(Back) (Front)

Indonesia Pesawaran PV
Power Plant Systems
Indon (10MW) Feasibility Study
esia
This Report
Pesa
is the final
waran
report of the
New and
PV [Final Report]
Powe
Renewable
r July. 6, 2017
Energy
Plant
Overseas
Syste
Supporting
ms(1
Program,
0MW Supervised by Dadam Micro Inc.
funded by
)
the Ministry
Feasi Participated by Gaia Energy Inc.
of Trade,
bility 위탁기관 ○○○○
Industry &
Study ○○○○
Energy.
MOTI
E
Ministry of Trade, Industry and
Energy
 Document for Submission

To the attention of the Director of the New and Renewable

Energy Center

This report is submitted as the final report on “Indonesia Pesawaran PV Power

Plant Systems (10MW) Feasibility Study [Period : Sept. 1, 2017 to Mar. 31, 2018].”

Apr. 30, 2018

S u p e r v is e d b y : Dadam Micro Inc.

Director in charge : Minbo, Shim

Participated by :
Iksoo, Jun
Cheol Min, Han
Baek Heung, Seong
Jae Young, Lee
Dong Won, Lee
Se Hwan, Oh
Gyeong Mee, Lee
Cheol Hyun, Lee
Byeong Un, Jeong
Dong Soo, Kim
Seung Il, Park
Byeong Soo, Park
Chang Yong, Jeong
Dong Min, Lee
Jeong Gyu, Ha
Chang Hee, Song
 ABSTRACT

Project Name Indonesia Pesawaran PV Power Plant Systems (10MW) Feasibility Study

Lead Company Dadam Micro Inc. General SHIM Minbo

Manager

Period 2017. 09. 01 ~ 2018. 03. 31 ( 7 months )

Government Private Fund

Total Expense Total
(unit : Fund Cash Goods
thousand won) 134,000 18,000 28,000 180,000
Participating ㈜가이아에너지
Company
10MW Photovoltaic Power Plant, Pesawaran Regency, Lampung
Key Words Province (Indonesia), Economic Feasibility, Environmental Impact
(6 ～ 10개) Assessment, New & Renewable Energy in Indonesia, Private Public
Partnership,

1. Business Goal
Ÿ The pre-feasibility study determines the economic, technical and
environmental feasibility of large scale solar precinct at Negri Katon Villeage
in Pesawaran Regency, Lampung Province, Indonesia.
Ÿ The capacity of PV energy to be generated by this project is 10MW that will
be sold to to the Indonesian government operated power company (PT. PLN)
through PPA contract.
Ÿ For the purpose of this study a solar precint is defined as the co-location of
solar plants into a precinct to facilitate sharing of infrastructure, particularly
access to the electricity network.

2. Business Contents and Scope

Ÿ The Indonesian government is advancing 30MW (solar-powered 10MW) for
new & renewable energy although the required electric energy is 330MW
with the development of large-scale tourist facilities complex including 파하
와섬, Pesawaran Regency, Lampung, Sumatera Island.
Ÿ Fulfill the required electric energy by establishing a grid-connected PV
power plant within the tourist facilities complex, improve the clean energy
image within the vacation spot, and elicit tourism package development.
Ÿ Install a monitoring device into the grid-connected photovoltaic power
station to facilitate its maintenance, optimize the size of generating unit, and
reduce the total project cost.
3. Outcome
Ÿ Established the foundation for export amounting to $15M (USD) for the
grid-connected photovoltaic power generation system, Indonesia.
Ÿ Elicited an agreement on MOU for the photovoltaic power generation system
required for this project (Q2, 2018)
Ÿ Licensing, PPA/turnkey project, funds planning, government-led SPC project
structure determination
Ÿ Grid-connected high efficiency solar photovoltaic power generation system
design technique

