Total Foreign Direct Investment in 2016 was US$ 28.9 billion. The investment climate, though
generally positive, faces continued regulatory uncertainties and high logistics costs. In order to
promote the open business culture in Indonesia, the government has launched a series of reform
measures, which include opening up a range of business activities that were previously either
1
Please visit http://www.indonesia-investments.com/projects/government-development-plans/masterplan-for-acceleration-and-expansion-of-
indonesias-economic-development-mp3ei/item306 for details on MP3EI

entirely closed or conditionally open to foreign investment. Among the industries that are fully
opened for foreign capital are the communication and information, health, manufacturing, and
general works sectors.
The government has unveiled 16 policy packages between September 2015 and August 2017 to
stimulate investment, strengthen competitiveness, and diversify the economy. Included in the
policy packages are measures to reduce regulatory bottlenecks, secure the legal rights of
investors, facilitate international trade, and promote infrastructure investment.
Backed by strong expansion in private consumption and private-sector investment, Indonesia is

forecast to grow by 5.5% in 2017. This is contingent on the success of recent reforms and
implementation of an ambitious public investment programme.
2.3. Trade Overview
Indonesia has been ambitious in concluding Free Trade Agreements (FTAs). The country is a
member of the ASEAN Free Trade Area (AFTA), which plays a key role in the nation’s intra-Asian
trade. ASEAN has concluded FTAs with China, India, Japan, South Korea, Australia and New
Zealand.
Indonesia recorded a trade surplus of US$ 8.78 billion in 2016, a 15% increase from the surplus
achieved in 2015. With domestic demand accounting for nearly two-thirds of GDP, Indonesia is
less dependent on exports than many of its neighbours. In the last 10 years, imports in Indonesia
tripled as a large portion of the population entered the middle-class and propelled higher
purchases of oil and consumption goods. Indonesia imports mainly oil and gas, machinery,
electrical equipment, iron and steel, vehicles and plastics. Indonesia’s primary sourcing partners
are China, Japan, Thailand, Singapore and the US (see ‘5.3 Useful Statistics’ for more information
on trade distribution for relevant product/component groups).
The EU is currently negotiating a free trade agreement (FTA) with Indonesia. The third round of
talks, which took place in September 2017, saw parties address a host of areas, including

government procurement, investment, trade remedies, geographical indications, technical
barriers to trade, and competition policy.
According to the EU’s report, more work is needed to reach common ground in relation to energy
and raw materials. The EU’s proposal for legal text provisions on energy and raw materials for
the EU-Indonesia FTA is available here:
http://trade.ec.europa.eu/doclib/docs/2017/september/tradoc_156108.pdf
Bilateral trade in goods between the EU and Indonesia amounted to EUR 25.1 billion in 2016,
with EU exports worth EUR 10.5 billion and EU imports worth EUR 14.6 billion. The EU is
Indonesia's fourth largest trading partner, while Indonesia ranks 30th in the overall EU trade
worldwide.
Bilateral trade in services between the EU and Indonesia in 2015 amounted to EUR 6.1 billion in
2015, with EU exports amounting to EUR 4 billion and Indonesia's exports amounting to
EUR 2.1 billion.
Figure 2: EU-Indonesia Trade in Goods & Services, 2014-2016

Source: European Commission

2.4. Market Access
European companies should adopt a long-term view of Indonesia and consider venturing into
Central and East Indonesia, which have much untapped potential and are less saturated than
Jakarta and West Java.
There are various ways to enter the market in Indonesia such as appointing a sales agent or local
partner (distributor) for the sales of products in the country, or by establishing a representative
office, joint venture or investing in an existing local company. Local government organisations,
foreign embassies, and associations (as identified in the Annex of this report) offer advice and
information on investment and business in Indonesia.
Doing business in Indonesia takes patience and perseverance. Companies should be prepared
to invest time and resources in regular visits over a period of months, sometimes years, before
seeing returns. European companies must visit the Indonesian market in order to properly choose
an appropriate agent or distributor. On the other hand, Indonesian representatives typically expect
their foreign principals to visit the market on a regular basis to maintain a good relationship.
Patience, persistence and presence are three key factors for success in Indonesia.
Deregulation has successfully reduced some barriers, but non-tariff barriers remain widespread
and the bureaucracy can still be cumbersome.
2.5. Business and Competitive Environment
Indonesia ranks 91st in the latest Doing Business Rank report of the World Bank for 2017.
The country went up by 15 places from 106 to 91, which was among the top 10 biggest climbers.
Indonesia’s overall improved performance in the 2017 report was attributed to government efforts
to simplify and remove unnecessary regulations.

Ease of Doing Business in Indonesia 2017 Rank 2016 Rank Change in Rank
Overall Ranking 91 106 15
Starting a business 151 167 16
Dealing with Construction Permits 116 113 -3
Getting Electricity 49 61 12
Registering Property 118 123 5
Getting Credit 62 70 8
Protecting Minority Investors 70 69 -1
Paying Taxes 104 115 11
Trading Across Borders 108 113 5
Enforcing Contracts 166 171 5
Resolving Insolvency 76 74 -2
Table 2: Ease of Doing Business in Indonesia
Source: World Bank
The World Bank noted that it is now easier to establish a business in Indonesia, have access to
electricity, register property, acquire finance, pay taxes, to engage in cross-border trade and
establish contracts. The encouragement of the use of online systems, the scrapping of the paid-
in minimum capital requirement for SMEs, the introduction of simpler customs documents and a
dedicated procedure for commercial litigation and small claims are some of the policies the
government implemented that contributed to the country’s jump in the ranking.
Indonesia applies a flat rate of 25% corporate income tax. Public companies that satisfy certain
conditions, including a minimum listing requirement of 40% of their total paid-up shares traded on
a stock exchange in Indonesia, are entitled to a tax cut of 5% off the standard rate, giving them
an effective tax rate of 20%. Small enterprises, i.e. corporate taxpayers with an annual turnover
of not more than IDR 50 billion (EUR 3.4 million), are entitled to 50% of the standard tax rate
which is imposed proportionally on taxable income of the part of gross turnover up to

IDR 4.8 billion (EUR 326,750). Certain enterprises with gross turnover of not more than
IDR 4.8 billion (EUR 326,750) are subject to final tax at 1% of turnover.
The administration of President Joko Widodo is committed to improving the state of public
infrastructure in Indonesia. A series of concentrated efforts launched by the government has
begun to speed up the development of strategic and priority infrastructure projects through better
inter-ministerial coordination. The Indonesian government is also focused on developing the
country’s ICT infrastructure, and has implemented projects such as the "Palapa Ring" Project,
a broadband network project connecting the entire archipelago.
While Indonesia offers unprecedented opportunities, companies entering the Indonesian market
should be prepared to deal with complex bureaucracy. To improve the situation, the government
has plans to lay off 300,000 civil servants between 2017 and 2019 through golden handshakes
and other mechanisms to show its commitment to improve the bureaucracy of the system. This
plan also aims to remove incompetent and corrupt civil servants that contribute to the inefficiency
of the government.

3.1 Market Overview & EU Entry Opportunities in Indonesia
3.1. The Green Energy Technologies Sector in Indonesia
3.1.1 Overview of the Green Energy Sector
Green Energy Technologies (GET) fall under the New and Renewable Energy (NRE) and Energy
Efficiency and Conservation (EE&EC) market segments in Indonesia and opportunities for GET
are largely driven by the recent sub-sectoral growth.
To achieve its ambitious target set by the Government in 2014 to reach 23% share of NRE in the
total energy mix by 2025, the Indonesian NRE market is estimated to require a total investment
of US$ 135 billion over the next ten years.2 The investment requirements include equipment, NRE
turnkey solutions and parts, maintenance and operations, services, and other NRE project
development needs. The segmentation of investment is further divided into US$ 39 billion
requirement for geothermal development, US$ 27 billion for hydro, US$ 54 billion for bioenergy,
and US$ 13 billion for other NRE subsectors.
Figure 3: Total NRE Investment Needs until 2025

Source: National Energy Council (2015)
2
National Energy Council (2015)

These NRE investment needs are in line with the growing Indonesian interest to move away from
fossil fuel based power and electricity generation towards greener energy utilisation. After many
years of neglect due to abundant oil and gas reserves which made NRE development an option
and not a priority, the recent move is partly driven by estimations that country’s fossil energy
resources may diminish as soon as 2025. While a latecomer to develop its NRE market, when
compared to other countries, Indonesia has rapidly shifted gears when the country became for
the first time a net oil importer in 2005. Since then, various efforts have been put in place to
accelerate the market growth.
Market prospects based on resource availability are bright for Indonesia. It is estimated 200 GW
of total NRE potential place the country in a favourable position to become a global renewables
and bio-economy leader of tomorrow.
NRE Energy Type Total Potential

Hydro 75,000 MW
Geothermal 29,5 MW
Bioenergy 32,000 MW
Solar Cell 4.80 kWh/ m2 / day
Wind and Hybrid 3 -6 m/s
Ocean 61 GW
Other NRE 6.4 GW
Total 197.5 GW (plus wind and solar potential)
Table 3: NRE Potential in Indonesia
Source: MEMR 2017
Much of this potential, however, remains untapped. NRE utilisation in 2015 stood at approximately
6% (11,329 MW) of the total estimated potential.3 By NRE sectoral division, hydropower remains
the most utilised renewable source with its 10.8% of the total potential, followed by bioenergy
(5.4%) and geothermal (4.8%). According to the Indonesian National Energy Council, the market
for other NRE resources remains largely untapped with low numbers of installed capacity and
only broad estimates on the total resource utilisation availability.
3
National Energy Council (2015)

Resource utilisation
NRE Energy Source Off grid (MW) On grid (MW) Total (MW)
ratio (%)
Hydro 81.79 8,029.76 8,111.55 10.81%
Geothermal - 1,403.50 1,403.50 4.8%
Bioenergy 1,626.10 114.30 1,740.40 5.4%
Solar Cell 66.02 5.00 71.02 -
Wind 1.30 1.77 3.07 -
Hybrid 0.54 - 0.54 -
Total 1,775.75 9,554.33 11,330.08
Table 4: NRE Installed and Potential Capacity by Grid Connectivity
Source: National Energy Council 2015
The market, however, is increasingly witnessing the entry of private sector players in all of its sub-
sectors. The participation ranges from small pilot studies and R&D initiatives to equipment
provision and large-scale NRE power plant developments.
Indonesia’s recent NRE strategic roadmap for new energy capacity additions also points to
increasing opportunities for green energy technologies. Embedded in the National Energy Policy
and the Fast Track Programmes, Indonesia’s capacity for NRE is expected to compete by 2025
and challenge traditional energy sources by 2050, for which large investments from the private
sector are needed.
Figure 4: Current and Targeted Energy Mix in Indonesia

Source: Asian Development Bank (2014) Energy Sector White Paper

As of 2017, the significant uptake of additional commitments to expand installed NRE capacity is
already pointing to the opening up of various opportunities for green energy technologies.
Currently, nearly 59% of the 2025 targeted capacity has been committed via various NRE
projects.
NRE Energy Capacity of Power Plants (GW)

Source Type Committed 2025 target 2050 Target
17.5 GW (59% of 29.5 GW
Geothermal 7.242 GW 7.242 GW
Potential)
Hydro Power 15.559 GW 20.987 GW 45 GW (60% of 75 GW Potential)
26.1 GW (80% of 32 GW
Bioenergy 2.006 GW 5.500 GW
Potential)
Solar 0.540 GW 6.500 GW 45 GW
Wind 0.913 GW 1.800 GW 28.6 GW
Other Energy 0.372 GW 3.125 GW 6.4 GW
Total 26.631 GW 45.153 GW 168.6 GW
Table 5: Indonesia’s NRE Targets and Committed Capacity as of 2017
Source: MEMR (2017)
National electrification programme, which aims to provide access to electricity to 96.6% of its
population by 2019, is also driving the development, and the need for GET, especially in rural and
remote areas – locations with few national grid connections and government’s focus for
electrification programmes.
Meeting these capacity and electrification targets requires both public and private investment.
Investors are starting to notice Indonesia’s growing demand for energy and the abundant
renewable resources as a significant reason to invest in the nation’s NRE sector. The Institute for
Essential Service Reform (IESR) in Indonesia estimates that both government agencies and the
private sector will be required to invest a combined US$ 15 billion per year until 2025.
GET market opportunities are also complemented by the growth of the EE&EC sector. Climate
Investment Fund (CIF) estimates that the energy efficiency opportunity in Indonesia is worth
approximately US$ 5 billion, with avenues for retrofitting (US$ 4 billion) and the implementation
of new EE solutions (US$ 1 billion). The market growth is driven by the government’s commitment

to achieve 17% energy savings by 2025,4 and opportunities are abundant in all end-user
segments – industry, transport, residential, commercial and others:
Energy Consumption Per Target of Energy

Potential of Energy
Sector Sector Year 2013 (Million Conservation Sectoral
Conservation
BOE) (2025)
Industry 335 (42%) 10 – 30% 17%
Transport 324 (39%) 15 – 35% 20%
Household 100 (12%) 15 – 30% 15%
Commercial 36 (4%) 10 – 30% 15%
Others (Agriculture,
23 (3%) 25% -
Construction, Mining)
Table 6: Potential Energy Savings per Sector by 2025
Source: Draft National Energy Conservation Master Plan (RIKEN), 2013
3.1.2 Key Institutional Actors for Green Energy Technologies
Green Energy Technologies are widely covered by a broad range of institutions involved in NRE
and EE&EC policy making and implementation. The following institutions have the greatest
relevance for the sector:
 Ministry of Energy and Mineral Resources (MEMR) is responsible for energy policy and
regulation. It hosts a Directorate General of New and Renewable Energy and Energy
Conservation (DGNREEC) for the administration and promotion of renewables and energy
efficiency. The MEMR also regulates the electricity sector through its Directorate of Electricity
and supervises the performance of electricity companies, including the national utility PLN.
 National Energy Council (DEN) is chaired by the President and it accommodates seven
ministries as members and eight non-government members, responsible for formulating the
National Energy Policy. This determines the overall strategy, goals and approaches to energy
sector in Indonesia.
 National Planning Agency (Bappenas) is responsible for economic planning, including

strategies around energy.
4
Draft National Energy Conservation Master Plan (RIKEN), 2013

 Ministry of Finance (MoF) controls government expenditure and budgets, including
renewables investment and incentives.
 Ministry of Agriculture (MoA) regulates palm oil and other plantations for biofuel feed-stocks.
 Local and regional governments also play important roles in policy implementation through
developing regulations and issuing permits. Decentralisation reforms have led to re-allocation
of some authority over investment policy to regional and local governments, requiring project
developers to comply with regulation of both central and decentralised authorities. Within
certain boundaries as set out in the Law on Regional Taxes and Charges, provincial and local
authorities can apply their own fiscal policies related to renewables, and can license local
electricity companies as well as determine local tariffs.
 Other government agencies, such as the Ministry of Environment and the Ministry of
Forestry affect renewables for instance through forest clearance for geothermal development,
whereas the Ministry of State-Owned Enterprises (SOEs) controls energy SOEs and
influences energy policy implementation. The Ministry of Industry is responsible for industry
affairs, including those falling under NRE.
In contrast to practice in many other countries, including Thailand and the Philippines, there is no
independent regulator to adjudicate disputes and advice/set prices for the NRE sector.
The subjects of policies on NRE are public and private enterprises. These include:
 National Electricity Company (PLN), which owns most power plants in Indonesia and is in
charge of most transmission and distribution.
 Independent Power Producers, which sell power to PLN.
 Fuel distributors, including the National Oil Company (Pertamina), PT AKR Corporindo, PT
Surya Parna Niaga (SPN), Shell and Petronas, and others.
 Biofuel producers, which develop biofuel resources across the country.

Figure 5: Key Institutions for NRE and EE&EC Policy
Source: Damuri & Atje (2012)
3.1.3 Relevant Policy Initiatives to Accelerate GET
As Indonesia committed itself to an aspirational target to increase the component of NRE to 23%
by 2025 in the total primary energy mix, and reduce energy intensity by 17%, it has been active
in accelerating a conducive policy and regulatory environment for the sector’s growth.
In recent years, a number of policies and regulations have been issued to promote accelerated
adoption of green technologies, including NRE selling tariffs and Feed-in Tariffs (FiTs), NRE and
EE&EC targets and incentives, financial support, simplified permits and licenses, and support
regarding technical aspects of green technology implementation. The ley legislative policies are:
 The overarching policy framework for green energy technologies has been embedded in the
National Energy Policy, under which the government is emphasising energy diversification,
environmental sustainability and maximum use of domestic energy resources.

 As outlined above, the government has also committed itself over the years to several strategic
targets for GET, including 23% NRE share and 31% NRE share in the energy mix by 2025
and 2050, respectively (2014 National Energy Plan), 17% energy savings by 2025 (2011
National Energy Conservation Masterplan), and 26% reduction in GHG emissions by 2020
(2007 National Action Plan Addressing Climate Change and National Action Plan for GHG
Emission Reduction).
 Since 2012, the Ministry of Energy and Mineral Resources (MEMR) has also issued multiple
iterations of Feed-in Tariffs (FiTs) for NRE to help accelerate the deployment of NRE power
projects. Nearly every year, new iterations have been released to address existing challenges
and incentivise private sector participation. These FiTs are expected to provide private
investors with guaranteed and consistent revenue that can help make a viable business case
for NRE projects.
 Law No. 21/2014 on Geothermal was also passed, which introduced a new regime for
geothermal business activities. The law aims to accelerate the development of geothermal
activities as an alternative energy source, given Indonesia’s large unutilised geothermal
resources.
 In May 2015, the Government has further issued a Roadmap for Accelerated Development of
New and Renewable Energy (NRE) 2015-2025 to support energy resilience and shift towards
NRE.
Further to legislative and collaboration incentives, the Government of Indonesia is supporting

NRE development via tax incentives, financial support, efforts to simplify permitting and licensing
processes, and support regarding technical aspects of green technology implementation:
 Incentives: Tax incentives for NRE-based power projects under Ministry of Finance (MOF)
Regulation No. 21/PMK.011/2010 now include income tax exemption/reduction for 5-10 years;
accelerated depreciation and amortisation; tax deduction per year for 6 years; exemption for
VAT; accelerated depreciation of capital and fixed assets; and import duty exemption for NRE
equipment. Under MOF Regulation No. 19/PMK.011/2011, the government also gives

financial guarantee for NRE plant projects through cooperation with Independent Power
Producer (IPP) in the case of payment failure by PLN.
 Financial support: The Geothermal Fund Facility (GFF), the Indonesia Infrastructure
Guarantee Fund (IIGF), also known as PT Perjaminan Infrastruktur Indonesia Persero, and
loans at an interest rate lower than that provided by national banks are also available for NRE
developments.
The Clean Technology Fund (CTF) also aims to accelerate the country’s initiatives to promote
energy efficiency and renewable energy, and to help achieve the objective of increasing
electrification rate up to 96.6% by 2019. Under a new US$ 400 million climate investment plan
endorsed by the CTF, Indonesia’s geothermal power capacity is also set to nearly double.
In March 2015, a CTF of US$ 500 million was further reallocated to the Geothermal Energy
Upstream Development Project of Indonesia to support strategic NRE projects.
 Permitting and licensing process simplification: The government has also been active to
address the complicated processes of NRE permit and license acquisitions. Since January
2015, the government compiled the permit procedures of electricity power plant into the
integrated one-stop service stationed in the Investment Coordinating Board (BKPM).
The Temporary and Permanent Permit of Electricity Power Supply Business (IUPL), the
Determination of Electricity Power Supply Business Area, and the Permit of Electricity Power
Supporting General of Electricity office, are now available in BKPM’s integrated One-Stop
Service, as well as other permit procedures. Simplifying related permits and regulations is one
of the government’s priorities to further accelerate and streamline the NRE market and the
utilisation of green energy technologies. NRE Cooperation Forum is also being integrated into
Indonesian NRE framework to offer network and collaboration opportunities among agencies
for accelerating the removal of obstacles that hinder the development of NRE.
 Technical issues: To offer support in other technical areas, in July 2014 the state-owned
PLN issued “Guidelines for Connecting Renewable Energy Generation Plants (REGP) to
PLN’s Distribution System”, which aims to ensure connection and parallel operation of REGPs
do not adversely affect the safety, reliability and power quality of PLN’s power system.

It provides REGP developers with clear guidance in performing connection studies and
technical requirements for early consideration in the REGP project planning and development
stages, and useful reference of technical information on REGP engineering firms, equipment
manufacturers and suppliers.
3.1.4 Domestic Research & Development (R&D) on GET
Despite the country’s abundance of almost every NRE source, including solar, wind, biomass,
ocean, hydro and geothermal reserves, the technology and capacity to harvest these sources
remains underdeveloped in Indonesia. Unlike traditional sources of energy, the deployment of
GET is not about the energy itself, which is free, but rather the technologies that capture it. Unlike
previous energy transitions from wood to coal, or coal to oil, the transition to GET represents a
major shift from conventional energy systems and infrastructure. As a result, the Government of
Indonesia, private sector and research institutions are actively engaged in developing Indonesia’s
capacities for deploying green energy technologies.
2017 2016
BASIC ENERGY RESEARCH
ENERGY STORAGE
ELECTRICITY GRID
CLEANER FOSSIL ENERGY
SOLAR, W IND AND OTHER RENEW ABLES
BIOFUELS
TRANSPORT
ENERGY EFFICIENCY
$0 $4.000.000 $8.000.000 $12.000.000 $16.000.000
Figure 6: Clean Energy R&D Focus Areas and Budget (US$), 2016 and 2017
Source: Mission Innovation (2017). Indonesia
In 2016, Indonesia’s budget for clean energy R&D across various government institutions
amounted to US$ 16.7 million, but the government has an ambitious target to increase it to
US$ 150 million by 2020. This year, the budget has already nearly doubled, reaching more than
US$ 30 million. Although research on cleaner fossil fuel still dominates the R&D efforts, there is

growing interest to explore new and renewable energy technologies, basic energy research, and
electricity grid. In renewables, geothermal energy research is receiving the largest share of the
funding.
Budget for 2016 Budget for 2017

Clean Energy R&D
(US$) (US$)
1 Energy Efficiency 776,771 272,727

Energy Efficiency and Conservation 776,771 272,727
2 Vehicles and other transport 12,545 16,309
Transport 12,545 16,309
3 Biofuels 1,239,381 759,645
Biofuels (Incl. Liquid biofuels, solid biofuels and biogases 1,239,381 759,645
4 Solar, wind and other renewables 2,543,278 4,503,436
Ocean energy 328,228 115,967
Geothermal energy 1,806,887 4,240,121
Other renewable energy sources 75,455 147,349
Unallocated renewable energy sources 332,599 -
5 Cleaner fossil energy 9,778,510 16,735,995
Oil and gas 3,829,381 9,604,995
Coal 5,548,739 7,149,000
Unallocated fossil fuels 400,390 -
6 Electricity grid 72,930 2,271,719
Electric power generation 63,839 2,259,900
Electricity transmission and distribution 9,091 11,818
7 Energy storage 235,386 490,973
Energy storage (non-transport application) 235,386 490,973
8 Basic energy research 2,067,067 5,320,091
Energy system analysis 149,616 -
Basic energy research that cannot be allocated to a specific
1,099,269 4,501,909
category
Unallocated 818,182 818,182
Total budget 16,725,869 30,388,895

Table 7: Clean Energy R&D Funding in 2016 and 2017 by Sub-categories
Source: Mission Innovation (2017). Indonesia
Currently, Indonesia’s priority in R&D of energy is threefold: 1) mitigating the impact of climate
change; 2) reducing dependency on fossil fuels; and 3) promoting clean energy in social and
economic development.

Indonesia also has a number of priority programs concerning clean energy R&D, including:
 The establishment of Indonesia’s Centre of Excellence (CoE) for Clean Energy, which is
a collective endeavour led by the Ministry of Energy and Mineral Resources (MEMR). CoE will
target to holistically address research, deployment, investment and project development of
clean energy as interlinked aspects that are required for acceleration of clean energy
technology diffusion. The centre aims to enhance access to reliable and affordable supply of
clean energy through three approaches: 1) consolidating information and high-quality data to
stimulate synergy and innovation; 2) supporting higher certainty of financial viability through
providing data and analysis; 3) reducing administrative and regulatory barriers through
synchronising and coordinating government supervision over clean energy projects; and 4)
enhancing quality of basic science and technical support.
 Another R&D programme is Bali National Clean Energy Area (KNEB), which is a pioneer
initiative where clean energy deployment is applied at provincial level. The main goal of the
initiative is for Bali to use 100% of its energy from clean energy sources and to explore
opportunities for larger areas to go green. In 2017, Energy Resilience Fund (ERF) is expected
to allocate around US$ 740,740 for innovations in clean energy initiatives in Bali Province to
further accelerate R&D efforts under KNEB programme.
 Additionally, the Government also plans to accelerate R&D on clean energy through Energy
Resilience Fund (ERF). ERF was established by the MEMR to focus on incentives for
acceleration of new and renewable energy (NRE) deployment in Indonesia. Amongst its
funding areas are: 1) off grid and on-grid electrification projects; 2) biofuel; 3) energy efficiency;
and 4) R&D on NRE. In 2017, ERF plans to allocate US$ 1,881,481 for research proposals
along the innovation chain from laboratory research, demonstration activities to pre-
commercial development. Furthermore, ERF is planning to spend up to US$ 3.7 million to fund
research and establishment of solar panel standards and certification in Indonesia.
 Indonesia has also launched in 2016 its first research funding institution, named Indonesian
Science Fund (ISF), supported by the Government of Indonesia, the U.S., Australia and the
UK. ISF provides multi-year grants for fundamental and frontier research and aims to elevate

the current state of science by providing sustainable funding for Indonesian scientists.
Although call for proposal on energy area have not commenced yet, the ISF has shown
interest in exploring future avenues for clean energy R&D.
 Finally, the MEMR’s Research and Development Centre for Electricity and Renewable
Energy Technology (P3TKEBT) is the leading domestic R&D centre in Indonesia, which is
also driving R&D advances in the country.
3.1.5 Key Associations
In Indonesia, there are several key associations, which address the interests of the Green Energy
Technologies market:
Indonesian Renewable Energy Society (METI) is a communication, consulting

and cooperation forum for Renewable Energy practitioners, which provides space
for stakeholders to advance the deployment of renewable energy. The forum
aims to accelerate the use of new and renewable energy to fulfil national energy
demand. The founding of METI was initiated in 1999 by a group of intellectuals,
government officials, private companies and renewable energy professionals, who were
concerned about the depletion of conventional energy resources and the need to find alternative
energy sources. Currently, the membership of METI consists of scientists, educators, regulators,
business developers and organisations, NGOs, private companies and other stakeholders, who
discuss and exchange views on strategic and pragmatic issues of using renewable energy. METI
is also committed to contribute to the global efforts in combating the negative effects of global
climate change by producing ideas and solutions through advocacy and promotion of renewable
energies. METI aims to be an effective vehicle for continuous efforts to develop and utilise
renewable energy to meet national sustainable energy needs.
The Independent Power Producers Association of

Indonesia (APLSI) is responsible for representing the
interests of its 48 members, particularly in relation to issues
such as renegotiation of tariffs and Power Purchase

Agreements (PPAs). At the moment, all of the association’s members are companies operating
coal-fired power plants, however, the association is seeking to expand its membership to include
companies involved in energy generation for other types sources, particularly those engaged in
renewable energy.
The Indonesian Biofuel Producers Association (APROBI)

was established in 2006 to support the Government program in
developing and using biofuels as a renewable fuel. Since its
establishment, APROBI has continued to work with the Government and various parties to pursue
the development of biofuels in Indonesia. It currently represents the interests of 22 members and
unifies the biofuel industry business stakeholders.
3.1.6 Entry Strategies
There are multiple strategies that European companies may wish to consider when thinking about
entering the Indonesian green energy technologies market. These include exporting and
licensing, franchising, strategic alliances and partnerships for export distribution and project
development via distributor or agent, joint ventures, wholly owned subsidiaries and specialised
tradeshows. Although company size and level of resource commitment may influence the choice
of entry mode – smaller, low resource commitment companies may prefer flexible contractual
entry modes, such as exporting and licensing via a distributor or agent, while larger, high resource
commitment companies may consider direct entry modes, such as joint ventures and wholly
owned subsidiaries – local partnerships still remain the preferred entry mode by most companies,
irrespective of company size, sector and international presence.
Many government tenders are also awarded based on the proven track record of providers, or
long-established relationships between the government agency and the agent or distributor. As a
result, the preferred path of entry into the Indonesian GET market is through the appointment of
distributor or agent, or partnerships with local companies.
Foreign companies seeking to sell their goods in Indonesia without setting up a local Indonesian
company must appoint an import agent or distributor, pursuant to Ministry of Trade Regulation

No. 36/1977 on Termination of Foreign Business Activities in the Trade Sector. In many cases,
foreign companies have established connections with Indonesian importers, allowing the two
companies to effectively function as one, where the Indonesian company acts as importer or
distributor and the foreign company promotes its products. Selecting the right local agent or
distributor is therefore critical for successful project development and delivery of products or
services.
While Indonesian Government is keen to encourage FDI in the utilisation of green energy
technologies, foreign ownership for some green energy projects is also limited to 49%-95%,
necessitating the partnerships with local stakeholders.
For example, the development of renewable energy based power plants is subject to a foreign
investment limitation under Presidential Regulation No. 44/2016 concerning the List of Business
Closed and Open with Conditions in the Field of Investment. As such, small scale IPPs (i.e. of
less than 10 MW capacity) have a foreign ownership capped at 49%, thus requiring partnerships
for such project development. Some ownership limitations also exist for other NRE projects,
including:
No. Business Fields PR 39/2014

1 Power Plant < 1 MW 100% Local Capital (Domestic Direct Investment)
Foreign Capital Ownership Maximum 95% (Maximum 100%
Power Pant > 10 MW
for the purpose of PPP during concession period)
2 Power Plant Transmission
3 Electricity Distribution
4 Small-scale Power Plant (1-10 MW) Foreign Capital Ownership Maximum 49%
Construction and Installation of Electric Power –
5 100% Local Capital (Domestic Direct Investment)
Installation of Electric Power Utilisation
6 Biomass Pellet Producing Industry for Energy Partnership
7 Electric Power Installation Examination and Testing 100% Local Capital (Domestic Direct Investment)
Geothermal Power Plant with capacity of less than 10
8. Maximum of 67% foreign ownership
MW
Table 8: Foreign Ownership Restrictions for Power Generation
Source: Presidential Regulation No. 39/2014
As a result, partnerships have become the preferred mode of entry in Indonesian NRE market.

Specialised tradeshows often serve as a springboard for interested international companies to
find relevant local partners. There are several upcoming events, which can offer opportunities to
develop business-to-business partnerships:
Solartech Indonesia 2018 is Indonesia’s largest solar power and

PV technology trade exhibition, which is going to take place on
3-5 May 2018 at JIExpo Kemayoran Exhibition Centre in Jakarta,
Indonesia. The trade show has been recognised as the
professional show of choice for solar power & PV technology professionals. It offers opportunities
for industry players to network with local solar industry stakeholders and make new business
contacts. The annual event gathers around 650 exhibiting companies and over 20,000 visitors.
Solartech Indonesia is also supported by the Indonesian Ministry of Industry.
Renewable Energy for Indonesia 2017 (RE4I) is the 3rd

International Conference and Exhibition on geothermal, hydro,
solar, wind, ocean wave and bioenergy. It offers an interactive
platform for potential investors and renewable energy technologies
providers to understand market directions, opportunities and
economic priorities of the Government of Indonesia on the renewable energy sector. At the same
time, it provides space for building potential business networks with local authorities and industry
stakeholders and establishing presence in the new market. The event is going to take place at Le
Méridien, Jakarta on 28-29 November 2017.
Asia Power Week 2018 is the premier power industry event for the
Asian region. Covering every aspect of the power generation
industry, the event attracts over 8,500 attendees, 200 exhibitors and
150 industry speakers. This time, Asia Power Week converges two industry events, the Power-
Gen Asia and Renewable Energy World Asia into a three days event packed with technical tours,
more than 50 conference sessions, panel discussions, a comprehensive exhibition and multiple
networking events. It offers ample opportunities for networking, business partnerships and new

market entry points. The event is scheduled for 18-20 September 2018 and it is going to take
place at ICE, BSD City venue in Jakarta.
The 3rd Industrial PowerGen & Renewable Energy Indonesia

2018 will take place at JIExpo, Jakarta from 3-5 May 2018.
The show will be held in conjunction with Solartech Indonesia 2018,
Battery Indonesia 2018, Inalight 2018 and Cable & Wire Indonesia
2018 as one stop platform for power generation, renewable energy, energy storage, lighting, cable
and other electrical equipment under one roof. The show is designed to showcase the latest
technology, innovations and solutions for the entire power generation sector, including the latest
technologies in biogas and biomass sector, PV & thermal, wind, hydropower, geothermal, energy
efficiency and conservation. The expo is expected to attract more than 25,000 professionals from
30 countries and offer multiple business networking opportunities.
Indonesia International Green Technology and Eco-Friendly

Products Exhibition 2018 is a three -day event being held on
3-5 May 2018 at the Jakarta International Expo (JIExpo) in Jakarta.
The event showcases products like green building, eco-friendly
products & technology, green energy, green transportation, green ICT, green manufacturing,
water & waste management, construction industry, construction equipment & technology, building
materials & technology, and others, in the environment and waste management, power and
renewable energy industries.
3.1.7 Challenges and Entry Barriers
Although the Indonesian green energy technologies market offers ample lucrative opportunities,
foreign companies wishing to enter the market must be prepared for a challenging business
environment.
Lengthy investment processes, issues over land permits and availability due to conflicting status
of land use, lack of reliable data systems on renewable energy as well as feasibility of projects
frequently lead to cost overruns. Remaining inconsistencies in regulations and financing as well

as overlapping mandates between government units are also proving to add further challenges
for the green energy technologies market. For example, in some cases, the MEMR has been
reported to issue land permits for renewable energy projects without stating the exact location,
resulting in local governments issuing two permits for one exact same location, and causing some
projects to be delayed or effectively abandoned.
Indonesian infrastructure and service networks have also not been developed or maintained
enough to keep pace with the booming consumer-led economy, causing increased transaction
costs and inefficiencies that hamper exporters and investors.
Although significant anti-corruption measures have been undertaken by the Indonesian government,
corruption remains a concern for many ventures looking to operate within Indonesia. The country has
been ranked 90th on Transparency International’s Corruption Perceptions Index 2016.
In turn, while improving, significant rule-of-law issues still persist. Formal dispute settlement
mechanisms are not considered effective, and business and regulatory disputes – which would
generally be considered administrative or civil matters in Europe – may be considered criminal
cases in Indonesia. International arbitration is widely discouraged by the Government of
Indonesia. The lack of a robust legal system for arbitrating business matters sometimes proves
to be a significant entry barrier for interested investors.
Access to site condition, availability of logistics facilities, on-site resources and local construction
companies and materials also prove challenging for companies wishing to develop power plant
construction business.
Furthermore, competition from 3rd country companies, such as Singapore, China, Japan,
Australia, South Korea, Russia, and other regional players is intense, and European companies
often have to significantly adapt their business model and pricing scheme to compete effectively.
This poses entry challenges when the higher quality equipment and service provision has to
balance with the locally acceptable requirements for cost-effectiveness.

High initial costs for projects due to imported technology and difficult operational/maintenance
environment are also deterring some potential investors. Quite often, financing institutions still
consider renewable energy investment in Indonesia a high-risk area, making interest rates on
loans rather high. Most loans for renewable power projects have interest rates of around 12%.
Indonesia has been also ranked 91st out of 190 countries in the Ease of Doing Business 2017
report by the World Bank. As a result, companies can often encounter complex bureaucratic and
regulatory requirements, which make it time-consuming to do business in Indonesia.

3.2 Wind
3.2.1 Market Overview
Indonesia offers an array of opportunities in renewable energy, including wind power.

The country’s location on the equator offers it the confluence of air currents from both the northern
and the southern hemispheres while its spreading across many islands provides it with a total
coastline of more than 54,000 km., where the wind is available during the day (from the sea) and
the night (from inland to the coast). Given its location, Indonesia appears to have what it takes to
reap the benefits of wind energy.
Figure 7: Wind Currents throughout Indonesia

Source: NephiCode.com
However, until recently the wind potential has not been seen as a great investment opportunity.
Lack of infrastructure and geospatial data for potential wind power developments, low interest
from the Government of Indonesia, marginal domestic demand, and stringent regulatory
environment – all have been seen as part of the problem.
More importantly, the estimated potential of wind energy in Indonesia has historically been
regarded as relatively small primarily because wind velocity was considered (in general) to be

relatively low. The exception has been in the eastern islands, where wind velocity can support
wind power developments. However, Indonesia’s windiest regions are also the least populated
and lack transmission infrastructure capable of sustaining large wind farms. As a result, wind
power opportunities have been often limited to small- and medium-sized projects with turbines
capable of power generation under lower wind speeds.
Pilot wind projects (mostly small projects with capacities of less than 400 kW) have been built, for
example, in Nusa Penida and several other locations, under bilateral grant financing. But only a
few of those units have operated until 2012. At the end of 2012, the total installed capacity of wind
power in Indonesia was just 1.4 MW.
Figure 8: Wind Power Facility in Nusa Penida

Source: windenergysolutions.nl
New studies have recently identified that Indonesia may have greater wind potential than
previously thought. EBTKE data together with the data from the National Institute of Aeronautics

and Space (LAPAN), currently the most comprehensive data on wind potential in circulation, have
identified at least 19 sites with good wind potential (wind speeds greater than 5 m/s at 50 m) out
of a total 153 investigated sites. 34 additional sites with a fair power potential (wind speeds of
4-5 m/s) have also been identified. Global Atlas of the International Renewable Energy Agency
has further noted that speeds of over 7 m/s are available in Indonesia at the height of 80 meters
in Sumatra, West Timor and Sulawesi.
Wind resources in Indonesia

Summary Data from Wind Resources Assessment and Research for 153 sites
Resource Potential Wind Wind Power No. of Provinces
Speed at Density, at sites
50 m., 50 m.,
(m/s) (W/m2)
Lowest < 3.0 < 45 66 West Sumatra, Bengkulu, Jambi, Central Java,
South Kalimantan, West Nusa Tenggara, East
Nusa Tenggara, South-East Sulawesi, North
Sulawesi, Maluku
Low (small-scale) 3.0 – 4.0 < 75 34 Lampung, Jogyakarta, Bali, East Java, Central
Java, West Nusa Tenggara, South Kalimantan,
East Nusa Tenggara, South-East Sulawesi,
Central Sulawesi, North Sumatra, West
Sulawesi
Medium (medium- 4.1 – 5.0 75 – 150 34 Bengkulu, Banten, DKI, Central Java, East Java,
scale) East and West Nusa Tenggara, South-east,
South and Central Sulawesi, Gorontalo
High (large-scale) >5.0 >150 19 Central Java, Yogyakarta, East and West Nusa
Tenggara, South and North Sulawesi
Table 9: Wind Resources in Indonesia
Source: RENSTRA DITJEN EBTKE 2015 – 2019
Given the availability of more robust data on wind resources, The Asian Development Bank has
more recently suggested that the total wind potential in Indonesia might be as high as 9 GW.5
5
ADB Paper No. 9, Summary of Indonesian Energy Sector Assessment December 2015. Soeripno Martosaputro and Nila Murti of WHyPGen
also cite the MEMR as assessing the total Indonesian wind capacity at 9.29 GW in Blowing the Wind Energy in Indonesia presented at the
Indonesia Renewable Energy & Energy Conservation Conference and Exhibition [Indonesia EBTKE CONEX 2013] online at Energy Procedia
Volume 47, 2014, pp. 273-282.

While the Indonesian wind power market is still in its nascent years, the geospatial studies have
revived interest from both the government and the private sector to explore existing opportunities
further via identification of potential locations for commercial scale wind energy.
Potential locations for commercial scale wind energy Broad Area (ha) Potential Energy (MW)
Sumatera 85,779 1,716
Banten and West Java 319,244 6,385
Stern Java and Bali 305,231 6,105
Eastern Nusa Tenggara 493,630 9,261
Maluku and Papua 1,539,401 30,788
TOTAL 61,973
Table 10: Potential Locations for Commercial Scale Wind Energy in Indonesia
Source: Statistik EBTKE 2014
Within Java and Sulawesi, an initial study by Agency for the Assessment and Application
Technology on Wind Hybrid Power Generation systems (BPPT-WHyPGen) has also indicated
that there is wind energy potential of around 970 MW, distributed as follows:
No. Locations Potential Energy (MW)
1 Lebak 100.0 MW
2 Sukabumi Selatan 100.0 MW

3 Garut Selatan 150.0 MW
4 Purworejo 67.5 MW
5 Bantul 50.0 MW
6 Gunung Kidul 15.0 MW
7 Sidrap 100.0 MW
8 Jeneponto 62.5 MW + 100 MW
9 Oelbubuk 10.0 MW
10 Kupang 50.0 MW (Indicative)
11 Palakahembi 5.0 MW (Indicative)
12 Seluyar 10.0 MW
13 Takalar 100.0 MW (Indicative)
14 Bulukumba 50.0 MW (Indicative)
Table 11: Java and Sulawesi Wind Energy Potential by Location

Given the renewed interest in the exploration of wind energy in recent years, the beginning of
2015 has already seen the installed wind power capacity increase to 3.6 MW, of which 1.77 MW
was connected to the state-owned Perusahaan Listrik Negara (PLN’s) grid and 1.84 MW were
the off-grid projects for rural power supply. The largest grid-connected wind power facility was at
Nusa Penida in Bali (0.735 MW) and at Sangihe and Selayar in Sulawesi (combined capacity of
0.54 MW). The on-grid projects were the result of the cooperation between the Ministry of Energy
and Mineral Resources (MEMR) and the PLN.
While the planned development of wind energy by the MEMR still appears to be very modest
(Table 12), a number of private sector developments have been prospected in the country in
recent years to fill the gap.
On-stream capacity of wind power plants 2015 2016 2017 2018 2019
2015-2019
Wind non-state budget 2.0 5.0 7.0 9.0 13.0
Wind state budget – MEMR 0.5 0.2 0.5 1.0 2.0
Wind special allocation fund 0.2 0.5 0.8 1.0 1.2
Construction of wind power plants 2.7 5.7 8.3 11.0 16.2
Table 12: Government Planned Additions for Wind Power Plants between 2015-2019
Source: RENSTRA KEDSM 2015 – 2019
Several big areas from the initial study by BPPT-WHyPGen have now been prospected and
developed with the backing of credible promoters, bankable feasibility studies and comprehensive
wind resource data, and have now moved into construction stages in 2016. At the beginning of
2016, Indonesia’s wind project pipeline had already totalled to 280 MW,6 including 195 MW in
South Sulawesi, 60 MW in Java, and several smaller projects in West Timor and Sumba. 7 At the
same time, more than 500 MW in projects was in negotiation for Power Purchase Agreements
(PPAs), or was already in the feasibility study/data validation stages. In 2017, PLN has
additionally signed PPAs for the construction of wind power farms combined with a solar and mini-
6
Indonesia’s wind project pipeline conssits of: Jeneponto, South Sulawesi (125 MW); Sidrap, South Sulawesi (70 MW); Central Java (50 MW);
Ciemas, West Java (10 MW); TTS, West Timor (20 MW); Hambapraign, Sumba (4 MW / 0.6 MW).
7
Asian Development Bank (2015). Summary of Indonesia’s Energy Sector Assessment.

hydro power plant in Selayar, Kei Kecil, Ambin, and Buru Islands with PT UPC Renewable
Indonesia and PT Binatek Energi Terbarukan.
In addition to the private sector, the development of wind energy is also being supported by
international governments and organisations. Denmark for example, is assisting Indonesia in
developing wind power for power generation, which was marked by the launch of wind energy
maps and studies, expected to locate cities in Indonesia that have the potential to host wind power
farms.
Figure 9: Wind Map developed via Danish-Indonesian Cooperation – Power Density at 50 m.

Source: http://indonesia.windprospecting.com
Figure 10: Wind Map developed via Danish-Indonesian Cooperation – Average Wind Speed at 50 m.
Source: http://indonesia.windprospecting.com

Even though in 2012 the sector was 99% underdeveloped, the private sector is starting to notice
Indonesia’s potential.
The Indonesian government has also set a target of increasing wind power capacity to 1.5 GW 8
in order to support its goal of generating additional 35 GW of power capacity by 2025 (23% coming
from renewable energy sources). It is expected that Independent Power producers (IPPs) will
develop the majority of the wind power plants to reach this target. Given the crucial role that the
IPPs are expected to play in wind power capacity development, the framework conditions are
being developed to ensure that developers and investors embark on this ambitious path.
For example, the Indonesian government has recently implemented several key policies to
support wind power development. In January 2017, the Ministry of Energy and Mineral Resources
(MEMR) introduced a new Feed-in Tariff (FiT) and procurement schemes. The Regulation
12/2017 will offer lower tariffs paid to private developers, causing some projects to become
commercially unviable. However, this will arguably encourage Indonesia’s state-owned utility
company, PLN, to purchase electricity from renewable energy sources by lowering PLN’s financial
burden through indexing all renewable energy tariffs to its local production costs.
The Regulation 12 also requires PLN to operate any solar or wind energy based plant with a
capacity of up to 10 MW on a ‘must run’ basis, meaning that PLN must dispatch qualifying projects
if they are available to produce energy. The use of auction to award wind capacity also introduced
price bidding as a factor in competitive tenders, and replaced the existing system of first come/first
served allocation of capacity quota. In addition, fiscal incentives for private sector participation in
renewable energy were introduced through corporate income tax reductions, reduced custom
duties and tax breaks.
The wind power generation sector is regulated by the Directorate General of New Renewable
Energy and Energy Conservation (DGNREEC) in the MEMR. It is responsible for wind energy
policies and regulation. The National Energy Council, established in 2008, is responsible for
formulating national energy policy and creating a national energy plan. The MEMR’s Research
8
http://www.aseanenergy.org/blog/wind-power-development-in-asean-its-promising/

and Development Centre for Electricity and Renewable Energy Technology (P3TKEBT) is the
leading domestic R&D centre in Indonesia for wind generation technologies. Other organisations
involved in the wind energy sub-sector include the Indonesian Wind Energy Society, which
promotes wind energy and facilitates collaboration between stakeholders; and the Indonesian
Renewable Energy Society (MET), which provides a forum for stakeholders to advance the
deployment of renewable energy in the country.
See ‘5.3 Useful Statistics’ for more data on importers and exporters of Wind Turbine Blades and
other parts of non-electrical engines and motors, used in wind power generation.
Local Players
PT Binatek Reka Energi (Binatek)
PT Binatek Reka Energi (Binatek) was established in 1991 and started its business as a local
agent for several products of various foreign energy and power generation companies. It has
been active in participating as a supplier for state-owned companies, such as PT PLN (Persero),
Pertamina; and government departments, such as the Department of Mines & Energy,
Department of Public Works, and Department of Agriculture & Forestry. In 1995, Binatek
developed into a Project Development Company, servicing the oil and gas, power generation,
mining and agriculture sectors. Its activities include Engineering, Procurement and Construction
(EPC), finance and investment.
Binatek started developing wind power expertise through collaboration with UPC Renewables,
acting as its local partner. In May 2015, Indonesia launched its first on-shore wind turbine farm
project in Bantul, Yogyakarta – a project developed by a joint venture PT Binatek Energi
Terbarukan and UPC Renewables Indonesia Ltd.
In 2017, PT UPC Sidrap Bayu Energi – a joint venture project company owned by UPC
Renewables, Binatek and AC Energy Holdings AC – has also achieved financial close for the
75 MW Sidrap project in South Sulawesi. The US$ 150 million development will become
Indonesia’s first utility-scale wind farm. The completion is scheduled for 2019.

PT Redaya Energi
PT Redaya Energi is a local wind farm construction company, based in Jakarta. It is an Equis
Group controlled development platform, renewable energy investor and asset manager,
established to construct and own wind, solar, hydro and bio energy assets in Indonesia.
The company was formed with a vision to be Indonesia’s leading developer and owner of
renewable energy. In 2016, it has taken part in the development of the Tolo 1 Wind Farm (60 MW)
in Jeneponto, South Sulawesi, acting as a local Indonesian platform.
PT Indonesia Power/ PT Perusahaan Listrik Negara (Persero) (PLN)
PT Perusahaan Listrik Negara (Persero) (PLN) is an Indonesian, state-owned company tasked

with supplying the electricity needs of the Indonesian people. Established in 1953, it has become
one of the leading construction and investment enterprises in Indonesia. Over six decades, PLN
has successfully completed various large-scale projects across Indonesia through its diverse
business lines and subsidiaries. Established in 1993, PT Power Indonesia is a PLN subsidiary
responsible for creating power generation business competition with Independent Power
Producers (IPPs). The company holds a monopoly on the distribution of electricity in Indonesia
and it is the second-largest state company by assets.
In recent years, PLN has built two small-scale wind power plants as pilot projects in the Aceh and
East Nusa Tenggara areas. PLN was also involved in the six-month study of slow-pace wind
power production in Sumba, before building a full-size plant.
PT Citrakaton Dwitama
PT Citrakaton Dwitama is an Indonesian wind power development company based in Jakarta.

The company was established in 1992 as an Engineering, Procurement and Construction (EPC)
company in the field of Power Generation. It participates actively in utilising existing natural
resources to generate maximum electricity. Among other projects, the company provided wind
turbines for the PLTB Bayu power plant.

Figure 11: Development of PLTB Bayu Power Plant
Source: PLTB
3.2.2 EU Entry Opportunities
Indonesia presents multiple opportunities in wind energy for European companies. Among the
most promising avenues are:
 Small- to medium-sized, off-grid, low wind solutions;
 Offshore wind solutions
 Technical knowledge development and quality assurance programmes
 Export opportunities in turnkey solutions, turbines and wind power components
Small- to medium-sized, off grid, low wind solutions
Indonesia’s wind potential lies mainly in the eastern parts of the country, which are less populated
and lack the transmission infrastructure to support large wind farms. The government is also keen
to explore options for rural electrification – areas, which typically have low levels of on-grid
electricity provision. Wind power development opportunities, as a result, may be available for

European companies with expertise in small- to medium-sized projects, designed with off-grid,
low wind solutions.
Offshore wind solutions
Due to Indonesia’s lengthy coastlines and consistent ocean breezes, there may be future
opportunities to explore offshore wind potential. While Indonesia does not at present have any
offshore wind farms, European companies such as Norway’s Global Maritime that have expertise
in offshore wind technologies are already eyeing the market and ensuring that they have
personnel with the relevant experience and capability stationed in Indonesia to help develop the
market. As the government set up a 1.5 GW wind power target for 2025, projects exploring and
utilising offshore wind may be in high demand in future.
Technical knowledge development and quality assurance programmes
There is also insufficient knowledge and capacity in the domestic manufacturing, project operation
and maintenance industries. Wind turbines require regular maintenance and spare parts to
function. Trained technicians are needed to perform such tasks. However, the lack of investments
and interest from domestic markets has led to the skills gap. The difficulty in securing these
resources makes it challenging to promote the acceptance of wind power projects in rural and
remote areas. Companies with the skills and expertise in technical knowledge development and
quality assurance programmes will find opportunities to gain a foothold in Indonesian wind market.
Export opportunities in turnkey solutions, turbines and wind power components
Finally, the domestic manufacturing market is in its nascent years. As a result, there are many
export opportunities, including exports of complete turnkey solutions, turbines, and wind power
components. Some of the European companies are already reaping the benefits of the new export
market. However, the increasing number of wind power projects may offer additional opportunities
for market players.

European Companies
Siemens Gamesa Renewable Energy (Gamesa)
Siemens Gamesa Renewable Energy (Gamesa) is a Spanish manufacturing company,

specialising in the fabrication of wind turbines and the construction of wind farms. Gamesa
develops, manages, and sells wind farms, for which it also supplies wind turbines. It is the market
leader in Spain and the fourth largest wind turbine manufacturer in the world. The company has
installed over 10,000 MW and presently has over 20,000 MW of production in development across
four continents. Siemens Wind and Gamesa reached an agreement in 2016 to merge their wind
turbine businesses, thus forming Siemens Gamesa Renewable Energy. Gamesa’s footprint in the
Asia Pacific region extends to Vietnam, Philippines, Taiwan, South Korea, Japan, Sri Lanka,
China, India, Australia and New Zealand, having installed 9 GW in these markets.
Gamesa entered the Indonesian market in 2017 after winning turbine and EPC order from PT
UPC Renewables. The company has been chosen to supply 30 G114 2.5 MW machines for the
Sidrap project – the first Indonesia’s wind farm, which will be commissioned in the first quarter of
2018.
Figure 12: The First Ever 2.5 MW Wind Turbine Components Arrive in Indonesia in August 2017
Source: Yermia Riezky for UPC Renewables Indonesia

In July 2017, Gamesa has secured its second contract from IPP Equis Energy to build and
operate the 60 MW Tolo 1 wind farm. The manufacturer will install 20 wind turbines at Jeneponto
in South Sulawesi. The scope of the contract also includes Engineering, Procurement and
Construction (EPC) and long-term Operation and Maintenance (O&M).
Vestas / Vestas Wind Systems AS (Vestas)
Vestas / Vestas Wind Systems AS (Vestas) is a Danish global energy company dedicated
exclusively to wind energy. It manufactures, sells, installs and services wind turbines. Founded in
1898, it is the largest wind turbine company in the world with 83 GW of installed wind power and
more than 71 GW under service across the globe. The company operates in two segments:
projects and services. The project segment sells wind power plants, wind turbines and other
equipment. The service segment engages in the sale of service contracts, spare parts and related
activities.
Vestas made its first move into Indonesia’s wind market in 2014 via joint initiative with the Danish
government to support wind project on Sumba island. The initiative was part of Vestas’ Wind for
Prosperity Programme, endorsed by the Indonesian government. Through its Programme, Vestas
supported a refurbished V47-660kW turbine.
Figure 13: Vestas’ V126 Turbines at the Jeneponto 1 Site

Source: windpowermonthly.com

More recently, Indo Wind Power Holdings, a subsidiary of Asia Green Capital, signed an EPC
agreement with Vestas for its 62.5 MW Jeneponto 1 wind power project.
The project will be the first utility-scale wind farm in Indonesia and construction was expected to
start in May 2016. Indo Wind Power Holdings have also expressed wishes to sign contracts with
Vestas for its other two wind farms in South Sulawesi and West Timor. Vestas was also signed
by Equis as a turbine supplier for 60 MW South Sulawesi project.
EREN Renewable Energy (EREN)
EREN Renewable Energy (EREN) was founded in 2012 and it is a French global renewable
energy power provider. Through its different subsidiaries and activities, EREN offers solutions in
the renewable energy industry. It also acts as an Independent Power Producer (IPP). It develops,
owns and operates wind and solar energy power plants. The Group already owns 525 MW of
renewable energy assets in operation or under construction, and 1,500 MW in development,
worldwide.
Determined to establish itself as a pioneer in wind energy development in Indonesia, EREN

mobilised a team based in the country in 2014. In 2015, EREN partnered with CWP Energy Asia
to create PACE Energy, dedicated to developing, building and owning greenfield wind power
plants. PACE Energy is currently developing a portfolio of around 300 MW of greenfield wind
projects. In March 2017, PACE Energy and PLN signed a Memorandum of Understanding (MoU),
which covers eight innovative renewable energy (wind/solar) projects across Indonesia.
Wind Energy Solutions (WES)
Wind Energy Solutions is a Dutch manufacturer of the WES50, WES80, WES100 and WES250
midsize wind turbines for the grid connected and off-grid solutions.

Figure 14: WES50, WES80, WES100 & WES250 Turbine Models
Source: windenergysolutions.nl
WES partnerships with its dealer channel are key to establishing WES, and wind-power itself,
in specific markets and/or regions. WES is now targeting simultaneously the high-volume projects
and international project developers around the world. The company also has a specific focus to
further develop its solutions for isolated grids that use diesel to generate electricity. In 2005,
it installed five WES80 wind turbines on a small island of Nusa Penida, Indonesia.

3.3 Solar
An advantageous geographic position on the equator has long afforded Indonesia with immense
potential for solar energy. Often touted in tandem with geothermal energy and hydroelectric power
as the next wave of energy sources to boost national power output, the country’s solar energy
industry now appears ready to begin realising its potential.
The potential of solar energy in the country ranges from 4.5 to 5.1 kWh/m2/day, averaging
approximately 4.8 kWh/m2/day of solar insolation, twice the levels of solar insolation in Germany.9
Average Insolation
No Regency/City Location Province Geographic Position
(kWh/m2/day)
1 Banda Aceh Nanggroe Aceh Darussalam 4°15’N;96 °52’E 4.10
2 Palembang South Sumatera 3°10’S;104°42’E 4.95
3 Menggala Lampung 4°28'S 5.23
4 Jakarta Special Capital Region of Jakarta 6°11’S;106°SE 4.19
5 Bandung West Java 6°56’S;107°38’E 4.15
6 Lembang West Java 6°50’S;107°37’E 5.15

7 Citius, Tangerang West Java 6°07’S;106°30’E 4.32
8 Darmaga, Bogor West Java 6°30’S;106°39’E 2.56
9 Serpong, Tangerang West Java 6°11’S;106°30’E 4.45
10 Semarang Central Java 6°59’S;110°23’E 5.40
11 Surabaya East Java 7°18’S;112°42’E 4.30
12 Kentang, Yogyakarta DI Yogyakarta 7°37’S;110°01’E 4.50
13 Denpasar Bali 8°40’S;115°13’E 5.26
14 Pontianak West Kalimantan 4°36’N;9°11’E 4.55
15 Banjarbaru South Kalimantan 3°27’S;144°50’E 4.80
16 Banjarmasin South Kalimantan 3°25’S;114°41’E 4.57
17 Samarinda East Kalimantan 0°32’S;117°52’E 4 .17
18 Menado North Sulawesi 1°32’N;124°55’E 4.91
19 Palu Central Sulawesi 0°57’S;120°0’E 5.51
20 Kupang West Nusa Tengarra 10°09’S;123°36’E 5.12
21 Waingapu, Suma Timur Central NT 9°37’S;120°16’E 5.7
22 Maumere East NT 8°37’S;122°12’E 5.72
Table 13: Solar Energy Potential in Indonesia
9
Re4I (2016). Renewable Energy for Indonesia. Link: http://there4i.org/conference/page/AboutIndonesiaRE

While the level of solar insolation varies across the country, it is regarded as offering good solar
potential by international standards, and represents a viable source of power, particularly suitable
for remote islands and communities with limited or no grid connections.
Figure 15: Global Horizontal Irradiation

Source: SolarGIS, 2016 GeoModel Solar
The solar market of South East Asia’s largest energy consumer has been relatively
underdeveloped so far. But new regulations are being implemented and the government has
shown increasing interest to diversify its energy portfolio, thus, spurring attention from domestic
and international investors and power developers.
The current market for PV systems in Indonesia is broadly divided into three segments: a market
that came from the Government via village electrification projects, which targets over 1,000 rural
locations and islands; a retail market, especially in the areas outside Java and Bali islands; and
a ‘commercial’ market, where the demand for alternative energy comes from urban and industrial
areas. While segmented, the market is still dominated by off-grid developments, mostly as solar

home systems, solar rooftops, utility-scale solar PV plants, and small-to-medium off-grid
solutions.
Despite the fact that the current installed solar power capacity is still low (about 90 MW),
especially when compared to its potential (50,000 MW),10 the Government of Indonesia
readjusted its plans in February 2016 to scale up solar capacity to 5 GW by 2020, a significant
increase from its previous commitments.
2015 2016 2017 2018 2019

Installed capacity – beginning of year 67.1 76.9 92.1 118.6 180.0
Construction of solar power plants 9.8 15.2 26.5 61.4 80.3
Solar non-state budget - 5.0 15.0 50.0 70.0
Solar state budget – MEMR 2.8 3.0 4.0 3.5 2.0
Solar special allocation fund 7.0 7.2 7.5 7.9 8.3
Installed capacity – end of year 76.9 92.1 118.6 180.0 260.3
Table 14: Solar On-Stream Development Plan (in MW) prepared in 2014
Source: RENSTRA KEDSM 2015-2019
The readjustment comes in line with the country’s expected ability to exceed its yearly targets via
strong project pipeline and its commitment to increase the share of renewable energy in the
energy mix (up to 23% of the additional 35 GW of energy to be drawn from renewable sources).
Although the country had previously planned to increase its installed capacity of solar power only
to 260.3 MW by 2019, it had already exceeded its target for 2015 by increasing installed capacity
to 85.2 MW (compared to targeted 76.9 MW). It expects that the interest from private developers
will continue driving the solar power project developments above the previous benchmarks.
Some of the recent domestic developments include the signing of a Power Purchase Agreement
(PPA) in 2016 by PLN with T Global Karya Mandiri for the construction of a solar power plant
(PLTS) with a capacity of 1 MWp in Atambua, and with PT Indo Solusi Utama for the construction
of PLTS with a capacity of 2 x 1 MWp in Ende-Ropa-Maumere. A year later in 2017, PLN has
also signed additional PPAs for six PLTS construction projects with a total capacity of 45 MW,
10
PwC (2016). Power in Indonesia: Investment and Taxation Guide

which are the PLTS Gorontalo (10 MW) by PT Quantum Energi; PLTS Pringgabaya, Lombok
(5 MW) by PT Infrastruktur Terbarukan Adhiguna; PTLS Sengko, Lombok (5 MW) by PT
Infrastruktur Terbarukan Cemerlang; PLTS Selong, Lombok (5 MW) by PT Infrastruktur
Terbarukan Buana; PLTS Kuta, Lombok (5 MW) by PT Delapan Menit Energi; and PLTS Likupang
Minahasa (15 MW) by PT Infrastruktur Terbarukan Lestari.11
Figure 16: Sulawesi’s Largest Solar Power Plant in East Sumalata District
Source: Global Expandia
In addition, there are two other PPAs for PLTS construction projects with diesel and gas engines
in Lombok, Bangka, Karimun Islands, Kupang, Minahasa and Gorontalo with PT Arsari Enviro
Industri and Sunpower Systems Sarl, and in Sumbawa, Bima/Sape, Lombok, Ambon,
Madura/Ketapang/Bawean, Waena, Bombana, Bangka/Belitung, Nias under PT Sumberdaya
Sewatama.12 These domestic investments are also complemented with a strong project pipeline,
which is expected to come out with the support of international investors and project developers.
According to the Government, the total existing pipeline of projects currently amounts up to
250 MW of solar PV installations. The Government has also indicated that even more solar PV
capacity will be tendered in the near future. By mid-2016, the commitments by PLN to develop
utility-scale solar PV systems together with the Memorandums of Understanding (MoUs)
amounted to 700 MW.
11
http://www.gbgindonesia.com/en/energy/article/2017/overview_of_renewable_energy_in_indonesia_progress_albeit_slow_11781.php
12
http://www.gbgindonesia.com/en/energy/article/2017/overview_of_renewable_energy_in_indonesia_progress_albeit_slow_11781.php

The domestic solar PV manufacturing market is currently limited to the presence of six companies
comprising the Indonesian Solar Module Manufacturer Association (APAMSI): PT Len Indonesia
(Persero), T Adyawinsa Electrical & Power, PT Surya Utama Putra, PT Swadaya Prima Utama,
PT Azet Surya Lestari and PT Wijaya Karya Inatrade Energi. With a combined production capacity
of 90 MW per annum, these six companies alone are currently not able to curb the need for
imported components, such as solar cells (often the most expensive component of a solar panel)
amidst growing market demand.
Local solar panel manufacturers must still contend with limitations to production capabilities
attributed to the still nascent state of the industry and their relatively new proficiency in carrying
out many processes to create solar modules. Having first developed expertise in manufacturing
modules suited for small PV power generation systems and home installation (as dictated by
demand from sparsely populated and remote communities in outlying islands), the local industry
still requires investment and involvement of experienced foreign players to accelerate industry
growth (see ‘5.3 Useful Statistics’ for relevant data on exporters and importers of photosensitive
semiconductor devices, incl. photovoltaic cells).
Chinese and Japanese companies are still dominating the export market, but the market is
increasingly witnessing new entrants, including French and German companies.
Government Initiatives
In order to encourage solar energy development in Indonesia, the government has created three
main development categories for solar power by size: (1) below 100 kWp, to be implemented by
Ministry of Energy and Mineral Resources (MEMR) through its own procurement system and by
state-owned Perusahaan Listrik Negara (PLN); (2) between 100 kWp and 1 MWp, intended by
PLN as hybrid systems with existing small-scale power plants (mostly diesel); and (3) above
1 MWp, intended for Independent Power Producers (IPPs). The government has also shown

interest to encourage solar PV rooftop power as a way to supplement power generation in urban
grids.13
In addition, the government has recognised the low electrification rate across remote and rural
areas, and the need to support the energy demand. As a result, it has embraced the strategy,
called “The 1,000 Islands PV Development Programme”, which aims to develop solar PV projects
in remote islands with some of the lowest electrification rates in the country (below 60%).
In March 2016, Pertamina, a state-owned company, also announced its plans to assist with rural
electrification under the Bright Indonesia Programme by building 1 GW of solar plants in areas
without or low levels of electricity.
Figure 17: 1,000 Island PV Development Programme

Source: Mach, Sofyan (Head of New and Renewable Energy Division PT PLN Persero, “PLN – Solar PV Development Plan”,
Solar Workshop, Jakarta, 8 February 2013
13
Asian Development Bank (2016). Indonesia: Energy Sector Assessment, Strategy, and Roadmap

Further to the 1,000 Islands PV Development Programme, the Government has further released
in February 2016 its strategy to achieve the ambitious target of 5 GW of solar capacity by 2020.
The solar PV power development includes:
 Cooperation with the Financial Services Authority, MEMR and the Local Governments for ten
provinces;
 Development of “Program Energi Terbarukan Listrik Desa” with a target to electrify 10,300
villages;
 Subsidisation of solar Feed-in Tariffs;
 Development of regulations for hybrid PV, on-grid PV and rooftop PV; and
 Development of a quality standard for the solar panel industry with qualified expert resources.
According to the Government, the planned distribution of 5 GW solar PV is expected to come

from the following sources:
The planned distribution of 5 GW of solar PV

On-grid general scale 1.5 GW
Hybrid (diesel and PV) 1 GW
Government and private building (rooftop PV) 0.5 GW
Industrial zone (Rooftop PV) 0.5 GW
Solar special Residential fund (Rooftop PV) 0.5 GW
Villages without electricity 1 GW
Table 15: Planned Distribution of 5 GW of solar PV in Indonesia
Source: PwC (2016). Power in Indonesia
To revitalise the interest in solar power energy from IPPs, investors, manufacturers and
distributors, a series of new regulations and policies have been introduced. For example, the July
2016 MEMR Regulation No. 19/2016 replaced the previous Regulation No. 17/2013, and set a
competitive reference tariff for many of the prevailing renewable energy technologies, including
those in the solar PV industry. The new regulation also established a Solar Auction, in which the
PLN is obliged to purchase solar electricity from solar PV plants of between 1 and 6 MW at a
ceiling price.

Purchase Price
No Region Capacity Quota (MWp)
(cent US$ / kWh)
1 DKI Jakarta
2 West Java
3 Banten 150.0 14.5
4 Central Java and Yogyakarta
5 East Java
6 Bali 5.0 16.0
7 Lampung 5.0 15.0
8 South Sumatra, Jambi and Bengkulu 10.0 15.0
9 Aceh 5.0 17.0
10 North Sumatra 25.0 16.0
11 West Sumatra 5.0 15.5
12 Riau and Riau Islands 4.0 17.0
13 Bangka – Belitung 5.0 17.0
14 West Kalimantan 5.0 17.0
15 South and Central Kalimantan 4.0 16.0
16 East and North Kalimantan 3.0 16.5
17 North and Central Sulawesi and Gorontalo 5.0 17.0
18 South, South-East and West Sulawesi 5.0 16.0
19 West Nusa Tenggara 5.0 18.0
20 East Nusa Tenggara 3.5 23.0
21 Maluku and North Maluku 3.0 23.0
22 Papua and West Papua 2.5 25.0
Table 16: Quotas and FiTs for Phase 1 of the 5 GW solar PV development, by Region
Source: PwC (2016). Power in Indonesia
The government has further encouraged cell manufacturers to develop their business in
cooperation with domestic players in Indonesia via higher tariff rates – US$ 0.30/kWh for projects
using at least 40% of local content – in order to create jobs and improve the local solar PV service
and maintenance sector.

Local Players
PT Contained Energy Indonesia
PT Contained Energy Indonesia (CEI) is a leading Indonesian solar system integrator. It provides
PV engineering, supply, installation and support services to governments and the private sector.
Since its founding in 2004 by two Dutch engineers, the company has implemented more than 120
successful PV projects.
In 2014, CEI deployed successfully stand-alone, off-grid, solar-powered cold storage facilities on
remote islands of Wakatobi and Pacitan for the EU- and Swiss-funded project. It also signed a
contract with PT Samudera Biru International in 2015 to supply and install almost 1 MW solar
power for two factories of Samator, the industrial gas manufacturer from Surabaya. Its Sampoerna
Kawawang tender for 500 kWp Solar PV plant system was also completed in 2017.
After being acquired by Impiro, a full-service investment firm from Singapore in 2015, the
company is set to accelerate its expansion further. The CEO, Lion Kraaijbeek, notes: “We are
currently in expansion mode and hope to open more branches soon. We expect explosive
growth.” The company already has offices in Jakarta, Surabaya, Bali and Singapore.
PT Buana Energy Surya Persada
PT Buana Energy Surya Persada (BESP) is one of the first independent PV power producers in
Indonesia. The company is specialising in consulting, project development, and finance for small
to utility-scale solar power. It is majority-owned by Jakarta-based Multi Buana Group (MBG),
which is dealing with heavy equipment and infrastructure, laboratory and medical equipment, and
sustainable investments.
The company’s milestone is its partnership with Conergy in 2015 to build the very first PV power
plant in Indonesia. BESP entered into an agreement with Conergy on a project to build three
1 MW ground-mounted solar PV power facilities that would generate electricity for three towns

within East Nusa Tenggara province. BESP was responsible for on-ground construction and
installation of PV power facilities in Sumba.
PT Rekasurya
PT Rekasurya is an Indonesian provider of comprehensive solar-power systems. The company

has secured a particular niche in a nascent solar power market in Indonesia. While other
companies specialise in solar panels, solar cells, or solar-power accessories, it provides complete
systems with competitive pricing.
At its production facility in Bandung, West Java, the company manufactures its proprietary range
of solar modules, inverters, solar-charge controllers, batteries and all other components required
for the installation of bespoke sustainable power systems. At present, PT Rekasurya’s clients are
government facilities, local businesses and a growing number of residential customers.
PT Surya Energi Indotama / PT LEN Industri (Persero)
PT Surya Energi Indotama (SEI) is a subsidiary of PT LEN Industri (LEN), a state-owned

enterprise, which manufactures and develops electronics for various industries. LEN has been
driving the development of renewable energy in Indonesia since 1997 via its Energy Business
Unit. In 2009, the Unit developed into a subsidiary by the name of SEI to expand further the LEN’s
renewable energy market. LEN remains a major shareholder (90%) while PT Altran Indonesia
holds 10% of the shares.
Its subsidiary, SEI, is a leading EPC company and one of the very few solar module
manufacturers in Indonesia. As a solar design and engineering company, SEI provides solar
system solutions, including system design, engineering and system integration; services, such as
installation, testing, commissioning and training; and sales, including solar module, energy
limiters, solar lighting, controllers, and other products. Its solar products have been installed in
remote areas of Indonesia. The company has dealt with hundreds of renewable energy projects,
catering both private sector and government clients.

Figure 18: Indonesia’s Largest Solar Power Plant by PT Len Industri in East Nusa Tenggara
Source: Retail Asia
SEI / LEN have been engaged in some of the major solar power projects across Indonesia.
For example, in 2013, SEI, as part of LEN, developed the first large-scale solar power project
(2 MW capacity) in Karangasem, Bali.
In 2014, SEI engaged in a 5 MW solar power plant development in Kupang, East Nusa Tenggara.
The plant was finished in 2016 and LEN operates it under Independent Power Producer (IPP)
scheme. In 2016, SEI was also developing the project in Kepulauan Riau to install a stand-alone
PV plant. The PV plant delivers 300Wh to each household every day for nearly 2 million residents.
Furthermore, in the rural electrification project, SEI installed more than 100,000 units of solar
home systems in various provinces of Indonesia while its PV hybrid systems are installed in 20
sites across the country and cater commercial, industrial and residential sectors.
PT Quantum Energy Indonesia
PT Quantum Energy is an Independent Power Producer, specialising in the development of both

grid-connected and off-grid, remote Hydropower, Solar PV and PV-Hybrid energy solutions

through acquisitions, strategic partnerships and greenfield developments. The company draws
expertise from over 30 years of project work in 22 countries. In October 2015, PT Quantum
Energy signed a Memorandum of Understanding (MoU) with PLN to conduct a feasibility study
up to 100 MW of utility-scale PV projects in Indonesia. The first projects are planned to be
developed in West Nusa Tenggara, Maluku, North Sulawesi, Central Sulawesi and Gorontalo.
The construction of the first project was expected to begin in the first quarter of 2016. Although
the project start has been delayed, in March 2017, the company signed an additional agreement
with the PLN to install 10 MW in Gorontalo province.14
Over the next 5 years, Quantum Energy plans to finance, build and operate a minimum of 500 MW
of clean power generation projects with an estimated total investment of more than US$ 1 billion.
PT Quantum Energy is also investigating the potential of co-locating technologies, such as Solar
PV-Gas, Solar PV-Coal and Solar PV-Biomass systems.
The solar panel industry in Indonesia appears primed to thrive with the increase in solar power
projects, offering abundant opportunities for investment in its booming solar energy industry.
Some of the opportunities for European solar PV companies may be in:
 Provision of on-grid and off-grid solar PV solutions

 Provision of rooftop solar solutions
 Large-scale solar farm development
 Export opportunities for solar modules and parts
 Add-on services for solar power projects
 Development of solar PV manufacturing facilities
 Provision of solar panel quality assurance programmes
 Domestic skills and knowledge development
14
https://www.pv-magazine.com/2017/04/10/indonesias-pln-signs-deals-for-45-mw-of-solar/

Provision of on on-grid and off-grid solar PV solutions
Although Indonesia’s electricity generating capacity has doubled in the past decade, the country
still has low electrification rate when compared to its ASEAN neighbours. In 2014, only 84% of
Indonesia’s population had access to electricity, with some remote provinces, such as Papua,
providing electricity only to 43% of its population. Given the Government’s National Energy Policy
to nearly complete electrification of the country by 2020, and its programme for rural electrification,
European companies are welcomed to support solar energy market via on-grid and off-grid solar
PV and solar PV-Hybrid solutions.
Following PLN’s announcement of a long-term plan to develop new solar power plant projects,
the government is aiming to attract IPP involvement in more than 60 projects (ranging between
1 MW to 10 MW) in existing isolated, on-grid systems currently powered by diesel.
In addition to incentivising IPPs to develop new on-grid systems to replace diesel power
generation facilities, the many off-grid and PV Stand Alone system projects undertaken by PLN
in remote, outlying islands also present another opportunity. The Government is increasingly
seeking the participation of the private sector to complement the efforts of the PLN for off-grid
solar power development in remote locations via new project development. Companies with
experience in deploying off-grid solar PV technologies in outlying islands, where most of the
current PV projects currently take place, may enjoy a successful pipeline of business
opportunities.
Provision of rooftop solar solutions
With the technological advancements, cost reductions of solar PVs, and the rise of residential
demand for more sustainable energy, solar panels are also gaining pace in the rooftop sector,
including parks, utility lands, commercial and residential buildings. Small-scale engineering
solutions, such as rooftop panels, solar home systems, utility-scale solar PV plants, and small-to-
medium off-grid solutions, are needed to address this growing market.

Large-scale solar farm development
The new regulations for FiTs and power purchase by the PLN on solar power development have
made investment in large-scale solar farms more attractive to domestic and international
developers. Some European companies, such as Conergy, Engie and Akuo Energy have already
signed MoUs to explore opportunities for large-scale solar projects in Indonesia, but a strong solar
power demand, and expected further tendering process for new projects, indicate that more
opportunities are likely to appear.
Export opportunities for solar modules and parts
Following the PLN’s announcement of a long-term plan to develop new solar power plant projects,
demand for components and equipment used in these projects is projected to create greater
opportunities for manufacturers of solar panels and modules.
Leading European PV exporters may find good opportunities to tap into the relatively nascent
solar market, especially taking into consideration that the majority of solar PV modules are
imported and the domestic manufacturing market is still limited. Moreover, even those
components which are produced locally (DC lamps, battery charge regulators and storage
batteries, among others) are often seen as low-quality products. As a result, European companies
can find lucrative export markets for turnkey solutions, PV modules, hybrid power conditioning
systems, batteries and other solar power solutions.
Add-on services for solar power projects
The relative lack of maturity of the industry also provides entry points for panel manufacturers to
extend their services into lucrative add-on areas, including project management, Engineering,
procurement and Construction (EPC), and even finance. Cooperation between international and
domestic solar power developers is particularly encouraged by the Indonesian government, which
aims to improve domestic capabilities in the solar energy market. The government’s plan hinges
on the use of attractive Power Purchase Agreements (PPAs) and Feed in Tariffs (FiT), to lure
both local and foreign developers to invest in large scale solar farms.

Development of manufacturing facilities in Indonesia
The Government of Indonesia is strongly encouraging the development of domestic

manufacturing industry. The new regulations offer better FiTs for those companies that use at
least 40% of local content. However, the domestic manufacturers are still not fully prepared to
satisfy the market demands. As a result, there are opportunities for companies to boost the
domestic manufacturing industry by developing new manufacturing facilities. Interest in opening
new manufacturing facilities through a joint venture with Indonesian companies has in the past
been expressed by global industry leaders, such as Canadian Solar Inc, which signed an MoU
with PT Swadaya Prima Utama to build a 60 MW solar module factory, which, if completed, would
be among the largest of its kind in Indonesia, and alone would match two-thirds of the local
industry’s present production capacity. Other opportunities for joint ventures include developing
solar cell production capabilities to directly address the current reliance on imports for this main
component. In 2012, state-owned oil and gas company, Pertamina, set the precedent for this type
of cooperation by working with PT Len Indonesia to boost the manufacture of solar cells.
Solar panel quality improvements
Improving solar panel quality will be another area where the guidance of an experienced partner
will prove most beneficial, as the prevalence of low quality components has impinged upon the
reliability of solar power generation in the market. Without a formally established certification
institute for solar panels in Indonesia to provide quality assurance, demonstrating high product
quality to consumers disillusioned with local panels can often prove difficult. Therefore, a foreign
partner with a history of adhering to international solar panel production standards and a proven
track record in more mature renewable energy markets can go a long way to providing this
assurance. As a result, companies with expertise and experience in quality assurance
programmes may find increasing opportunities in Indonesia.
Domestic knowledge and skills development
There is also a knowledge and expertise gap when it comes to managing solar installations
optimally. European companies with expertise in monitoring technology, experience in efficiency

optimisation in power installations, and skills training programmes will find a strong demand for
their services.
European Companies
Conergy
A leading German photovoltaic (PV) solution and service provider, Conergy offers development,
financing, EPC and O&M services with more than 1.3 GW of installed capacity, globally. Founded
in 1998, the company has pioneered the expansion of solar power globally and, today, it combines
industry-leading solar PV expertise with access to capital across six continents. Within Asia
Pacific region, Conergy has closed over 460 MW of EPC contracts and it has provided O&M
services for over 400 MW of solar projects.
The company entered the Indonesian market in 2014 in cooperation with local partner, PT Buana
Energy Surya Persada (PT BUSP). One of the factors that drove Conergy’s successful entry into
the Indonesian market was the government’s interest to open up the renewable energy sector for
foreign companies.
In 2015, Conergy received a contract to develop its first-ever utility-scale solar power plant in the
country, which brought 35,000 homes in East Nusa Tenggara access to clean energy for the first
time. The project was developed in partnership with PT BUSP and PT Indo Sulosi Utama (PT
ISU). The company developed three 1 MW projects that would generate electricity in three towns,
namely, Suma, Ende and Maumere. Conergy was responsible for engineering, planning, design,
equipment, procurement and long-term maintenance of the three solar installations. BT BUSP
and PT ISU were to handle on-the-ground construction. The project cost US$ 2.2 million. It was
completed and connected to the grid in 2017.
Engie
Engie is a French multinational electric utility company, which operates in the fields of electricity
generation and distribution, natural gas, nuclear and renewable energy. Founded in 1880, it

develops its business with innovative solutions largely based on its expertise in four key sectors:
renewable energy, energy efficiency, LNG, and digital technology. Within renewable energy, the
company is involved in the development, construction, financing, operation and maintenance of
various renewable power generation assets.
The company operates throughout North America, Latin America, Africa/Asia and Europe.
In 2016, Engie took a major step in the transformation of its portfolio by selling 13 GW of power
generation assets, including the 2 GW PT Paiton coal-fired power plants in Indonesia.
The divestment was in line with Engie’s global strategy to move away from fossil fuel to clean and
green energy technology.
In turn, the company began investing in renewable energy. In March 2017 the French power giant
signed three partnership agreements to develop, co-finance, operate and maintain micro-grid and
other renewable energy projects across Indonesia for a total value of US$ 1.25 billion over the
next five years. The largest partnership is with sugar producer Sugar Group, for joint US$ 1 billion
investments in 500 MW of solar PV and biomass projects in Sumatra and Eastern Indonesia. Of
this, 300 MW will be dedicated to solar parks, including the 140 MW park in Lampung – one of
the largest solar power facilities in South East Asia. The second partnership is with micro-grid
developer Electric Vine Industries to invest US$ 240 million in building and operating smart PV
micro-grids for 3,000 villages in Papua. The projects are set to power around 2.5 million people
over a 20-year period.
The third partnership is with PT Arya Watala Capital to invest US$ 15 million in up to 10 MW of
solar plants in East Nusa Tenggara, the southernmost province, over the period of three years.
The projects will be located in 10 different areas on major islands, such as West Timor, Flores
and Sumba.
The three partnership agreements come as part of the Terrawatt Initiative, a non-profit
organisation that was launched by Engie during COP21. The projects contribute to the Indonesian
government’s target to enable 100% electrification across the country by 2020, and it has received
support from the local government under the guidelines of MEMR Regulation No. 038/2016

“Acceleration of Electrification in Areas of Undeveloped, Rural, Border and Small Inhabited
Islands through Small Scale Electric Generation”.
Akuo Energy
Founded in 2006, Akuo Energy is the leading French independent renewable energy power
producer. The company operates across the whole value chain, including project development,
financing, construction, and operation. As of end-2016, Akuo Energy had invested US$ 2 billion
for a total capacity of 960 MW of renewable energy in operation and under construction worldwide.
While based in France, it has subsidiaries in 11 countries, including Indonesia. Akuo Energy aims
to have a global production capacity of 3,500 MW by 2022.
Akuo Energy entered Indonesian market in 2012 via the creation of its subsidiary, PT Akuo Energy
Indonesia (AKI). Today, AKI partners with PT Pertamina (Persero) in co-developing hundreds of
MW, covering wind, solar PV and (Ocean Thermal Energy Conversion) OTEC technologies.
A significant milestone for AKI was reached in 2017 when it signed a cooperation agreement with
Millennium Challenge Account Indonesia (MCA-Indonesia) to develop 3 off-grid PV projects in
Berau, Easy Kalimantan. The company will be developing Indonesia’s biggest off-grid hybrid
solution (Solar PV-Battery-Micro Hydro-Genset) in East Kalimantan/ Borneo island. Furthermore,
in March 2017, AKI signed a Memorandum of Understanding (MoU) with PT PLN (Persero)
regarding the conduct of a feasibility study and system stability of renewable energy with a hybrid
system. The project’s potential capacity within this framework is 500 MW, involving a total
investment of US$ 850 million. AKI has a team of 25 people with offices in Bali and Jakarta, with
future intentions of opening new offices in Sumatra and Kalimantan to support their projects.
Renewable Energy Corporation (REC)
Founded in Norway in 1996, Renewable Energy Corporation (REC) is a leading vertically

integrated solar energy company. The company manufactures polysilicon, wafers, cells, high-
quality solar photovoltaic (PV) panels, and also provides turnkey Engineering, Procurement and

Construction (EPC) solutions. In partnership with a sales channel of distributors, installers, and
EPCs, REC panels are installed globally.
To reap the benefits of the growing pressures from the Indonesian government for all installers to
develop and regularly upgrade their installation skills, REC Solar launched a certification scheme
in November 2015. This came after a similar programme was launched in the Philippines in May.
The new scheme is aimed at promoting a long-term alliance between local customers and local
solar installers. Only the best and the most qualified installers are selected for REC Solar
Professional status, setting them apart from other installers.
It is anticipated that the programme will equip installers with the tools and know-how for them to
differentiate themselves as professional installers, increase their credibility and grow their
business. In addition to training programmes and exclusive seminars, REC Solar Professionals
will benefit from extended product warranty, a service fee for approved claims and access to sales
and marketing tools to support their business.
Customers are expected to benefit from the programme in the form of a consistently high-standard
installations backed by excellent technical and safety expertise, with the assurance of REC’s high
performing solar panels. Five solar installers have been signed up to the scheme. The companies
with the certification of REC Solar Professional Installer in Indonesia are Tesaputra Adiguna,
Witraco Perdana, Gaspro Wahyu Widana, ADL Energy and Adidaya Abadi Sentosa.