4. Application Plan and Expected Effect

Ÿ To be able to win opportunities to work in cooperation for developing
stand-alone solar photovoltaic energy-based (new & renewable energy)
tourist facilities and industrial complexes in Pesawaran Regency
Ÿ Contributing to Indonesian renewable energy promotion policy, solving power
supply and demand issues, and reducing GHG emissions
Ÿ Acquiring the chance to collaborate with the development of independent
photovoltaic renewable energy-based tourism complex and industrial complex
in the region
Ÿ Acquisition of additional construction possibility of large-scale stand-alone
solar power generation facility for efficient use of electric power energy in
Persawaranta area
 Table of Contents
Chapter 1. Executive Summary ···························································································· 1
1. Objectives ··········································································································································· 1
2. Business Scale and Structure ······································································································ 1
3. Business Method ······························································································································ 3
4. PV Power Plant Site ······················································································································· 3
5. Sales Plan ··········································································································································· 3
6. Estimated total construction cost ······························································································· 5
7. Economic Feasibility ······················································································································· 5
8. Conclusion and Future Plan ·········································································································· 7

Chapter 2. Project Plan ············································································································ 8

1. Project Outline ·································································································································· 8
1.1. Objectives and Background ···································································································· 8
1.2. Project Outline ························································································································ 10
2. Project Execution Plan ················································································································· 13
2.1. Project Organization Structure ···························································································· 13
2.2. Schedule ···································································································································· 16
3. Expected Effect ····························································································································· 17
3.1. Export Aspects ······················································································································· 17
3.2. Technical Aspects ·················································································································· 18
3.3. Economic Aspects ·················································································································· 18
3.4. Environmental Aspects ········································································································· 19
3.5. Possibility to obtain future orders ···················································································· 19

Chapter 3. Overview of Indonesia ······················································································ 20

1. Overview ·········································································································································· 20
1.1. Basic Information ···················································································································· 20
1.2. Relationship with Korea ······································································································· 21
2. Indonesia Industry Trends ·········································································································· 24
3. Economic and Financial Trends ································································································ 25
3.1. Indonesia’s Economy & Outlook (2017) ········································································· 25
3.2. Major issues and prospects ································································································ 27
4. Indonesia Texation System ········································································································ 28
4.1. Status ········································································································································· 28
4.2. Major Tax Breakdown ··········································································································· 29
5. Investment Environment in Indonesia ····················································································· 33
5.1. Overall investment environment ························································································· 33
 5.2. Investment Incentive ············································································································· 36
5.3. Foreign Investment Incentives ··························································································· 38

Chapter 4. Energy Market Analysis ················································································· 39

1. Global Energy Market ·················································································································· 39
1.1. Global Energy ·························································································································· 39
1.2. Global PV market ··················································································································· 40
2. Indonesia Power Market ·············································································································· 46
2.1. Status ········································································································································· 46
2.3. Policy ········································································································································· 51
3. Indonesian power industry structure and management system ······································ 56
3.1. Power industry structure ····································································································· 56
3.2. Electric Power Industry Management System ······························································ 57
3.3. Electric Power System / Supply / Development ·························································· 59
3.4. Electricity Bill ························································································································· 61
3.5. Electric Power Supply Plan in Indonesia ········································································ 65
4. PV Market in Indonesia ··············································································································· 67
4.1. Solar Power ······························································································································ 67
4.2. Photovoltaic Power Generation Status ············································································· 68

Chapter 5. Field Analysis ······································································································ 70

1. Climatic Conditions ························································································································ 70
2. Location and Site Survey Status ······························································································ 70
2.1. Power Plant Location ············································································································ 70
2.2. Site Survey Status ················································································································· 71
3. Local PV Plant related company survey ················································································ 75
3.1. Survey on PV business ········································································································ 75
3.2. Status of local manufacturers of photovoltaic structures ········································ 76

Chapter 6. Technical Analysis ····························································································· 78