3.4 Aerothermal
Currently, Indonesia does not have a suitable market for aerothermal technologies.
The Government of Indonesia has identified that traditional power generating sources will be
increasingly complemented with renewable energy (RE) and technologies in geothermal, hydro,
solar, wind and bioenergy sectors. Indonesia’s Electricity Supply Business Plan (RUPTL) for
2017-2026, prepared by the state electricity company PT Perusahaan Listrik Negara (PLN), does
not anticipate the implementation of aerothermal technologies in the near- to medium-term future.
The government also does not have any suitable laws and regulations to govern the aerothermal
market.
Local Players
There are currently no domestic companies specialising in aerothermal energy in Indonesia and
no pilot projects or pre-feasibility studies have been conducted yet.
Given the absence of the market and the lack of interest from the Indonesian government to
pursue aerothermal technologies, there are very limited opportunities for European companies.
Some technology showcasing avenues may be available by way of renewable energy trade
exhibitions in Indonesia, however it may be a while before practical implementation of these
technologies becomes a viable option in the country.
European Companies
Currently, there are no European companies that have successfully entered the Indonesian
aerothermal market.

3.5 Geothermal
Indonesia, located in the “ring of fire” volcano belt, is said to possess the world’s largest
geothermal resources. Its 29,543 MW of potential across 329 locations represents 40% of the
world’s total geothermal supplies. The country’s current installed capacity for geothermal power
is 1,438 MW, placing Indonesia third in the world behind the US and the Philippines. However,
the current levels of resource exploitation represent only 4% of the country’s potential.
Potential Energy (MWe)

No. of Total Installed
No. Island Resources Reserves
Locations Potential Capacity
Speculative Hypothetical Possible Probable Proven
1 Sumatera 97 3,091 2,408 6,992 15 380 12,886 122

2 Java 73 1,560 1,739 4,023 658 1,815 9,795 1,224
3 Bali-Nusa
Tenggara 33 301 535 1,052 - 15 1,903 12
4 Kalimanta
n 14 153 - 90 - - 243 -
5 Sulawesi 76 1,239 302 1,451 150 78 3,220 80
6 Maluku 33 532 89 800 - - 1,421 -
7 Papua 3 75 - - - - 75 -
Total 329 6,951 5,073 14,408 823 2,288 29,543 1,438

12,024 17,519
Table 17: Geothermal Resources and Installed Capacity in Indonesia (2015)
Source: LAKIP KESDM 2015
The physical location of geothermal resources across Indonesia and their lack of “tradability”
means that this power source is well-placed to assist Indonesia in improving its domestic energy
security.15
15
Geothermal is regarded as a “clean” energy, emitting up to 1,800 times less carbon dioxide than coal-fired burning plants and 1,600 less than
oil-fired burning plants. Being a renewable resource, geothermal energy is unaffected by changes in hydrocarbon prices. It is also the only
renewable source with a potential factor close to 100%.

Recognising the benefits of geothermal energy, the government has recently prioritised
geothermal in its power generation expansion plans. Under the Fast Track programmes,
geothermal is expected to account for over 3.1 GW of power by the end of 2019, mostly coming
from Independent Power Producers (IPPs).16
Until 2015, most geothermal fields have been developed by the state-owned oil company,
Pertamina, and its subsidiary PT Pertamina Geothermal Energy (PGE), in collaboration with
major oil companies. Over 90% of the current installed capacity remains in Pertamina-owned
fields.
However, while the PGE still holds the authority to develop an additional 15 fields, it has not been
allocated with the capital it needs to proceed. As a result, the market is being increasingly scouted
by private investment and power development companies.
There are currently only nine working (or concession) areas which are producing energy, but the
government has identified an additional 58 working areas, which have already been, or are likely
to be, tendered in the near future. The current geothermal working areas are located in North
Sumatra, West Java, Central Java, North Sulawesi, Lampung and Nusa Tenggara Timur
provinces.
Installed
Geothermal Working Power Turbine Capacity
No. License Holder Developer Capacity
Area Location Plant (MW)
(MW)
PT Pertamina
Sibayak – Sinabung,
1. Geothermal PGE Sibayak 12 1 x 10 2MW
North Sumatra
Energy (“PGE”)
JOB –
Chevron 3 x 60
Cibeureum – Parabakti,
2. PGE Salak 376.8
West Java Geothermal 3 x 65.6
Salak, Ltd
16
FinerGreen (2017). Renewables Overview: Indonesia. Link: www.finergreen.fr/wp-content/uploads/2016/07/September-2016-Indonesia.pdf

Installed
Geothermal Working Power Turbine Capacity
No. License Holder Developer Capacity
Area Location Plant (MW)
(MW)
JOB – Star
Energy 1 x 110
Geothermal Wayang
Pangalengan, West Java PGE 55
Windu 1 x 117
Wayang
3.
Windu Ltd
PT Geo Dipa Energi GDE 1 x 55

Pangalengan, West Java Patuha 55
(“GDE”)
1 x 30
Kamojang – Darajat, West 2 x 55

PGE PGE Kamojang 235
Java 1 x 60
1 x 35
4.
JOB –
Chevron 1 x 55
Kamojang – Darajat, West Geothermal 1 x 94
PGE Darajat 270
Java
Indonesia, 1 x 35
LTD
Dataran Tinggi Dieng, GDE 1 x 60

5. GDE Dieng 60
Central Java
Lahendong – Tompaso, PGE 4 x 20

6. PGE Lahedong 80
North Sulawesi
7. Ulubelu, Lampung PGE PGE Ulubelu 110 2 x 55
PT PLN Geothermal PLN G 4 x 2.5

8. Ulumbu, NTT Ulumbu 10
(“PLN G”)
9. Mataloko, NTT PLN G PLN G Mataloko 2.5 1 x 2.5
Table 18: Installed Geothermal Capacity as of 2015 by License Holder and Developer
Source: Statistik EBTKE 2015 & LAKIP KESDM 2015
In addition to nine producing geothermal working areas, there are currently 28 areas under the
exploration stages, 13 of which have active exploration projects and 15 are within constrained
exploration phases. Additional 30 working areas with over 1,630 MW of potential power
generation capacity are being prepared for auctioning process.

Figure 19: Status of the 67 Geothermal Working Areas
Source: Rencana Strategic Ditien EBTKE 2015-2019
With only 1,438 MW of current installed capacity, the Government plans to achieve around
3,200 MW of installed geothermal power capacity by 2019, mainly via following additions to its
existing geothermal capacities:
2015 2016 2017 2018 2019
Installed capacity – beginning of year 1,404 1,439 1,713 1,977 2,611
Planned Additions:
Kamojang Unit 5 35

2015 2016 2017 2018 2019
Ulubelu Units 3 and 4 55 55
Lahendong Units 5 and 6 20 20
Sarulla Units 1, 2 and 3 114 119 119
Karaha Bodas Units 1 and 2 30 60
Lumut Balai Units 1, 2 and 3 55 55 55
Muaralaboh 70
Tulehu 20
Rantau Dedap 220
Rajabasa Units 1 and 2 110 110
Hululais Units 1 and 2 55 55
Dieng Units 2 and 3 55 55
Patuha 110
Sungai Penuh 55
Cisolok Cisukarame 45
Kotomobagu 40
Construction of geothermal plants 35 274 264 634 585

Installed capacity – end of year 1,439 1,713 1,977 2,611 3,196
Table 19: Government Plans for Additions to Geothermal Capacity, 2015-2019

Source: RENSTRA KESDM 2015-2019
Given that the Government’s target for the new and renewable energy share of the power
generation fuel mix is 23%, the Government is planning for the geothermal energy to reach
approximately 7,500 MW in installed capacity by 2025. Such steep increase in geothermal power
capacity is estimated to require an investment of funds in excess of US$ 25 billion and roughly
300 MW of yearly additions (or drilling around 60 new wells, annually). While the progress so far
suggests that this may be an ambitious target, such targets open up many opportunities for private
sector participation.

Recent developments within the regulatory field are also encouraging for geothermal energy
development. The Ministry of Finance (MoF) has recently taken a significant step in setting up a
US$ 300 million Geothermal Fund in order to alleviate some of the initial exploration risks which
often deter private developers from investing in geothermal energy exploration in Indonesia.
Geothermal law was also revised in 2014 to allow geothermal exploration and exploitation in
protected forest areas – locations with the majority of viable geothermal resources. Furthermore,
tendering authority has been shifted from local to central government in order to simplify the
application processes, and MoF and MEMR have begun consulting with each other to formulate
a set of ceiling prices to encourage competition and the lowest possible process within the
attractive range to developers. In January 2017, the Government has also introduced new,
revised Feed-in Tariff (FiT) for geothermal power and procurement schemes under its Regulation
No. 12/2017. The Decree established a reference tariff for geothermal power projects and the
developers are now permitted to negotiate with the PLN on matters relating to the development
of the transmission interconnection between the plants and the PLN grid on a Business-to-
business (B2B) basis.
With new policies in place and the increased flexibility for B2B negotiation on transmission
matters, projects that were long delayed are now starting to move forward. For example, the
330 MW Sarulla geothermal project in North Sumatra – initiated in 1990 and developed by a
consortium of investors from Japan, the US and Indonesia – have finally achieved financial
closure. Its first 110 MW unit has commenced commercial operation in March 2017.
The improving regulatory environment is to a large extent driven by the need for the private sector
participation in geothermal power development. According to the PLN, over half of the investment
funding needed for the period of 2015-2019 for geothermal development in Indonesia has been
allocated to private sector stakeholders.

Figure 20: The Sarulla Geothermal Power Plant
Source: Global Geothermal News
Local Players
PT Medco Energi International (PT Medco)
PT Medco Energi International (PT Medco) owns and operates power plants in Batam Island and
Palembang. The company develops and operates small-to-medium size independent power
projects in Indonesia; and provides power project services with business activities, including
operating and maintenance power plant services; as well as project engineering, procurement,
and construction (EPC) services. It focuses on small to medium independent power producers in
domestic and international markets. The company was founded in 2004 and it is based in Jakarta.
It operates as a subsidiary of PT Saratoga Power, which is the largest national listed energy
company in Indonesia.
PT Medco, together with its partner PT Saratoga Power, has conducted power development
business since 2011 via joint venture PT Medco Power Indonesia (MPI). Medco Power is

developing renewable projects comprising of mini-hydro and geothermal power plants in Sarulla
in North Sumatra and Ijen in East Java. In 2006, it won a contract to develop 3 x 110 MW of
Sarulla geothermal power project. Construction of Sarulla Geothermal Power Plant project has
started in early 2014 and once completed it would be the largest single-contract of the geothermal
power in the world. Together with partners Itochu, Ormat and Kyushu Electric (Sarulla
Consortium), it is currently in the final phase of an Energy Sale Contract (ESC) negotiation with
PLN, as well as the negotiation with PT Pertamina Geothermal Energy (PGE) for a Joint Operating
Contract (JOC). The commercial operation of the first 110 MW unit was slated for 2016 but it
started operations in 2017. The remaining two units are to be finished by the end of 2017 and
2018, respectively.
Figure 21: PT Medco Ijen Project at the Exploration Stage

Source: Medco Power Indonesia
In June 2011, PT MPI has also secured a contract from the Provincial Government of East Java
for the development of a 2 x 55 MW geothermal power plant at Ijen. The geology and geophysics
study was conducted in 2012. Currently the company is preparing to drill an exploration well at
the site. It is also negotiating a Power Purchase Agreement with PT PLN.

PT Supreme Energy
PT Supreme Energy is an Indonesian pioneer of geothermal exploration and development.

The company carries out geothermal explorations, exploitations and development. Since its
establishment in 2007, Supreme Energy has conducted four pre-feasibility studies in Sumatra
with success in three areas. Following “preliminary survey” stages, it successfully secured three
geothermal permits in Sumatra with support and participation of the international partners via joint
ventures.
The company aims to develop at least 220 MW of geothermal capacity in Rajabasa Project,
86 MW for Rantau Dedap Project Stage I, and 80 MW for Muara Laboh Project Stage I.
The projects for Supreme Energy are expected to cost around US$ 230 million and the
commercial production should start in 2019. It is funding the early construction through internal
cash, however it is exploring international bank funding for the EPC phase.
Figure 22: Drill site at Muara Laboh Project, West Java

Source: Engie
The projects are developed in a consortium with international companies, such as Sumitomo
Corporation, Marubeni, and Engie, under the 30-year Power Purchase Agreement.

PT Supreme Energy, Engie and Sumitomo Corporation are the shareholders of the Supreme
Energy Muara Laboh and Supreme Energy Rajabasa project ventures. As for Rantau Dedap
project, Marubeni Corporation has later joined the consortium as the newest shareholder.
PT Star Energy
PT Star Energy is an independent energy company, which engages in the production and
exploration of oil, gas and geothermal energy with assets in three operating sites: Darajat, Salak
and Wayang Windu. With a total installed capacity of 875 MW, Star Energy is the largest
geothermal operator in Indonesia and the third largest in the world. It was founded in 2003 and it
is based in West Jakarta, Indonesia. The company operates as a subsidiary of PT Barito
Pacific Tbk.
In 2004, Star Energy acquired the 110 MW Wayang Windu geothermal generation facility. Via its
subsidiary, Wayang Windu Power Generation, which is managed under a Joint Operation
Contract with Pertamina, the company has the right to develop up to 400 MW of geothermal
resources within the 12,960 hectares contract area over a period of 42 years. While the first
geothermal unit (110 MW) in the area was completed in 1999, the company opened the second
Wayang Windu unit in 2009, which increased the total generation capacity to 227 MW. Planning
is now underway to expand Wayang Windu further through the addition of a third unit with
generation capacity of 127 MW.
A consortium led by Star Energy has completed an acquisition of two geothermal power plants
from global energy giant Chevron. The geothermal power plants sold to Star Energy consortium
are the 370 MW power plant in Mount Salak in Bogor, West Java, and 240 MW geothermal power
plant Darajat in Garut, West Java.
Commercial
Project Name Unit Capacity Operation Sales Expiry date
Date
Unit 1 110 MW 2000 Electricity 2030

Wayang Windu

Commercial
Project Name Unit Capacity Operation Sales Expiry date
Date
Sub-total 227 MW
Unit 1-2 2x60 MW 1994 Steam 2040

Salak Unit 3 60 MW 1997 Steam 2040
Unit 4-6 3X65.6 MW 1997 Electricity 2040
Sub-total 377 MW
Unit 1 55 MW 1994 Steam 2041

Darajat Unit 2 95 MW 2000 Electricity 2041
Sub-total 271 MW
GRAND TOTAL 875 MW

Table 20: Overview of Star Energy’s Operating Geothermal Portfolio
Source: Star Energy, Mirae Asset Sekuritas Indonesia
PT Geo Dipa Energi (GDE)
PT Geo Dipa Energi operates as a geothermal energy company with offices in Bandung and
Wonosobo. It engages in exploration and exploitation of geothermal source area, power plant
development, and distribution of geothermal products in the form of electrical energy to the
electrical transmission interconnection networks. Founded in 2002 as a joint venture of Pertamina
and PLN to manage Dieng and Patuha geothermal fields, PT Geo Dipa Energi operates as a
subsidiary of PT Pertamina (Persero). In 2017, the company changed its name to PT Geothermal
Nusantara, following its expansion into geothermal energy processing.
The company announced in 2017, that it will soon manage two new geothermal working areas in
Umbul Telomoyo and Arjuno Welirang (West Java) aside from its existing sites in Dieng Plateau,
Central Java, and Patuha, West Java.
The company is pushing forward the development of its Dieng and Patuha geothermal power
projects, which could potentially add up to 275 MW capacity by 2021, when the projects start
operation.

Figure 23: Patuha Geothermal 1 x 55 MW Power Plant in Bandung, operated by PT GDE
Source: Takenaka Doboku Indonesia
In 2014, GDE has also successfully completed the construction of 1 unit of PLTP in Patuha with 60 MW
capacity. The company has plans for additions of PLTP Patuha units 2 and 3, each with 55MW of
capacity. GDE’s long-term plan is to develop up to 1,100 MW of geothermal energy by 2030.
Indonesia possesses around 40% of the global geothermal reserves, which remain largely
untapped. Under the Fast Track Programmes, geothermal energy is expected to amount to
3.2 GW of power capacity by 2019 and 7.5 GW by 2025, mostly developed by Independent Power
Producers (IPPs). The Government of Indonesia has also devoted US$ 375 million from the 2017
state budget for geothermal exploration, which accounts for half of the total renewable budget.
As the geothermal market opens up for IPPs, new opportunities are becoming available at all
stages of geothermal power development – exploration, exploitation, production and provision of
equipment. Some of the best prospects for European companies lie in the following avenues:
 Exploration and exploitation of new geothermal resources
 Building and maintaining of geothermal power plants

 Export opportunities for geothermal equipment and turnkey solutions
 Energy efficiency optimising solutions
 Cost-effective solutions for resource confirmation
 Skills development and training
Exploration and exploitation of new geothermal resources
At the moment, the MEMR is auctioning 30 geothermal working areas through open tenders or
direct appointment of state-owned enterprises (PGE, PLN G and GDE). These working areas are
expected to be tendered in 2016-2017, or at a later stage, and they offer good prospects for
geothermal exploration and exploitation companies to enter the Indonesian geothermal market.
European companies with experience in greenfield and brownfield project development are likely
to find opportunities to compete for the geothermal exploration and exploitation programmes in
the following working areas:
Block Capacity (MW) Estimated Status

Investment (US$
million)
Bonjul 60 240 Open
Gunung Talang Bukit Kili 20 80 Re-tender in 2016

Hunung Endut 40 160 Open
Candi Umbul Telomoyo 55 220 Assigned to GDE
Gunung Wilis 20 80 Tender in 2016

Gunung Arjuno Wlirang 110 440 Assigned to GDE
Gunung Pandan 10 40 Open
Gunung Gede Pangrango 55 220 Assigned to PGE
Songgorit 20 80 Open
Sipoholon Ria-Ria 20 80 Open
Simbolon Samosir 110 440 Tender in 2016
Graho Nyabu 110 440 Tender in 2016
Suwawa 20 80 Open
Sembalun 20 80 Assigned to PLN G

Block Capacity (MW) Estimated Status
Investment (US$
million)
Oka-Ile Ange 10 40 Open
Bora Pulu 40 160 Open
Gunung Hamiding 10 40 Tender in 2016
Songa Wayaua 5 20 Open
Gunung Geureudong 110 440 Open
Gunung Galunggung 110 440 Tender in 2016
Gunung Ciremai 110 440 Open
Way Ratai 55 220 Optima Nusantara Energy & Enel
Green Power SPA won the tender
Gunung Lawu 165 660 PGE won the tender
Kepahiang 110 440 Tender in 2016
Danau Ranau 110 440 Tender completed – no winner
Marana 20 80 Re-tender in 2016
Seulawah Agam 55 220 Tender in 2016
Telaga Ranau 10 40 Tender in 2016
Ciater 30 120 Re-tender
Atedai 10 40 Re-tender
Table 21: Auctions for 30 Geothermal Working Areas (2016-2017)
Source: Statistik EBTKE 2015; Bisnis Indonesia 19 March 2016; Bisnis Indonesia 30 December 2015; Investor Daily 30 March
2016; Investor Daily 18 January 2016; Bisnis Indonesia 29 March 2016; Jakarta Post 3 March 2016; Jakarta Post 20 April 2016;
Bisnis Indonesia 10 May 2016; Investor Daily 4 July 2016; Detik Finance 13 November 2015
Building and maintaining of geothermal power plants
Private operators have previously found success in Indonesian geothermal market through
project financing strategy tools, such as build-own-operate (BOO), build-own-operate-transfer
(BOOT), and build-own-transfer (BOT). As these initiatives have significantly increased the speed
of geothermal development in the country, the government is keen to explore additional projects
with similar strategies. Opportunities, therefore, exist for European companies in power plant and
small-scale power plant development under the aforementioned strategies. In addition, as the
number of geothermal power plant projects increases, European companies may also find
opportunities in operations and maintenance services, including geothermal drilling and

installation, electricity distribution, Engineering, Procurement and Construction (EPC) services,
as well as electricity and plant maintenance consultation.
Export opportunities for geothermal equipment and turnkey solutions
Indonesia is expected to spend the next few years developing and constructing geothermal power
plants across the country, creating significant opportunities for suppliers of geothermal
equipment. Exports of geothermal related goods and services to Indonesia have reportedly
increased significantly over the past few years and the upward trend is likely to stay at least until
2019.
Indonesia is also experimenting with new and combined technologies, such as flash cycle, dry
steam and binary cycle geothermal power plants. As a result, Indonesia is likely to witness high
demand for a diverse mix of geothermal turbine types and combined energy technologies. Given
the EU’s strong geothermal market with advanced technological solutions, European companies
are well placed to offer such turnkey systems for exportation to Indonesia.
Energy efficiency optimising solutions
As some of the lower temperature geothermal sites are starting to be explored for energy
production, there is a strong demand for energy extraction optimisation solutions.
The engineering sector may find opportunities to undertake a number of equipment and process
development projects, targeted at more efficient utilisation of geothermal resources. Currently,
there is a particular focus on binary cycle units, as demand for smaller scale and lower
temperature resource developments is increasing.
In addition, avenues for scaling up of existing geothermal plants also exist for qualified European
companies. As the existing power plants are seeking to improve site efficiency, companies with
expertise in scaling up single site utility may find their services in demand across Indonesia.

Cost-effective solutions for resource confirmation
Additional opportunities may be available for companies which can provide solutions to finding the
most cost-effective way for quick resource confirmation. Given the risks that geothermal power
developers undertake when exploring potential resources, such technologies would be highly
valued in a growing Indonesian geothermal market. Cheaper hard-rock, high-temperature and high-
pressure drilling technologies as well as new drilling methods are some of the avenues for entry.
Skills development and training
Indonesia is also facing a stiff competition for staff given the lack of Indonesians trained in
geothermal skills. The lack of qualified human resources means that there is high demand for
skilled workers for geological explorations and trained operators of geothermal plants.
Opportunities may be available for consultancies to provide expertise and/or training for local
staff. As the government is seeking to improve domestic geothermal market conditions, it is also
likely that companies, which commit to developing local skillset, may find it easier to compete for
existing greenfield and brownfield projects.
European Companies
Enel Green Power (EGP)
Enel Green Power (EGP) is an Italian multinational renewable energy corporation, which
generates electricity from renewable resources across six continents. The company was formed
as a subsidiary of the power generation firm, Enel, in December 2008, grouping Enel’s global
renewable energy interests together, but it was absorbed back into the general Enel Power
company in 2016.
EGP started its presence in the Indonesian renewable market in 2016, after signing a
Memorandum of Understanding (MoU) with the Indonesian power utility company PT PLN
(Persero) to cooperate on sustainable power generation in Indonesia. The MoU marked an
important partnership and the EPG’s commitment to develop an operational presence in the

country. The company also signed an MoU with Japanese Marubeni Corporation to evaluate
possible cooperation opportunities in renewable energy projects in the Asia-Pacific region.
More recently, EPG and Indonesia’s PT Optima Nusantara Energi (PT ONE) have been awarded
the exploration and development license for the 55 MW Way Ratai power project in Lampung.
Way Ratai will be the first geothermal project developed by EGP in the country and marks its full
entry into the geothermal sector. It is expected that EPG will invest up to US$ 22 million in the
exploration phase. Based on the results, the project construction is expected to be completed and
commissioned by 2022. Electricity generated by the plant will be sold to the PT PLN under a
30-year Power Purchase Agreement.
Engie
Engie (known as GDF Suez prior to April 2015) is a French multinational electric utility company,
which operates in the fields of electricity generation and distribution, natural gas, nuclear and
renewable energy. It is the leading producer and supplier in Europe of geothermal energy for
heating and cooling of residential and commercial facilities. It develops its business with
innovative solutions largely based on its expertise in four key sectors: renewable energy, energy
efficiency, LNG and digital technology.
In 2016, Engie took a major step in the implementation of its transformation plan to redesign and
simplify its portfolio. The company sold its 13 GW of power generation assets, including the 2 GW
PT Paiton coal-fired power plants in Indonesia. The divestment was in line with Engie’s global
strategy to move away from fossil fuel to clean and green energy technology.
In turn, the company began its investment in renewable energy, especially in geothermal plant
development. Its first major projects are Muara Laboh, Rajabasa and Rantau Dedap geothermal
power plants which are developed in a consortium including PT Supreme Energy, Sumitomo
Corporation and Marubeni Corporation.
In January 2017, Engie reached the financial close for the Phase I of the Muara Laboh geothermal
project, the Group’s first high temperature geothermal power generation plant in the world. With

commissioning planned in 2019, the first phase will generate 80 MW of emission-free electricity,
the equivalent of the energy consumption of around 120,000 households.
With the strong expertise in geothermal, wind and solar sectors, Engie expects to develop its
efficiency energy business and facility management services in Indonesia. Through its subsidiary,
Storengy, the Group has all the drilling and underground expertise to manage such projects.
The company has a presence in Indonesia for over 60 years.
Alstom Power
Alstom Power provides clean power technologies, including power generation services, support
and equipment for global utility and industrial energy markets. It designs, manufactures and
supplies products and systems in gas, coal, wind, hydro and geothermal sectors. The French
company was incorporated in 1999 and operated as a subsidiary of Alstom Group until 2015 when
it was acquired by GE Group.
The company has nearly 50 years of strong presence in Indonesia with offices in Jakarta,
Bandung and Surabaya. Alstom in Indonesia has made strategic partnerships with strong local
players to bring advanced technologies to the power generation market in the country. It has been
awarded over 100 contracts, covering engineering, manufacturing, project management,
commissioning and services.
In 1995, PT PLN granted Alstom a contract to develop a 20 MW geothermal power plant unit
under the supervision of the Compagne Française de Géothermie (CFG). The contract required
Alstom to build a turnkey geothermal power generation unit. The company built its first geothermal
power plant in 2000 in Lahendong, North Sulawesi. The 20 MW unit began its commercial
operation in 2001 after an extended construction period.

Figure 24: Karaha Project Site for Karaha Plant by Alstom for Pertamina
Source: Think Geoenergy / Hawkins
In 2015, Alstom has been awarded an EPC contract worth over EUR 61 million by PT Pertamina
Geothermal Energy (PGE) to supply and install a 30 MW geothermal plant for the Karaha Power
Plant in West Java, Indonesia. Alstom will design, supply, install and commission the entire power
plant.
Ansaldo Energia Group (AEG)
Ansaldo Energia Group (AEG) is an Italian power engineering company. AEG is a leading
international player in the power generation industry. It offers integrated models for turnkey plants
and components (gas turbines, steam turbines, generators and microturbines) for energy sector.
The Group operates on international markets for customers ranging from public administration to
Independent Power Producers (IPPs) and industrial clients. It covers the entire power generation
spectrum with a combination of plant engineering, manufacturing and service activities.
The AEG made its debut in Indonesia in 2015 when it signed two US$ 88 million contracts in the
geothermal sub-sector. The first covers the supply of two AE94.2 gas turbines and two air-cooled
generators with the relative auxiliary systems for the 500 MW Grati-Pasuruan combined cycle
plant in eastern Java for Lotte E&C. The second contract covers the total refurbishment of a
30 MW geothermal plant in Kamojang, western Java.

Figure 25: Kamojang Geothermal Complex, West Java, Indonesia
Source: Think Geoenergy
The company is acting as the EPC contractor and it is supplying the geothermal steam turbine
and relative air-cooled generator for PT PLN subsidiary Indonesia Power. The two contracts
increase the total geothermal output installed by Ansaldo Energia in the area to 270 MW.
To supervise the activities and to seize future opportunities in the market with promising
prospects, the company has opened a branch office in Jakarta in 2016.

3.6 Hydrothermal and Ocean Energy
Indonesia is the world’s largest archipelago and it has one of the greatest potentials for ocean
energy in the world. With 54,716 km of coastline, the country is estimated to have between 10 MW
and 35 MW of available ocean energy per kilometre of coastline.17
Main ocean resources in Indonesia include tidal stream, waves and ocean thermal energy, which
amount to a total commercial potential of 61 GW:
Theoretical potential (GW) Commercial potential (GW)
Waves 140 2
Tidal Stream 290 18
OTEC 4,250 41
Table 22: Theoretical and Potential Power Generating Capacity of Ocean Energy In Indonesia
Source: Ernst & Young (2016) Ocean energies, moving towards competitiveness: a market overview
Ocean energies often offer some benefits when compared to solar or onshore wind, as they
provide better predictability of production and do not require onshore land acquisition – issues
that are critical in a country like Indonesia. Despite this major potential, Indonesia’s ocean energy
sector has been characterised by only few pilot projects so far.
Project proponents Technology Location Capacity (MW) Development stage

Platform built and on
Ponte di Archimede
site, waiting for a
SpA (Italy) – PT Tidal stream East Lombok island 0.18
budget to deploy at
Walinusa
sea
PLN – Institut
Early stage of
Teknologi Sepuluh Wave power Madura – East Java 0.02
development
Nopember
Early stage of
BPDP-BPPT ILH OTEC Flores island 0.01
development
Table 23: Ocean Energy Pilot Projects in Indonesia as of 2016
Source: Ernst & Young (2016) Ocean energies, moving towards competitiveness: a market overview
17
US Department of Commerce (2010). Renewable Energy Market Assessment Report: Indonesia

Recent developments in Indonesia, however, suggest that ocean energy may experience a more
rapid growth in the upcoming years. As the country embarks on its ambitious strategy to achieve
23% of renewables in its energy mix by 2025, ocean energy is increasingly recognised as a potential
supplement to Indonesia’s power supply. Although the estimated share of ocean energies in the
renewable energy portfolio is estimated to remain below 1%, the government is expected to invest
approximately EUR 8 million over the next five years to accelerate the segment growth.18
In addition, the state-owned company, PLN, has recently published its power supply business
plan for the period of 2015-2024. The document comprises a development plan for new and
renewable sources of energy, encompassing mini hydro and geothermal power plants, wind
turbines, biomass, biofuel, solar and marine energies. In regard to ocean energies, PLN is
expecting to increase the installed capacity up to 5 MW by 2020, and up to 10 MW by 2024,
mainly via small-scale pilot tests on several ocean technologies in the form of R&D projects
(similar to those conducted in Madura).19
On the research and development side, several actors are actively involved in promoting ocean
energy in Indonesia:
 The Indonesian Ocean Energy Association (INOCEAN) is in charge of promoting the

development of ocean energies through research and advocacy;
 International development agencies, such as France’s Agence Francaise de Development

(AFD) and British Department for International Development (DFID), support the development
of ocean energies in Indonesia by organising and funding pilot programmes (e.g. AFD has
granted EUR 500,000 for Ocean Thermal Energy Conversion (OTEC) projects);
 Indonesian and foreign private technology providers are starting to initiate pilot projects and
partnerships with local actors (e.g. Ponte di Archimede SpA and PT Walinusa; Sabella, PLP
and Meindo; Bombora Wave Power and Anoa Power). Via such collaborations, foreign
18
Ernst & Young (2016). Ocean energies, moving towards competitiveness: a market overview.
19
PLN (2015). Electricity supply business plan

technology providers are aiming to adapt their products to the local content before bringing
them to the market.
Although the market for ocean technologies remains largely unexplored, recent major
announcements by technology providers and development agencies are expected to boost the
development of the ocean energy sector in Indonesia. These announcements include:
 The French company Sabella, which signed in February 2015 a Memorandum of

Understanding (MoU) with Indonesian companies PLP and Meindo to commercialise its D10
submarine tidal turbines;
 The Australian company Bombora Wave Power, which has also signed in June 2015 a
technology evaluation agreement with Indonesian company Anoa Power, in order to
manufacture and distribute its Wave Energy Collector in the country;
 The British company SBS, which is engaging in a technology transfer partnership with PT
Pertamina;
 The French company Akuo Energy, which has signed an agreement in 2015 with PT
Pertamina to develop renewable energy projects in Indonesia, including OTEC; and
 The British company Atlantis, which has partnered with SBS in 2016 to develop ocean energy
technologies in Indonesia.
Together with the Indonesian Ministry of Energy (EBTKE), PLN, DFID and AFD have also initiated
a programme to identify appropriate sites to develop tidal stream facilities and select technology
providers to develop these facilities. A request for proposals was expected to launch at the end
of 2016.
On the other hand, although there is an increasing interest to develop ocean energies, the
government has yet to design a Feed-in Tariff (FiT) in order to incentivise ocean energy IPPs to
deliver bankable projects with a fair return on investment.

Local Players
Anoa Power
Anoa Power is an Indonesian hydropower developer. In June 2015, the company signed a
technology evaluation agreement with Australian Bombora Wave Power. Under the agreement,
Anoa Power will evaluate suitable deployment sites for Bombora marine hydrokinetic devices
(MHK) while Bombora will confirm electricity generation capability across these locations.
The agreement is a precursor to the formulation of a manufacturing and distribution arrangement
for Bombora Wave Energy Collectors (WEC) into Indonesia.
Figure 26: Bombora mWave Converter

Source: Bombora Wave Power
PT Arus Indonesia Raya (AIR)
PT AIR is an Indonesian company focused on marine renewable energy, which is spearheading

the domestic marine tidal energy industry in the country. PT AIR’s manufacturing facility
manufactures tidal turbine products for use in the country and throughout South East Asia.
The company works closely with marine consulting and coastal engineering research firm PT
ASR, which has been actively surveying and scouting suitable locations for tidal energy projects
throughout the Indonesian archipelago.

The company has also partnered with OpenHydro, company, which specialises in the design and
manufacture of marine turbines to generate renewable energy, and over the next three years the
two companies plan to develop up to twenty 2 MW turbines in a pilot tidal array in the Bali strait,
which will supply power directly to state energy company Pertamina.
PT Meindo
PT Meindo is an Indonesian industrial and construction company, which specialises in providing

construction sites, marine equipment and material, and transportation and installation for the oil
and gas industry. More recently, Meindo has partnered with Sabella and PLP in 2015 to develop
ocean current energy in Indonesia. Together they aim to produce and deploy from 100 kW to
2,500 kW turbines to harness marine currents.
Ocean covers nearly 70% of the Indonesia’s archipelago and represents an enormous energy
generation opportunity in the form of wave, wind, tidal, ocean current and thermal resources.20
Indonesia’s marine area has the potential to generate up to 61 GW commercial power via these
channels and most of the resources are currently unutilised. This offers great avenues for private
developers to tap into the Indonesian ocean energy market in its early days.
Based on the increasing interest from the Indonesian government to accelerate the development
of ocean energy, the private sector is keen to address this nascent market. European companies
with their technological advancements would be well positioned to offer their products and
innovations in ocean power plant development, storage and pioneering grid solutions.
Ocean energy in Indonesia can be harnessed via Ocean Thermal Energy Conversion (OTEC),
chemo kinetics as well as tide and wave conversion technologies and the government is keen to
support interested IPPs. There are currently at least 11 known areas with potential ocean energy
20
http://www.sciencedirect.com/science/article/pii/S1876610215000363

resources that have proven commercial viability for projects. Some of the potential entry points
for European companies exist in:
 Wave energy development
 Tidal energy development
 Ocean thermal energy (OTEC) development
 Manufacturing and export of ocean energy technologies and components
Wave energy development
Wave energy potential spreads across Sumatra, Java and Nusa Tenggara seas. The highest
potential is located in the west of Sumatra with 20 kW/m wave length, while the outskirts of
southern Java, eastern Kalimantan and southern Sulawesi are estimated to have the potential of
15 kW/m wave length. These areas offer good opportunities for foreign investors to engage in
research and development initiatives and deploy their technologies via pilot projects.
Figure 27: Potency of Wave Energy in Indonesia

Source: P3GL & ESDM 2011

Tidal energy development
Meanwhile, the tidal energy potential spreads across the southern Java, Nusa Tenggara,
Sulawesi and southern Papua, and has the average sea surface difference of 3-5 metres
(between high and low tide). These areas have sufficient tidal potential to support power
generation and provide bankable opportunities for private developers. Some of the areas for
consideration are the R&D initiatives, pilot projects and small-to-medium scale tidal energy power
plant development.
Figure 28: Potency of Tidal Energy in Indonesia’s Marine Territory

Source: P3GL & ESDM 2011
Ocean thermal energy (OTEC) development
Ocean thermal energy also offers huge potential to develop OTEC technologies, especially for
application in tropical areas. There are at least six potential areas for OTEC application, including
south of Sumatra (A) in areas such as Siberut and Nias Islands, North of Sulawesi (B), North of
Maluku (C), such as Morotai Island, South of Maluku (E), such as Taliabu, Buru and Seram
islands (F). Given the fact that the subsector is very new to Indonesia, there are opportunities for

European companies to export their equipment and turnkey solutions for pilot projects as well as
to cooperate with local stakeholders on research and development initiatives.
Figure 29: Potency of OTEC in Indonesia’s Marine Territory

Source: Koto, J. (2016). Potential of Ocean Thermal Energy Conversion in Indonesia
Manufacturing and export of ocean energy technologies and components
Manufacturing of significant components, such as large turbine support structures and marine
base facilities as well as logistics, is also not readily available locally. This presents an enormous
opportunity for the EU companies to seize, including the avenues for investment in ocean energy
infrastructure and industry as well as the massive potential to export its products and expertise.
The EU is at the forefront of technology development, with about 50% of tidal energy and about
60% of wave energy developers being located in the EU, and it is positioned well to offer both the
technology and knowledge transfer to the growing Indonesian ocean energy market.

European Companies
Sabella
Sabella is a French company, which develops reliable and efficient tidal turbine technologies to
supply turnkey energy solutions worldwide. The company signed in February 2015 a
Memorandum of Understanding (MoU) with Indonesian PLP and Meindo to commercialise its D10
submarine tidal turbines via upcoming tidal wave projects. Sabella is in charge of engineering and
manufacturing of the turbines, while PLP is to provide technical assistance and project
management. Meindo is expected to take over the construction phase.
Akuo Energy
As the leading independent renewable energy producer in France, Akuo Energy specialises in
the implementation of electricity generating units from renewable resource: wind, solar, hydro and
biomass. It develops, finances, constructs, and operates renewable energy generation power
plants in France and abroad. The company was founded in 2006 and today it has subsidiaries in
France, the US, Uruguay, Croatia, Poland, United Arab Emirates, Indonesia and Turkey.
The company entered the Indonesian ocean energy market in 2015, when it signed the
agreement with PT Pertamina to develop renewable energy projects in Indonesia, including
OTEC. In April 2016, PT Pertamina, French company Akuo Energy and French development
agency AFD have signed an additional agreement to develop solar PV energy, wind energy and
OTEC. AFD contributed with a EUR 500,000 grant specifically dedicated to the development of
OTEC in Indonesia. A first phase of the project will consist of the identification of the most
appropriate sites to develop OTEC projects.
SBS
SBS is a UK-based international renewable energy project developer with international branches,
including a branch office and IPP in Jakarta. The company is an independently-owned business
which is still operated by its founder, Group Chairman and CEO, Michael J. Spencer. SBS delivers

the full range of marine and subsea design and development engineering consultancy services,
more recently, in the area of ocean energy renewable energy generation projects.
The company established its first South East Asian branch office, SBS Indonesia, in Jakarta,
in 2004. Subsequently, offices in Thailand and Malaysia were opened.
After more than three years of research, SBS completed a study of the potential for commercial
scale tidal arrays in the archipelago and submitted detailed feasibility studies to PLN and the
government. This was followed by the signing of a technology transfer agreement with PLN to
develop the first three offshore sites for exclusive development by SBS in the eastern archipelago.
SBS is now working on the launch of the first ocean energy technology at a commercial scale in
Indonesia.
The first of the three sites will be developed with a 150 MW tidal array power generation facility
at a privately funded cost of US$ 750 million. After the launch of this first facility, two other facilities
will be built on other sites. In order to sell produced electricity, the company incorporated PT SBS
Energi Kelautan (which will become the first ocean energy Independent Power Producer with
100% Indonesian ownership), and signed an agreement between PT Pertamina and PT SBS
Energi Kelautan for energy supply to the national grid.
Atlantis Resources Limited
Atlantis Resources is a British vertically integrated marine renewable power company developing
tidal power generation technology for commercial deployment globally. Atlantis works with the
industry to provide turbine technology solutions, greenfield project origination, site selection,
resource assessment and array optimisation consultancy, offshore installation and completion
management, as well as operations and maintenance to governments, utilities and power
companies worldwide.
In 2016, the company has signed a Preferred Supplier Agreement with SBS for the supply of
turbines, engineering services and equipment for a 150 MW tidal stream array in Lombok,
Indonesia. The project will be supported via a 25-year power purchase agreement with PT PLN.