1. General Design Criteria for Photovoltaic Systems ······························································· 78
2. Local Climate Data Analysis ········································································································ 81
3. PV power generation analysis ····································································································· 86
3.1. PVSYST based power generation analysis ····································································· 86
3.2. Analysis of power generation using local climatic data ············································ 90
4. Design and Installation Drawings ······························································································· 90
4.1. Spec for major components ································································································ 90
4.2. Optimum Photovoltaic System Layout Design and Installation Drawing ··············· 92
4.3. Structure design with geotechnical & directivity review ·········································· 95
Chapter 7. Environment Impact Assessment ··································································· 99
1. Overview ·········································································································································· 99
2. Background ······································································································································· 99
2.1. Geographic Environment ······································································································· 99
2.2. Current Status ······················································································································· 100
2.3. Future Values ························································································································ 100
3. Environment Impact Assessment Tasks ·············································································· 101
3.1. Progress ·································································································································· 101
3.2. PV Plant Site(Geography) ································································································· 102
3.3. Climate Characteristics: Precipitation, Atmospheric Pressure, Wind speed &
Duration of Sunshine ··········································································································· 103
3.4. Flora & Fauna Distribution ······························································································· 103
3.5. Flood & Storm Disaster ····································································································· 104
3.6. Soil Analysis ·························································································································· 105
3.7. Water Analysis ····················································································································· 109
3.8. Social Impact Analysis ······································································································· 110

Chapter 8. Economic Feasibility ························································································ 113

1. Key Points ····································································································································· 113
2. Prerequisites ································································································································· 114
3. Basis for Prerequisites ·············································································································· 114
3.1. PPA unit price ······················································································································ 114
3.2. Annual Power Generation ·································································································· 118
3.3. Weighted Average Cost of Capital (WACC) ······························································· 119
3.4. Capital cost in NPV method ····························································································· 121
3.5. Minimum return on investment in IRR method ·························································· 124
3.6. PF funding method ··············································································································· 124
3.7. Other capital interest rate ································································································· 126
3.8. Purchase of land ··················································································································· 128
3.9. Investment environment ····································································································· 128
4. Economic Analysis ······················································································································ 129
4.1. Investment Plan ···················································································································· 129
4.2. Year-on-year free cash flow (FCF) estimation ······················································ 142
4.3. Results of economic feasibility study based on NPV method ······························· 143
4.4. Results of the economic feasibility study based on IRR method ························· 145
4.5. Sensitivity Analysis ············································································································· 146

Appendix ··································································································································· 147

[Attachment 1. Statement of working expenses] ······································································ 147
Table
<Table 1> Funding plan for the project ··········································································································· 5
<Table 2> Basic conditions for economical feasibility study ····································································· 6
<Table 3> Result of economic feasibility using NPV and IRR methods. ··············································· 7
<Table 4> Info of ordering agency (SPC) ···································································································· 12
<Table 5> Procurement Items and Expected Amount ··············································································· 18
<Table 6> Basic information of Indonesia ····································································································· 20
<Table 7> Personal income tax rate ··············································································································· 32
<Table 8> Corporate tax exemption system for inducing specific industrial investment ·············· 38
<Table 9> Power Generation Trend in Indonesia (Unit: TWh) ····························································· 47
<Table 10> Indonesia Electricity Expansion Program, 2015-2019 ······················································ 48
<Table 11> Indonesian renewable energy potential and secured generation capacity, 2013 ········ 50
<Table 12> Indonesia FIT grant system: Photovoltaic sector(July 2017) ········································· 54
<Table 13> Indonesian Government Renewable Energy Electricity Production Rate (2017) ······· 55
<Table 14> Increase in electricity rates in Indonesia in 2014 (source:PLN) ·································· 63
<Table 15> Electricity bill for each group in Indonesia (June 2015, source: PLN) ···················· 64
<Table 16> Electric power supply plan in Indonesia ················································································· 65
<Table 17> Solar power On-stream development Plan (in MW) ························································· 68
<Table 18> Average solar irradiance in the main regions of Indonesia ·············································· 70
<Table 19> Process-specific considerations ································································································ 78
<Table 21> Analysis of solar radiation data at installed area ································································ 83
<Table 22> Population Density of Negeri Katon ······················································································ 102
<Table 23> Pesawaran Regency Precipitation ·························································································· 103
<Table 24> Pesawaran Regency Atmospheric Pressure, Wind Speed & Duration of Sunshine 104
<Table 25> Pesawaran Regency Disaster Report(2013 ~ 2017) ······················································· 105
<Table 26> Criteria for chemical substances to be included in drinking water(1996) ················ 110
<Table 27> Analysis of the composition of drinking water in Negri Katon solar plant area ···· 111
<Table 28> Matrix for Social Impact Analysis ························································································· 112
<Table 29> Comparison between NPV method and IRR method ························································· 113
<Table 30> Prerequisites for Economic Feasibility ················································································· 114
<Table 31> Interpretation of the Ministry of Energy and Mineral Resources Act (No 12/2017)
(Filed by KOTRA 2017) ············································································································ 117
<Table 32> - Average annual return of 5-year government bonds ················································· 120
<Table 33> Cost of Equity ······························································································································ 124
<Table 34> Oversee re-lending products ··································································································· 125
<Table 35> EPC cost breakdown ··················································································································· 129
<Table 36> Basic equipment list ···················································································································· 130
<Table 37> Land cost ········································································································································ 130
<Table 38> Assumptions for depreciation cost estimation ···································································· 131
<Table 39> Depreciation cost estimation ···································································································· 132
<Table 40> Sales during production period ································································································ 133
<Table 41> output ·············································································································································· 134
<Table 42> Operating Expenses ····················································································································· 135
<Table 43> A&G Expenses ····························································································································· 136
<Table 44> O&M Expenses ····························································································································· 137
<Table 45> Insurance cost ······························································································································· 138
<Table 46> Year-to-year net income (NI) ······························································································ 139
<Table 47> Annual Interest Cost ·················································································································· 140
<Table 48> Annual corporate tax ·················································································································· 141
<Table 49> Interest income ····························································································································· 142
<Table 50> Year-on-year free cash flow (FCF) estimation ······························································ 143
<Table 51> Result of economic feasibility (NPV) ··················································································· 144
<Table 52> Discounted FCF ···························································································································· 144
<Table 53> IRR calculation condition ··········································································································· 145
<Table 54> Discount Rate by year for IRR calculation ·········································································· 145
<Table 55> Result of economic feasibility (IRR) ···················································································· 146
<Table 56> Sensitivity of discount rate ······································································································ 146
Figure
<Fig 1> Business Structure ·································································································································· 2
<Fig 2> PV Plant Site ············································································································································ 3
<Fig 3> Solat irradiance map for the PV plant site ····················································································· 4
<Fig 4> Estimated EPC cost ································································································································ 5
<Fig 5> Future schedule ········································································································································ 7
<Fig 6> LOI agreement between Dadam Micro and Farsawaran officials (2017.4.7.) ······················ 9
<Fig 7> LOI letter signed ··································································································································· 10
<Fig 8> Business & organization structure of stakeholders ···································································· 13
<Fig 9> Meeting minutes for business structure and schedule (2018.1.19) ····································· 14
<Fig 10> Roles for feasibility study project ································································································ 16
<Fig 11> Project processing schedule ············································································································ 16
<Fig 12> Detailed schedule ································································································································ 17
<Fig 13> Regional divisions in Indonesia ······································································································· 21
<Fig 14> Domestic Construction Projects in Indonesia (2000-15) (Unit: US $ Million) ············ 23
<Fig 15> Indonesian construction orders by Korean companies (2000-15) ····································· 24