Atlantis is planning to establish a dedicated local facility for turbine assembly, testing and
maintenance and a local turbine manufacturing facility once aggregate orders for turbines exceed
100 units in Indonesia.
Figure 30: First MeyGen Turbine Deployment

Source: Atlantis Resources

3.7 Hydropower
Hydropower is currently the single largest source of renewable power in Indonesia, accounting
for 6% of generation in 2015 and is expected to grow to 10.4% in 2025.21 The country’s technical
hydropower potential is estimated at around 75,000 MW, with untapped resources concentrated
on the islands of Sumatra, Java and Sulawesi, ranking Indonesia among the top six of countries
with unutilised hydropower potential.22
Country Undeveloped (GWh/year) Total Potential (GWh/year) Current Utilisation (%)
Russia 1,509,829 1,670,000 10%
China 1,013,600 2,140,000 41%
Canada 805,111 1,180,737 32%
India 540,000 660,000 21%
Brazil 435.542 817,600 48%
Indonesia 388.289 401,646 3%

Table 24: Top 6 Countries by Unutilised Hydropower Potential
Source: World Energy Council (2016). Hydropower
According to the Directorate General of New Renewable Energy and Energy Conservation,
the existing hydropower resources are distributed in Indonesia across the following locations:
21
PwC (2016). Power in Indonesia. Link: https://www.pwc.com/id/en/energy-utilities-mining/assets/power/power-guide-2016.pdf
22
IHA (2016). Indonesia. Link: https://www.hydropower.org/country-profiles/indonesia

Figure 31: Hydropower Potential in Indonesia
Source: RENSTRA DITJEN EBTKE 2015-2019
The state-owned utility PT PLN has recently identified 96 potential hydropower sites for
commercial hydropower energy development. Of those locations, about 60% will be developed
by PLN, while the remaining 40% are expected to be offered to independent power producers
(IPPs). According to the Ministry of Energy and Mineral Resources (MEMR), these sites have the
commercial potential to deliver up to 12,800 MW of energy in addition to the current installed
hydropower capacity of 5,705 MW.
The hydropower development in Indonesia is driven primarily by the government’s target to

increase the share of renewables in the country’s total energy mix up to 23% by 2025, and the
need to ensure a more stable power supply to the country’s growing energy demand. In addition
to developing domestic hydropower energy sources, Indonesia is also now importing hydropower
to the West Kalimantan from the neighbouring state of Sarawak in Malaysia.
For data on exporters and importers of hydraulic turbines, water wheels and regulators, see
‘5.3 Useful Statistics’.

Recent developments
The hydropower energy market in Indonesia is booming, with many projects under construction,
under negotiation, or in study and design phases. Several big hydropower projects are currently
taking place in Indonesia. As of 2016, seven hydropower projects totalling 1,559 MW were under
construction while an additional ten projects totalling 1,819 MW were subject to negotiations and
19 projects totalling 2,131 MW were in the study or design phases.23 In 2017, an additional four
mini-hydropower plant developments were negotiated, which are expected to add up to 36 MW
to the hydropower energy generation mix.
For example, four hydropower projects with a total capacity of 146 MW in East Java, the 47 MW
Rajamandala project in West Java and 360 MW Maung project in Central Java have progressed
towards completion while a pumped storage facility, planned for Upper Cisokan, may soon
provide 1,040 MW of power to the Java grid. Furthermore, additional pumped storage projects in
Sumatra and Java are being explored for additional construction opportunities. 24
Figure 32: Construction of Upper Cisokan Hydropower Plant

Source: Rambu News (2017)
23
Ibid.
24
Asian Development Bank (July 2016). Indonesia: Energy Sector Assessment, Strategy and Road Map

Several additional IPP projects are also under the Power Purchase Agreement negotiation
stages, including the Merangin (350 MW), Meurebo (56 MW) and Karangkates & Kesamben
(137 MW) projects. The IPP Wampu (45 MW), Batang Toru (510 MW), Hasang (40 MW),
Peusangan (83 MW), Semangka (2 x 28 MW), Bonto Batu (110 MW) and Malea (2 x 45 MW)
hydro projects are also under development stages, or are close to completion.
Figure 33: Wampu Hydroelectric Power Plant in Indonesia

Source: The Steel Wire
In addition, the 35 GW Programme lists two PLN hydro projects under construction and there are
nine further IPP hydro projects with a total capacity of 413 MW that the government expects to
allocate by direct appointment.25
A series of successfully commissioned micro hydropower projects by PT PLN and IPPs in West
Nusa Tenggara, East Nusa Tenggara, Papua, and other provinces of eastern Indonesia have
also provided much needed project development experience and capacity, and IPPs are
developing more run-of-river hydropower plants in Central Java, Sumatra, and Sulawesi.
25
Deloitte (November 2016). Power in Indonesia: Investment and Taxation Guide, 4th edition

Director General of NREEC reported in 2016 that in the period of September 2014 to December
2015 there were proposals for 175 small-scale hydropower plants with an investment of
US$ 783 million.26 For example, PT Terregra Asia Energy Tbk has announced in 2017 its plans
to construct four mini-hydro plants in North Sumatra with a total capacity of 36 MW and investment
of IRD 1 trillion (EUR 60 million).
According to the strategic roadmap for renewable energy development in Indonesia, the plans to
develop hydropower (including small hydro) for the period of 2015-2019 are expected to come
via the following yearly additions:
Development of Hydro (Including Small Hydro), MV

2015 2016 2017 2018 2019
Hydro (including small hydro) non-state budget 222.0 899.0 326.0 477.0 527.0
Hydro (including small hydro) state budget – MEMR 0.7 1.7 4.0 3.0 2.0
Hydro (including small hydro) special allocation fund 8.0 8.5 9.7 10.0 11.0
Construction of hydro (including small hydro power
230.7 910.2 339.7 490.0 540.0
plants)
Table 25: Planned Government Development of Hydropower (in MW), 2015-2019
The strategic hydropower projects that that the government expects to be completed yearly,
however, are more modest:
Unit 2016 2017 2018 2019

Wampu MW 45.0
Meurebo – 2 MW 56.0
Oksibil MW 1.0
Supiori MW 3.0
Ilaga MW 0.7
Rajamandala MW 47.0
Jatigede MW 110.0
Asahan – 3 MW 174.0
Table 26: Expected Projects to be Completed, 2015-2019
26
Deloitte (November 2016). Power in Indonesia: Investment and Taxation Guide, 4th edition

Government initiatives
To incentivise the market growth and the IPP involvement in hydro power development, the
Government of Indonesia (GoI) has prioritised the creation of a favourable environment for the
private sector. Among its initiatives are the numerous tax incentives for power projects, including
the tax deduction per year for six years; import duty exemption for renewable energy-related
equipment; income tax reduction/exemption for 5 to 10 years; exemption from value-added tax;
and accelerated depreciation of capital and fixed assets.
The Government expects that such incentives will boost investment, supply and trade for
domestic renewable industry, thus, attesting to the favourable environment for European market
entry opportunities.
In addition, two key legislations have been implemented since 2014 that are of significance for
hydropower development in Indonesia: Power Purchase Agreements (PPA) and Feed-in Tariffs
(FiT). Power Purchase Agreements allow for greater private sector participation in hydropower
development while the new FiTs incentivise the PLN to create more bankable opportunities for
IPPs.
Most recently, the Ministry of Energy and Mineral Resources (MEMR) Regulation 12 has further
added new lower maximum FiTs for hydropower and new contracting regimes, which are
expected to further boost hydropower development in Indonesia:
 Lower FiTs: The previous FiTs for hydropower were considered to be too high when compared
to tariffs charged by thermal power plants. New, lower tariffs are expected to encourage and
incentivise Indonesia’s state-owned energy company, PLN, which controls around 74% of the
country’s installed electricity capacity, to issue more tenders for renewable energy projects
and purchase more electricity from renewable sources.
Under Regulation 12, all renewable energy tariffs (except for geothermal and urban waste)
have been also set to be either lower or equal to the local production cost (also known as
BPP). The maximum permissible tariff has been set to 85% of BPP if the local production cost

is higher than the national average production cost, and 100% of BPP if the cost is the same
or lower. As of March 2017, the BPP in Indonesia has been estimated to be around IDR 1,400
(EUR 0.088) per kWh. While local production costs vary from region to region, the tariff has
been set subject to negotiation in certain areas (including for projects in Sumatra, Java and
Bali).27
A new FiT for micro hydro projects (less than 10 MW) was also issued in 2012, and revised
upward in 2014 and 2015, successfully heightening the IPP interest in investing in small-scale
hydro power development.28
 New contracting regimes have been also implemented, making hydropower projects subject
to either “reference price” or “direct selection” mechanisms. In selecting a developer,
Regulation 12 now requires the PLN to carry out due diligence process on technical and
financial capabilities of the candidates, and permits imposing fines and sanctions on the Power
Purchase Agreement (PPA) in the event of completion delay caused by the project developer.
These new regulatory processes make experienced international developers more
competitive against domestic IPPs, which may have lower capacities for project development
and management.
Currently, large-scale power plants with PPAs are negotiated with the state-owned PLN and
foreign private sector participation is allowed through IPP concessions. Electricity business
licenses for public use (IUPTLs) can be offered to IPPs with up to 95% foreign shareholding when
generating more than 10 MW of electricity, and this has been increased to 100% foreign
shareholding if the initiative constitutes a PPP project.
For small-scale power plants, which generate between 1-10 MW, there is a 49% foreign
shareholding cap and power plants generating less than 1 MW are closed to foreign investment.29
27
https://www.dlapiper.com/en/australia/insights/publications/2017/03/new-indonesian-feed-in-tariffs/
28
MEMR Ministerial Regulation No. 4/2012, MEMR Ministerial Regulation No. 12/2014 & MEMR Ministerial Regulation No. 22/2015.
29
http://emerhub.com/indonesia/investing-hydro-solar-power-indonesia/

Obstacles for hydropower development in Indonesia
Despite the booming market for hydropower development and the increasing interest by the
Government to ease the process of private sector participation, several obstacles still exist. A key
obstacle in developing hydropower projects arises from the need for vast areas of land.
Environmental issues also frequently delay project developments.30
A number of other hydropower projects have been delayed due to constrained process of getting
the forest use permits. Even in forest areas where hydropower projects can be constructed, the
permit processes from the Ministry of Environment and Forestry has often taken years, and
sometimes they were never issued due to conflicting claims on the land or protests by
environmental groups. As license regulations do not specify time limits, this creates uncertainty
in project preparation and implementation
Land ownership also remains a controversial issue since many hydropower plant sites are located
in remote forest areas, where land is often claimed by multiple owners in the absence of a reliable
land registration system. Land registered as government-owned forests has even been found to
overlap with privately-owned land.
Permitting issues have also been complicated in some instances where local governments issued
an excess of development licenses without the knowledge of PT PLN. In several potential hydro
project sites in Sumatra, for example, a large water resource has been divided by permits for a
number of mini hydro developments, preventing PT PLN from optimising the utilisation of the
resource for larger-scale development.
Local Players
Perusahaan Listrik Negara (PLN)
PLN is a state-owned power company which controls around 74% of the country’s installed
electricity capacity, as well as the transmission and distribution infrastructure in accordance with
the 2009 Electricity Law.
30
For example, the preparation for Kusan 3, PLN’s potential project in South Kalimantan, was stalled after the feasibility study found small
populations of International Union for Conservation of Nature red-listed proboscis monkeys that live only in the project area.

As part of its second phase of the “Fast Track Programme”, aimed at meeting Indonesia’s
increasing energy needs, the company aims to shift away from coal power generation towards
new energy sources, including hydropower. The company has recently identified 96 potential
hydropower sites for commercial hydropower energy development and it has the aim to develop
approximately 60% of the new hydropower sites.
The largest project currently under construction by PLN is the 1,040 MW Upper Cisokan plant,
a pumped storage project located in western Java. The project is being built by South Korea’s
Daelim and Italy’s Astaldi Group, in a joint venture with an Indonesian firm, Wika. The total project
cost is estimated at US$ 800 million, supported by a US$ 640 million specific investment loan
from the World Bank with the remaining US$ 160 million supplied by the project owner, the PLN.
According to the World Bank, the goal of this project is to increase the peak capacity of the Java-
Bali grid in an environmentally and socially sustainable way, while strengthening PLN’s
institutional capacity to oversee hydropower planning, development and operations.31
PT Nusantara Infrastructure Tbk
PT Nusantara Infrastructure Tbk is a leading Indonesian integrated infrastructure company, with

infrastructure concessions in both western and eastern parts of Indonesia. Established in 2006,
the company is investing in five different business sectors: toll roads, water, energy, power and
telecommunication towers. Currently, the company provides services to more than 103 million
customers, 550,000 households, 103 million vehicles, and more than 210 vessels.
In 2012, it established its subsidiary, PT Energi Infanusantara (EI), in order to expand its focus to
renewable energy sector. At the moment, the company is constructing a mini hydro power plant
with 2 x 5 MW capacity, located in North Sumatra, approximately 74.5 km from Medan.
31
https://www.hydropower.org/country-profiles/indonesia

Figure 34: Mini Hydro Plant Location in Lau Gunung
Source: PT Nusantara Infrastructure Tbk
The project was signed with the PLN under a 20-year Power Purchase Agreement. Overall
progress has reached 22% and the hydropower plant is scheduled to commence operation in the
third quarter of 2018. To develop this project, Nusantara has partnered with PT Pembangunan
Perumahan Tbk (PTPP) as a joint shareholder and main contractor.
In 2015, EI has also signed a Memorandum of Understanding (MoU) with Norwegian SN Power
and the Philippine Aboitiz Power to co-develop a 127 MW hydropower project in Lariang river,
Central Sulawesi. The hydroelectric project is expected to cost around US$ 476 million and it will
begin with the implementation stages, such as hydrology, topography, geological survey and the
evaluation of social impact.
PT Terregra Asia Energy
PT Terregra Asia Energy is an Indonesia-based company engaged in renewable energy

business. The company develops, builds and operates renewable energy projects, including
hydro power plant projects, utility-scale solar photovoltaic power plant and rooftop power projects.
Its hydro power plants include large-scale hydro power plants in Aceh province operated by PT

Teunom Hidro Power and PT Meutia Hidro Perkasa. It is the first renewable energy firm to list on
the Indonesia Stock Exchange (IDX).
In April 2017, Terregra unveiled its plans to raise up to US$ 14.9 million from its upcoming stock
market listing to fund four micro hydropower plants (PTLMHs) in North Sumatra with a total
capacity of 36 MW and investment value of between US$ 70 - 90 million. Electricity generated
from those power plants will be sold at a price of IDR 1,210 (EUR 0.076) per kilowatt hour (kWh).
The company signed Power Purchase Agreements for those four PTLMHs with PLN for a period
of 20 or 30 years.
Overall, Terregra - through its subsidiaries PT Terregra Hydro Power and PT Terregra Solar Polar
- currently has a total of 12 power plant projects in the pipeline, including several using hydro and
solar power planned to be constructed within the next five years, with an estimated total capacity
of 492 MW. The company, which also has a solar division, currently has 72 MW of installed
hydropower and solar power plants throughout the country. 32 By 2023, it expects to operate over
300 MW of renewable power in Indonesia.
The hydropower market in Indonesia is thriving and offers many opportunities for European
companies. Some of the best options to consider are:
 Development of large-scale hydropower projects
 Development of mini-hydropower plants
 Export opportunities for hydropower equipment and turnkey solutions
 Development of dam sites
32
https://www.pressreader.com/indonesia/the-jakarta-post/20170411/282050506925707

Development of large-scale hydropower projects
As renewable - and especially hydropower - energy projects are gaining momentum in the
Indonesian energy sector, new business opportunities are to be found in large-scale hydropower
projects not just in the most populated and industrial island of Java but also in remote regions
such as Maluku, Kalimantan and Sulawesi. The 75 GW of untapped hydropower capacity
potential is split according to region and offers abundant opportunities for project development:
 Java - 12.05 GW
 Sumatera - 16.1 GW
 Sulawesi - 14.55 GW
 Kalimantan - 5.9 GW
 Maluku - 21.05 GW
 Bali-Nusa Tenggara - 4.9 GW33
The revised shareholding regulations, which now allow 100% of foreign ownership, are offering
additional incentives to tap into the hydropower plant development sector.
Development of mini-hydropower plants
In remote communities where connection to the national power grid is prohibitively expensive,
local hydropower production from small power plants with capacities of less than 10 MW – known
as mini-hydropower plants – is also an attractive and viable option. Therefore, there is a growing
need to conduct accurate feasibility assessments for hydropower generation at such sites.
European companies with expertise in feasibility assessment, design and maintenance of small-
scale hydropower plants will find a demand for their knowledge.
Small hydropower plants are mostly targeted at rural electrification, with the largest potential in
Java, Sumatra and Papua. In May 2016, PLN has already signed hydropower Power Purchase
33
www.euind-tcf.com/download/.../2015_TCF_SectorPropositions_HydroEnergy.pdf

Agreements with the following companies to increase the rural electrification rate, but further
opportunities exist given the scale of the untapped hydropower potential:
 PT Bakara Energi Lestari (10 MW)
 PT Dempo Sumber Energi (13.4 MW)
 PT Green Lahat
 PT Nusantara Indah Energindo
 PT Midigio, PT Sahung Brantas Energy
 PT Malaka Guna Energi
 PT Tropisindo Sumber Energi and PT Klaai Denden Lestari (totaling 21.2 MW)
 PT Uway Energy Perdana (7 MW) to support electricity need in Sumatera.
 PT Tirta Mukti Lestari (PLTMH Cibuni – 3.2 MW)
 PT Lima Energi Lestari (PLTMH Pesantren 1 – 1.8 MW)
 PT Petro Hidro Optima (PLTMH Cikaengan – 5.1 MW)
 PT Cikaengan Tirta Energi (PLTMH Cikaengan 2 – 7.2 MW)
 PT Manha Daya Mandir (PLTMH Cibuni Mandiri – 2 MW)
 PT Republika Mandiri Energi (PLTMH Cikandang – 6 MW)
 PT Bangun Bumi Bersatu (PLTMH Cobarero 1 – 5 MW) in West Java and Banten Province.
Export Opportunities for hydropower equipment and turnkey solutions
Indonesia’s imports of hydraulic turbines, water wheels, and regulators (excluding power engines)
surged to their highest levels in 2016. The country’s imports in these categories were valued at
US$ 31.5 million – close to a US$ 10 million increase over the previous year. Imports from the
Netherlands have increased greatly from US$ 20,000 in 2015 to US$ 6.95 million in 2016, placing
it as the top supplier of hydraulic technology to Indonesia.

Italy, Austria, Slovenia and the Czech Republic are also leading suppliers of hydraulic
technologies. With the extensive pipeline of hydroelectric projects, Indonesia’s demand for
hydraulic equipment is likely to continue its upwards trend, offering good opportunities for
European exporters.
Development of dam sites
The government is also screening 239 possible locations to identify 5 to 6 dam sites (over 30 MW)
for possible conversion and development by IPPs into multipurpose dams to be managed by the
Ministry of Public Works. Possible locations include Sutami, Kesamben, and Lodoyo in East
Java.34 Companies with expertise and a successful track record in dam development are likely to
find opportunities in Indonesia. Some avenues may be available for equipment provision, project
management, EPC, and provision of turnkey solutions.
European Companies
Andritz Hydro
The Austrian company Andritz Hydro is a global leading supplier of plants, equipment, and services
for hydropower stations, the pulp and paper industry, the metalworking and steel industries, for
solid/liquid separation in the municipal and industrial sectors, as well as for animal feed and biomass
pelleting. The multinational company has been active in Indonesia for more than a century with its
first delivery in 1910 (Bangoen Poerbo) and the establishment of its subsidiary in Jakarta in 1996.
The company has installed or modernised about 180 hydropower units with more than 3,000 MW
in Indonesia, making it a leading player in Indonesia’s hydropower market.
One of the Andritz Hydro’s successful projects is the Cirata hydropower plant with units I and II,
which are the largest hydropower plant units in the country with a combined output of 1,000 MW.
The company has been contracted to construct the plants and deliver the electro-mechanical
equipment, including eight Francis turbines, generators, valves, transformers, and control system.
34

Royal HaskoningDHV
Royal HaskoningDHV is a Dutch engineering and project management consultancy with offices
in 30 countries. Established in 1881, the company has been active in delivering projects for
aviation, buildings, energy, industry, infrastructure, maritime, mining, rural and urban
development and water industries in over 150 countries.
In 2013, the company signed an agreement with PT Bhakti Putra Bangsa (TIRASA), an
Indonesian renewable energy developer, to collaborate in developing a total of 100 MW of small
hydropower in Indonesia within the next five years. In 2014, the company started implementing
its first stage of the cooperation, namely, the delivery of four mini hydropower plants along the
Mewawu river in Central Java. The project consists of four cascaded run-of-river plants: 6 MW at
Kerakan and Pandensari, 2.4 MW in Watupayang and 1.2 MW in Tempuran. The electricity from
the hydropower plants will be sold under a FiT agreement of about US$ 0.04 for a period of 25
years. The US$ 30 million investment has a return on investment of seven years. The company
also aims to provide a total installed capacity of 100 MW by 2018.
Astaldi Group
Astaldi Group is an Italian multinational construction company active in the fields of civil
engineering, hydraulic engineering, electromechanical engineering and transportation.
In 2015, it was reported that the Astaldi Group was awarded two contracts for the first two phases
of the Upper Cisokan Hydroelectric Power Plant Project on the Island of Java, in Indonesia, for a
total value equalling US$ 234 million. With financing by the World Bank, the works are carried out
in joint venture with South Korea’s Daelim (40% stake) and the local Wika (30%).
The secured contracts call for carrying out all the civil works related to the construction of two
dams, the Lower Dam and Upper Dam, respectively 75 and 98 metres in height, for a total volume
of 1 million m3 of roller-compacted concrete. An installed power of 1,040 MW is planned, complete
with intake and conveyance systems, 6 kilometres of tunnels up to 10 metres in diameter, an

underground power station, ventilation works and an electrical substation. The works are to be
performed over 50 months, starting during the first months of 2016.35
Velcan
Velcan, the Luxembourgish company that develops, finances and operates hydropower
concessions in emerging markets, is currently developing flagship projects in Indonesia.36 For
instance, in addition to constructing the Suka Rame 7 MW hydropower plant it is also developing
a 59 MW hydroelectric project in Sumatera, called Meureubo 2.
Velcan started the development of Meureubo 2 in 2011 with a 70% stake alongside PT PJB with
a 25% stake. PT PJB is a fully-owned subsidiary of national utility PT-PLN and is responsible for
the operations and maintenance of the power plant. PT-PPC, Velcan’s local partner for this
project, owns the remaining 5% of the consortium.
Tractabel
Tractebel is an international company, with Belgian roots, providing worldwide life-cycle

consultancy and engineering in power, nuclear, gas, industry and infrastructure. With over
100 years of experience in the fields of energy and of infrastructure projects, the company
provides its services to national and international institutions and customers in public and private
markets.
Since the opening of its representative office in Jakarta in 2012, and the set-up of PT Tractebel
Engineering Indonesia in February 2016, Tractebel has been focusing on Indonesian projects in
the hydropower, thermal power, power systems, power transmission and distribution, gas
transportation and distribution and LNG sectors. The company’s Jakarta office ensures strong
local presence and coordination of projects throughout entire assignments. The company is
currently engaged in hydropower plant IPP development in Central Kalimantan for PT Indonesia
Power. The project is planned for the period of 2017-2020.
35
http://www.astaldi.com/en/press-releases/astaldi-new-orders-indonesia-total-usd-234-million
36
http://www.velcan.lu/about-us/activities/activities-in-indonesia/

3.8 Biomass
In recent years, diminishing non-renewable energy sources and an increasing need for more
power generation has forced Indonesia to shift gears and refocus its attention on sectors, such
as biomass. The country has good potential to produce energy from biomass with a quickly
maturing market and steadily improving regulatory environment. As the country sets itself on a
path to achieving the 23% renewable energy share in the energy mix by 2025, it is increasingly
eyeing opportunities to accelerate the utilisation of biomass for power generation.
Figure 35: Biomass Potential in Indonesia (MWe)

Source: Fan Way Machinery
Indonesia is currently the largest producer of biomass available for energy purposes in the South
East Asian region.37 A tropical country with large forestry and agricultural sectors, it has abundant
biomass resources. Agricultural residues, including rice husk, bagasse, rubber and waste from
37
Ministry of Foreign Affairs of Denmark (2017). Pre-feasibility Study of a Biomass. Link: http://um.dk/en/danida-
en/business/contracts/short/contract-opportunitie/newsdisplaypage/?newsid=34e207c1-6519-4e6a-bc57-fa45bf74fcde

the oil palm industry, and the residues from forestry activities, are among the potential resources
for biomass-to-energy projects.
Figure 36: Biomass Sources in Indonesia

Source: Penn Energy
It is estimated that Indonesia produces approximately 150 million tonnes of biomass each year,
equivalent to 470 GJ of energy. According to the Danish Ministry of Foreign Affairs, approximately
15% of biomass resources come from forest sources and 85% from agriculture. 38 In 2012, the
Ministry of Agriculture has further reported an even higher potential of existing biomass resources.
It is estimated the energy potential for estate crops at 614.6 GJ/year and 41.8 GJ/year for solid
forest biomass.
38
Ministry of Foreign Affairs of Denmark (2017). Pre-feasibility Study of a Biomass. Link: http://um.dk/en/danida-
en/business/contracts/short/contract-opportunitie/newsdisplaypage/?newsid=34e207c1-6519-4e6a-bc57-fa45bf74fcde

The total potential for biomass-based electricity generation is reported to be at around
32,000 MW, which includes biomass derived from forestry, agriculture and estates, particularly
the oil palm plantations.39
The present utilisation of biomass for energy generation, however, reaches only 10% of the total
available potential. In 2015, electricity generated from biomass amounted to 1,740.4 MW,
consisting of 114.3 MW connected to the grid and 1,626.1 MW operating via off-grid systems.40
The majority of the existing biogas energy facilities are not yet connected to the main grid and are
used mostly for private own purposes. Sumatra, Kalimantan, Java-Bali-Madura system and
Sulawesi are the areas with the highest biomass energy potential.
Java-
Potential Bali- Nusa Total
No. Sumatra Kalimantan Sulawesi Maluku Papua
(MWe) Madu Tenggara (MWe)
ra
1 Palm oil 8,812 3,384 60 - 323 - 75 12,654
2 Sugar cane 399 - 854 - 42 - - 1,295
3 Rubber 1,918 862 - - - - - 2,781
4 Coconut 53 10 37 7 38 19 14 177
5 Rise husk 2,255 642 5,353 405 1,111 22 20 9,808
6 Corn 408 30 954 85 251 4 1 1,733
7 Cassava 110 7 120 18 12 2 1 271
8 Wood 1,212 44 14 19 21 4 21 1,335
9 Cow dung 96 16 296 53 65 5 4 535
Total potential 15,283 4,995 7,688 587 1,863 56 136 30,589
Table 27: Biomass Energy Potential in Indonesia
Source: Re4I (2017)
According to Frost & Sullivan Research, the biomass power market was valued at US$ 53 million
in 2010, and it was projected to reach US$ 213 million by 2016, at a CAGR of 26.2%.
Some of the existing biomass power plants connected to the grid include the 6.5 MW MSW and
6 MW MSW biomass power plants in Bekasi, two 10 MW, one 9 MW and one 6 MW palm waste
biomass power plants in North Sumatra, two 5 MW and two 2 MW palm waste biomass power
39
MEMR (2013). Presentation by DG of New and Renewable Energy and Energy Conservation.
40
www.ic.kmitl.ac.th/rcenee2014/.../The_Future_of_Biomass_Energy_in_Indonesia.pdf

plants in Riau, 7 MW palm waste plant in Belitung, 5 MW and 2 MW palm waste biomass power
plants in Bangka and Bali, respectively.
Additional biomass power plants are being developed across the country for private uses in
agricultural and industrial sectors. However, there are no available estimates for the total number
of off-grid, private biomass energy facilities.
Latest regulatory initiatives to accelerate the market growth
Following the succession of FiT changes (in 2012 and 2014) for biomass power production, the
Ministry of Energy and Mineral Resources (MEMR) has in August 2016 introduced the latest
revision of the regulation on biomass power generation (MEMR Regulation No. 21/2016), which
is expected to provide additional incentives for private sector participation. The key features of
the new regulation are:
 Biomass and biogas power projects are to be awarded on the basis of a direct appointment
process;
 Feed-in Tariffs (FiTs) are available for both conventional IPP projects and projects which
involve the sale of excess electricity to PLN;
 Previous restrictions on the capacity of biomass and biogas power projects that can be
developed by IPPs and benefit from the FiTs are removed;
 Standard power purchase agreement (PPA) now needs to be issued by PLN, which will need
to be signed within 30 days from award of the relevant project by MEMR;
 The new regulation also simplifies requirements for IPPs wishing to sell all, or part, of the
output of biomass and biogas power projects to PLN;
 It specifies that only Indonesian entities are allowed to become a Developer and must have
incorporated entities;

 It also introduces split FiTs for small (below 20 MW), medium (20 MW to 50 MW) and large
projects (over 50 MW), thus, diversifying the range of profitable opportunities available in the
country.
 The new FiTs are in the upper range of FiTs applicable to similar projects across the region
and, when applying the multiplying factor, the FiTs for projects in Indonesia’s outlying islands
appear to be fairly competitive.
Feed-in Tariff (US$ cent/kWh)

20 MW to 50 Above 50 MW F Factor
No. Location of biogas power plant Up to 20 MW capacity
MW capacity capacity (location)
Low Medium of
High voltage High voltage
voltage high voltage
1 Java 16,00 x F 13,50 x F 11,48 x F 10,80 x F 1,00
2 Sumatra 16,00 x F 13,50 x F 11,48 x F 10,80 x F 1,15
3 Sulawesi 16,00 x F 13,50 x F 11,48 x F 10,80 x F 1,25
4 Kalimantan 16,00 x F 13,50 x F 11,48 x F 10,80 x F 1,30
5 Bali, Bangka Belitung and Lombok 16,00 x F 13,50 x F 11,48 x F 10,80 x F 1,50
Riau, Nusa Tenggara and other

6 16,00 x F 13,50 x F 11,48 x F 10,80 x F 1,60
islands
7 Maluku and Papua 16,00 x F 13,50 x F 11,48 x F 10,80 x F 1,70

Table 28: Feed-inTariff for Purchase of Electricity by PLN from Biomass Power Plants
Source: MEMR Regulation 21/2016
The introduction of the new regime points to additional efforts by the Government to boost the
development of electricity generation via biomass in order to achieve its ambitious objective of
generating 35 GW of electricity by 2020.
The state-owned utility company, the PLN, currently has an important role to play in the
Indonesian biomass market. Under the new regulation, the project award process is based on
direct appointment and PLN is responsible for reviewing and signing off on the feasibility study of
any project in the country. The terms of the model Power Purchase Agreement (PPA) are also
issued by the PLN.

Local Players
Clean Power Indonesia (CPI)
Clean Power Indonesia is an Independent Power Producer that specialises in biomass

gasification technology. The company is the recipient of Frost & Sullivan Indonesia Excellence
Award 2015, 2016 and Sakalp Forum Award 2015 as recognition to its efforts in the renewable
energy industry and rural electrification development.
In 2016, Charta Putra received a US$ 12 million grant from the Renewable Energy Grant for a
Community programme to build a 700-kW biomass power plant in Mentawai District, West
Sumatra. The power source will come from bamboo and will provide electricity to about 1,200
households, 35 local businesses and public facilities in villages of Modobag, Matototan and
Saliguma. The community and PT Charta Indonesia established jointly the PT Kemakmuran Hijau
Mentawai which will operate, maintain and sell electricity to the community in the village.
The project is scheduled for completion in February 2018. The company has plans to build similar
projects in 13 additional villages across the region.
PT Perhutani (Persero)
PT Perhutani is a state-owned forestry company based in Jakarta, Indonesia. The company

manages 2.4 million hectares of forests area in Java and Madura islands, consisting of
1.7 million hectares of production forest and 0.7 million hectares of conservation forest.
It manages its plantation forests based on sustainable forest management principles (FSC
Standard).
Perhutani has five subsidiary companies (Inhutani I-V) which manage large industrial forest
plantation areas outside of Java. Perhutani and its subsidiary companies produce large quantities
of wood residues, stemming from conversion of low yielding tree crops to high yielding, from wood
harvesting processes (thinnings and clear-fellings) and from wood industries. Every year, more
than 2 million tonnes of biomass residues are produced from the Perhutani group’s business
activities.

In early 2017, the company decided to become a forest biomass-for-energy producer and an IPP
(produce and sell electricity generated from forest biomass). The private role in the development
of biomass power plant projects is driven by IPP schemes or excess power transactions.
The overall aim of Pertuhani is to develop approximately 130,000 hectares of biomass plantations
in Java as fuel stock for biomass-based power plants in Java.
PT Trenergy Biomasse Indoensia (TreBi)
Established in 2008, TreBi is a farm-product raw materials company focusing on the development
of biomass supply for the export market. Based in Medan, Indonesia, Trebi operates in three
different locations in Sumatra from where it exports mainly Palm Kernel Shell (PKS).
The company purchases PKS from local factories, trucks the products to the stocking area, stores
products using its own equipment and exports it to other markets. With the target to increase the
volume handled by the company and to diversify the product, TreBi is planning to open new
stockpiles supporting the PKS operations and handle new commodities, in particular for the
animal feeding market.
PT Cakrawala Persada Biomas
PT Cakrawala Persada Biomas is an Indonesian wood pellets manufacturer, based in Jakarta.

The company produces high quality wood pellets from pure wood residues which are sourced
from Plantation sources. The team has over 20 years of forestry industry experience. The supply
of raw material for the annual production capacity of up to 250,000 tonnes is secured via long-
term partnerships. The primary goal of PT Cakrawala Biomas is to become an international
biomass energy producer providing high quality energy products.
The company is currently constructing its new production plant with a capacity of 180,000 tonnes
annually of premium grade wood pellets and it is expanding into new locations. The Pellet Mill
site is located in West Kalimantan.

As the Indonesian market for biomass energy products and technologies matures, the country
offers many opportunities for European companies. Given the fact that the market is largely
underutilised, early entry can bring significant long-term opportunities for European companies.
The current, strong demand for business-matching in biomass ventures is also providing a golden
opportunity for enterprises to enter this nascent market and create wealth from waste.
The Indonesian biomass energy sector offers the following opportunities for experienced
European players:
 Biomass-to-energy projects
 Export opportunities for biomass energy technologies
 Retrofitting services
 Biomass palletisation
Biomass-to-energy projects
Indonesia is seeking to explore greater utilisation of biomass conversion into energy, in line with
its national renewable energy targets. To date, biomass contributes only around 3% of the nation’s
overall renewable energy capacity. Moving forward, Indonesia is seeking to increase the share of
biomass within the renewable energy mix and to optimise the waste utilisation. Three main
biomass conversion technology platforms are currently being explored, namely, thermal,
biological and chemical conversion. European companies, thus, may find avenues to offer their
expertise in these energy conversion technologies.
Since the release of new regulation, the capacity of biomass and biogas projects is no longer
limited as it was under Regulation No. 27/2014. Instead, the projects are now split between those
with capacity below 20 MW, projects with capacity between 20 MW and 50 MW, and those above
50 MW. This opens up wider opportunities for European companies to develop a full range of
biomass projects under favourable FiT conditions. European expertise in optimising energy
extraction under projects of various sizes is likely to be in demand in the upcoming years.

Sumatra, Jambi, East Kalimantan, Bangka-Belitung, South Sulawesi, Gorontalo, Bali and East
Java are some of the potential areas that are sought by the investors for bioelectricity projects.
There are also significant opportunities for companies in R&D on combustion properties of new
and hard-to-process feedstock; optimisation of combustion processes; technology supply and
transfer through boilers, gasification and fermentations; investment in independent power
producers; technology supply and R&D on pyrolysis oil production and upgrading; supply chain
management for pre-treatment of biomass for the internal market; and research and consultancy
on biomass-to-power value chain (including off-grid solutions).
Export opportunities for biomass energy technologies
Given the growing interest in Indonesia to develop greater capacities for biomass energy
utilisation, it is likely that the demand for biomass energy turnkey solutions and equipment will
also grow. This offers opportunities for biomass equipment manufacturers and suppliers to export
their products to the Indonesian market. Some of the technologies in demand are: combustion
and gasification technologies, boilers, turbines, engines, heat exchangers, generators and gas
cleaning equipment.
Retrofitting services
The existing biomass energy facilities are mostly using old technologies as they are often cheaper
to acquire. However, these technologies are not adequate enough to address the requirements
for mill optimisation. This leaves large efficiency gaps, which can be utilised by experienced
European companies with expertise in energy efficiency and retrofitting technology
implementation. As the technology becomes more cost-effective, Indonesian clients are likely to
be more open for evaluating retrofitting solutions.

Biomass palletisation
The sector also offers opportunities for biomass palletisation. In response to the growing market
for biomass as energy source for heat and power, an increasing number of companies is venturing
into production of biomass pellets and briquettes for the export markets, such as Europe, Japan,
South Korea and China. The availability of an international export market for pellets and export
opportunities with the price of around US$ 125.54/tonne are driving this sub-sector demand.
Substitution of coal with biomass in the EU Member States, South Korea, Japan and China to
meet carbon emission targets may be an additional driving force for biomass pellet products.
In addition, this demand is also expected to nearly double in the next six years, from
29 million tonnes in 2015 to 53 million tonnes in 2023. Producers that can make efforts to lower
the production costs and solve logistical issues may find lucrative opportunities in this market
segment.
Urban biomass waste utilisation
While the main source of the local biomass matter comes from agricultural and forestry sectors,
solid urban waste is largely under-utilised. All organic materials can be used to produce bio-
energy, bio-agriculture and eco-products. Given the fact that this biomass market sub-sector
requires more advanced technologies, European companies are well-positioned to compete with
local players in Indonesia.
European Companies
Maris Projects B.V.
Maris Projects BV is a Dutch engineering company specialising in energy production from

agricultural waste. It was founded in 1976 with expertise in processing waste to create value-
added energy products. In the last few years, the company gained expertise in waste-to-biofuels
and by-product processing.

The company entered Indonesian market in 2012 via consortium, which consists of Indonesian
and international organisations. The consortium was tasked with creating an integrated bio-
energy generation facility that utilises waste products from commercial and smallholder oil palm
farmers41 in Riau, Indonesia. The project goal was to produce 10-20 MW of energy from
sustainable biomass sources. Maris Projects was in charge of engineering divisions to integrate
the three forms of biomass – solid, gas and liquid – maximising the useable energy output.
In the same year, Maris Projects established a local affiliate, PT Maris Sustainable Indonesia, to
support its activities in the country. Working through its affiliate, the company has research and
some commercial projects in Indonesia. The company is particularly active in Palm Oil Mill
Effluent (POME) treatment to biogas, algae production and bio-energy development.
Figure 37: Maris Projects Research to Investigate the Potential of Algae Biomass
Source: Maris Projects B.V.
41
To qualify as a smallholder farmer in Indonesia, farmer plantations must be less than 25 hectares. On average, smallholders in Indonesia
manage around 2 hectares per farming household.

Engie Group
Engie Group (Engie) is a global energy player. It develops its businesses via three key business
areas: power, natural gas and energy services. The company provides individuals, cities and
businesses with solutions based on its expertise in four key sectors: renewable energy, energy
efficiency, liquefied natural gas and digital technology.
In 2017, the company has signed three partnership deals to develop, co-finance, build, operate
and maintain microgrid and other renewable energy projects in various parts of Indonesia. Among
them, Engie has agreed with Sugar Group Companies to invest US$ 1 billion in the next five years
to build 300 MW of PV and 200 MW of biomass-power plants in Sumatra and Eastern Indonesia.
The biomass power plants with a total power generation capacity of 200 MW will use agricultural
waste as well as land clearing material.