<Fig 16> Recent economic growth in Indonesia ·························································································· 26
<Fig 17> Korea-Indonesia export and import performance ···································································· 26
<Fig 18> Growth of Indonesian GDP by expenditure component ························································ 34
<Fig 19> Indonesian Rupee to rise to normal level ··················································································· 35
<Fig 20> PIP: Pesawaran Investment Promotion (2017.11.14.) ···························································· 36
<Fig 21> 2040 World Energy Sources (Source: IEA) ·············································································· 39
<Fig 22> Life Cycle of global PV industry ··································································································· 41
<Fig 23> Trends and Prospects for PV Installations ················································································ 42
<Fig 24> Long-term Global Solar Market Forecast ·················································································· 43
<Fig 25> Demand Trend of US Solar Installations ···················································································· 44
<Fig 26> China's solar installation demand trend ······················································································· 45
<Fig 27> Indonesian Power Industry Development Plan (Source: ESDM) ········································· 48
<Fig 28> Sumatra Island Power Supply and Demand Plan 2017-2019 (Source PLN) ················· 49
<Fig 29> National energy mix target including NEP14 ············································································ 51
<Fig 30> Indonesian renewable energy FIT program ················································································ 52
<Fig 31> Status of Indonesian Electricity Grant Support System, 2003-2012 ······························· 54
<Fig 32> Indonesian power industry sales structure ················································································· 57
<Fig 33> PLN Subsidiary Organization Chart ······························································································· 58
<Fig 34> Indonesia PLN Location of Regional Office ················································································ 58
<Fig 35> Status and development plan of electric power supply infrastructure in Indonesia ······ 60
<Fig 36> Indonesian transmission and distribution network development plan ······························· 60
<Fig 37> Electric power infrastructure investment scale 2011-2020 ················································· 61
<Fig 38> Detailed plan for 35GW power plant construction ································································· 66
<Fig 39> Indonesia solar energy potential ···································································································· 67
<Fig 40> Global insolation ·································································································································· 67
<Fig 41> Photovoltaic development program of 1000 islands ································································ 68
<Fig 42> Location of Final Solar Power Plant: Negeri Katon Village ················································· 71
<Fig 43> Two candidates in the Pesawaran region ··················································································· 71
<Fig 44> Survey of the site #1 and its power connection point ························································· 72
<Fig 45> Field survey of final candidate site ······························································································ 72
<Fig 46> Power linkage site survey ··············································································································· 73
<Fig 47> Installation of measuring equipment in the final destination Negeri Katon village ······· 74
<Fig 48> Data confirmation and measurement equipment dissemble (March 19, 2018) ··············· 75
<Fig 49> PT. EST INT meeting and field survey (Nov. 2017) ··························································· 76
<Fig 50> Visits and Survey of Local Photovoltaic Manufacturers (March, 2018) ·························· 77
<Fig 51> Identify the latitude and longitude of the installation site ··················································· 79
<Fig 52> Determining the separation distance between modules ·························································· 79
<Fig 53> Shading loss of solar cell ················································································································ 80
<Fig 54> Maximum Power Point Tracking Algorithm for Interter ························································ 81
<Fig 55> Irradiance data for 5 months in Pesawaran area ····································································· 82
<Fig 56> Climatic conditions of the Pasawaran solar installation area (Nov. 2017) ······················ 83
<Fig 57> Climatic conditions of the Pasawaran solar installation area (Dec. 2017) ······················ 84
<Fig 58> Climatic conditions of the Pasawaran solar installation area (Jan. 2018) ······················· 85
<Fig 59> Climatic conditions of the Pasawaran solar installation area (Feb. 2018) ······················ 85
<Fig 60> Climatic conditions of the Pasawaran solar installation area (Mar. 2018) ······················ 86
<Fig 61> PVSYST Analysis condition of grid-connected system ························································· 87
<Fig 62> PVSYST loss rate of the grid-connected system ··································································· 88
<Fig 63> PVSYST power generation analysis of grid-connected power generation system ······· 89
<Fig 64> PV module spec ·································································································································· 91
<Fig 65> Inverter spec ········································································································································ 92
<Fig 66> 10MW photovoltaic system diagram ····························································································· 93
<Fig 67> 10MW PV system layout sketch ··································································································· 93
<Fig 68> 10MW PV transmission and distribution facility skeleton diagram #1 ····························· 94
<Fig 69> 10MW PV transmission and distribution facility skeleton diagram #2 ····························· 95
<Fig 70> 10MW PV system structure drawing ··························································································· 96
<Fig 71> Cross-sectional diagram & 3D Modeling of 5kW structure for 10MW PV system ···· 98
<Fig 72> Environment Impact Assessment Progress ················································································· 99
<Fig 73> Indonesia Solar Irradiance (SOLARGIS, 2014) ······································································· 100
<Fig 74> Solar power plant scheduled for evaluation of environmental impact MAP ·················· 101
<Fig 75> Sampling Soil February 22, 2018 ······························································································· 105
<Fig 76> Soil sampling area map of PV plant site ·················································································· 106
<Fig 77> Final Result of Sampling Soil Analysis ····················································································· 106
<Fig 78> Soil sample component structure ································································································ 107
<Fig 79> Moisture content ······························································································································· 107
<Fig 80> Gravity Analysis ······························································································································· 108
<Fig 81> Sieve Analysis ··································································································································· 108
<Fig 82> Atterberg Limit ································································································································· 109
<Fig 83> Well water sample February 22, 2018 ····················································································· 110
<Fig 84> Indonesia Ministry of Energy and Mineral Resources on Renewable Energy ·············· 116
<Fig 85> Ministry of Energy Mineral Resources Restricted Specification of Renewable ··········· 117
<Fig 86> Solar irradiance of PV plant candidate site (Global Solar Atlas) ···································· 118
<Fig 87> Global credit line for oversee re-lending ················································································ 126
<Fig 88> Indonesian lending rate ··················································································································· 127
<Fig 89> Mr. Opinion on land purchase by Usman (President of PPP @ Pesawaran) ··············· 128
 Chapter 1. Executive Summary
1. Objectives
❍ This pre-feasibility study determines the economic, technical and environmental
feasibility of large scale solar precinct at Negri Katon Villeage in Pesawaran
Regency, Lampung Province, Indonesia.