3.9 Landfill Gas/ Sewage Treatment Gas / Biogas
Biogas technology has been deployed in Indonesia for quite some time now. However, the earlier
developments were subjected more to waste control rather than electricity generation.
2 to 3 years ago, the Indonesian market for biogas power projects stagnated in response to falling
carbon credit prices and uncertainty over the continuation of the Clean Development Mechanism
(CDM). The market value of carbon credits fell from approximately EUR 20/tCO2 in 2008 to
EUR 0.7/7CO2 in 2014, completely eliminating any tangible benefit from engaging in this scheme.
A number of biogas projects (especially using landfill gas) were discontinued following this price
fall, as they were deemed economically unviable without the CDM revenue. However, the biogas
market was kept afloat by opportunities in the palm oil industry. To meet the Roundtable of
Sustainable Palm Oil (RSPO) criteria, palm oil mills have been obliged to cut emissions from mill
effluents, with biogas power generation being one of the options.
More recently, biogas power generation potential has improved via a combination of incentive
schemes, including new Feed-in Tariffs (FiTs) and tax relief grants, and the increasing availability
of feedstock resources.
According to the Ministry of Energy and Mineral Resources (MEMR), the government plans to
increase the electricity generating capacity of on-grid biogas plants up to 14.8 MW in the
upcoming years, compared to 3.6 MW in 2016.42 The expected capacity is likely to come from
25 companies that have recently applied for permits for the installation of biogas plants. Biogas
power plants via off-grid solutions are also likely to contribute greatly to the growing market size.
According to Pike Research, the Indonesian biogas power generation market is expected to be
in the leading position in South East Asia by 2022, with a total market size of EUR 3.65 billion.
42
http://www.thejakartapost.com/news/2016/03/24/ri-s-biogas-capacity-reach-148-megawatts-ministry.html

MARKET SIZE OF THE INDUSTRY(2022)
Market Size (RM billion)
45
18
12
6,5 8,3
PHILIPPINE MALAYSIA THAILAND INDONESIA SOUTHEAST ASIA
Figure 38: Market Size of the Biogas Industry, 2022

Source: Pike Research
Biogas can be produced from many different sources, including organic materials, such as animal
waste, household and municipal waste, organic waste from factories, and biomass. In Indonesia,
however, agriculture, wastewater and urban waste sectors have the largest potential for biogas
energy generation. These sectors are considered the most suitable for biogas power development
in terms of their characteristics, feedstock availability as well as technical and economic
specifications. The most common biogas feedstocks in these industries are Palm Oil Mill Effluent
(POME), Cassava-Starch Mill Effluent, Bioethanol Mill Effluent, and animal and municipal waste.
Many small-scale biogas plants in rural areas in Indonesia use farm manure and slurries as
feedstock. On average, farmers with at least two cows can generate sufficient biogas to meet
their daily basic cooking and lighting needs.
Biogas from agricultural waste
With over 11 million hectares of oil palm plantations and 850 oil mills, Indonesia is one of the
world’s leading producers of palm oil. Until now, wastewater and waste products from palm oil
production have not been consistently used for energy recovery. Digestion of empty fruit bunches
is a more complex task and so these were left unused or incinerated for energy recovery. Unlike
incineration, digestion in a biogas plant has the advantage of producing digestate that can
significantly reduce the volume of artificial fertiliser used in the plantations.

With the growing number of palm oil mills, Indonesia has seen a subsequent rise of vast
wastewater lagoons, which release huge amounts of methane into the atmosphere. 43 Small
amount of this methane is currently being captured in several palm oil businesses - mainly the
larger oil palm groups, especially those that are aspiring to Roundtable on Sustainable Palm Oil
(RSPO) certification. These palm oil mills have started to commercialise liquid waste for power
generation. According to the Indonesan Palm Oil Mill Board, approximately 10% of palm oil mills
are equiped with biogas power plants.
According to national data, biogas from the liquid waste of the 850 palm oil mills in Indonesia
could generate approximately 1,100 MW, but POME-to-energy projects are still limited when
compared to the estimated potential. So far, the majority of the existing small plants (usually with
1-2 MW capacity) are operated to power households around the mills. The total installed capacity
of palm biomass waste and POME-to-energy projects, both on-grid and off-grid, amounted to only
14 MW in 2014, which is under 2% of the total estimated potential.44
Figure 39: The first IPP Biogas Power Plant in Indonesia

Source: AANE, 2013
The estimates of the total number of POME-to-energy projects currently range from 12 to 50,
primarily due to the fact that some projects have been discontinued in the past and there is little
available data to verify their status. Specific POME-to-energy facilities include the first-ever pilot
43
http://www.thejakartapost.com/news/2016/01/27/editorial-harnessing-palm-oil-waste.html
44
ESDM 2014

project by Riau’s government, the 5 projects undertaken via the CIRCLE initiative,45 between 8
and 12 projects developed by Musim Mas, and a handful of projects of Asian Agri, Wilmar,
Alternative Energy Corporation, and others. It is believed that some of these existing projects may
not be working well due to operational issues. Additionally, only 5 to 7 of them are connected to
the grid; most palm oil mills are located in remote areas that are not connected to the power grid.
The CIRCLE initiative has further identified 24 other projects with the potential for further
development: 9 have completed feasibility studies; 11 are in pre-feasibility stages; and 4 have
completed preliminary assessments. Some oil palm mill companies have also laid plans to
upgrade their other existing facilities. For example, Asian Agri is targeting to build an additional
15 power plants with 2 MW capacity each by 2020. In May 2017, PLN has also signed five
additional on-grid biogas plant Power Purchase Agreements with IPPs, with the total capacity of
71 MW.46
Recently, the government has undertaken several steps to stimulate investment in the biogas
energy sector, including the revision of biogas Feed-in-Tariffs (FiTs), priority appointment
process, tax investment credit, reductions and/or exemptions from customs tax, and simplified
permit procedures. In 2016, MEMR Regulation No. 21/2016 on the purchase of electricity power
from biomass and biogas power plants by PLN was also enacted, replacing the previous MEMR
Regulation No. 27/2014. The new FiTs were priced in US$, and FiTs have been differentiated
depending on the location of where the projects are being deployed. Under new regulations, palm
oil mills can also have their licences revoked if they operate without methane capture.
In March 2017, the Director General of New Renewable Energy and Energy Conversion (EBTKE)
for the Energy and Mineral Resources Ministry announced that it was planning a program that
would impose mandatory conversion of palm waste to energy. The Indonesian Energy
Ministry is currently deliberating the regulation with the Environment and Forestry Ministry.
45
The USAID-funded Capacity for Indonesian Reduction of Carbon in Land Use and Energy (CIRCLE) initiative helps the owners of palm
oil mills produce renewable energy and improve the overall sustainability of their facilities. Winrock International implements the CIRCLE
project in partnership with World Wide Fund for Nature (WWF) Indonesia. CIRCLE assists Indonesian palm oil mills with sustainability
assistance, pre-feasibility studies, in-depth feasibility studies, technical assistance, and capacity building.
46
https://www.rambuenergy.com/2017/05/pln-signs-mou-to-develop-283-mw-of-renewable-energy/ &
http://www.thejakartapost.com/news/2017/08/02/pln-seals-deal-with-53-renewable-developers.html

European companies with connections to the Indonesian biogas market can expect to benefit
from this development, as palm oil mills are already starting biogas operations before new
government regulations kick in.
Feed-in Tariff (US$ cent/kWh)

20 MW to 50 Above 50 MW F Factor
No. Location of biogas power plant Up to 20 MW capacity
MW capacity capacity (location)
Low Medium of
High voltage High voltage
voltage high voltage
1 Java 13,14 x F 10,64 x F 9,05 x F 8,51 x F 1,00
2 Sumatra 13,14 x F 10,64 x F 9,05 x F 8,51 x F 1,15
3 Sulawesi 13,14 x F 10,64 x F 9,05 x F 8,51 x F 1,25
4 Kalimantan 13,14 x F 10,64 x F 9,05 x F 8,51 x F 1,30
5 Bali, Bangka Belitung and Lombok 13,14 x F 10,64 x F 9,05 x F 8,51 x F 1,50
Riau, Nusa Tenggara and other

6 13,14 x F 10,64 x F 9,05 x F 8,51 x F 1,60
islands
7 Maluku and Papua 13,14 x F 10,64 x F 9,05 x F 8,51 x F 1,70

Table 29: Feed-inTariff for Purchase of Electricity by PLN from Biogas Power Plants
Biogas from municipal waste
Municipal waste management has also seen a number of initiatives to develop landfill gas power
projects.
If land use change and forestry, and peat are excluded, waste contributes 28.3% of GHG
emissions. In order to achieve 26% GHG emission reduction by 2020, Indonesia has developed
a National Action Plan for GHG Emission Reduction. Under this plan, the waste sector has to
reduce GHG emissions by up to 0.048 GtCO2e. The longer-term target for the sector is
0.078 GtCO2e, in order to achieve 41% GHG emission reduction by 2030.
According to the National Commission for Clean Development Mechanism (CDM), there were
several landfill gas projects in Indonesia under the CDM scheme in areas Bali, South Sumatra,
West Java and South Sulawesi. Unfortunately, all but two projects were discontinued since the
CDM schemes, under which they were proposed, became unfeasible. Two landfills (Suwung in

Bali and Bantargebang in Jakarta), however, are still producing electricity, with the total capacity
of 14.5 MW.
Figure 40: Bantargebang Landfill Gas Plant

Source: Acritas Energy
Recently, the government has introduced several policies from the presidential and ministerial
levels down to the local authorities to accelerate the application of Waste-to-Energy (WtE)
technologies.
In early 2016, the government issued the Presidential Decree No. 18/2016 to accelerate the
development of WtE projects in 7 cities, including Jakarta, Tangerang, Bandung, Semarang,
Surakarta, Surabaya, and Makassar. While previously the PPP projects in the waste-to-energy
sector have faced difficulties due to complexity in the tendering process, this new regulation was
expected to provide a shortcut for project development – mayors would be able to directly appoint
developers for waste-to-energy projects.47
The regulation was annulled by the Supreme Court in January 2017 following a dispute with civic
society organisations over health and environmental aspects of incinerators. The Government,
however, is still pursuing the development of WtE projects via the utilisation of alternative
technologies.
47
https://opportunities.export.great.gov.uk/opportunities/indonesia-waste-management-opportunities-in-7-indonesian-cities/

The Government has also established a Waste Law, which allows waste management activities
to be financed from the state/regional budgets. In addition, a Feed-in Tariff (FiT) for electricity
generated from municipal waste has been established in 2015. Under the MEMR
Regulation 44/2015, the PLN is obliged to purchase electricity from WtE facilities. The new FiT
has also seen a 45% increase from the previous legislation:
Tariff (US
Technology Capacity
cents/kWh)
Sanitary Landfill, Anaerobic Digestion, 16,55 Capacity up to 20 MW connected to high or mid-voltage
or Similar Technology 20,16 Capacity up to 20 MW connected to low-voltage
18,77 Capacity up to 20 MW connected to high or mid-voltage
22,43 Capacity up to 20 MW connected to low-voltage
Themochemical Technology
15,95 Capacity 20 MW up to 50 MW connected to high-voltage
13,14 Capacity over 50 MW connected to high-voltage
Table 30: New FiT for Waste-to-Energy Technologies
Sewage treatment gas
There are currently no plans to accelerate sewage treatment gas energy development in
Indonesia. Although some projects have evolved over the years, such as the 1.5 MW sewage gas
cogeneration power plant by Ettes Power, neither the Government nor the private sector has
expressed wider interest in expanding sewage gas treatment plants beyond some additional
preliminary studies.
Figure 41: 1.5 MW Sewage Gas Cogeneration Power Plant

Source: Ettes Power (2011)

Local Players
Asian Agri
Asian Agri is one of Asia’s largest palm oil producers, with an annual production of 1 million tonnes
of palm oil. The company is the pioneer of one of the largest and most successful community
partnership schemes in Indonesia. Founded in 1979, Asian Agri manages 27 oil plantations and
20 mills in Sumatra, Indonesia. In 2015, Asian Agri announced plans to build 20 biogas power
plants by 2020, which will be powered by POME. As of December 2015, it has successfully
installed 5 biogas power plants and has laid out a roadmap to building an additional 15 by 2020.
The existing power plants: two in Riau, two in North Sumatra and one in Jambi, are each capable
of producing up to 2 MW of power from biogas resources.
Ecody
Ecody is a specialist company, focusing in methane capture technology and biogas power plant
construction. Established in 2014, Ecody has obtained 6 biogas projects until 2016. Among its
successful contracts, the company has designed and engineered a 1 MW biogas power plant in
Pagar Merbau, North Sumatra, which was connected to the PLN grid. It supplied and installed the
digester liner, cover, and internal piping system. The plant has obtained the Social License to
Operate (SLO) certificate and now waits for commercial operation.
In addition, Ecody has been awarded the contract for a biogas power plant in Harapan Sawit
Lestari, West Kalimantan, to retrofit the existing pond, supply and install the mechanical and civil
works, and supervise during the commissioning and start-up stages. The 2 x 600 KW power plant
is now in the commissioning and start-up stages. It has also conducted pre- and in-depth feasibility
studies of 90 tbh Bumitama Gunajaya Abadi palm oil mill located in Central Kalimantan.
The estimated potential for energy generation is 3 MW, which is likely to be connected to the PLN
grid.

Figure 42: PLT Biogas with Covered Lagoon Technology in Pagar Merbau
Source: BTTP
Among its recent projects, the company is supplying and installing liner and cover for digester,
internal and external HDPE pipe, and main valves for internal distribution lines for two projects,
namely Biogas Power Plants in Satui and Jorong, South Kalimantan. Both power plants are
expected to be connected to the PLN grid, once completed.
Sampoerna Agro Tbk
Sampoerna Agro is a national palm oil plantation company and palm oil manufacturer. Together
with its subsidiaries, the company engages in the production of palm products, which are crude
palm oil and palm kernel. The operational areas for the company are located in South Sumatra,
Riau, West Kalimantan and Central Kalimantan. Additionally, the company has started upgrading
its mills with the biogas power plant technologies to provide electricity for its mill operations and
to surrounding villages. It has been successful in building two biogas power plants with 4 MW
capacity. Biogas power plants will supply 29 villages in Pantai Timur with electricity. The power
plants run on methane capture technology.

PT Sumberdaya Sewatama
PT Sumberdaya Sewatama is an integrated power solution provider in Indonesia. It is a subsidiary

of PT ABM Investama Tbk, an integrated energy company. Established in 1992, Sumberdaya
Sewatama works primarily through its 4 main business lines: temporary power, operations and
maintenance, energy efficiency services and long-term power solutions. These service lines make
Sumberdaya Sewatama the only integrated power solutions provider in Indonesia. The company
has entered the renewable energy sector via acquisitions of shares in existing gas and steam
power plants (10 MW in South Sumatra), steam power plants (15 MW in Nanggroe Aceh
Darussalam) and the development of water energy based projects (50 MW in South Sulawesi).
Sumberdaya Sewatama has also recently entered the biogas energy market by starting to
develop biogas power plants in Central Kalimantan and South Kalimantan with a combined
capacity of 5.4 MW. In 2016, it has also signed a Power Purchase Agreement (PPA) with PLN for
Suka Damai Biogas Power Plant. The plant is expected to utilise POME produced by the palm oil
mill of PT Eagle High Plantation Tbk.
PT SyRes Indonesia (SyRes)
PT SyRes Indonesia (SyRes) is an Indonesian renewable energy company, specialising in agro

waste and hydro power development and project management. Among other projects, the
company develops and implements projects which utilise waste for an alternative source of
energy. One of its focuses is the usage of rice husk as feedstock for power generation. SyRes
has installed and commissioned two Rice Husk power plants in Sulawesi and Java based on
biomass gasification in 2013.
Indonesia’s emerging biogas sector has the potential to grow significantly and is highly promising.
Since the sector does not depend on subsidies, large players can draw their own roadmaps.
Biogas is claimed to be already commercially viable when produced as landfill gas and
fermentation of agricultural waste, and it is seen as a good option for rural energy development.

Indonesia’s biogas market also offers an interesting investment climate and tax incentives for
project development. One of the key concerns for biogas power developers has traditionally been
the competition of alternative energy with traditional, often much cheaper and subsidised sources
of energy. Concerns have often risen over the prospects of renewable energy from biogas being
integrated into the national grid with competitive FiTs. The Government has recently established
a new FiT regime that obliges Distribution Licensees (i.e. the PLN) to buy from the FiT Approval
Holders, such as Biogas Energy Developers, the electricity produced from renewable sources.
By guaranteeing access to the grid and setting a favourable tariff from renewable energy, the FiT
mechanism ensures that renewable energy becomes a viable and sound long-term investment
for companies with interest in biogas. In addition, the current scarcity of national players and
European expertise in this field make for interesting opportunities. The key opportunities for
European companies exist in the following avenues:
 Biogas projects in the oil palm industry
 Smaller-size biogas engine supply for other sectors
 Supply and transfer of technology and R&D cooperation
 Landfill gas management
 R&D on utilisation of algae for biogas power plants
Biogas projects in the oil palm industry
The main biogas industry opportunities for European companies lie in the oil palm mills. Indonesia
is the largest producer of palm oil with over 600 mills scattered across the country. If all of the oil
palm mills were to implement POME-to-energy projects, the total investment requirements would
be around US$ 25 billion.

Figure 43: Market Potential & Project Sizing in Indonesia: Palm Oil Mil Industry in Indonesia, 2010
Source: AANE 2013
POME-to-energy technology implementation is one of the lower-hanging fruits from both the
economic and government policy perspectives. The technology is increasingly understood and
has been widely used in other contexts. Positive project economics and a legal framework for
FiTs indicate the potential for solid financial returns. At the same time, the technology
implementation rate in the industry is very low, meaning significant opportunities for market
capture. With oil palm industry is obliged to capture methane gas, this can offer lucrative entry
opportunities for European companies.
The government is also keen to reduce its carbon footprint by 26% in 2020. Converting POME
into biogas would not only allow Indonesia to free up significant biomass resources for higher
value-added uses, but would also contribute to the government’s renewable energy targets. As a
result, cooperation with the government on joint projects may be available for exploration.
Technologies in demand in the POME-to-energy sector are likely to be cooling ponds, mixing
ponds and anaerobic lagoon systems in the upstream side, and gas cleaning systems
(desulphurisation units and dehumidity units), gas engines and generators, and biogas flaring
systems in the downstream sector.

Smaller-size biogas engine supply for other sectors
While palm mills will remain the largest biogas energy opportunity in the short term, other
industries, including tapioca, cane sugar, fruit juice and agriculture present additional entry points
via servicing smaller industry players, especially with engine size bands of 0.4 – 1 MWe.
Supply and transfer of technology and R&D cooperation
The added-value of potential European players would also lie in the supply and transfer of
technology, knowledge and R&D cooperation, in areas of: State-of-the-art anaerobic digestion
technology; co-fermentation technology; collaborative R&D in anaerobic digestion innovation; gas
monitors for electric generation; vehicle engines for biogas fuel; turbines, blowers and storage
equipment; waste and waste water treatment and fertiliser conversion technologies; research and
monitoring of impacts of waste on air, soil, water and plant; solid waste to energy technologies;
and waste management know-how. There is also a growing demand to cooperate on biogas
purification for small-scale digesters and integration of biogas micro-grids.
In addition, spare parts and aftersales support may be a growing field with the increasing number
of biogas projects in Indonesia.
Landfill gas management
Finally, further opportunities for European companies may exist in landfill gas management for
municipalities; technology supply for landfill gas plants; and infrastructure development (piping,
pumps, turbines) for urban biogas projects. In particular, the engine size bands 1-2 MW are in
demand in the waste-to-energy sector.
The new Presidential Decree No. 18/2016 also offers immediate opportunities for developers and
technology providers in WtE sector. The government currently seeks participation by companies
providing waste-to-energy technologies, including those which utilise incineration, gasification
and pyrolysis:

Estimated
Design Estimated
No. Project Technology project Cost Status
Capacity Output
(US$)
Sunter Intermediate
1 Treatment Facility 1000 tpd Incinerator 10-12 MW 100 million PPP tender (bid evaluation)
(Jakarta)
Marunda Intermediate PT Jakarta Propertindo is
2 Treatment Facility 2500 tpd Incinerator 20-25 MW 231 milion appointed to carry out the
(Jakarta) construction phase
Cakung Intermediate
3 Treatment Facility 1500 tpd Incinerator 10-15 MW 139 million Preparation (PPP)
(Jakarta)
Duri Kosambi PT Jakarta Propertindo is
4 Intermediate Treatment 1500 tpd Incinerator 10-14 MW 139 million appointed to carry out the
Facility (Jakarta) construction phase
Batam Waste-to- Preparation (PPP) Batam City
5 1000 tpd Incinerator 12 MW 77 million
Energy will commence re –PQ in 2016
Tangerang has received grant
Tangerang Waste-to-
6 1000 tpd N/A N/A N/A from Korea Govt to develop WtE
Energy
project
Nambo Solid Waste 525 tonnes Targeted contract signing is on
7 1500 tpd MBT to RDF 40 million
Management RDF/day May 2016
Legok Nangka Waste- PPP tender will commence in
8 1500 tpd Gasification 10-12 MW 77 million
to-Energy 2016
Bandung Waste-to- Contract signing is pending due
9 700 tpd Incinerator 7 MW 55 milion
Energy to political reason
Table 31: Potential Projects in WtE Sector
Source: World Waste to Energy City Summit (2016). WtE Development in Indonesia
R&D on utilisation of algae for biogas power plants
One of the promising renewable energy resource at the end of commercialisation is the utilisation
of algae as a bioenergy source. The algae can grow on water, even waste water, and therefore
is seen as not competing with space for food crops. While algae can be used as a biodiesel, it can
also be utilised in a fermenter for the production of biogas. Given Indonesia’s geography with over
15,000 islands, even if each island had just 2 installations of 1 MW, algae could contribute over
30,000 MW, or about half of the 64 GW of renewable energy resources required for 2050. Given
this information, companies may seek potential partnership opportunities to activate this market.

Some of the companies, such as Maris Projects P.V. is already investigating the potential of algae
for biogas energy production, however, the space for other players is vast. As a result, European
companies with expertise in utilisation of new biomass resources for energy production may find
increasing opportunities in the algae R&D and commercial utilisation sectors.
European Companies
EnviTec Biogas AG
EnviTec is a Lohne-based biogas plant manufacturer. The company covers the entire value chain
for the production of biogas, including the planning and turnkey construction of biogas plants and
biogas upgrading plants as well as their commissioning. The company takes charge of biological
and technical services on demand and also offers full plant and operational management.
In addition, EnviTec operates its own biogas plants. In 2011, EnviTex Biogas expanded its
business operations into the direct marketing of upgraded biomethane as well as marketing of
green electricity and balancing energy. The company currently has presence in 14 countries.
In 2015, the company had the first opportunity to establish itself in the Indonesian biogas industry.
EnviTec signed a cooperation agreement with the PT Trumpi Energi Indonesiaku for the
implementation of a biogas plant in Indonesia with a total initial power of 4 MW. The agreement
was the first step for EnviTec towards gaining a foothold in the promising Indonesian market.
The plant will contribute the first 4 MW of a planned 100 MW to the green energy transition in
Indonesia. The plant will be constructed at the PT Herfinta Palm & Plantation in northern Sumatra.
Maris Projects BV
Maris Projects BV is a Dutch engineering company specialising in energy production from

agricultural waste. It was founded in 1976 with expertise in processing waste to create value-
added energy products. In the last few years, the company gained expertise in waste-to-biofuels
and by-product processing.

The company entered the Indonesian market in 2012 via a consortium, which consists of
Indonesian and international organisations. The consortium was tasked with creating an
integrated bio-energy generation facility that utilises waste products from commercial and
smallholder oil palm farmers in Riau, Indonesia. The project goal was to produce 10-20 MW of
energy from sustainable biomass sources. Maris Projects was in charge of engineering divisions
to integrate the three forms of biomass – solid, gas and liquid – maximising the useable energy
output. The planned facility utilises custom biogas reactors and pond covers with internal paddle-
wheels to maximise biogas production and capture from POME.
In the same year, Maris Projects established a local affiliate, PT Maris Sustainable Indonesia, to
support its activities in the country. Working through its affiliate, the company has research and
some commercial projects in Indonesia. The company is particularly active in POME treatment to
biogas, algae production and bio-energy development.
Q2 Group
The Q2 Group of companies have their origins in Denmark. Q2 A/S was set up in 2006 to develop
and build biogas and landfill gas plants worldwide. Q2 has entered the Indonesian market by
successfully upgrading and improving existing landfill gas projects in four landfills in Bekasi,
Palembang and Pontianak. The company has completed these projects under design and build
schemes.

3.10 Power Generation
For a large middle-income country with a growing economy, the future economic outlook of
Indonesia depends largely on its ability to harness and manage energy sources optimally. If the
economy continues to grow at its current rate, the Ministry of Energy and Mineral Resources
(MEMR) estimates that domestic demand for energy will rise by around 7% annually, with
electricity demand projected to nearly triple between 2010 and 2030. 48 Renewable energy
sources are expected to play an increasingly important role in filling the need for more power
generation.
According to MEMR, the total power generating capacity (including captive and off-grid
generation) was about 55.5 GW in 2015, of which 39,258 MW was owned by the state utility
company PT PLN and the rest procured from contracted Independent Power Producers (IPPs).
Power Capacity: 55.5 GW Electricity Generation: 234 TWh
Others Others
Diesel Diesel
3% 5%
11% 9%
Coal
24%
Hydro Hydro
9% 6%
Coal
49%
Natural
gas
28%
Natural
gas
56%
Figure 44: Installed Power Capacity and Electricity Generation, 2015

Source: MEMR & BPS (2015)
48

While the majority of Indonesia’s current primary energy supply still comes from traditional energy
resources, such as oil, coal and gas, the government has put plans in place to increase the share
of renewable power generation to 23% by 2025, and to 31% by 2050.
Figure 45: Current and Targeted Energy Mix in Indonesia

Source: Asian Development Bank (2014)
The Government’s overall strategy on power generation is embedded in the Presidential Decree
No. 5/2006 on National Energy Policy, which emphasises diversification, environmental
sustainability and maximum use of domestic energy resources.
Facing the prospect of electricity shortages over the medium term, the PLN has recently
introduced a series of Fast Track Programmes (FTPs) to accelerate power generation. While the
mandate of the first FTP (FTP-I) focused exclusively on bringing coal-fired plants online, the FTP-
II has put in place the plans for increases in geothermal power (4,000 MW), hydropower
(1,753 MW), coal gasification (64 MW), and gas (280 MW), in addition to a bulk of coal power
(3,000 MW). So far, only 5,707 MW out of the planned 9,975 MW under FTP-I have been
delivered. FTP-II is also facing severe delays.
In its RUPTL 2015-2024, the government has further introduced a third phase (FTP-III), which
aims to add an additional 35 GW of power by 2019, with increasingly visible share of renewables
in the power generation mix. In combination, the three FTPs aim to bring 42.9 GW of generation
online between 2015 and 2019.

Additional power capacity 2015-2019: 42.9 GW
Hydro (incl. micro)

3%
Solar and others

Coal 3%
60%
Geothermal
3%
Gas PP/ Gas

turbines
Natural gas 10%
(CCGT)
21%
Figure 46: Fast Track Programmes (FTP): Additional Capacity by Plant Type, 2015-2019
Source: MEMR (2015)
Many of the projects involved in the latest stage of power generation programme are still in their
procurement or planning stages. As of June 2016, 8.2 GW (22% of the planned 35 GW) were
under construction, 9.8 GW (27%) were approaching financial closure, 10.4 GW (28%) were in
the procurement stage, and 8.1 GW (22%) in the planning phase.49
While the PLN aims to add additional 18,027 MW under the Fast Track Programmes, nearly
25 GW are expected to come from the participation of IPPs.
Year 2015 2016 2017 2018 2019 Total

PLN 2,658 2,348 4,830 3,777 4,414 18,027
IPP 1,471 1,357 1,720 5,461 14,905 24,914
Total 4,129 3,705 6,550 9,238 19,319 42,941
Table 32: Indonesia’s Generation Expansion Needs, 2015-2019 (MW of Capacity Additions)
Source: RUPTL 2015-2024
To meet its mandate under the FTPs, PLN estimates it will need approximately US$ 40.1 billion
between 2015 and 2019 to cover its costs for generation, transmission and substations, and
distribution of power. An additional US$ 43.4 billion needs to come from the private sector to
49
PLN (2016)

cover IPP investments over the same period in order for Indonesia to reach its goals under the
FTPs.
Item 2015 2016 2017 2018 2019 Total %

Investment requirements from IPPs
Generation (IPP) 3.1 7.5 11.5 11.5 9.8 43.4 52
Investment requirements from PT PLN
Generation (PT PLN) 2.6 3.6 3.9 3.1 2.4 15.6 19
Transmission and Substations 3.8 4.0 3.6 3.4 2.2 17.1 20
Distribution 1.5 1.4 1.5 1.5 1.5 7.4 9
Subtotal PT PLN 7.9 9.0 9.0 8.0 6.1 40.1 48
Total 11.0 16.5 20.5 19.6 15.9 83.5 100
Table 33: Base Cost Investment Requirements for PT PLN’s Network, 2015-2019 (US$ billion)
Source: PT PLN (2015). Program Pembangunan Pemangkit 25 GW & Transmisi
Most recently, the PLN has further revised the power generation projections in its Electricity
Supply Business Plan (RUPTL) 2016-2025 update, which aims to raise the power generation
capacity to 137 GW by 2025, and 430 GW by 2050, compared to 55.5 GW in 2015.50 The use of
coal resources is also expected to decrease while the share of renewable energy sources is
projected to grow further.
Figure 47: Projections of Electricity Generation in RUPTL, 2016-2025

Source: PLN (2016)
50

Given the delays on the delivery of projects under the Fast Track Programmes and the need for
greater private sector involvement, the government has recently taken steps to shorten approval
processes in order to accelerate the realisation of the programme and facilitate private
investment. Supporting regulations include MEMR Regulation No. 3/2015 on the pricing
benchmark for the IPPs and excess power, Presidential Regulation No. 30/2015 on the
implementation of land acquisition for public purposes, and the Presidential Regulation
No. 4/2016 on the acceleration of electric power infrastructure construction.
Key power generation systems in Indonesia
The islands of Java, Madura and Bali account for almost 80% of Indonesia’s total power
generation and consumption, and service needs of around 60% of the total population
(approximately 140 million people). Demand on the Java-Madura-Bali grid is currently about
32 GW.51
Sumatra has the second-largest power generation system in Indonesia. Its installed capacity is
expected to increase to 14 GW by 2022 from its 6 GW in 2013. Peak demand in 2020 is estimated
to reach 8.5 GW, allowing for surplus to be exported. These estimates have spurred the PLN to
plan for Sumatra-Java high-voltage direct current (HVDC) link, capable of handling 3,000 MW,
and for HVDC 600 MW link to Peninsular Malaysia.
Kalimantan is the third-largest demand centre and holds an abundance of fossil fuel and
renewable energy resources. The Kalimantan system currently provides 1,819 MW of power, of
which about 1,356 MW is diesel and fossil fuel-fired units and the rest comes from renewable
energy sources.52
The remaining generating capacity is spread across 600 isolated systems, where electricity
demand is much lower. However, given the national plans to increase the electrification ratio from
51
52

84.4% in 2014 to 96.6% in 2019, the demand for electricity, and, in turn, power generation is
expected to increase in these areas.
Figure 48: Electrification Ratio in Indonesia (2014)

Source: MEMR & BPS (2015)
Significant investments for power generation improvements are also being planned for Sulawesi
and, to a smaller extent, Papua and West Timor.53
Distribution of generated power
The state-owned PT PLN holds a de facto monopoly over distribution of generated power.
In 2014, PLN operated about 925,300 circuit-kilometres of distribution lines and 46,800 megavolt-
amperes of transformer capacity. The network has recently begun to deteriorate due to lack of
upkeep. It is reported that several areas – particularly those with high load densities, such as
Jakarta, Bandung and Surabaya, are overloaded and unreliable.
53

Policies to improve access to electricity around the country and to increase power generating
capacities are currently tightening pressure on the country’s already stretched distribution
capacity, requiring urgent and extensive network investment to ensure that additional generation
capacity translates into more and better-quality supply to consumers. The estimated expenditure
for network expansion and upgrades is about US$ 15 billion per year. However, the de facto
monopoly of PLN over the distribution lines is hindering the potential investments from the private
sector.54
Key stakeholders in Indonesia’s power generation sector
The primary governmental body responsible for governing the Indonesian energy sector is
MEMR. MEMR comprises several directorates with their own specific responsibilities within the
sector, in particular, the directorates general for oil and gas; electricity; and new and renewable
energy and energy conservation. In addition to its legal responsibilities, MEMR also manages
relevant activities of the state-owned utilities and energy service companies, and conducts
research relevant to Indonesia’s mandated energy goals.55
Other relevant government ministries and agencies include the Ministry of Finance (MOF),
the State Ministry of National Development Planning (BAPPENAS), the Ministry of State-Owned
Enterprises, the Ministry of Environment and Forestry, and others, which are involved in various
areas of the energy generation sector.
Since the passing of the Law on Local Government No. 22/1999, revised as Law on Local
Government No. 32/2004, local governments now play a greater role in administration of energy
provision and power generation. A consequence of political decentralisation has been the
confusion and even conflict over jurisdiction of the various levels of government. Local
governments now effectively control the development of energy resources and the issuing of
permits for infrastructure projects. Delays and difficulties in land acquisition and procurement of
the various necessary permissions have interrupted the implementation of many projects,
54
55

including ones of national priority. The national government is now focused on rectifying this
situation through the efforts of the Committee for Acceleration of Priority Infrastructure Delivery,
housed within the Coordinating Ministry of Economic Affairs.
State-owned enterprises also play a key role in the Indonesian energy sector. They function as
corporations but are simultaneously charged with mandates to work towards the goals and needs
of the state. Some of the state-owned enterprises in the power generation sub-sector are the
PLN, PT Pertamina, PT Perusahaan Gas Negara, PT Pertamina Geothermal Energy, and
PT Geo Dipa Energi.
The table below maps out the involvement of these different ministries and agencies and their
operational levels:
New and Renewable

Coal Oil & Gas Electricity
Energy
MEMR; DG Minerba,
CMEA, BAPPENAS, CMEA, BAPPENAS, CMEA, BAPENNAS,
Policy CMEA, BAPPENAS,
MOF, MOEF, MOI, MOT, MOF, MOEF, MOI, MOF, MOEF, MOI MOT,
Making MOF, MOEF, MOI, MOT,
MSOE MOPWH MSOE
BKPM
National Energy Council (DEN)
SKK MIGAS, BPH
Licensing DG Minerba NA DG Electricity
MIGAS, DG MIGAS
Local Government Local Government Local Government Local Government
Contract
NA SKK MIGAS (Upstream) NA NA
Making
DG MIGAS (Upstream
and Technical), BPH DG EBTKE, DG
Regulator DG Minerba DG Electricity
MIGAS (Downstream and Electricity, DG MIGAS
Business)
SOEs, PSCs, Local SOEs (PT Pertamina,
Local Companies, SOE (PT PLN), Captive
Companies, PGN), PSCs
Operation Cooepratives, Power, Cooperatives,
Cooperatives, (International and Local
Communities Communiites
Communities Companies)
BAPPENAS = State Ministry of National Development Planning, BKPM = Indonesia Investment Coordinating Board, BPH
MIGAS = Regulatory Agency for Upstream Oil and Gas, CMEA = Coordinating Ministry of Economic Affairs, DG = Directorate
general, EBTKE = New and Renewable Energy and Energy Conservation, MIGAS = Oil and Gas, Minerba = Minerals and
Coal, MEMR = Ministry of Energy and Mineral Resources, MOEF = Ministry of Environment and Forestry, MOF = Ministry of
Finance, MOI = Ministry of Industry, MOPW = Ministry of Public Works and Housing, MOT = Ministry of Trade, NA = not
applicable, PGN = State Gas Company, PT PLN = State Electricity Company, PSC = production sharing contract, SKK
MIGAs = Special Task Force for Upstream Oil and Gas Business Activities, SOE = state-owned enterprise
Table 34: Institutional Mapping of Indonesian Energy Sector

Source: Asian Development Bank (2014). Energy Sector White Paper

Local Players
PT Pertamina
PT Pertamina is an Indonesian state-owned oil and gas corporation based in Jakarta. Created in
1968, the company is the second-largest crude oil producer in Indonesia, behind the US-based
Chevron Pacific Indonesia. It provides exploration, drilling, transmission, and production of oil,
gas and geothermal energy products. It also manages renewable energy projects. In addition,
Pertamina is developing Coal Bed Methane, in order to support energy diversification and
increase the government’s national gas supply.
In 2013, the company decided to expand its business line into the building of power plants in order
to become an independent power producer with the ability to supply up to 5 GW of electricity to
the state electricity company PLN. The same year, the company started its feasibility studies for
a 120 MW plant in Bantar Gebang. Being in diversification mode, Pertamina has also expanded
its business lines into the fields of shale gas, biomass, solar power, hydropower, wind power and
geothermal power.
In January 2017, Pertamina announced a US$ 1.8 billion deal with state electric utility PLN to
build a 1760 MW gas-fired power plant, floating storage and regasification unit (FSRU) in
West Java, Indonesia. The two parties have signed a Power Purchase Agreement (PPA), through
which PLN will buy electricity from the plant for 25 years, following its planned completion in 2021.
Pertamina holds a 40% stake in the joint venture that will develop the project, Jawa Satu Power,
while Japanese trading houses Marubeni and Sojitz own 40% and 20%, respectively. The power
plant, once completed, will be one of the largest gas-fired plants in Asia. Gas will be supplied from
the FSRU.
PT Medco Power
PT Medco Power owns and operates gas-fired plants in Batam Island and Palembang.
The company develops and operates small-to-medium size independent power projects across
the country; and provides power project services with business activities, including operation and

maintenance power plant services, as well as project engineering, procurement and construction
(EPC). The company was founded in 2004 and it is based in Jakarta, Indonesia.
The company has also ventured into geothermal power plant development when it won contract
to work on the Sarulla Geothermal Power Plant in Tapanuli Utara district, North Sumatra province.
In March 2017, the first unit of 330 MW Sarulla geothermal power plant has commenced
commercial operation.
Figure 49: First Unit of 330 MW Sarulla Geothermal Power Plant

Source: Power Info Today
The company, in consortium with Ratchaburi Electricity Generating Holding of Thailand, has also
started the construction of a gas power plant in Pekanbaru, Riau, which, when completed, will
have the total installed capacity of 250 MW. The company now owns 11 power generation
facilities across Indonesia.
PT Indonesia Power
PT Indonesia Power was founded in 1995 as a subsidiary of PLN, a state-owned electricity

company. The company owns and operates power plants in various energy sectors and offers
power generation services. Indonesia Power produces power through coal, hydro, geothermal,
natural gas, oil power plants. It also holds operational units in combined cycle power plants.
The company occupies over 35% of the power generation market in Indonesia.

PT PLN
The State Electricity Corporation (PT PLN) is a key agency in the energy sector in Indonesia. It is
the only state-owned power utility company in the country and the country’s only fully integrated
power utility firm. PT PLN is the major provider of all public electricity and electricity infrastructure
in Indonesia, including power generation, transmission, distribution and retail sales of electricity.
It holds primary responsibility for achieving the government’s accelerated generation targets
through the Fast Track programmes (FTPs). Since the passage of the new electricity law in 2009
(Law 30/2009), PT PLN no longer holds a legal monopoly over electricity generation, transmission
and distribution, but it has a right of first refusal over any activity in the sub-sector, and this often
serves as an effective deterrent for private enterprises in many cases. 56
Given the increasing energy demands in Indonesia, the power generation market is booming.
The government is planning to increase Indonesia’s generating capacity to 137 GW by 2025, and
430 GW by 2050, from its current state of 55 GW. Participation of private sector is crucial for the
success of the government’s plans. Therefore, there are significant opportunities for European
companies to enter the Indonesian power generation market. Although the state-owned utility,
PLN, continues to hold de facto monopoly over power generation, the limited resources and
capacities for expansion are pushing the PLN to open up the sector for IPPs. The cooperation
with the PLN, therefore, is easing and new avenues for domestic and international power
generation developers are opening up in power development projects. Among the most promising
entry points are:
 Development of new power generation projects
 Provision of turnkey solutions for new power plant projects
 Replacement, upgrading and retrofitting market opportunities
 Smaller-scale, off-grid power generation solutions
56

Development of new power generation projects
Under the new Fast Track Programmes and the PLN RUPTL 2016-2025 plan, Indonesia expects
to significantly expand its power generating capacity in the upcoming years. While the state-
owned PLN aims to develop around 18 GW of additional power, nearly 25 GW are expected to
come from the IPPs. It is estimated that around US$ 43.4 billion need to come from the private
sector to cover IPP investments in order for Indonesia to reach its power generation goals. As a
result, there are ample opportunities for European companies with expertise in power plant
development to enter the Indonesian market.
Taking into consideration the National Energy Policy, which emphasises diversification,
environmental sustainability and maximum use of domestic energy resources, companies may
find opportunities for power generation projects in both traditional and NRE (New and Renewable
Energy) sectors.
Provision of equipment and turnkey solutions for new power plant projects
In addition to directly engaging in power plant development through IPP tenders, the expanding
number of projects also opens up opportunities for turnkey solutions providers and distributors.
New power generating projects require various parts and equipment, which can be provided by
European companies. Energy efficient, resource-saving technologies, including turbines,
substations, transmission, engines, pipes, transformers, distribution equipment, and other power
generation equipment parts, are likely to be in demand. These opportunities lie either in the sale
and implementation of turnkey systems in existing infrastructure, or in project development for the
expanding Indonesian power generation network.
Replacement, upgrading and retrofitting market opportunities
The replacement market in Indonesia is also growing as there is a constant requirement for
replacement parts and services for the ageing power generation infrastructure. The continuous
maintenance, upgrading and expansion of existing power plant systems to improve power

generation efficiency, the optimisation of power generation management and provision, and the
efforts to abate pollution via more optimal solutions are driving the growth of opportunities.
While the government plans to generate more power via new projects, it is also equally interested
in opportunities to optimise the existing power plant portfolio. The government’s energy
conservation and energy efficiency goals together with concerns over GHG emissions point to
the growing opportunities for European companies. There are currently over 922 listed power
plants in Indonesia, which can potentially benefit from European expertise in power generation
optimisation.
Smaller-scale, off-grid power generation solutions
While current power generation capacities are concentrated in three key networks, namely, the
Java-Madura-Bali, Sumatra and Kalimantan networks. The remaining generating capacity is
spread across 600 isolated systems where electricity demand has been traditionally much lower.
However, with the national plans to increase the electrification ratio to 96.6% by 2019, the demand
for electricity, and, in turn, power generation in these locations is expected to rise. In 2016, the
Indonesian government has also issued a new framework policy to incentivise the electrification
of remote areas. Minister Regulation ESDM No. 38/2016 provides a regulatory framework for
private companies to develop independent microgrid utilities in remote and underserved locations.
Under Regulation 38/2016 a developer now can theoretically combine a group of villages and
communities into a bundled packet and apply for the issuance of a license to own and operate an
independent utility concession. As a result, companies may find opportunities to enter the
Indonesian power generation market via provision of solutions for remote, off-grid or isolated
power systems.

European Companies
Siemens AG
Siemens is a global technology leader which is active in more than 200 countries. The company
focuses on the areas of electrification, automation and digitalisation. One of the world’s largest
producers of energy-efficient, resource-saving technologies, Siemens is No. 1 in offshore wind
turbine construction, a leading supplier of gas and steam turbines for power generation, a major
provider of power transmission solutions and a pioneer in infrastructure solutions as well as
automation, drive and software solutions for the industry. With approximately 1500 employees in
Indonesia, Siemens generated sales of EUR 263 million in fiscal 2015.
In April 2016, the company signed two Memorandums of Understanding (MoU) with the state
power company PLN to develop 500 MW of distributed power generation capacities as well as
the Indonesian transmission and distribution grid.
Siemens has been actively engaged in supporting Indonesia’s infrastructure with innovative
technologies since 1855. Several projects like the Jawa Power’s Paiton II Plant in East Java or
the Simangkuk project at the Sumatra grid support Indonesia’s energy supply.
Wärtsilä
Wärtsilä is a Finnish corporation which manufactures and services power sources and other
equipment in the marine and energy markets. Wärtsilä has three main businesses: Energy
Solutions focusing on the energy market; Marine Solutions focusing on the marine market; and
Services, responsible for supporting both markets.
The company has secured its foothold in Indonesia in 2017, when the company (as part of a
consortium with PT PP) was awarded a contract to build five power plants, which will have a total
capacity of 255 MW. The plants are being built for Indonesian state utility PLN and the consortium
will be responsible for the complete engineering, procurement and construction operations.

The consortium will also operate and maintain these facilities for five years before handing over
the control to PLN.
The five plants are covered by two separate orders. One order comprises four modular “gas cube”
power plants, totalling 115 MW, in Ternabe, Nabire, Bontang and Flores. The second order is for
a 140 MW power plant in Bengkanai, Central Kalimantan. All five plants will include Wärtsilä 34DF
engines capable of running on multiple fuels, such as liquid fuel and natural gas. The four gas
cube power plants are scheduled to be operational later this year, or early 2018, and the
Bangkanai plant is expected to be operational in late 2018.

3.11 Energy Efficiency & Carbon Services
Indonesia is a country with a clear need for energy efficiency services. Between 2004 and 2014,
the primary energy consumption has increased by more than 5% every year. The national utility,
on the other hand, has been struggling to supply the increasing demand for electricity, resulting
in burnouts and production losses at industrial plants.
Currently, Indonesia’s income elasticity of energy demand and energy intensity is higher than in
other ASEAN countries. The high levels of energy intensity are the result of several key factors.
For many years, Indonesia was a strong oil-producing country and subsidised petroleum products
and electricity. This inevitably engendered an inefficient pattern of energy use. Other factors, such
as a relatively high share of biomass and the rapid growth of energy-intensive industrial activities,
particularly in petrochemical, fertilisers and cement industries, have increased Indonesia’s energy
intensity.
A country with a large potential for energy efficiency solutions, Indonesia has established some
of the most ambitious targets in the region in order to accelerate more efficient energy use.
The 2011 update on the 2005 National Energy Conservation Masterplan has identified an energy
savings potential of 17% by 2025. According to the Ministry of Energy and Mineral Resources
(MEMR), the potential savings per sector are distributed as follows:
Energy Consumption Per Sector Potential of Energy Target of Energy Conservation

Sector
Year 2013 (Million BOE) Conservation Sectoral (2025)
Industry 335 (42%) 10 – 30% 17%
Transport 324 (39%) 15 – 35% 20%
Household 100 (12%) 15 – 30% 15%
Commercial 36 (4%) 10 – 30% 15%
Others (Agriculture,
23 (3%) 25% -
Construction, Mining)
Table 35: Potential Energy Savings per Sector by 2025
Source: Draft National Energy Conservation Master Plan (RIKEN), 2013

In early 2015, the Government has also launched a national campaign, called Potong 10%
(Cut 10%), which aims to reduce energy use by 10% before the end of 2019. It is also targeting
a decrease in energy intensity by 1% per year until 2025 and aims to significantly improve energy
elasticity over the same period.57
The Climate Investment Fund estimates that the energy efficiency opportunity in Indonesia is
worth approximately US$ 5 billion. The Asian Development Bank has further suggested that the
energy efficiency retrofit requirements may amount to US$ 4 billion, including US$ 1 billion in
electrical equipment, US$ 1 billion in coal-fired systems, US$ 0.9 billion in diesel-fired plants and
US$ 1 billion to finance the building retrofit requirements of shopping malls, office buildings and
hotels.58
Looking at the opportunities in transport, residential and manufacturing sectors, ReEx Capital
Asia has further estimated that Indonesia has the second largest market for energy efficiency
services and technologies in the South East Asian region.59 It has approximated that the industrial
and commercial sectors alone can offer an investment potential of US$ 1.4 billion (US$ 0.8 billion
in the industrial and US$ 0.6 billion in the commercial sectors).
End-users and energy efficiency potential
Energy use in the transport sector has grown more quickly than in any other end-user sector,
doubling over the last ten years. However, improvements in energy intensity have been more
modest than in either the residential or manufacturing sectors. To date, efforts to improve energy
efficiency performance of the transport sector have not received enough legislative support. As a
57
58
Low Carbon Support Programme & Ministry of Finance of Indonesia (2015). A Coherent Fiscal Policy Framework for Promoting Renewable
Energies and Energy Efficiency in Indonesia.
59
The market potential for energy efficiency ranking: 1. Malaysia, 2. Indonesia, 3. Thailand, 4. Singapore, 5. Vietnam, 6. Philippines. Source:
ReEx Capital Asia (2011). South East Asia Energy Efficiency Market Report 2011 & Global Business Guide (accessed in September 2017).
Indonesia: Joint Ventures / Export Distribution.
http://www.gbgindonesia.com/en/manufacturing/directory/pura_mayungan/products/energy_efficiency_consultancy.php

result, the IEA has ranked Indonesia 23rd out of 36 surveyed countries in terms of energy
efficiency, placing it lower than countries such as India and a host of European nations.60
In the manufacturing sector, iron, steel, cement, ceramic, glass and textile industries are all heavy
energy consumers with potential for substantial improvements in energy utilisation. Collectively,
the industrial sector accounts for almost a third of energy consumption in Indonesia, but
consumes energy inefficiently when compared to international benchmarks. Conversion efficiency
at the power plant level has also remained almost constant for more than 20 years. 61
There are also gains to be made in the residential and commercial sectors. Some estimates report
that these two end-users may require the largest percentage reductions from business-as-usual
energy consumption in order to reach energy efficiency targets. However, energy prices in
Indonesia currently provide few incentives for these customers to improve their energy efficiency.
Customers are also often unaware of the opportunities to improve their energy use by utilising
more efficient appliances and may have limited resources to undertake energy efficiency
improvements.
Figure 50: Indonesian Final Energy Use by Sector, 2000 and 2015
Source: IEA (2017). World Energy Balances
60
61

Government initiatives to accelerate energy efficiency
In recent years, the Government, together with international partners, has introduced several
initiatives which are expected to further drive Indonesia towards reaching its energy efficiency
targets. For example, the MEMR has embarked on a concerted effort to roll out energy efficiency
regulations, implementation rules and standards, including the Regulation No. 70/2009 on Energy
Efficiency. The Asian Development Bank has also approved the loans programme which aims to
fund energy efficiency projects in Indonesia.
The Government has further developed specifications and procurement guidelines for upgrading
municipal street lighting systems to those based on light-emitting diode technologies. It is also in
the process of preparing a nationally appropriate mitigation action plan and registering it with the
UNFCCC so that GHG emissions reductions from future municipal programmes would receive
GHG emissions reductions credit.62
The Indonesian Government has initially proposed setting up a revolving fund for energy
efficiency, but the launch of the fund has been delayed due to uncertainties related to demand,
administration and utilisation of such financing mechanisms.63
Finally, Indonesia has made progress on non-fiscal policies, such as standards and labelling in
order to encourage the uptake of energy efficient appliances. For example, in 2011 it began
developing the energy efficient labelling for Compact Fluorescent Lamps as well as refrigerators,
air conditioners, electronic ballasts, electric fans, rice cookers and motorcycles. There are plans
to accelerate this programme to cover a wide range of other appliances. 64 However,
manufacturers are still reluctant to implement these labelling regulations due to difficulties in
finding accredited testing laboratories.
62
Asian Development Bank (July 2016). Indonesia: Energy Sector Assessment, Strategy and Road Map. [Indonesia has traditionally been an
energy-surplus country. The Indonesian population is still used to overconsumption as a result of decades of cheap fossil fuel based power
and electricity generation. As a result, energy conservation is still not among the top priorities for significant segments of Indonesians and the
demand for energy efficiency services needs further push. The delay of the revolving fund has been related to further investigation of the
demand for energy efficiency services, bureaucratic considerations of how the fund would be used and which channels would be available for
interested parties. The government is currently evaluating the available options for opening up the revolving fund].
63
ADB (2015). Summary of Indonesia’s Energy Sector Assessment.
64

Vehicle energy efficiency testing is currently limited to requirements for low-cost green car
initiatives. In general, the transport sector remains largely unaddressed, with room for policy-side
action. The situation, however, is not exclusive to Indonesia and reflects the general trends in the
South East Asian region.
Figure 51: Policies and standards on transport energy efficiency across the South East Asian region
Source: Energy Research Institute Network (2016). Energy Efficiency Policy Update
Local Players
PT Hexamitra Daya Prima
PT Hexamitra Daya Prima is an Indonesian privately-owned company specialising in solutions for

energy security challenges. Hexamitra conducts initial studies and formulates solutions for
improving energy efficiency and energy security in Indonesia. Its solutions are available for private
sector, government and non-profit organisations.

Hexamitra performs technical and economical comparisons for adoption of LED technology on
lighting in order to improve energy efficiency in light usage across Indonesia. The company also
conducts planning, product supply, installation and maintenance services. Their solutions are
available for hotels, hospitals, shopping centres, malls government buildings and facilities as well
as factory sites and office buildings.
PT Pura Mayungan
PT Pura Mayungan was established in 1975 as a joint venture of two companies with experience
in the electrical component and switchboard manufacturing industry in Indonesia. Over the
decades the company has evolved to become the leading integrated solution provider in the
design, manufacture, marketing and distribution of Medium Voltage (MV) and Low Voltage (LV)
switchboards and electrical panel components in Indonesia. In 2007, the company established its
Business Energy Efficiency Solution arm, which provides consultancy and audits to support
clients in achieving the ISO 50001 certification. Pura Mayungan was among the first Indonesian
companies to gain the ISO 50001 certification itself.
The company carries out energy audits, covering every aspect of plants’ operations, processes
and products as well as electrical and thermal energy, and the study of generators and utility
equipment, such as fans, pumps and air conditioners.
In Indonesia, Pura Mayungan has served many of the country’s leading local and multinational
companies in a broad range of industry sectors to achieve optimal energy efficiency results.
The company works with clients in the long term to continually provide support, assistance and
human resources training on the best energy efficient processes.
Synergy Efficiency Solutions (SES)
Synergy Efficiency Solutions (SES) is an Indonesian energy efficiency company with offices in
Jakarta and Bali. Established in 2008, SES specialises in building performance simulation, green
building certification, energy audits, Energy Service Company (ESCO) financing and lighting
optimisations.

In the few short years it has operated, the company has become a leader in South East Asia’s
market for energy efficiency. The company’s services were contracted by a number of clients,
including the Nagan Raya 11 MW coal-fired power plant, Indonesia Convention Exhibition (ICE),
Universitas Multimedia Nusantra and Surabaya’s Adi Husada Hospital.
SES provided Nagan Raya 11 MW coal-fired power plant a Level 1 Energy audit on all of their
energy-consuming equipment. These optimisations increased Nagan Raya’s production to
12 MW (thus increasing net profits by more than US$ 514,924 per year) and caused a 14%
reduction in coal consumption. It was also contacted as the lead energy efficiency consultant for
the Indonesia Convention Exhibition – the largest convention centre in South East Asia. Together
with Australia’s COX Architects, SES designed a building with the reduction in initial investment
costs by US$ 11 million. SES also helped Universitas Multimedia Nusantara win the Indonesian
Ministry of Energy 2013 award for the Most Energy Efficient building in Indonesia and it has
designed an ESCO (Energy Savings Company) financial support to carry out a Level 1 Energy
Efficiency Assessment of Surabaya’s Adi Husada Hospital with 15% energy savings on the
1st retrofit and 45% energy savings on the 2nd retrofit. It was Indonesia’s first full ESCO.
Various market studies demonstrate the ample opportunity for cost-effective energy efficiency
investment in Indonesia. European companies may find success in providing technologies and
services across several areas:
 Export opportunities for energy efficient technologies
 Improvements for thermal plant efficiency
 Energy efficiency monitoring and auditing
 Optimisation of energy efficient transport systems

Export opportunities for energy efficient technologies
European companies may find demand for energy efficient technologies and export opportunities
in 4 main areas:
 Industrial manufacturing sector (covering both energy supply and energy demand):
The technologies in demand are likely to be combined heat and power solutions, including the
retrofit of equipment needed for heat and power generation, lighting, ventilation and air
conditioning, and technologies facilitating process improvements.
 Building technologies: The products in demand are expected to be the energy efficient chillers,
energy efficient cooling systems, energy efficient lighting, such as LEDs and ballast
improvement equipment, energy efficient shading and ventilation, double-glazing, insulation,
and solar heating.
 Machinery: Companies may find opportunities to export variable speed drives, automated
motors, heat recovery systems, insulation equipment, energy usage monitoring systems,
emission capturing systems, such as filters and catalytic converters, energy efficient coolers
and gas turbines, and energy efficient boilers.
 Transport: Export opportunities exist for solutions, which improve public transport systems and
offer smart-grid technologies.
Improvements for thermal plant efficiency
There is considerable supply-side efficiency potential in Indonesia. Despite some efforts, there
has been minimal overall improvement in the operational efficiency of the state-owned utility, PLN,
thermal plants since 1990. These plants, however, are generally acknowledged to be inefficient
energy consumers. As the government is aiming for ambitious GHG emissions reductions through
the implementation of renewable energy technologies and energy efficiency programmes,
companies with expertise in power plant efficiency optimisation can find lucrative opportunities in
Indonesia.

Energy efficiency monitoring and auditing
Indonesia also lacks experienced energy managers and energy auditors in order to move energy
efficiency further. Companies which can provide capacity-building initiatives to develop a
domestic skillset may find avenues for entering the Indonesian energy efficiency market. To date,
only 96 energy managers and 54 energy auditors have been accredited in the country. In addition,
the lack of qualified professionals may offer opportunities for European energy efficiency
consultancies to offer their own auditing and energy efficiency consulting services and/or may
prove a good entry point for exporting and implementing energy efficiency technologies. 65
Optimisation of energy efficient transport systems
Indonesia also suffers from some of the most traffic congested cities in the world and high energy
consumption is expected to grow in the future. There are a series of measures, and subsequent
opportunities, that would promote greater energy efficiency in the transport sector. These include
the development of intelligent transport systems, application of traffic implementation control,
application of parking management, and rejuvenation of public transport fleets, among others.
European companies with expertise in traffic management and optimisation can find opportunities
to assist the Indonesian government in transforming the transport sector within the energy
efficiency guidelines. Both technical and financial assistance may be needed and these may be
two avenues to enter this market. Companies wishing to offer their services and investment in the
optimisation of energy efficient transport systems should engage the government, as urban
development projects fall within the government’s jurisdiction.
65
The EU’s 25 July 2017 proposal for legal text provisions on energy and raw materials in the EU-Indonesia FTA, Article Y.2 “Standards,
Technical Regulations and Conformity Assessments”, proposes the promotion of cooperation between regulators and/or standardization
bodies in both territories on energy efficiency and renewable energy. It proposes the development of common standards and convergence or
harmonization of applied standards on energy efficiency; joint analysis, methodologies and approaches, to assist and facilitate the
development of relevant tests and measurement standards for energy efficiency; the promotion of standards on energy efficiency, including
product design and labelling, and, where appropriate, through existing international cooperation initiatives; and the exchange of information
and best practices. As a result, the European companies may gradually find it easier to participate in the Indonesian energy efficiency market.

European Companies
ABB
ABB is a Swedish-Swiss multinational headquartered in Zurich, and is a global leader in power

and automation technologies that enable utility, industry, and transport and infrastructure
customers to improve performance while lowering environmental impacts. In 2014, the company
opened its new production facility in Cibitung, West Java, to double ABB’s miniature circuit
breaker (MCB) production capacity within the region, to meet the growing demands for energy
efficiency. The company sees substantial growth opportunities for the low voltage business in
Indonesia.
AQYLON
Founded in 2009, the French AQYLON is a global leader in the design and manufacturing of
Organic Rankine Cycle (ORC) turbines, which transforms heat into electricity and thermal power
from renewable sources (biomass, geothermal, solar), or from waste heat created by industrial
processes, engines or gas turbines. Since its founding, the company has focused primarily on
delivering its solutions for Renewable Energy and Energy Efficiency markets. The company offers
a wide range of Engineering Services, including Turbomachine Design, Energy Efficiency
Consulting and Project Engineering Management.
AQYLON opened its office in Jakarta in March 2017, following the signing of a 3 MW biomass
plant contract where it installed its ORC turbines. After its first direct sale of a biomass power
plant that uses the Empty Fruit Bunch (EFB) as fuel to power the boiler, the company is currently
developing several biomass and waste-to-energy projects under a Power Purchase Agreement
(PPA) scheme.

3.12 Biofuel
Indonesia is the world’s 15th largest motor vehicle market and national demand for transport fuel
is growing rapidly. Since 2006, Indonesia has been increasing its biofuel blend targets as well as
providing biofuel subsidies to producers, mainly to reduce the country’s dependence on oil
imports, but also to support the domestic agricultural economy and to mitigate climate change.
According to the government strategy, biofuels are expected to meet at least 5% of energy use
by 2025.66 The National Medium-term Development Plan (RPJMN – Rencana Pembangunan
Jangka Menengah Nasional) 2015-2019 aims to produce 4.3-10 thousand kilolitres of biodiesel
and 0.34-0.93 thousand kilolitres of bioethanol by 2020.67
The Indonesian biofuels policy is governed by a number of regulations and decrees. The most
significant is the biofuel blending mandate first introduced in 2008 by the Ministry of Energy and
Mineral Resources (MEMR). It has since been revised several times, most recently in early 2016
with a mandate for 20% blending (B20) in diesel for 2016 and a targeted 30% by 2025; power
plant sectors were obliged to blend 30% (B30).
Total liquid biofuel use per year is projected to increase to 25 billion litres by 2030, compared to
1.35 billion litres blended in the first half of 2016.68 Further, the Minister of Transport announced
in late 2015 that the government will require all airlines to use biofuels from 2018 onwards. 69
Today, biodiesel in Indonesia is produced from palm oil, a crop for which the government recently
renewed a moratorium to prevent additional plantations.
66
ICCT (2016). Biofuels policy in Indonesia. Link:
http://www.theicct.org/sites/default/files/publications/Indonesia%20Biofuels%20Policy_ICCT_08082016.pdf
67
MEMR Ministerial Regulation No. 25/2013
68
International Energy Agency (2015) Indonesia
69
Global Indonesian Voices (2015). Pushing for aviation biofuel. Link: http://www.globalindonesianvoices.com/23247/pushing-for-aviation-
biofuel/

Biodiesel
Indonesia’s biofuels program is centred on palm oil-based biodiesel and the development of
Indonesia’s on-road domestic market. Although the current EU anti-dumping duties have
contributed to a decline in Indonesian exports since 2015,70 biodiesel policy is not expected to
change as a result of policy changes. China has evolved as the primary market for Indonesian
biodiesel exports at about 55% of total exports in 2014, boosted by China’s elimination of biodiesel
import taxes.
MEMR data states that 2016 biodiesel consumption reached 3.008 billion litres, while 2017
consumption is expected to drop to 2.8 billion litres based on MEMR reports of slightly lower
demand. Trade data states that Indonesia’s 2016 exports reached 478 million litres.71 The share
of biodiesel in all diesel fuel expressed in volume terms is estimated to grow to 8% by 2025. 72
Ethanol
There is no fuel ethanol production in Indonesia, although there are 14 ethanol plants in Indonesia
producing non-fuel ethanol for the medical industry, cosmetics and export. Indonesian ethanol
production is molasses based, as it is the most readily available ethanol feedstock in Indonesia,
which has more than 60 sugarcane mills.
There are ambitious targets to reach 20% ethanol blending in industry, power and transport set
for 2025. Yet, due to the relative lack of ethanol infrastructure, feedback supply gaps and the
general focus on diesel, the Government of Indonesia is unlikely to pursue ethanol blending.
70
In November 2013, the EU imposed tariffs of 8.8% to 20.5% for Indonesian biodiesel producers, which would apply for five years. The duties
were set to curb competition for European biodiesel producers. Indonesia, which uses palm oil to make biodiesel, has submitted a complaint
case, which is still pending at the WTO.
71
USDA Global Agricultural Service (2017). Indonesia biofuels annual report 2017. Link:
https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Biofuels%20Annual_Jakarta_Indonesia_6-20-2017.pdf
72
FAO (2016). Agricultural Outlook 2016-2025. Link: http://www.fao.org/3/a-BO103e.pdf

Challenges for biofuel development in Indonesia
The biofuel development, especially via palm oil plantations, experiences additional challenges.
The growth of Indonesia’s domestic palm oil industry is coming at enormous environmental and
social cost. The expansion of the industry is resulting in massive land clearing of mostly carbon-
dense forests, meaning that biodiesel based on palm oil is in fact associated with rising
greenhouse gas emissions. Lost forests are contributing to massive losses in biodiversity, and
burning in palm oil plantations creates thick regional haze and pollution. Conflicts frequently arise
over land use between local people and corporations seeking to build palm oil plantations. Weak
law enforcement in the forestry and plantations sectors indicates that this damage will continue.73
Local Players
PT Pertamina (Persero)
Indonesia’s largest state-owned oil company, Pertamina, is the country’s leading integrated
energy company. It is present throughout the value chain of the energy sector, including the
exploration and production, refining, manufacturing and marketing of oil products and
petrochemicals; and the development of biofuels, geothermal power and other sustainable
alternative energy sources.
In 2015, Pertamina announced plans to invest approximately US$ 480 million to produce
bio-aviation turbine fuel (avtur/jet fuel), as well as build a refinery, with a production capacity of
260 million litres per year.74
Sinar Mas Agro Resources and Technology
Sinar Mas Agro Resources and Technology, a part of the Sinar Mas Group, is the country’s largest
palm oil plantation group holding plantation concessions totalling 139,300 hectares and operating
16 crude palm oil mills. Their plantations are located in Sumatra Utara, Jambi, Bangka,
73
74
Jakarta Post (2017). Pertamina to construct bioavtur plant. Link: http://www.thejakartapost.com/news/2015/08/13/pertamina-construct-
bioavtur-plant-2017.html

Kalimantan Tengah, Kalimantan Timur and Kalimantan Selatan, while its processing plants are
located in Surabaya, Medan, Tarjun and Bekasi.
The company’s first biodiesel plant began operating in 2016 with an installed capacity of 300,000
tonnes per annum. Its second plant, the Marunda biodiesel plant started operations in 2017, also
with a capacity of 300,000 tonnes of biodiesel per annum.
In 2007, Sinar Mas Agro signed a deal with China National Offshore Oil Corporation (CNOOC)
and Hong Kong Energy Holdings to develop biofuel projects worth US$ 5.5 billion in two remote
provinces. The three companies intended to plant 1 million hectares of oil palm, sugarcane and
cassava over the next eight years in Kalimantan and Papua to generate bioethanol from the latter
two crops and palm oil, according to a Sinar Mas statement.75 As of 2015, the plan was halted
after palm oil prices augmented.76
PT Astra Agro Lestari Terbuka (AALI)
AALI is one of the largest oil palm plantations in Indonesia, and has been operating for 35 years
in both the upstream and downstream businesses. By the end of 2015, the company has been
managing oil palm plantations covering a total of 297,862 hectares, comprising about 80%
nucleus and 20% plasma plantations, spreading over Sumatra, Kalimantan, and Sulawesi.
Combining its upstream and downstream refineries, the company’s refining capacity reached
3,000 tonnes of CPO a day, equal to 900,000 tonnes a year.77
The biofuel market in Indonesia provides several entry points for European companies. Some of
the existing channels for entering the market are:
 Biofuel production
75
Rambu Energy (2017). Sinar Mas Agro expects new biodiesel plant to start operating in Q2. Link:
https://www.rambuenergy.com/2017/02/sinar-mas-agro-expects-new-biodiesel-plant-to-start-operating-in-q2/
76
Asia Nikkei (2015). Conglomerate wants favourable policies for new refineries. Link:
https://asia.nikkei.com/Business/Companies/Conglomerate-wants-favorable-policies-for-new-refineries
77
Sikuritas Sinarmas (016). El Nino – a blessing in disguise. Link: http://www.sinarmassekuritas.co.id/download/research/AALI%20-
%20Initiating%20Coverage.pdf

 Research & Development (R&D) into innovative and second-generation biofuels
 Biofuel development for aviation sector
Biofuel production
Several opportunities are presented on the supply side for European companies for consulting
and engineering services for design, construction and management of biofuel plants as well as
supply of technology, machinery and equipment for biofuel processing. Technical knowledge and
technology for biofuel processing, storage, handling, transportation and distribution are some of
the key needs in the biofuel production sector.
The recent example of Finnish investment in the first commercial-sized biofuel pellet production
plant in Indonesia, through finance (FinnFunds) and management consultancy (Dovre Group)
which further provided opportunity for the Swedish company CellMark to trade in renewable
energy with countries such as South Korea and Japan, attest to the favourable conditions for
foreign business and innovation in biofuels production, consultancy and trade. European
companies with expertise, machinery, packaging and transport related to biofuel or biofuel pellets
made from organic matter or biomass will continue to find market opportunities in Indonesia, as
well as the capacity for commercial-sized production for international trade (more information on
this below under “European Companies”).
Research & Development (R&D) into innovative and second-generation biofuels
R&D into innovative and second-generation biofuels also present particular opportunities, for
instance from woody crops. Woody crops on surplus and marginal agricultural land could be used
for the production of advanced biofuels. Given the rapid increase in liquid biofuel demand and the
relatively limited potential for sustainable energy crops, advanced biofuels from woody crops
might present an opportunity towards meeting blending targets while ensuring the sustainability
of the bioenergy feedstock supply chain.

Biofuel development for aviation sector
Other opportunities for European companies are available through the aviation sector. Following
the new mandatory blending target from 2018, European companies may see an increased
demand for supply of technology, equipment and consulting.
European Companies
FirmTec
The Dutch company FirmTec is a specialist in vegetable oil processing systems. FirmTec’s main
areas of specialisation include the processing of alternative residual oil and fats.
In 2014, it was reported that FirmTec will deliver the first ever container-sized plant capable of
producing 100% green biodiesel to the Indonesian company, Waterland. Developed using a patented
method by the Fraunhofer Institute in Germany, the plant aims to produce biodiesel with the aid of
enzymes and ethanol, using oil from the Camelina sativa plant.78 The worldwide patent on this
method was bought by Waterland, which also produces its own ethanol. As the demand for
sustainable energy continues to rise in Indonesia, more of these plants are expected to be built.
The Indonesian government is providing assistance for the rapid implementation of this type of
biodiesel.
Repsol
Repsol is an integrated global energy company based in Madrid, Spain. It carries out upstream
and downstream activities throughout the entire world. As a vertically integrated company, Repsol
operates in all areas of the oil and gas industry, including exploration and production, refining,
distribution and marketing, petrochemicals, power generation and trading.
78
Camelina Sativa is a genus within the flowering plant family Brassicaceae. Camelina oil is an edible oil that comes from seeds of Camelina
Sativa, commonly known as false flax, which can be used as a biofuel.

In 2017, Repsol signed a partnership agreement with Indonesian company Pertamina consisting
of Research and Development (R&D) in upstream digital technology, development of Enhanced
Oil Recovery (EOR) technology, second generation biofuels and R&D management.79 The biofuel
cooperation is focused on the provision of raw materials, process selection, laboratory testing of
facility tests to meet energy policy targets, improvement of fuel quality and utilisation of available
raw materials.
Finnish Fund for Industrial Cooperation Ltd (Finnfund)
Finnfund is a Finnish development finance company that promotes sustainable development by

providing long-term risk capital for private projects in developing countries.
In 2013, Finnfund inaugurated the first commercial-scale pellet production plant in Indonesia.
Named the SaraRasa Bioindo and located in Riau province on the Island of Sumatra, the project
was launched in 2012 with finance from Finnfund in partnership with the Singaporean-based
renewable energy producer SaraRasa Biomass Pte. Ltd, Dovre Group (a Finnish management
consulting company) and a local Private Equity company.
The plant produces industrial grade pellets using waste biomass sourced from the local food
industry to power plants. It has been projected to have an annual production capacity of
approximately 50,000 tonnes and to be one of the largest producers of pellets in South East
Asia.80
In 2015, SaraRasa Bioindo announced it had signed a wood pellet off-take agreement with a
Swedish company (CellMark Energy) specialised in renewable energy production and logistics
worth a minimum US$ 1.5 million. Cellmark Energy was to purchase a majority portion of the
79
Katadata (2017). Pertamina cooperates with Repsol. Link: http://katadata.co.id/berita/2017/07/18/pertamina-gandeng-repsol-studi-
peningkatan-cadangan-dan-produksi-migas
80
Finnfund (2013). Sararasa starts renewable fuel production in Indonesia. Link:
https://www.finnfund.fi/ajankohtaista/uutiset13/en_GB/SaraRasa_renewable_energy_Indonesia/

wood pellets produced by the plant and the end users of the pellets were to be in South Korea
and Japan.81
Green Fuels
This UK-based company is a leading supplier (both manufacturing and commissioning) of

biodiesel processing equipment. In 2013, it was commissioned by the international NGO Caritas
Switzerland for a turnkey biodiesel facility in Bali. As a community-scale biodiesel production,
Green Fuels provided the FuelMatic GSX 3 (figure 52) small-scale equipment, which recycles
cooking oil into biodiesel. Green Fuels also trained local professionals to run the bio-refinery.82
Figure 52: The installed FuelMatic GSX 3 equipment

Source: Green Fuels
81
Cellmark (2016). Cellmark signs wood pellet off-take agreement with Sararasa. Link: https://www.cellmark.com/2016/01/21/cellmark-signs-
wood-pellet-off-take-agreement-with-sararasa/
82
Green Fuels (2013). Bali biodiesel. Link: http://greenfuels.co.uk/blog/2013/01/bali-biodiesel/

3.13 Cogeneration Technology
The theory of cogeneration (cogen) is not new to Indonesia as cogeneration technology has
matured over the years and equipment of various capacities and designs have been readily
available in the market. The technology has been applied in some of the major industries, such
as power generation, sugar, rice, palm oil, and paper and pulp, although the process has been
often described as outdated and limited to major industry players.
What is new, however, is the renewed interest in more advanced cogeneration technologies and
a wider stakeholder intent to explore the applicability of cogeneration in smaller industry entities.
This shift is primarily associated with the recent changes in government policies regarding the
role of private sector participation in the power generation sector, the new targets for energy
efficiency and greater availability of cost-effective cogeneration solutions. These developments
have recently given the right thrust towards revitalisation of the cogeneration concept as a viable
option for energy optimisation.
Figure 53: 2x100 MW Tarahan Coal Fired Cogeneration Plant

Source: jel.com

Currently, the share of cogeneration in the total installed power capacity in Indonesia is around
7.3%.83 While the exact figures are not compiled in the country, several sources have previously
identified 25 to 32 cogeneration plants in Indonesia with a total installed capacity of 1,200 MW to
1,827 MW (excluding combined cycle plants developed by IPPs).84 In the past decade, 37 new
projects with an aggregate capacity of 537 MW have also been identified in the country. More
than 80% of these are likely to be implemented by power utilities, chemicals, pulp and paper,
palm oil, rice and sugar industries.
With the renewed industry interest for greater applicability of cogeneration in new power projects
and for retrofitting of old equipment (many of the existing cogeneration facilities are between 20
and 50 years old and are in need of repair85), research by Frost and Sullivan suggests that the
market for cogen technologies is likely to continue to grow (see ‘5.3 Useful Statistics’ for more
information on key exporters and importers of cogeneration equipment). The growth is expected
to be driven primarily by the increasing adoption of cogeneration systems in the biomass sub-
sector. Currently, pulp and paper mills are the largest users of cogeneration, followed by
petrochemical and textile industries.
ANNUAL CAPACITY
ADDITIONS (MW)
Annual capacity additions (MW)
86
77
68
43 47 50
33
2010 2011 2012 2013 2014 2015 2016
Figure 54: Annual Cogeneration Capacity Additions

Source: Frost & Sullivan Research
83
The total power generation in Indonesia is around 55 GW. Around 39 GW has been installed by the state-owned PLN. The remaining consists
largely of captive power for the industrial use. Diesel generators account for approximately 60% of captive power capacity, while cogeneration
plants provide approximately 25%. Indonesia Energypedia (2017). Indonesia Energy Situation. Link:
https://energypedia.info/wiki/Indonesia_Energy_Situation
84
Front & Sullivan (2005). Cogeneration in Southeast Asia – Poised for Growth?; Wargadalam, V. J. (2004).Cogeneration in Indonesia: Current
situation and prospects; European Commission (2006).Ex-post Evaluation of the COGEN 3 Programme.
85
Persson, B.E. Business prospects in South East Asia for European cogeneration equipment using biomass as fuels.

So far, the technology has been limited to major industries mainly because the past generation
technologies are often only cost-effective for bigger power and heating generation capacities. 86
With the arrival of more modern technologies, smaller industries are now showing interest in
small-scale cogeneration.87 It is important to note, however, that modern biomass cogeneration
technologies are sometimes also subject to economies of scale, such that the cost per unit of
energy becomes prohibitive below a particular processing plant size.
Figure 55: MWM TCG 2032 Gas Engines in Power Plant at Indonesian Industrial Site Panbil
Source: MWM
For example, the engineering companies that market cogeneration technologies, report that rice
mills, processing less than 10,000m3/year, cannot benefit from modern biomass cogeneration
technology. Smaller processing plants, on the other hand, are eyeing opportunities to combine
resources and jointly invest in biomass cogeneration plants. Larger independently-run plants have
also shown interest to cooperate with smaller plants to increase cogeneration utility. The majority
of mill operators are still considering biomass cogeneration for own uses, rather than electricity
production for grids.
86
AC-ACEAN COGEN Programme Phase III (2005). Cogeneration Development in ASEAN.
87
Aldowe, R. & Prasetyo, B. (2014). Indonesia: Microturbine cogeneration technology application project

The emerging interest in new (mostly biomass) cogeneration technologies is now driven by wood,
sugar, palm oil and rice industries. Due to limited policy on cogeneration, potential smaller
industries in agricultural and commercial sectors are yet to show greater affinity for cogeneration.
Opportunities for urban-based cogen solutions or trigeneration systems are compelling, but are
still far from being commercially viable options for Indonesia.
More recently, subsidy reduction for diesel in 2014 has also made gas cogeneration, for the first
time, cheaper than diesel – an option completely neglected in Indonesia until then. Several
initiatives to explore gas cogeneration have evolved since. For example, GE has been involved
in setting up several 5-10 MW gas cogeneration pilot projects serving several Bali hotels, an
airport, a seaport and a Jakarta shopping mall.88
Figure 56: 1.5 MW Sewage Gas Cogeneration Power Plant

Source: Ettes Power (2011)
Presently, Indonesia does not have an active policy, legislation, or support programme for
cogeneration. Support has been generally indirect via energy efficiency and biomass utilisation
measures. Neither roadmap nor directive, similar to those in the US, the EU and other parts of
the world, are available. Many smaller industries with potential for adoption of cogeneration
88
Decentralised Energy (2014). Indonesia targets on-site power growth. Link: http://www.decentralized-energy.com/articles/print/volume-
15/issue-4/features/indonesia-targets-on-site-power-growth.html

technologies are also not aware of the benefits of cogeneration in terms of cost savings and low
levels of incremental investment. In addition, energy operation remains not the core business of
many potential users, thus, limiting the scope of adoption of cogen technologies. These reasons
are still slowing the rate of cogeneration adoption and market penetration in Indonesia.89
Local Players
PT Pupuk Indonesia (Persero)
PT Pupuk Indonesia (Persero), together with its subsidiaries, manufactures and sells fertilisers in
Indonesia and internationally. It also provides engineering, procurement and construction
services for environment, infrastructure, mineral, geothermal, refinery/petrochemical, and gas
industries; and plant support services as well as electricity and steam generation services. One of
its projects is the Gresik Gas Cogeneration Plant (GGCP).
The project was initiated due to the rising demand for electricity and steam from PT Petrokimia
Gresik as it is currently developing its newest production facility, the Amurea II plant. The use of
gas-based technology is supported by the availability of local gas supply at an economical price.
The future GGCP will be capable of producing 160 tonnes of steam per hour coming from a boiler
package (with a capacity of 100 tonnes per hour (TPH)) and one heat recovery steam generation
boiler (capacity 60 TPH). One gas turbine power generator of 22 MW will be installed to meet the
electricity needs of PT Petrokimia Gresik. The project was scheduled to commence in late 2015,
and projected to be operational by the end of 2017.
Navigat Group
Navigat Group is Indonesia’s leading distributed power plant developer, owner and operator with
265 MW of installed capacity in Indonesia. In addition to its activities in Indonesia, the company
also operates in other South East Asian markets, such as Thailand and Myanmar. Navigat is also
the second largest global distributor of General Electric Jenbacher power equipment having sold
over 1,000 MW of units in South East Asia. The top holding company of Navigat is incorporated
89
Persson, B.E. Business prospects in South East Asia for European cogeneration equipment using biomass as fuels.

in Singapore, but the company’s headquarters are in Jakarta. The company’s main focus is the
distributed gas to power market in South East Asia, and it typically pursues power projects of 5 to
100 MW in size. Through its two major divisions, Navigat Energy (GE Jenbacher gas engine
equipment sales and service) and MAXPower (IPP, BOOT and rental projects), Navigat has the
ability to exploit distributed power opportunities along the value chain from equipment sales to
services, construction management, project development and asset ownership.
In Indonesia, it is one of the pioneers to provide and execute Cogeneration (CHP) solutions for
major shopping malls, textile factories, palm oil mills, and others. For example, in 2011, the
company installed CHP plant technology in Bali and Bekasi waste-to-energy sites, each with the
capacity of 2 MW.
The cogeneration market in Indonesia offers multiple opportunities for European companies. As
the country starts exploring options for optimising facilities with retrofitting solutions for old
cogeneration technologies and install new ones in emerging cogeneration industries, potential for
cogen systems remains high. The sector offers particularly lucrative opportunities for suppliers of
equipment for the industrial-scale renewable energy and cogeneration plants. Suppliers are likely
to find growth opportunities for gas turbines, steam turbines and generators in the range of 4 to
20 MW. There is also likely to be an equally attractive opportunity for heat recovery steam
generators (HRSG) in the range of 8 to 40 tonnes/hour (TPH). Some of the most promising entry
points for providing cogen technologies lie in the following sectors:
 Cogeneration technologies for wood industry
 Cogeneration technologies for sugar industry
 Cogeneration technologies for palm oil industry
 Cogeneration technologies for rice industry

Cogeneration technologies for wood industry
Although there are over 400 sawmills producing wood residues (ranging from 10,000 to
50,000 m3/year), very little has been used to generate electricity to date. Most sawmills generate
power with diesel generators. Plywood factories are also using wood wastes to generate process
heat, but most do not generate power. The ASEAN COGEN programme has previously supported
the development of a 5.5 MW waste wood power plant at T Siak Riaya Timber in Pekanbaru,
Sumatra. Earlier feasibility studies and demonstration projects have also shown favourable
returns on investment for biomass cogeneration. With the elimination of diesel subsidies in
Indonesia, many of these mills are beginning to reconsider cogeneration options.90
Cogeneration technologies for sugar industry
At present, there are 56 sugar mills in operation in Indonesia. Cogeneration in most sugar mills is
still limited to outdated equipment using conventional steam thermal technology. However, most
of them have a large potential to produce excess electricity from bagasse. Three co-generation
plants utilising bagasse with a combined total capacity of 25 MW are planned in Java (18 MW),
Sumatra (6 MW) and Sulawesi (1 MW). Another 12 bagasse projects are planned with a total
combined capacity of 104 MW. These plants are to be located in Sumatra (38 MW), Sulawesi
(13 MW), Kalimantan (4 MW), and Java (29 MW). Around 100 MW of projects (mostly biomass
and bagasse cogeneration) have been identified for power generation supply to the grid. 91 Total
annual power generation potential from sugar industries via cogeneration is estimated at
3,500 MW.92
The Government of Indonesia has also an active policy to relocate sugar cane fields from East
Java to Kalimantan, Sumatra and Sulawesi. Setting up mill to process the newly developed sugar
cane plantations outside Java offers an immediate opportunity to install new cogeneration
90
IBP, Inc. (2015). Indonesia: Energy Policy, Laws and Regulations Handbook.
91
92
Renewable Energy World (2009). Biopower in Asia: growth in Cogeneration and Power Production. Link:
http://www.renewableenergyworld.com/articles/print/volume-12/issue-4/bioenergy/biopower-in-asia-growth-in-cogeneration-and-power-
production.html

systems, some in locations that currently depend heavily on diesel generators for power supply.
In these areas, financial rates of return for investments in cogeneration are expected to be high.
Cogeneration technologies for palm oil industry
While the palm oil industry is under close examination for the environmental impact, the palm oil
industries have good potential for high-pressure modern cogeneration plants at above
5,000 GWh.93 Like sugar mills, palm oil mills have traditionally been designed to cover their own
energy needs by utilising low pressure boilers and back pressure turbo-generators. Some mills in
the industry are eyeing opportunities to upgrade, or have already upgraded, their technology. For
example, in the Palm Oil Factory in Dumai, Riau province, around 20% of the generated steam
from palm kernel shells is already used for heating of bleached palm oil and 80% for electricity
generation of 3 MW. Additional opportunities for retrofitting, upgrading and installing cogeneration
technologies are likely to be available for experienced European companies.
Cogeneration technologies for rice industry
The growing interest for rice husk power plant projects is also visible across Indonesia. The rice
industries have good potential for medium and high-pressure modern power plants and the annual
power generation under high-pressure modes of up to 7,500 GWh.94 It is estimated that around
15% of the total available electricity from biomass wastes could be generated by utilising rice
waste. A bulk of this capacity would come from Java. Significant additional capacities could come
from Sumatra, Sulawesi, and Kalimantan where the majority of rice mills are located. In contrast
to sugar and palm oil mills, there are only very few installations of cogeneration systems in rice
mills. But the industry sector has growing interest in cogeneration potential.
In addition, given the fact that the quality of biomass as fuel is not homogenous, certain types of
biomass impose challenging technical problems. The quality of biomass as fuel is not
93
Renewable Energy World (2009). Biopower in Asia: growth in Cogeneration and Power Production. Link:
production.html
94
Renewable Energy World (2009). Biopower in Asia: Growth in Cogeneration and Power Production. Link:
production.html

homogenous. Some properties impose challenging technical problems. Rice husk, for example,
has low char reactivity. The heat value is rather low (due to high moisture and/or high ash) and
the ash properties are problematic (low ash fusion) which cause combustion-related problems
such as slagging, fouling and corrosion. These circumstances provide European industry with a
competitive advantage due to its experience burning demanding fuels at high boiler efficiencies
based on efficient cycles with advanced live steam data. The major advantages of European
equipment are related to high overall efficiency, high availability, reliability and durability,
environmental friendliness (low emissions), high automation levels and low service demand. As a
result, European companies are well positioned to reap the benefits of cogeneration market in the
rice industry.
European Companies
Caterpillar Energy Solutions GmbH
Caterpillar Energy Solutions GmbH (Caterpillar) is a German mechanical engineering company,

based in Mannheim. For many years it was known as Motoren-Werke Mannheim (MWM).
However, in 2010 the company was acquired by Caterpillar Group and in 2013 it has changed its
name to the current Caterpillar Energy Solutions. In 2009 the company was the third-largest
producer by revenue of gas and diesel engines. Today, the company offers mainly gas engines
for cogeneration units and biogas plants with an output between 400 and 4,300 kilowatts.
Figure 57: The 14 Containerised MWM TCG 2020 V20 Natural Gas Gensets of the Rawa Minyak CHP Plant
Source: MWM

In 2017, the company announced that it has successfully installed 14 MWM TCG 2020 V20 gas
engines as a cogeneration solution in Rawa Minyak CHP plant in Riau province. The development
of the CHP plant was commissioned by the state-owned utility PLN and developed by PT Wijaya
Karya Tbk together with the Indonesian MWM partner PT Euroasiatic Jaya.
AQYLON
Founded in 2009, the French company AQYLON is a global leader in the design and
manufacturing of Organic Rankine Cycle (ORC) turbines, which transforms heat into electricity
and thermal power from renewable sources (biomass, geothermal, solar), or from waste heat
created by industrial processes, engines or gas turbines. Since its founding, the company has
focused primarily on delivering its solutions for renewable energy and energy efficiency markets.
The company offers a wide range of Engineering Services, including Turbomachine Design,
Energy Efficiency Consulting and Project Engineering Management.
AQYLON opened its office in Jakarta in March 2017, following the increase in projects and the
recent signing of a 3 MW biomass plant contract where it installed its ORC turbines. After its first
direct sale of the biomass power plant burning waste from Empty Fruit Bunch, the company is
currently developing several biomass and waste-to-energy projects under the PPA scheme.
Aprovis Energy Systems GmbH (Aprovis)
Aprovis in a German specialist in exhaust heat recovery for the combined heat and power
business. Founded in 2000, Aprovis has installed its units across the globe. Aprovis Energy
Systems GmbH produces around 3,000 units per year with a thermal output starting at 10 kWhth
up to 16 MWth.95 Its applications of cogeneration range from very large industrial processes
through to individual households and the tertiary sector, including with capacities of less than
1 kW up to hundreds of Megawatts. The company entered the Indonesian market via its
representative, PT Karya Energi Indonesia, which sells its units in the domestic market.
95
http://www.cogeneurope.eu/aprovis-energy-systems-joins-cogen-europe_680.html
16 MWth is equivalent to 16,000 kWth

3.14 Carbon Capture and Storage
In addition to its abundant resources and power generation capacities, Indonesia struggles with
high levels of emissions of greenhouse gasses (GHG). The GHG emissions come primarily from
land use change and forestry activities, energy generation, peak fires, waste, agriculture and
industry. According to the World Bank, per capita emissions of carbon dioxide (CO 2) were
estimated to be around 2.3 metric tonnes in 2011, 0.7 metric tonnes higher than the average for
lower middle-income countries.96 The energy-related CO2 emissions are projected to rise to over
800 million tonnes by 2030, more than doubling over the period of 20 years.
Figure 58: Business-as-usual Emissions Projections up to 2030

Source: Ministry of Finance (2009). Economic and Fiscal Policy Strategies for Climate Change Mitigation in Indonesia
Carbon capture and storage (CCS) is an emerging technology that could help Indonesia to limit
its GHG emissions from the energy and industrial sectors while also increasing Indonesia’s
national energy security.
96

With abundant geological CO2 storage capacities, largely based in depleted oil and gas
reservoirs, saline aquifers and coal seams, Indonesia is in a privileged position to play an active
role in CCS development. It is currently the only South East Asian nation to have taken initial
steps to explore the possibility of large-scale application of CCS.
The Ministry of Energy and Mineral Resources (MEMR) and the Environmental Ministry have
been the most active government agencies to push for wider CCS exploration, however, the
progress has been relatively slow so far. However, the relevance of CCS technologies for
Indonesia have been recognised in some legislative documents. In late 2011, for example, the
President of Indonesia approved a decree making a commitment to reduce Indonesia’s emissions
by 26% below unchecked levels by 2020. The 2007 National Action Plan Addressing Climate
Change has specifically recognised CCS as an important mitigation technology for the power, oil
and gas and industry sectors, although there is no specific roadmap for the technology in
Indonesia.97
The applicability of CCS in Indonesia was also recognised earlier than in many other countries
via activities of the Indonesian R&D centre for oil and gas technology (LEMIGAS) and its research
partnerships with private sector and other governments. Via its own research initiatives and short-
term collaborations with the other stakeholders, it has conducted some exploratory projects on
CCS application in the country. Its projects have focused on both the technical and non-technical
aspects, such as CCS regulation. For example, between 2003 and 2005, LEMIGAS has
investigated the potential of CO2EOR in conjunction with CO2 storage in East Kalimantan and
South Sumatra. It has also collaborated with a number of international partners to explore CCS
technology and its potential uses in Indonesia. Some of its partnerships included:
 2005: Sojitz Corporation and Mitsubishi to conduct a study on the potential for CCS
 2007: Total to investigate CO2 emissions and the possibility of CO2 storage in East Kalimantan
 2008: Shell to undertake early scoping work into a potential CCS project
97
Ministry of Environment (2007). National Action Plan Addressing Climate
Change. https://theredddesk.org/sites/default/files/indonesia_national_action_plan_addressing_climate_change.pdf

 2009: Joint study with the British Embassy in Jakarta, Kementerian Lingkungan Hidup, Shell
International, PT PLN (Persero) and the World Energy Council to investigate two regions with
the most potential for CCS – East Kalimantan and Sumatra
 2010: Memorandum of Understanding signed with the Japanese CCS Corporation, the
Indonesian Renewable Energy Society (METI), and Korea Institute of Geoscience and Mineral
Resources (KIGAM) to explore the application of CCS technologies in Indonesia
Most recently, in 2016, the country has launched the Gundih CCS pilot project, located in central
Java Province, which aims to use CO2 captured from the Gundih gas field, and inject around
30 tonnes per day over a two-year period (with a total injection of around 20,000 tonnes) into an
uneconomic oil and gas reservoir.
Design and construction of the surface facilities for CO2 injection is planned to commence the
implementation stage by the end of 2018, or early 2019. The feasibility study is undertaken by the
Bandung Institute of Technology, with the funding from the Asian Development Bank, and the
Japan International Cooperation Agency (JICA). The Gundih project aims to transfer resources,
technological knowledge, necessary equipment and training in order to pave the way for full-scale
CCS operations in the South East Asian country.
Figure 59: CCS Gundih Pilot Project Status since 2012

Source: Wahyudi, E. (2017). Timelapse microgravity data acquisition in baseline stage of CO 2 injection Gundih pilot project
While the Gundih project is spurring more interest in the exploration of CCS technologies in
Indonesia, the lack of enabling conditions for large-scale CCS market still hinders greater
engagement from the private sector. A key barrier to CCS in Indonesia, as in many other

countries, is the lack of regulation. At present, the use of CCS is not included in Electricity Supply
Business Plan (RUPTL) 2016-2025 and no legislation or laws on CCS are available. Several
existing regulations under the oil and gas sectors, however, may in the future serve as a pathway
to a more robust legislative environment. 98
Local Players
As the field of CCS is very nascent in Indonesia, there are currently no local companies engaged
in CCS activities. The local market has not developed enough to provide scalable opportunities
for local players to find bankable opportunities in the application of CCS technologies. The most
important local player is currently the Indonesian R&D centre for oil and gas technology
(LEMIGAS), which engages in pilot R&D projects in Indonesia.
The Government of Indonesia has been increasingly vocal with concerns about climate change
and its impact on the developing world. It has pledged to reduce GHG emissions by 26% in 2020
and has stated that this target would increase to 41%, if international financing was available.
Current government efforts, including energy mix improvements and the switch to less carbon-
intensive fuels and renewable sources, are considered insufficient to achieve CO2 emissions
abatement targets for 2020. As the country speeds up its development and increases power
generating capacity, it is likely to acquire an opportunity to deploy CCS and avoid higher retrofit
costs down the line, offering opportunities for European companies to engage the government at
the early stages and incentivise the usage of CCS for new power generation projects.
Those interested in the Indonesian CCS market should mark Indonesia’s expressed priority for
enhancing and sustaining energy security and access to the population. Consequently, without
international financial support, Indonesia may only be interested in CCS if it contributes to energy
98
For example, the Ministerial Regulation No. 13/2007 sets out requirements and procedures for waste treatment in upstream oil and gas and
geothermal activities using injection methods into the subsurface. It is considered as the most suitable regulation to CCS, particularly on
storage aspects.

provision or energy security objectives. Companies looking to enter the CCS market in Indonesia
should target their initiatives to address energy security goals.
In the short to medium term, several opportunities are available for interested European
companies. Some of the most promising short-to-medium term opportunities are:
 Demonstration of CCS technologies via pilot projects
 CCS technology provision for oil and gas upstream sector
 Partnerships with international organisations
Companies interested to take a proactive role and to strategically position themselves in the yet
nascent CCS market may also take notice of ample storage and resource availability, which could
provide lucrative CCS market opportunities in the long-term. The most promising areas for the
application of CCS technologies in the longer-term are:
 CCS application for depleted oil and gas reservoirs, coal seams and saline formations
 Retrofitting opportunity for combined biogas and CCS technologies
Demonstration of CCS technologies via pilot projects
While the market for CCS technologies is very new to Indonesia, the country currently has no
scalable commercial projects to tap into. However, the Gundih pilot project demonstrates
Indonesia’s willingness to move from pilot studies to demonstration stages, and then to
commercial-scale applications. European companies may find opportunities to collaborate with
local stakeholders to develop demonstrations of CCS technologies. Indonesia’s Roadmap for
CCS Pilot Project in Indonesia, 2012-2018 (LEMIGAS) also indicates that the country is ready to
open up opportunities for such initiatives and to collaborate with domestic and international
partners. These initiatives would be limited, however, to cooperation with the government
agencies on pre-feasibility and feasibility studies and small-scale demonstrations of the CCS
potential.

CCS technology provision for oil and gas upstream sector
The most suitable near-term deployment of CCS in Indonesia is likely to be in the oil and gas
upstream sectors. CCS technologies can capture the CO2 for storage in depleted oil and gas
reservoirs that may be used for Enhanced Oil Recovery (EOR) and Enhanced Gas Recovery
(EGR) projects and in saline formations, to meet economic development and energy security
goals. Such projects would be similar in nature to existing projects in Sleipner, Snohvit and
In Salah. This is particularly the case for the large Natuna gas field which has 70% of the region’s
CO2. It is unlikely that this field will be able to develop further without deploying CCS to deal with
the resulting emissions. This offers opportunities for European companies to offer their services
and knowledge in the development of affordable, efficient and effective CCS technology.
Partnerships with international organisations
Indonesia has also expressed interest in working with international governments and
organisations to develop the deployment capabilities of CCS. Companies looking to enter the
Indonesian market may consider partnering with international organisations for co-financed pilot
projects, before an existing commercially viable market for CCS can be fully verified and
developed. The Indonesian research and development centre LEMIGAS has already partnered
with the British embassy, World Bank and the Asian Development Bank in addition to the private
sector in the past to conduct research on CCS application in the country. Companies may find
additional opportunities via such partnerships, where the funding and risk is divided between
partnering stakeholders.
CCS application for depleted oil and gas reservoirs, coal seams and saline formations
For opportunities in the longer-term, LEMIGAS studies have identified the following sedimentary
basins for most promising CO2 storage opportunities in Indonesia in the near future. These CO2
storage locations are considered as the most economically feasible for longer-term deployment
of CCS technologies due to good reservoir characterisation, geological stability, existing
infrastructure and low population density. The locations are primarily the depleted oil and gas
reservoirs, coal seams and saline aquifers, and they offer abundant storage capacity.

No. Basin Name Region Suitability Score (1-0)
1 Kutai East Kalimantan 0.913

2 Tarakan East Kalimantan 0.777
2 South Sumatra South Sumatra 0.756
4 Seram Maluku 0.735
5 North West java West Java 0.723
6 Barito Central-South Kalimantan 0.722
7 Central Sumatra Riau 0.715
8 North Sumatra North Sumatra 0.702
9 Salawati Papua 0.690
10 North East Java East Java 0.683
Table 36: Most Suitable Sedimentary Basins for CO2 Storage in Indonesia
Source: LEMIGAS
Figure 60: CO2 Storage Capacity Estimates in Depleted Oil and Gas Fields
Source: LEMIGAS
For example, a long exploration and production history in Indonesia has left a legacy of many
depleted oil and gas fields that could be used for potential CO2 storage in the longer-term. Mostly
located in Sumatra, Kalimantan and Java, these areas can store more than 600 Mt of CO 2 and
offer significant CCS opportunities.
Indonesia also has vast coal bed methane resources, which approximate to 453 trillion cubic feet
(Tcf). With higher affinity to CO2 than CH4, coal seams offer more secure trapping mechanism
and these resources can be found in all of the main islands of Indonesia. As a result, they offer

good opportunities for CCS technology application in the longer-term, once the market for CCS
has fully developed from pilot studies to demonstration and commercial application stages.
While there has been no detailed study to identify saline aquifer storage opportunities, some
estimations point to a theoretical 7.7 GtCO2 99storage capacity. With its wide distribution and size,
saline aquifer is yet another resource with potential for widespread CCS application. Preliminary
studies indicate the greatest potential in Natuna and South Sumatra basins.
Together, these geological formations are considered as potential sites for wider application of
CCS technology in Indonesia, including both offshore and onshore future developments. They
contain significant storage capacity and, therefore, ample opportunities for CCS deployment in
the longer-term.
STORAGE CAPACITY (GTCO2)

Theoretical Effective
7,7
2,7
0,9
SALINE FORMATIONS COAL SEAMS DEPLETED OIL AND GAS

RESERVOIRS (103 FIELDS)
Figure 61: CO2 Storage Capacity in Geological Formations
Source: LEMIGAS
Retrofitting opportunity for combined biogas and CCS technologies
Combining CCS with biomass energies may also offer potential opportunities in the future. While
the biomass industries are too immature at the moment and the scale of the industry is too small
for CO2 supply, or retrofitting technologies, future reduction technologies may require negative
emissions, which can be addressed by combining biomass with CCS. Those companies that are
seeking to gain a strategic foothold in the Indonesian CCS market may consider initiatives to
collaborate with local biomass energy players in order to secure future retrofitting opportunities.
99
GtCO2 refers to the Gigatons CO2. A gigaon is equal to 1 billion tons.

European Companies
Currently, there are no European companies engaged in CCS technology development or

commercialisation in Indonesia. Some interest in cooperation on pilot studies and further research
on CCS potential in the country has been shown over the years from American and Japanese
Companies.
Figure 62: CCS Milestones in Indonesia & Cooperation over the Years
Source: LEMIGAS (2012). The Latest Status of Carbon Capture and Storage (CCS) in Indonesia

3.15 Electric Vehicles
Indonesia is urbanising and its population is increasing, as are the sales of motor vehicles. 100
These trends are converging to cause crippling congestion and pollution in the Indonesian cities.
The government is considering transport to be one of the seven emission reduction areas under
its commitment to reduce greenhouse gas (GHG) emissions by 26% by 2020 (or up to 41% with
international support), as against projected business-as-usual scenarios.101 To catch up with the
global campaign to go green, Indonesia is evaluating zero-emission electric cars and other electric
vehicles (EVs) as viable options. Amongst its aims is the increase of the share of electric vehicles
in the transport mix of up to 30% by 2050.
Development of electric cars in Indonesia
Although Indonesia has initiated the development of electric cars, progress has been very slow
so far, without any unified stance or urgency in terms of national policy. 102 The government has
set targets to mitigate transport emissions, but the overall approach has focused more on
alternative fuels, such as natural gas and biofuels for transport, rather than on demand-side
management or improved system efficiency. As a result, the electric car market is close to non-
existent in Indonesia.103
Several domestic initiatives have been initiated over the years, mostly limited to the on-going
research at several universities to develop domestic EVs.104 For example, the University of
Indonesia (UI), in collaboration with the government and investors, launched four electric vehicle
prototypes in July 2016, including one commercial vehicle, two city cars and a bus.
100
International Energy Agency (2015) Indonesia
101
Transport accounts for more than 50% of oil consumption and 30% of energy-related emissions, and it is growing at a faster rate than any
other demand sector.
102
OECD (January 2015). Domestic incentive measures for environmental goods with possible trade implications: electric vehicles and batteries
103
Asian Sedan (2014). Hybrid and Electric Car market in Indonesia. Link: http://asiansedan.blogspot.co.uk/2014/04/hybrid-and-electric-car-
market-in.html#.WaScYHeGOAw
104
GE SEAN Reports (June 2017). From Tuk-Tuks and Jeepneys to EVs – ASEAN nations prepare for an electric car future. Link:
http://gereportsasean.com/post/161883580105/from-tuk-tuks-and-jeepneys-to-evs-asean-nations

Aside from the efforts at the UI, the government appointed other top universities and research
institutes to develop electric vehicles as well. They include the Bandung Institute of Technology,
Gadjah Mada University, November 10 Institute, Electronics Polytechnic Surabaya (PENS),
Sabelas Maret University (UNS), the Ministry of Technology Research and Higher Education
(Riset Dikti), University of Cikarang, and the Indonesian Institute of Sciences (LIPI).105
Although some institutes, such as Sepuluh November Institute of Technology (ITS),106 have
progressed a long way on the path to creating sustainable models, none of the prototypes have
reached the level of production to date. Compared to other ASEAN countries where electric cars
already exist, Indonesia is lagging far behind.
Figure 63: Domestic Research Initiatives to Develop Prototype EVs

Achmadi Mesin 5.0 (top left), Pindad PIEV (top right), EC Electric Car (lower left) & SmarT EV.3 (lower left)
Source: Association of Indonesian Electric Vehicle Developer
105
Globe Asia (January 2017). E-mobility – the future of motoring. Link: http://www.globeasia.com/technology/e-mobility-the-future-of-motoring/
& The Jakarta Post (January 2017). University of Cikarang plans to develop electric vehicles. Link:
http://www.thejakartapost.com/youth/2017/01/04/university-in-cikarang-plans-to-develop-electric-vehicles.html
106
ITS notes that it has progressed significantly towards creating sustainable EV model and, except for battery, it is ready to develop electric
vehicles. According to ITS, main components, such as electric motor, the transmission power control modules and the charging systems can
be produced by university, while other general parts, such as tyres, bolts, wheels, lighting system and seats can be manufactured by the
existing industries.

According to Gusti Muhammad Hatta, Minister for Research and Technology, there are nine
stages of development that Indonesia has to pass before electric cars can be mass-produced.
Until now, Indonesia has passed only six levels, up to the development of prototypes and testing,
while the three remaining stages – laboratory and field testing and readiness for production –
have yet to be achieved. Although Mohammad Nasir, the Minister of Research, Technology and
Higher Education, noted in 2017 that Indonesia will begin mass production of electric cars by
2020, the Ministry of Industry is less clear about the timelines.107 In its Roadmap for Automotive
Industry it also identifies that conventional cars will still dominate the market until at least 2025. 108
Challenges for commercialisation of electric cars
The Indonesian electric car market is also paved with challenges. E-mobility faces risks from the
market, technical capabilities, policies and infrastructure.
For example, commercial companies find it difficult to enter the Indonesian EV market as there is
not enough data on the market. Although different types of hybrid and electric vehicles are in
circulation, the numbers are too low to determine the market size and composition, making it
extremely difficult for companies to weigh their risks and opportunities. 109
Lack of infrastructure to support wider electric vehicle adoption is also hampering growth of the
sector. Around 40 companies incorporated in the Association of Indonesian Automotive Industries
(Gaikindo) could produce electric cars for consumers.110 But the willingness to develop
commercial electric cars is often contingent on the availability of supporting infrastructures.
Currently, neither charging stations nor EV component manufacturing facilities are widely
107
Xinhuan Net (2017). Indonesia to kick off mass production of electric vehicles in 2020. Link: http://news.xinhuanet.com/english/2017-
08/03/c_136497266.htm & MetroTV News (2016). Indonesia not ready for electric car. Link:
http://en.metrotvnews.com/read/2016/01/22/473296/indonesia-not-ready-for-electric-car
108
Asian Sedan (2014). Hybrid and Electric Car Market in Indonesia. Link: http://asiansedan.blogspot.co.uk/2014/04/hybrid-and-electric-car-
market-in.html#.WaScYHeGOAw
109
The Jakarta Post (February 2016). South Korean firms eye shipyards, electric cars, seeking business partners. Link:
http://marintecindonesia.com/south-korean-firms-eye-shipyards-electric-cars-seek-business-partners/
110
Antara News (2015). Car industry interested in developing Indonesian electric car. Link: http://www.antaranews.com/en/news/100091/car-
industry-interested-in-developing-indonesian-electric-car

available across Indonesia. PLN has built only 2 charging stations for electric cars in 2013 and
this number increased only marginally since then.111
The question whether Indonesians can afford electric cars also remains unanswered. Current
fiscal and taxation policies are likely to inflate the price of such products to around US$ 150,000
per unit. Tesla’s Model X, introduced in 2017 to the Indonesian market, had a staggering price
tag of US$ 200,000. Therefore, even if electric cars become more available across the Indonesian
market, there is little information whether there would be enough domestic appetite for such cars.
It is more likely that such cars would be contained within the luxury car market segment.
Government initiatives to accelerate electric car market
While the development of the electric car market has been stagnant until recently, the government
is starting to provide additional incentives for EVs in the country. In mid-2017, the government
announced plans to accelerate the expansion of attractive regulations and policies to improve the
environment for EVs.112 The representatives from the Ministry of Finance, the Ministry of Industry
and the Ministry of Energy and Mineral Resources (MEMR) are now tasked with the drafting of a
Presidential Regulation to support the development of electric vehicles, which is likely to be
released by the end of the year.
The key pillar of the new policy is to introduce tax breaks for low-carbon emission cars, with the
goal of reducing emissions by 29% by 2030. There are plans to make the tax exemption under
the “Low Carbon Emission Vehicle” programme, which would replace the Low Cost Green Car
(LCGC) initiative113 currently in place. The government aims to push low-carbon emissions cars
by stages, starting with hybrids before moving into the electric cars segment.
111
The Jakarta Post (February 2016). South Korean firms eye shipyards, electric cars, seeking business partners. Link:
112
The Jakarta Post (July 2017). RI prepares regulation to make way for electric cars. Link: https://www.pressreader.com/indonesia/the-jakarta-
post/20170720/281913068166664
113 Indonesia's "low-cost green car" category is a government initiative to make small, fuel-efficient vehicles affordable for low-income people.
The LCGC is a type of vehicle category that meets certain requirements, such as a basic price of 95 million rupiah ($7,275) or less, high fuel
economy of 20km or more per liter, and an engine displacement of 1,200cc or less for a gasoline-fueled car.

The MEMR also plans to instruct the state electricity company PLN to establish a small battery
shop in each of the 6,000 existing gas stations across the country. Furthermore, the government
is looking to introduce quotas for domestic production, but the actual percentage is still under
consideration, largely due to a lack of established part makers in the country that can provide
electric and other types of green cars.114
Finally, the government is expected to consider attracting industries, such as battery and software
manufacturing, which are essential for electric car production. To accelerate these efforts,
measures under consideration include introducing tax breaks and subsidies to EV-related
industries.115
While Indonesia has announced generous incentives for companies developing EVs, the impacts
of these on the market trends are yet to be seen.
Electric vehicles (EVs) for public transport
Although the development of electric cars has been slow, Indonesia has seen some initiatives
that create space for electric vehicles (EVs) in the Indonesian market. For example, Chinese BYD
Company Ltd, the world’s largest battery electric bus maker, created a partnership with PT Steady
Safe Tbk, one of the biggest public transit operators in Jakarta, to supply BYD fully electric buses
to the TransJakarta BRT System. BYT electric buses started operating in the Indonesian BRT
system in 2015. The governor Basuki Tjahaja Purnama highlighted his hopes to replace all
internal combustion buses and taxis with electrified vehicles, meaning EV potential for Indonesia.
114
Nikkei Asian Review (August 2017). Indonesia to introduce tax breaks for low-carbon cars. Link: https://asia.nikkei.com/Politics-
Economy/Policy-Politics/Indonesia-to-introduce-tax-breaks-for-low-carbon-cars
115
Nikkei Asian Review (August 2017). Indonesia to introduce tax breaks for low-carbon cars. Link: https://asia.nikkei.com/Politics-
Economy/Policy-Politics/Indonesia-to-introduce-tax-breaks-for-low-carbon-cars

Figure 64: BYD Fully Electric Bus in Indonesia
Source: BYD
Electric two and three-wheelers (2/3Ws)
While electric car development and commercialisation is still stagnating in Indonesia, the country
offers a promising market for electric scooters and two- and three-wheelers (2/3Ws). Local small-
scale assemblies for low cost EVs as well as the market for electric scooters is already available
in Indonesia.116
Figure 65: The Travellers on Motorbikes on Jalan Raya Bekasi km 22, Cakung, Jakarta
Source: Antara News
116
United Nations Centre for Regional Development (2014). E-mobility as the next generation solutions for clean air and sustainable transport in Asia.

Nowhere else in the world is the concentration of 2/3Ws as high as in South East Asia. Some
6 million motorcycles are sold annually in Indonesia, making it one of the biggest markets in the
world.117 After China and India, Indonesia is the third largest market in the world for petrol scooters
and that strength is expected to carry over into the electric scooter market.118
Average annual Average Annual

Motorcycles %
Country/ Region Year Other Vehicles growth* Other Growth*
and Mopeds Motorcycles
Vehicles Motorcycles
China 2009 62,136,896 95,805,176 60.7% 30.9% 10.4%
India 2009 21,200,140 82,402,105 79.5% 10.7% 12.1%
Indonesia 2009 18,281,437 52,433,132 74.1% 22.6% 20.9%
Vietnam 2007 1,146,312 21,779,919 95.0% ND ND
Thailand 2006 8,923,447 15,674,941 63.7% 6.8% 2.6%
Taiwan 2009 6,718,746 14,604,330 68.5% 2.3% 3.3%
Malaysia 2008 9,030,292 8,487,451 48.5% 7.1% 7.5%
Pakistan 2009 2,170,430 3,383,493 60.9% 10.4% 13.0%
Philippines 2009 2,990,743 3,200,968 51.7% 2.0% 23.5%
Sri Lanka 2009 951,362 2,339,916 71.1% ND 8.0%
Table 37: Top Ten Largest Markets for 2/2Ws in Asia and their Growth
Source: World Road Statistics (2010) via International Council on Clean Transportation (2011)
Sales projections for electric scooters by Pike Research also indicate that Indonesia is one of the
largest electric two-wheel vehicle markets in the region.
Figure 66: Electric Two-Wheel Vehicles Sales by Country in Asia Pacific (except for China), 2012-2018
Source: Pike Research
117
Nikkei Asian review (August 2017). Local maker kicks off Indonesia’s electric scooter market. Link:
https://asia.nikkei.com/Business/Trends/Local-maker-kicks-off-Indonesia-s-electric-scooter-market?page=2
118
Vmoto (2013). Company News. Link: http://www.vmoto.com/news/detail.aspx?ID=71

Demand for electric 2/3Ws is expected to grow in the upcoming years due to widening concerns
about the environment and the relatively low cost of such EVs. As the Indonesian Government is
also considering tightening environmental standards for motorbikes in response to worsening air
pollution, it is likely that more customers will opt for electric alternatives.
Most electric 2/3Ws in Indonesia are assembled locally, but vehicle parts are imported, mostly
from China as completely knocked down units.119
Although there are some concerns that 2/3Ws would increase electricity demand in the country,
experiences from the Chinese market (around 200 million electric 2-wheelers deployed) show
that due to significant increase in efficiency (6-9 times when compared to the internal combustion
engine equivalent), the increased electricity demand and associated emissions would be more
than offset via efficiency gains. Preliminary analysis by the International Energy Agency (IEA)
shows that around one to two power plants would be needed to power all 65 million two-wheelers
of Indonesia, assuming they all converted to all-electric configurations.120
Several local and international companies are already competing for the market share of electric
2/3Ws in the country.
Local Players
PT Triangle Motorindo
Established in 2000, PT Triangle Motorindo is an Indonesian motorbike manufacturer and the

sole brand holder of VIAR Motors. The company is aiming to become one of the largest
motorcycle manufacturers in Indonesia. With its 20-hectare factory in Semarang, Central Java,
PT Triangle Motorindo continues to expand its production and distribution of VIAR motorcycles
across Indonesia. Currently, the company has a production capacity of up to 1,000 units per day
(25,000 units per month), making it one of the largest automotive factories in the country.
The company has a network of over 700 motorcycle dealers that sell VIAR motorcycles, mainly
119
Erie News Now (August 2017). Electric Three-Wheeler – Market Drivers and Opportunity Assessment by Technavio
120
International Energy Agency (2015). Indonesia

in smaller cities. Despite its capacities, it has struggled to make a dent in the Japanese
manufacturers’ market share of over 90%, primarily due to the sales network being weak in larger
cities, such as Jakarta.
In 2016, VIAR Motor Indonesia announced its plans to collaborate with UGM in the development
of electric motorcycles. Within the next 5 years, PT Triangle Motorindo together with Gadjah Mada
University (UGM) will conduct research and development for electric motorcycles, Viar Pulse and
Q1, mainly in engine, controller, battery management system and battery technologies. According
to Prof. Dr. Suratman of UGM, “this cooperation could eventually push the national automotive
industry to have more local components”. In 2017, it has introduced the country’s first street-legal
electric scooter, Viar Q1, to the domestic market.
Figure 67: Viar Q1 Model on Display in Bilai Kartini, Jakarta

Source: tomotifzone.com
The company developed the scooter with German auto parts maker, Robert Bosch, and an
Indonesian university (UGM). Bosch supplies the motor and other key components for the scooter
Viar Q1. It can travel up to 70 km on a single charge at a maximum speed of 60kph. When plugged
into a household electrical outlet, the scooter can be fully charged in five to seven hours. Viar Q1
is priced at around 16 million Indonesian rupiah (US$ 1,200), close to price tags of the top-selling
models of Honda Motor and Yamaha Motor. Sales of the Q1 remain tiny – several dozen per

month. The company aims to improve its marketing by creating more electric scooter models
through a partnership with Bosch and other companies.
Garansindo Group
The Indonesian Garansindo Group was established in 2001 as a service-focused company. Over
time, it evolved by adding various business divisions, including distribution and, most recently,
automotive manufacturing. In 2014 the company signed the contract with Zero Motorcycles
(producer of electric motor vehicles in the US) and was appointed as a Sole General Distributor
for Indonesia for its electric motorcycles.
In 2015, the company expanded its electric two-wheeler distribution network by signing an
agreement with Italjet, a premium electric bike producer from Italy. Finally, in March of 2017, the
company’s collaboration with the Institute of Technology (ITS) has resulted in the release of the
Indonesian-made electric bike, Garasindo Electric Scooter ITS (Gesits), which started limited
production in April 2017. The ITS workshop in Surabaya will produce 300 vehicles: 100 of the
standard edition and another 200 of the special edition ordered by the Bali administration. Some
institutions have already pre-ordered it, such as PT Telcom, which has asked for 5,000 units and
the Bali administration, which has ordered 22,000 units.
PT Great Asia Link
Great Asia Link is electric car company and single distributor of DCP automotive assembly in
Surabaya, Indonesia. The company is the first commercial electric car company in Indonesia with
the national brand ELVI. Its core business goal is the electric car distribution with total capacity of
around 20,000 cars/year, together with electric car spare part distribution and electric car
dealerships & workshops. With the spread of the business group network in 34 provinces, the
company’s aim is to become the electric vehicle pioneer in Indonesia.
The company started operating its factory in 2017 and plans to release the first vehicles by the
end of the year. The car ELVI will be sold at around RP 75-150 million (EUR 4,717 – 9,434) and
it will be using 40% local components with the rest imported from abroad.

The ambitious blending mandates for ethanol (20%) and biodiesel (30%) for 2025 onwards
currently dominate the Indonesian outlook for renewables in transport. However, electric vehicles
and two- and three-wheelers provide some opportunities that may offer entry points for European
companies:
 Provision of electric 2/3Ws for domestic market
 Export opportunities for EV components and knocked down EV models
 Research & Development (R&D) collaboration on EVs
 Infrastructure development
Provision of electric 2/3Ws for domestic market
The potential by 2030 for 6% of the vehicle stock and 20% of all motorcycles and scooters to be
electric has been identified by International Renewable Energy Agency, based on the expectation
of a rapid continued increase in vehicle penetration.121 Vmoto, an Australian motorcycle
manufacturer, has also noted that the motorcycle market in Indonesia still offers enormous room
for growth, as the ratio of motorcycle owners to residents is one unit per seven people, making
Indonesia’s ratio much lower than those of neighbouring countries. In remote areas and islands,
electric vehicles and electric two- and three-wheelers are good solutions given the relatively short
travelling distances. In larger cities, electric mobility can play an important role in mitigating air
pollution.
Market sales projections from Pikes Research for the period 2012-2018 also indicate that the
Indonesian electric scooter market will become the third largest in Asia Pacific after China and
India. This represents a significant sales opportunity for European-styled quality products in the
growing market of electric 2/3Ws.
121
Remap (March 2017). Renewable Energy Prospects: Indonesia

Export opportunities for EV components and knocked down EV models
While several initiatives tried to develop feasible EV models, among the identified obstacles for
the development were the inefficient battery charging time and battery capacity. There are
significant opportunities for European manufacturers to export these parts to Indonesia or
collaborate in knowledge transfer and R&D initiatives. In particular, two main technologies are
used in the e-motorcycle and e-scooter market: lead-acid and lithium ion batteries. Lead-acid
batteries will be the primary technology used in Indonesia’s electric two-wheeler vehicle markets
and the demand for quality products is expected to rise.
Indonesia also charges relatively high import tariffs on most vehicles under the HS 8703
Harmonised Trade System, including all-electric vehicles, but a relatively low (10%) import tariff
on “complete knocked down” (i.e. unassembled) vehicles. As a result, companies wishing to enter
the Indonesian EV market should consider the import tactics of knocked down production lines in
order to minimise costs.
Research & Development (R&D) collaboration on EVs
The electric car market in Indonesia is close to non-existent, but the government is keen to
support initiatives that could activate the Indonesian electric car market. While the immaturity of
the market, including lack of infrastructure, poses many challenges, it also opens up opportunities
for European companies to get involved in all stages of the electric car market development: from
research and development of electric car prototypes, to prototype testing, infrastructure projects
and commercialisation of EVs. All aspects of support, such as regulation, charging stations and
tool production components must also be in place before the market takes off. European expertise
and support in these fields may also offer them a chance to become one of the earliest players in
the market.
To maximise the potential of localisation benefits, the domestic industry should be involved early
on. For example, incentivising local industry with the production of electric vehicles, motorcycles
and scooters for the local market could be an effective way to achieve faster market growth as
well as greater opportunities for international players. Several initiatives are available in Indonesia

to research and develop feasible EV prototypes for commercial use and for cooperation with
research institutes. European companies could provide technical support via collaboration with
these local initiatives.
Infrastructure development
To accelerate the uptake of electric vehicles and electric two- and three-wheelers, Indonesia
needs infrastructure investments, such as charging infrastructure for electric vehicles and electric
two- and three-wheelers at large parking lots in cities. This could be one of the entry points for
European companies, as the development of such infrastructure is typically contracted out to the
private sector. However, greater supportive policies need to be in place in Indonesia (e.g. tax
incentives to reduce the cost of electric vehicles) to kick-start the market.
European Companies
Clean Motion
Clean Motion is a Swedish electric vehicle maker. In May 2013, Clean Motion announced its
interest to enter the Indonesian market with its Zbee electric three-wheeler.
Figure 68: Zbee Model by Clean Motion

Source: Clean Motion

The company targets to replace the numerous Bajaj auto rickshaws in Jakarta. The Zbee model
was showcased in Indonesia in August 2013. Clean Motion’s three-wheeler is powered by a 4 KW
electric motor that consumes 40 Wh of electricity per km. On a full charge, the Zbee can travel up
to 50 km. The 3 seater weighs a mere 270 kg. It has a top speed of 45 kph and it has been priced
at IDR 80 million (EUR 4,800).
In order to arrive at a competitive pricing, Clean Motion has established a local manufacturing
partnership with PT Lundin Industry. The production of the first 100 units commenced in
September 2013. Apart from Indonesia, Clean Motion aims to reach other Asian markets as well.
Italjet Moto Srl (Italjet)
Italjet Moto Srl (Italjet) is an Italian manufacturer of motorcycles, headquartered in Bologna, Italy.
Since its founding in 1959, the company has produced more than 150 models of motorbikes for
domestic and international markets.
The company has first entered the Indonesian electric vehicle market via participation in the 23rd
Indonesia International Motor Show (IIMS) in 2015, where it displayed its Italjet Ascot e-bike.
Figure 69: An Italjet Ascot e-bike at the 23rd Indonesia International Motor Show
Source: Electric Bike Insider

In the same year, the company signed an agreement with the Indonesian Garasindo Group,
appointing it as the sole distributor of its electric two-wheeler.
Robert Bosch GmbH (Bosch)
Robert Bosch GmbH (Bosch) is a German multinational engineering and electronics company
headquartered in Gerlingen, Germany. It is the world’s largest supplier of automotive components
measured by 2011 revenues. Bosch’s core products are automotive components, including
brakes, controls, electric drives, electronics, fuel systems, generators, starter motors and steering
systems; industrial products, such as drives and controls, packaging technology and consumer
goods; and building products, including household appliances, power tools, security systems and
thermotechnology.
Bosch has been present in Indonesia since 1919. In 2008, the company established its subsidiary
PT Robert Bosch in Jakarta with branch offices in Surabaya, Medan, Balikpapan, Semarang and
Bali. The company has also opened a technical centre for power tools division in Jakarta.
The company has recently partnered with a domestic motorbike manufacturer, PT Triangle
Motorindo, to introduce the country’s first street-legal electric scooter to the market. Bosch was
responsible for supplying the motor and other key components for the scooter.

4. Regulations
4.1 Import Procedures
EU companies looking to appoint a local distributor should ensure that their prospective partners
understand the complexity and modus operandi of doing business in Indonesia, and have the
appropriate licenses to import goods into the country. Importing goods into Indonesia requires the
appropriate documentation and verification from the Directorate-General of Customs and Excise
(DGCE). A physical inspection of the goods may also be required. All imported goods must be,
additionally, declared to the Customs Authority via the requisite Import Declaration Form.
Import License
In order to bring in goods into Indonesia, the Indonesian importer needs to have the following:
Import Identification Number (API)
The Importer Identification Number or Angka Pengenal Importir (API) constitutes identification
that importers must possess in order to import goods, which is used by the government as an
instrument to regulate orderly importation for the purpose of implementing the foreign trade policy
in the field of imports. There are 4 types of APIs:
 API for General Importer (Importir Umum, API-U), which should be obtained by a trading
company;
 API for Producer Importer (Importir Produsen, API-P), which should be obtained by an
industrial company importing raw materials and capital goods for its own use;
 API for Limited Importer (Importir Terbatas, API-T), which should be obtained by a foreign or
domestic investment company; and
 API for Special Importer (Importir Khusus, API-K), which should be obtained by a Production
Sharing Contract (PSC) company and also companies that import certain commodities such
as rice, electronic products, sugar, corn, soybeans, toys, footwear and textiles.

An API can be obtained from the Ministry of Trade, except for API-T, which should be obtained
from the Indonesian Investment Coordinating Board (BKPM). The API is valid for five years and
can be extended.
Customs Identification Number (NIK)
In order to get a Customs Identification Number (NIK), the importer should firstly conduct a User
ID registration through www.beacukai.go.id to sign in and do the Custom Registration on the same
website by following the steps. There are several documents that need to be prepared in order to
do the Custom Registration, including the Taxpayer Identification Number (NPWP), the Certificate
of Business Domicile (Surat Keterangan Domisili); the Import Identification Number (API), among
others
Import Process
Imported products in Indonesia are classified into three categories, namely Free Import,
Controlled/Restricted, and Prohibited. Equipment that are used in the energy sector are classified
under the first category. Such products can go through the standard import process in Indonesia,
assuming the local importer possesses the necessary licenses, and documentations.
 The importer has to complete and submit the Import Declaration Form (PIB), compute the
customs duty and import taxes, and make a payment to the depository bank.
 The PIB and its attachments, such as commercial invoice, packing list, bill of lading/ airway
bill, the receipt of payment of import duty and import related taxes (also known as ‘SSPCP’,
or Surat Setoran Pabean, Cukai dan Pajak Dalam Ranka Impor), the insurance policy, and
the power of attorney (should the custom declaration be submitted by the broker) are
submitted to the Customs Authority for approval.
 The customs declaration will determine which customs inspection channel the products should
go through. A physical inspection of the goods may be required. The imported goods can be
released from the customs area after approval by the Customs Authority.

Trade Samples
Prior to the transaction process, the buyer may request for trade samples. To import trade
samples, the Indonesian importer is not obliged to possess an API. However, the importer needs
to do the custom declaration process in order to receive the goods. In order to declare the trade
samples, several documents need to be prepared by the importer:
 The statement letter: a letter to show that the goods are new and will not be traded;
 The Taxpayer Identification Number (NPWP) / Driving License / Indonesian Identity Card;
 Other additional documents (Trading License, Industrial Patents, Industrial Enterprise

License, Company Registration Certificate, Bill of Lading).
Import Duties
Import duty and taxes are due when importing goods into Indonesia whether by a private
individual or a commercial entity. The valuation method is CIF (Cost, Insurance and Freight),
which means that the import duty and taxes payable are calculated on the complete shipping
value, which includes the cost of the imported goods, freight, and insurance. VAT is levied on
imports at a standard rate of 10%, or at a reduced rate between 0% and 5% calculated on the
sum of the CIF value and duty. However, sales tax can vary and be applicable based on units of
measure.
Import duties in Indonesia vary between 0% and 170%. However, most imported items will attract
duties in the range of 0% to 15%. Companies importing goods into Indonesia must obtain an
Importer Identification Number from the Ministry of Trade or the Investment Coordinating Board.

4.2 Government Tenders
Indonesia’s National Public Procurement Agency (LKPP) plays an important role as the regulator
of procurement for infrastructure projects in the public-private procurement (PPP) framework.
In order to achieve service excellence, an Electronic-Based Procurement Service (LPSE) was
established as part of the LKPP. As of September 2016, approximately 700 LPSEs have been
formed, and they have been implemented in 344 government agencies spread in 31 provinces.
All parties are allowed to participate in the procurement tender, including foreign companies.
According to a recent Presidential Regulation, in order to create more opportunities and to protect
domestic suppliers, there are certain limits within which foreign companies are able to participate
in the procurement tender. Foreign companies are able to participate in the national procurement
only if the project value is over IDR 100 billion (EUR 6.8 million) for construction projects, over
IDR 20 billion (EUR 1.4 million) for other procurement projects and over IDR 10 billion
(EUR 680,728) for consultancy. However, according to the Indonesian Constitution Article 5
No.25, the foreign companies that can participate in the procurement process are those that are
located outside Indonesian territory. As for those foreign companies that already operate in
Indonesia, should the company have 100% foreign ownership (or in other words those companies
that are fully owned by foreign parties), this company cannot participate in the procurement
process.
All the companies, including the foreign companies that fulfil the requirements mentioned above,
that want to participate in the Indonesian national procurement process, have to firstly get their
company registered by the Electronic-Based Procurement Service (LPSE) as the procurement
partner. The registration process could be conducted through
https://lpse.lkpp.go.id/eproc4/publik/mendaftaremail for email registration, where the applicant
will be guided to follow several registration steps informed by email. In order to complete the
registration, there are several documents needs to be prepared by the applicant, including:
 Copy of Indonesian Identity Card (KTP) or passport of the person in charge of the company;
 Copy of the Taxpayer Identification Number (NPWP);

 Copy of the Trading License (SIUP);
 Copy of the Company Registration Certificate (TDP);
 The registration form.
4.3 Regulations and Agencies Related to Green Energy Technologies
As a strategic sector, energy continues to be heavily regulated by the government in Indonesia.

The responsible ministry in charge of regulating the energy sector is the Ministry of Energy and
Mineral Resources (MEMR). The government controls the price of electricity, as well as directly
setting the domestic price of fuels and electricity. Perusahaan Listrik Negara (PLN) remains the
only state-owned enterprise responsible for the transmission and distribution of electricity in
Indonesia. PLN no longer has the legal monopoly to generate, transmit and distribute electricity
since the passing of a new regulation in 2009 (Law 30/2009). Even so, it is accorded with the right
of first refusal of activities in the energy sector, effectively preventing private enterprise
participation. Other state-owned enterprises also continue to dominate the industry, including
Pertamina in oil and gas production and exports, Perusahaan Gas Negara (PGN) in natural gas
transportation and distribution, and Pertamina Geothermal Energy (PGE) and Geothermal
Nusantara (formerly known as Geo Dipa Energi, GDE)122 in geothermal energy.123 124
Recent developments unfolding in the past few years indicate strong commitment of the
Indonesian government towards the use of renewable energy in terms of targets and policies.
Under its Nationally Determined Contribution (NDC) ratified in 2015 through the Paris Agreement,
the country targets to reduce greenhouse gas emissions by 29% by 2030, up from 26% by 2020
pledged in its initial Intended Nationally Determined Contribution (INDC). 125 The unconditional
target however is increased to 41% subject to international support availability through bilateral
cooperation on technology development and transfer, technical cooperation, capacity building,
122
http://www.thejakartapost.com/news/2017/06/19/geo-dipa-energi-changes-name.html
123
https://www.adb.org/sites/default/files/publication/178039/ino-paper-09-2015.pdf
124
www.irena.org/DocumentDownloads/.../IRENA_REmap_Indonesia_report_2017.pdf
125
Draft of the Intended Nationally Determined Contribution, Republic of Indonesia

payment for performance mechanisms and access to financial resources.126 Commitment
towards NDC has led to coordination among the government institutions and the newly
established Directorate General of Climate Change under the Ministry of Environment and
Forestry, to implement the formulated climate change mitigation and adaptation activities in
Indonesia. Few regulations were put in place, such as Regulation No. 21/2008. This addresses
emission regulations, which among others require emissions monitoring systems to be installed
at thermal power plants and an emission inventory to be prepared. There are also targets set on
the use of renewable energy and the power sector. The following table contains details of the
more updated regulations related to renewable energy and the targets set by the government.
Sector Target Current Policy Framework & Regulation

Instruments
Overall Targets
Renewable energy in Total 23% Government
Primary Energy Supply (TPES) Regulation No.
excluding traditional uses of 79/2014
bioenergy
Renewable energy in power 25% Draft RUKN 2015-
generation 2034 (plan, no
regulation)
Power Sector Targets
Large hydropower 18.3 Regulation allows for power purchase MEMR No.
GW through direct selection or direct 03/2015
appointment without the minister’s
approval as long as the tariff does not
exceed the levelised base cost at the
power plant’s busbar.
Small hydropower 3.0 Different feed-in-tariff for projects up to 250 MEMR No.
GW kW (low voltage) and 10 MW (medium 19/2015
voltage) for 20 years. Rates vary for years
1-8 and 9-20, and between locations (60%
premium for Papua, for example). Tariff
range is indexed at US$ 0.12-0.144/kWh
for the first 8 years and US$ 0.075-
0.09/kWh for years 9-20.
Bioenergy power 5.5 Feed-in tariffs in the range of about US$ MEMR No.
GW 0.108- 0.272/kWh depending on location, 21/2016 (biomass
voltage (low/ medium) and type of and biogas) and
MEMR No.
126
www.irena.org/DocumentDownloads/.../IRENA_REmap_Indonesia_report_2017.pdf

Sector Target Current Policy Framework & Regulation
Instruments
bioenergy (biomass, biogas, municipal 44/2015 (municipal
solid waste). waste)
Acceleration of municipal solid waste Presidential
power plants are done for seven specific Decree No.
cities and include, as an example, ease of 18/2016 (municipal
permitting and the use of government solid waste)
funds to pay for the feasibility studies.
Geothermal power 7.1 Direct geothermal within conservation MEMR No.
GW forests only allowed when used for nature 17/2014
tourism activities. For indirect geothermal Republic of
(power) need permit from Ministry of Indonesia Law No.
Forestry if location is in forest areas. Tariff 21/2014
range of US$ 0.122-0.296/kWh dependent
on year of commercial operation and area
in which project is located.
Solar PV 6.4 Feed-in tariff for 250 MW of capacity, with MEMR No.
GW 150 MW in Java and the remaining 100 19/2016
MW spread over other locations. Feed-in
tariffs range from US$ 0.145/kWh in Java
to US$ 0.25/kWh in Papua for 20 years.
Wind 1.8 Not covered by specific regulation at the
GW moment, although a feed-in tariff is under
discussion. Current projects directly
negotiated with PLN.
Ocean power 3.1 Not covered by specific regulation.
GW
Ethanol Transportation 20% 2% blending mandate in transportation MEMR No.
Blending (PSO), 5% in non-PSO transportation for 12/2015
2016.
Industry 20% 5% blending mandate for 2016. MEMR No.
12/2015
Biodiesel Transportation 30% 20% blending mandate for 2016. MEMR No.
Blending 12/2015
Industry 30% 20% blending mandate for 2016. MEMR No.
12/2015
Electricity 30% 30% blending mandate for 2016. MEMR No.
12/2015
Aviation blending 3% Alternative biofuel for aircraft, 2% blending MEMR No.
(2020) mandate for 2018. 12/2015
Table 38: Targets, Policies and Regulation for Renewable Energy in Indonesia
Source: IRENA, March 2017 (Renewable Energy Prospects: Indonesia)
On 30 January 2017 the government announced Regulation 12 of 2017 (Regulation 12/2017)

which applies to a broad range of renewable energy sources imposing new lower maximum feed
in tariffs and new contracting regime. This is done to attract more investment into the renewable

energy industry in the country, but some experts were of the opinion that the regulation may
hinder instead of stimulating more investment, as it empowers PLN to have more control over
procurement.127 A summary of what is covered under Regulation 12/2017 is provided in the
following table.128
Items Descriptions Reference

Key features • This regulation sets out guidance for PLN regarding the purchase of Articles 3
electricity from IPPs that utilise renewable energy, i.e. solar photovoltaic &4
(PV), hydro, biogas, biomass, wind, geothermal, and municipal WtE
power projects.
• PLN “must-run” renewable energy power plants up to 10MW (i.e. PLN
must evacuate and pay for all power produced).
Solar PV & • The purchase of electricity from solar PV and wind power is done by PLN Articles 5
Wind Power through an open tender system based on the capacity quota. The capacity &6
quota is specified in PLN’s Plan (Rencana Usaha Penyediaan Tenaga
Listrik – “RUPTL”) with a minimum total package of 15 MW which can be
spread across several locations.
Hydropower • Hydro ≤10 MW should operate at a minimum capacity factor of 65%. Article 7
• Hydro >10 MW should operate with a capacity factor aligned with system
requirements.
Biomass & • Biomass and biogas projects can only be done by IPPs that have Articles 8
Biogas sufficient feedstock for the whole operational period. &9
Waste-to- • The municipal WtE technologies that are subject to this regulation include: Article 10
energy (WtE) (a) sanitary landfill, (b) anaerobic digestion, and (c) the use of
heat/thermal by using thermochemical technology.
• In addition, IPPs may get additional facilities and incentives according to
current existing regulations.
Geothermal • The purchase of electricity through geothermal can only be done by IPPs Article 11
that have working areas (Wilayah Kerja Panas Bumi – WKP) with "proven
reserves" after exploration.
Tariff for • Generally, the tariff for renewable electricity is determined through Articles 5,
Renewable negotiations between IPPs and PLN by benchmarking to the regional BPP 6, 7, 8, 9,
Electricity where the project is installed. For details for each technology please see 10 & 11
the following tariff table (Table 39).
BOOT • The BOOT business scheme is applied to geothermal and hydropower Articles 7
Scheme projects. & 11
Local • In the procurement process for IPPs, PLN will prioritise an IPP that uses Article 13
Components local components (Tingkat Komponen Dalam Negeri – TKDN) as stated in
prevailing regulations.
127
http://www.shearman.com/en/newsinsights/publications/2017/05/a-step-forward-or-a-step-back
128
https://www.pwc.com/id/en/publications/assets/.../2017/eum-newsflash-2017-61.pdf

Items Descriptions Reference
Others • PLN is obliged to: (a) transparently inform the public about the regional Article 14
power systems that are ready to utilise the renewable electricity; (b)
inform the regional BPP only to IPPs intending to utilise and develop
renewable projects.
• The electricity purchase process and pricing for any Business Entities that Article 17
have already been: (a) designated the winner of Solar PV Capacity Quota,
or the party managing water for hydro power plants, or as the developer of
Biomass, Biogas or WtE projects, or as the winner of a tender of WKP;
and, (b) has had the PPA signed, shall comply with the provisions set out
in the signed PPA and previous regulations.
• The electricity purchase process and pricing for any Business Entities that Article 18
have already been: (a) designated the party managing water for hydro
power plants, or as the developer of Biomass, Biogas or WtE projects;
and, (b) has not had the PPA signed, shall comply with the provisions set
out in MEMR 12/2017.
• The electricity purchase process and pricing for (a) any geothermal IPP Article 19
that has been declared as the auction winner of a WKP and has not
entered into PPA with PLN; and (b) any SOEs that have been assigned as
a geothermal business provider, shall comply with previous regulations.
• The electricity purchase process and the price of steam/electricity for the Article 20
holders of Geothermal Concessions who have entered into steam sale
and purchase agreements and/or PPAs which have been verified and/or
are in the process of verification by the Finance and Development
Supervisory Board, shall comply with previous regulations.
• Exemption from the provisions in Articles 17-20 may be granted to IPPs Article 21
and PLN if they agree to comply with the provisions on the electricity
purchase process implementation and price set out in MEMR Regulation
No. 12/2017.
• Following MEMR Regulation No.12/2017, the process of implementation Article 22
of, and purchase of electricity from, WtE projects under the WtE
Development Acceleration Programme shall be carried out in accordance
with previous regulations.
• This regulation explicitly supersedes the benchmark price for the Article 23
purchase of electricity from hydropower as stated in MEMR Regulation
No. 03/2015, and supersedes any contradictory clauses in MEMR
Regulation No. 17/2014 on Geothermal power purchase, No. 19/2015 on
Mini-hydro power purchase, No. 44/2015 on Municipal Solid Waste power
purchase, No. 19/2016 on Solar PV power purchase, and No. 21/2016 on
Biomass power purchase.
Table 39 Summary of Regulation 12/2017

Source: PwC Indonesia (Energy, Utilities & Mining Newsflash)

Tariff Determination of Renewable Energy
Renewable Tariff Determination
Method of
Energy Regional Av. BPP > Regional BPP ≤
Procurement
Type National Av. BPP National BPP
Open tender
Solar PV & based on At maximum
The regional BPP
Wind Power quota 85% regional BPP
capacity
Benchmark At maximum
The regional BPP
Price 85% regional BPP
Hydropower
Direct
Determined by following the direct selection process
Selection
Benchmark
At maximum
Price A maximum of the regional BPP
85% regional BPP
Biomass & (≤ 10 MW)
Biogas Direct
Selection Determined by the following direct selection process
(> 10 MW)
Including Java, Sumatera, Bali, or other power
Waste-to- Benchmark At maximum
system regions, the tariff is based on mutual
energy Price 100% regional BPP
agreement of both parties (IPPs and PLN)
Including Java, Sumatera, Bali, or other power
Benchmark At maximum
Geothermal system regions, the tariff is based on mutual
Price 100% regional BPP
agreement of both parties (IPPs and PLN)
Table 40: Tariff Determination of Renewable Energy
Source: Source: PwC Indonesia (Energy, Utilities & Mining Newsflash)
Note: Av. = Average. BPP = Biaya Pokok Pembangkitan (Costs of Generation)

5. Annex
5.1 List of Useful Contacts
The Ministry of Trade, Republic of Indonesia

M. I. Ridwan Rais Road, No. 5
Jakarta Pusat 10110
Tel: +62 21 3858 171
Email: contact.us@kemendag.go.id
Website: www.kemendag.go.id
The Ministry of Industry, Republic of Indonesia

Gedung Kementerian Perindustrian
Jl. Jend. Gatot Subroto Kav. 52-53
Jakarta Selatan 12950
Tel: +62 21 5255 509 ext 2666
Email: humas@kemenperin.go.id
Website: www.kemenperin.go.id
The Ministry of Energy and Mineral Resources (MEMR)

Jl. Medan Merdeka Selatan No. 18
Jakarta Pusat 10110
Tel: 021 3804242
Website: www.esdm.go.id/en
National Energy Council (DEN)

Gedung Badan Diklat ESDM Lantai 4
Jl. Jenderal Gatot Subroto Kav. 49
Jakarta Selatan 12950
Tel: 021-52921621
Email: sekretariat@den.go.id
Website: www.den.go.id
Directorate General of Taxes

Primary Building, 16th Floor
Kantor Pusat Direktorat Jenderal Pajak
Jalan Gatot Subroto, Kavling 40-42,
Jakarta 12190, Pos code 124
Tel: +62 21 525 0208 / 525 1509
Fax: +62 21 584 792
Email: pengelolaan.situs@pajak.go.id
Website: www.pajak.go.id
Indonesian Investment Coordinating Board (BKPM)

Jl. Jend. Gatot Subroto No. 44,
Jakarta 12190
P.O. Box 3186, Indonesia
Tel: +62 21 5252 008 ext.1132
Fax: +62 21 520 2050
Email: info@bkpm.go.id
Website: www.bkpm.go.id
Indonesian National Importer Association (GINSI)

Wisma Kosgoro Lt. 8
Jl. MH. Thamrin No. 53
Jakarta 10350 - Indonesia
Tel: +62 21 3983 2510 / 3983 2511 / 39832534
Fax: +62 21 3983 2499, 3983 2504
Email: bpp@ginsi-imports.com
Website: www.ginsi-imports.com
Indonesian Chamber of Commerce (KADIN)

Menara KADIN Indonesia
Jl.HR.Rasuna Said No.2-3, Kuningan Timur
Jakarta 12950
Tel: +62 21 5790 4062
Email: rosanr@kadin-indonesia.or.id
Website: www.kadin-indonesia.or.id
Indonesian Central Bureau of Statistics (BPS)

Jl.Dr.Sutomo 6-8, Jakarta 10710
Tel: +62 21 384 1195 / 384 2506 / 381 0291
Fax: +62 21 385 7046
Email: bpshq@bps.go.id
Website: www.bps.go.id

5.2 Starting a Business in Indonesia
Why Indonesia?
Indonesia is a country with high economic potential and it is also the largest economy in South
East Asia. The growth of an urban middle class is a key factor behind the high economic potential
of the country.
Indonesia is the country with the 4th largest population in the world, and more than 53% people
live in urban areas with a modern lifestyle and increasing purchasing power. Aside from the
country’s high economic potential, the fact that Indonesia is well recognised as a highly trade-
driven consumptive society has been an important factor which encourages foreign investors to
conduct business in Indonesia.
Finding a Distributor in Indonesia
The company could find some information regarding the potential distribution partner in Indonesia
through the Indonesian Ministry of Trade. However, in order to find a qualified and suitable
distribution partner, it is recommended that the company uses an agency that fully understands
the market and the distribution in Indonesia.
The European Chamber of Commerce Indonesia (www.eurocham.id) offers support to European

businesses in Indonesia. One of the services it offers is EU Asia Business Link (www.ealink.eu),
a one-stop-shop where European SMEs and business organisations can find key information and
relevant links to develop business in Asia. EALink is a useful platform providing European
business support organisations in Asia with extra visibility among their target audiences in the
EU. The EU Asia Business Link (EALink) is a project funded by the European Union and
implemented by a consortium composed of GOPA.com and EUROCHAMBRES, the Brussels-
based Association of European Chambers of Commerce and Industry.

Registering your business
Prior to starting the registration process, the investor should be aware that there are some share
ownership limitations for foreign companies that plan to establish a company/business in
Indonesia as well as a negative investment list of the restricted or prohibited industries for foreign
companies in Indonesia.
To establish a limited liability company with foreign ownership (known in Indonesia as PT PMA),
a foreign investor must submit an application to the Capital Investment Co-ordinating Board to
obtain a principle licence. Once the principle licence is issued by the Capital Investment
Co-ordinating Board, the founding shareholders or their proxies need to execute the deed of
establishment containing the PT PMA's articles of association, which must be signed before a
notary public and filed with the Ministry of Law and Human Rights for its approval. The filing
process is handled by the notary. Once the Ministry of Law and Human Rights approves the
articles of association, the PT PMA must then register with the Ministry of Trade.
The establishment of a PT PMA may take six to eight weeks.
The step-by-step formation process of a PT PMA is as follows:
 Reserve the PT's name with the Ministry of Law and Human Rights. This reservation
is usually handled by a notary. The PT PMA's name must be in the Indonesian language.
Other statutory requirements for the company's name are found in Government Regulation
No. 43 of 2011 regarding the procedure for the submission and usage of name of a PT.
 Execute and obtain approval for the PT PMA's articles of association. Filing is done by
the notary public electronically. The notary completes the electronic form prescribed by the
Ministry of Law and Human Rights with the required information and supporting documents
and submits them to the ministry, at the latest, 60 days after the date the deed of establishment
containing the articles of association is executed. The articles of association are prepared in
notarial deed form in the Indonesian language. Within a maximum of 14 days after the
complete application letter and supporting documents are received by the Ministry of Law and

Human Rights, the ministry will electronically issue its signed decision to approve the company
as a legal entity.
 Obtain a certificate of domicile.
 Obtain a taxpayer registration number and a taxable entrepreneur registration number.
 Register the PT PMA with the Ministry of Law and Human Rights. The application to
register the PT with the Ministry of Law and Human Rights is submitted by a notary as the
proxy for the founding shareholders.
 Register the articles of association with the Ministry of Trade. Following the Ministry of
Law and Human Rights' approval of the PT's articles of association, the PT must be registered
in the company registry at the relevant regional office of the Ministry of Trade within three
months of starting business. A company registration certificate will be issued on filing and is
valid for five years. The first Ministry of Trade registration is handled by a notary.
 Publish the articles of association in the state gazette. Following the Ministry of Law and
Human Rights' approval and Ministry of Trade registration, the articles of association must be
submitted to the state printing office for publication in the supplement to the state gazette. This
step is traditionally handled by a notary. Article 30 of Law No. 40 of 2007 regarding limited
liability companies (Company Law) requires the Ministry of Law and Human Rights to
announce the deed of establishment of the PT along with the ministry's approval in the
supplement to the state gazette within 14 days of that approval.
Company constitution
A limited liability company must have Articles of Association as required by Law No. 40 of 2007
regarding limited liability companies (Company Law). While the Company Law does not provide
model articles of association it enumerates the minimum contents that must be incorporated in
the articles of association. These include:
 The name and domicile of the company.
 The purposes, objectives and business activities of the company.

 The period of incorporation of the company.
 The amount of authorised capital, issued capital and paid-up capital.
 The number of shares, shares classification, if any, including the number of shares for each
classification, the rights attached to each share and the nominal value of each share.
 The name of the title or position and the number of members of the board of directors and
board of commissioners.
 The determination of the place and procedures for holding a general meeting of shareholders.
 The procedures for the appointment, replacement and dismissal of members of the board of
directors and board of commissioners.
 The procedure for profit utilisation and the distribution of dividends.
The articles of association of a limited liability company are available by request at the Ministry of
Law and Human Rights. Shareholders’ agreements are commonly used in addition to the articles
of association.
Business Locations in Indonesia
As the capital city, Jakarta had an estimated total population of over 10 million in 2015. Jakarta is
also the centre of many economic and commercial activities in Indonesia, and many companies
place and centralise their business (offices) in Jakarta. There are several business centres in
Jakarta, and most of them are located in the Golden Triangle of Jakarta, especially in Central
Business District (CBD) in Sudirman. However, plenty of other companies and SMEs located their
business in several big cities in Indonesia, like Surabaya, Bandung, Medan, Semarang,
Makassar, Batam, etc.
As for industrial activities, currently there are many companies that are located and centralised in
industrial areas, which are privately managed. According to the Presidential Regulation No.24 in
2009, an industrial estate is a place where the industrial activities are centralised, with facilities
managed by the industrial estate companies, which have the necessary industrial estate business

permit. The Indonesian Ministry of Industry has recently released a statement explaining that the
Ministry will focus on the development of industrial estates, currently 74 in industrial Indonesia,
reaching the total size of around 30,000 Ha.
Name of company managing the area Size (HA) Location

Bhumyamca Sekawan 11.30 South Jakarta
Jakarta Industrial Estate 438.75 East Jakarta
Kawasan Berikat Nusantara 594.00 North Jakarta
Cakung Remaja Development 43.00 North Jakarta
Krakatau Industrial Estate 550.00 Cilegon
Jababeka Tbk 1,800 Cilegon
Modem Cikande Industrial Estate 1,050.00 Serang
Mustika Lodan 662.00 Serang
Berlian Sarana Utama 100.00 Serang
Buana Eka Ganda 250.00 Serang
Bumi Cahya Mandiri 100.00 Serang
Cahaya Bajatama Indonesia 250.00 Serang
Cikande Industrial Estate 200.00 Serang
Cipta Perintis Mandiri 200.00 Serang
Eterindo Wahanatama 25.00 Serang
Intibangun Adi Pratama 250.00 Serang
Intisarana Pertiwi Putra 200.00 Serang
Kartawi Adyaland 150.00 Serang
Krakatau Bandar Samudra 25.00 Serang
Langgeng Sahabat 500.00 Serang
Margasari Kalimas 200.00 Serang
Modern Persada Kreasi 400.00 Serang
Nikomas Gemilang 165.00 Serang
Pancapuri Indoperkasa 500.00 Serang
Pancatama Gotong Royong 100.00 Serang
Samada Perdana 150.00 Serang
Sri Agung Utama Raya 250.00 Serang
The Asia Industrial Estate 200.00 Serang
Bekasi Fajar Industrial Estate 200.00 Bekasi
East Jakarta Industrial Park 320.00 Bekasi
Gobel Dharma Nusantara 54.00 Bekasi
Hyundai Inti Development 200.00 Bekasi

Jababeka Tbk. 1,570.00 Bekasi
Indonesia-China Integrated Industrial
200.00 Bekasi
Estate
Lippo Cikarang Tbk 1,000 Bekasi
Megalopolis Manunggal Ind. Dev. 1,000 Bekasi
Patria Manunggal Jaya 220.00 Bekasi
Puradelta Lestari 1,000 Bekasi
Tegar Primajaya 430.00 Bekasi
Alindatamasakti Brother Corp. 400.00 Bekasi
Amcol Propertindo Imv. 230.00 Bekasi
Bekasi Matra Real Estate 500.00 Bekasi
Cikarang Hijau Indah 230.00 Bekasi
Gerbang Teknologi Cikarang 300.00 Bekasi
Great Jakarta Inti Development 12.50 Bekasi
Indocargomas Persada 230.00 Bekasi
Jatiwangi Utama 220.00 Bekasi
Kawasan Darma Industri 18.00 Bekasi
Kreasi Intan 300.00 Bekasi
Sarana Panca Utama 250.00 Bekasi
YKK Indonesia Ziper Co Ltd. 0.00 Bekasi
Daya Kencanasia 210.00 Karawang
Indotaisei Indah Development 700.00 Karawang
Kawasan Industri Kujang Cikampek 140.00 Karawang
Maligi Permata Industrial Estate 1,100.00 Karawang
Mitra Karawangjaya 430.00 Karawang
Suryacipta Swadaya 1,400.00 Karawang
Aneka Inti Sejahtera 500.00 Karawang
Bintang Puspita Dwikarya 400.00 Karawang
Canggih Bersaudara Muliajaya 300.00 Karawang
Hab & Sons 358.00 Karawang
Karawang Jabar Industrial Estate 506.00 Karawang
Karawang Tatabina Industrial Estate 314.00 Karawang
Mandalapratama Permai 300.00 Karawang
Persadanusa Makmurindo 300.00 Karawang
Pertiwi Lestari 7,100.00 Karawang
Pradidhana Anugerah 250.00 Karawang

Rasindo Perkasa 100.00 Karawang
Sejatibuana Jayadharma 200.00 Karawang
Sitiswadaya Permai 500.00 Karawang
Sumber Air Mas Pratama 500.00 Karawang
Table 41: Major Industrial Areas in Indonesia
Apart from the Jakarta area, there are some other big cities with industrial estates located all over
Indonesia. According to the Master Plan of National Industrial Development 2015 – 2035,
Indonesia set the target of building at least 36 new industrial estates with total area of 50,000 Ha,
while for the period of 2014-2019, the Ministry of Industry set the target to build 14 industrial
estates outside Java, which includes seven industrial estates in East Indonesia and the rest of it
in West Indonesia.
Supporting Government Agencies
A representative office can be established depending upon the line of business and the necessary
licenses issued by the related government department. Representative offices are set up primarily
for marketing, market research, or as buying or selling agents. The related government ministries
are:
 Ministry of Industry & Trade - for bilateral trade
 Ministry of Public Work - for consultant or contractor
 Ministry of Finance - for banking
 Ministry of Trading - for trading
 Investment Board (BKPM) - regional representative
There are several Indonesian Government Agencies that support international trading activities.
As a main Government Agencies aimed for investment management in Indonesia, BKPM
(Indonesia Investment Coordinating Board) is one of the supporting Government Agencies
that could be of help in the establishment of business in Indonesia for foreign companies, as

BKPM is mandated to boost domestic and foreign direct investment through creating a conducive
investment climate.
The Indonesian Chamber of Commerce (KADIN) is an organisation which communicates,

represents, informs and facilitates the relationship between Indonesian businesses and the
Indonesian Government, as well as between Indonesian businesses and foreign companies.
KADIN will be of help for information regarding trading, industry and services in all kinds of
economic activities.
Another one is the Indonesian Trade Promotion Centre (ITPC) located in several countries in
Europe, like ITPC Barcelona, ITPC Lyon, ITPC Budapest, ITPC Milan and ITPC Hamburg. From
ITPCs located in those representative countries, foreign companies can gain useful information
regarding the establishment of a business in Indonesia.

5.3 Useful Statistics
Exporters Imported value Imported value Imported value Imported value Imported value
in 2012 in 2013 in 2014 in 2015 in 2016
World 28,517 37,178 59,540 41,542 32,012
Japan 14,289 18,051 17,853 15,393 10,723
United States of America 383 1,829 3,138 2,763 5,929
Singapore 5,606 7,064 27,787 13,702 4,271
Canada 1,749 2,574 2,875 2,866 3,422
China 2,149 2,509 2,591 2,133 2,397
Hong Kong, China 461 461 602 1,208 1,823
Korea, Republic of 610 1,879 1,764 1,454 1,501
Germany 1,190 92 765 239 798
United Kingdom 91 49 147 673 313
Table 42: Imports of Photosensitive semiconductor devices, incl. photovoltaic cells

Source: Trade Map
Unit: US Dollar thousand
Importers Exported value Exported value Exported value Exported value Exported value
in 2012 in 2013 in 2014 in 2015 in 2016
World 126,128 123,905 144,274 89,335 70,485
Hong Kong, China 32,335 30,080 49,848 31,079 33,120
Japan 53,409 56,886 53,271 38,600 23,034
Germany 3,924 5,118 8,274 5,004 4,071
Singapore 3,795 3,626 4,114 5,889 3,689
China 25,735 14,098 16,335 3,863 2,938
Taipei, Chinese 2,254 3,956 2,993 2,388 2,287
United States of America 1,335 1,129 1,032 571 725
Korea, Republic of 173 472 393 408 387
Philippines 2,323 8,254 7,849 1,446 170
Table 43: Exports of Photosensitive semiconductor devices, incl. photovoltaic cells

Source: Trade Map

Exporters Imported value Imported value Imported value Imported value Imported value
in 2012 in 2013 in 2014 in 2015 in 2016
World 30,046 34,012 28,099 34,010 42,525
Norway 469 1,523 10 2,800 22,511
Japan 3,310 1,807 1,585 1,810 4,710
United States of America 3,439 5,744 4,482 7,377 3,351
Singapore 7,683 4,480 8,200 7,419 2,516
United Kingdom 1,295 904 362 824 2,065
China 2,350 2,053 1,461 1,504 1,336
Germany 2,509 2,227 3,123 2,114 1,285
Australia 2,751 3,866 2,685 1,045 994
Sweden 321 291 804 500 689
Table 44: Imports of Parts of non-electrical engines and motors, n.e.s.(Wind Turbine Blades)
Source: Trade Map
in 2012 in 2013 in 2014 in 2015 in 2016
World 9,279 8,223 3,688 1,388 2,709
Singapore 3,390 3,724 1,146 562 2,092
Japan - 672 24 57 155
Egypt - - - 40 78
Taipei, Chinese 6 - 3 - 70
Australia 2,141 520 119 231 55
Malaysia 121 1,409 546 - 52
United Arab Emirates 112 86 267 85 50
Russian Federation 28 10 36 - 47
United States of America 2,504 1,063 149 95 32
Table 45: Exports of Parts of non-electrical engines and motors, n.e.s.(Wind Turbine Blades)
Source: Trade Map

Exporters Imported Imported Imported Imported Imported
value in 2012 value in 2013 value in 2014 value in 2015 value in 2016
World 2,548 1,409 191 652 154
Singapore - 4 2 5 139
China 28 83 38 6 11
Hong Kong, China - - - 3 4
Australia - - 3 2 -
Belgium - - - 2 -
Japan 46 140 17 - -
Taipei, Chinese - 15 - - -
India 660 - - - -
Spain 1,800 - - - -
Table 46: Imports of Generating sets, wind-powered
Source: Trade Map
Importers Exported Exported Exported Exported Exported

World 0 0 25 6 26
Korea, Republic of 0 0 19 6 26
Thailand 0 0 6 0 0
United States of America 0 0 0 0 0
Table 47: Exports of Generating sets, wind-powered
Source: Trade Map

World 152,629 77,457 198,439 56,665 83,663
China 43,089 14,217 87,831 7,146 32,690
Japan 60,820 4,145 11,216 9,170 27,770
Finland - - - 2 9,042
Israel - - - - 8,653
Spain - 1,309 1,000 354 2,145
Malaysia 785 232 178 906 1,259
India 1,693 3,009 958 6,094 926
Singapore 3,447 15,944 2,932 1,579 293
Korea, Republic of 13 65 2,648 10,462 284
Table 48: Imports of Generating sets (excluding wind-powered and powered by spark-ignition internal combustion piston
engine) - Wave/Tidal power converter
Source: Trade Map
in 2012 in 2013 in 2014 in 2015 in 2016
World 723 491 2,262 1,063 1,797
United States of America 67 - - - 1,233
Benin - - - - 301
Singapore 585 433 1,195 348 171
Malaysia - 1 47 18 36
Brunei Darussalam - - - - 22
Philippines - - - - 20
Hong Kong, China 30 - 1 - 8
Timor-Leste - 17 14 96 4
Cameroon - - - - 1
Table 49: Exports of Generating sets (excluding wind-powered and powered by spark-ignition internal combustion piston
engine) - Wave/Tidal power converter
Source: Trade Map

World 200,316 161,934 105,152 200,006 161,581
Israel 0 0 0 28,409 52,473
China 25,907 31,368 23,290 43,634 24,984
Japan 19,520 10,467 7,713 5,414 16,727
Thailand 16,200 1,871 3,191 8,109 13,551
Malaysia 16,027 17,176 12,714 11,022 12,270
Singapore 9,905 5,542 8,134 7,654 9,107
Korea, Republic of 12,003 35,944 9,741 42,083 7,237
United Kingdom 1,396 1,249 1,164 282 3,452
Table 50: Imports of Heat-exchange units (excluding instantaneous heaters, storage water heaters, boilers and equipment)
Source: Trade Map

World 13,366 11,696 4,794 3,589 1,223
Japan 50 23 33 0 379
United States of America 0 20 59 52 173
Timor-Leste 0 7 42 73 123
Netherlands 0 2 18 0 68
Singapore 1,013 414 292 980 59
Australia 5,631 6,892 128 57 54
Turkey 0 0 0 0 53
Germany 123 46 0 8 48
Maldives 0 0 0 0 45
Table 51: Exports of Heat-exchange units (excluding instantaneous heaters, storage water heaters, boilers and equipment)
Source: Trade Map

World 14,943 17,129 18,505 22,776 31,498
Netherlands 14 83 36 20 6,950
Japan 330 1,823 727 1,317 5,546
India 1,148 3,902 3,301 5,316 5,462
China 2,409 5,275 5,583 4,387 4,999
Italy 13 43 11 336 4,000
Austria 307 140 162 416 2,176
Slovenia - - - - 562
Taipei, Chinese 1,030 890 948 948 531
Singapore 1,332 1,239 2,316 5,703 272
Table 52: Imports of Hydraulic turbines, water wheels, and regulators therefor (excluding hydraulic power engines)
Source: Trade Map

World 305 57 878 626 138
Thailand 4 - 270 36 85
Singapore 188 24 35 48 23
Myanmar - - - 2 12
Malaysia 39 2 311 32 7
Madagascar - - - 9 4
Ethiopia - - - - 2
Philippines - 20 89 65 2
United Arab Emirates - 2 - - 2
Australia - - 25 - -
Table 53: Exports of Hydraulic turbines, water wheels, and regulators therefor (excluding hydraulic power engines)
Source: Trade Map

World 85,427 137,917 107,088 79,202 81,613
China 17,481 34,383 49,738 41,517 51,134
Germany 6,708 13,912 18,248 8,956 8,630
Japan 19,342 18,912 7,975 3,769 5,762
Italy 1,964 9,343 13,976 3,068 5,013
Switzerland - 58 14 13 2,025
Korea, Republic of 24,410 43,028 1,493 1,104 1,350
Hong Kong, China 31 30 2 8 698
Finland 1,247 334 990 1,559 656
Table 54: Imports of Furnace burners for pulverised solid fuel or gas, incl. combination burners
Source: Trade Map

World 582 1,657 1,553 871 1,179
Malaysia 302 116 954 521 547
Singapore 173 176 61 7 323
Germany - - 121 39 177
United Arab Emirates - - - - 68
Japan - 43 3 18 56
Colombia - - - - 5
Timor-Leste - - - 1 3
Australia - 594 214 3 1
New Zealand - - - - 1
Table 55: Exports of Furnace burners for pulverised solid fuel or gas, incl. combination burners
Source: Trade Map

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Green Energy Technologies

Indonesia Market Study

Photo by Benson Kua, distributed under CC licence BY-SA 2.0.

Central Management Unit

Indonesia Market Study

Submitted to the European Commission

Green Energy Technologies – Indonesia Market Study - Page 3 of 261

LIST OF FIGURES ...................................................................................................................................................... 7

LIST OF TABLES ........................................................................................................................................................ 8

TABLE OF ABBREVIATIONS .................................................................................................................................. 10

1. EXECUTIVE SUMMARY ....................................................................................................................................... 13

2. WHAT ARE THE CHARACTERISTICS OF INDONESIA? .................................................................................. 21

3. MARKET OVERVIEW & EU ENTRY OPPORTUNITIES IN INDONESIA ............................................................ 29

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4. REGULATIONS ................................................................................................................................................... 225

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Hydrothermal and Ocean Energy

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Landfill Gas/ Sewage treatment Gas/ Biogas

Energy Efficiency & Carbon Services

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Carbon Capture and Storage (CCS)

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New and Renewable Energy (NRE) Project Development

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Retrofitting, Refurbishment and Upgrade of Existing Energy Infrastructure

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Regulations & Policies

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Figure 1: Map of Indonesia

2.1. Political Overview

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Region Key Figures

Central Java (including Population: 37.4 million

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CAGR 2010 – 2015: 5.3%

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Backed by strong expansion in private consumption and private-sector investment, Indonesia is

2.3. Trade Overview

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Figure 2: EU-Indonesia Trade in Goods & Services, 2014-2016

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2.5. Business and Competitive Environment

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Overall Ranking 91 106 15

Starting a business 151 167 16

Dealing with Construction Permits 116 113 -3

Registering Property 118 123 5

Protecting Minority Investors 70 69 -1

Paying Taxes 104 115 11

Trading Across Borders 108 113 5

Enforcing Contracts 166 171 5

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