❍ For the purpose of this study a solar precint is defined as the co-location of solar
plants into a precinct to facilitate sharing of infrastructure, particularly access to
the electricity network.

❍ The goal of this project is to build a 10MW solar power plant in the Pesawaran
Regency in Lampung Province, Indonesia and sell the generated power to the
Indonesian government owned power company (PT. PLN) in the form of PPA for
20 years and then sell it to the commercial market.

❍ This project is well aligned with Indonesia’s effort for the promotion of renewable
energy, solving power supply problems, and reducing GHG emissions.

❍ Objectives include providing stable supply of electricity and promoting eco-friendly

image through installation of grid-connected high efficient solar power facility and
expanding tourism business by establishing eco-friendly energy complex.

❍ Once this project is completed, we will be able to get more business opportunities
for additional projects (grid-type or ESS-based standalone type systems) in
surrounding areas using the engineering knowledge and know-hows acquired
through this project.

❍ This study:
- Informs the Pesawarn Regency how best to develop a large-scale solar plant in
Negri Katon Villeage area
- Determins the feasibility of solar precinct

❍ Highlights the key measures, risks, and issues for the Pesawaran Goverment in
development and implementaion of solar power precinct.

2. Business Scale and Structure

❍ Scale
- Power Generation Capacity: 10MWh
- Facility Scale: 10MWp

❍ Business Structure

- 1 -
 <Fig 1> Business Structure

❍ The SPC is a joint venture between the Dadam Consortium in Korea and the local
government company (BUMD - Badan Usaha Milik Daerah) mainly owned by the
Pesawaran Regency, Lampung Province, Indonesia. The stakes are 45% for the
Dadam consortium and 55% for the BUMD.

❍ Roles of SPC
- Dadam Consortium:
Ÿ SPC 45% fund raising
Ÿ EPC company selection
Ÿ PPA contract negotiation
Ÿ Export-Import Bank of Korea, Interbank TC loan based PF
Ÿ Power Plant Management
Ÿ Local staff training and technology transfer

- BUMD :
Ÿ Purchase contract with the landowers of the plant site 140,000m2
Ÿ Level 2 Environment Impact Assessment
Ÿ Licenses for solar power plant business
Ÿ PPA unit price negotiation and contract with the Ministry of Energy and
Mineral Resources (ESDM) and the government owned Power Company (PT.

- 2 -
 PLN)
Ÿ Operation after the plant is built

3. Business Method
❍ BOT (Build-Operate-Transfer) based PPP (Public-Private-Partnership)
- Project feasibility study, Licensing, PPA contract, PF, and EPC company selection
- Power plant construction by EPC company
- O&M by SPC

4. PV Power Plant Site

❍ Size of the site : 140,000㎡

❍ Construction Area required for building facility : 130,000㎡

❍ Location
- S 5°18‘06.56’‘ E 105°06’02.73‘’
- Negerikatun, Negeri Katon, Kabupaten Pesawaran, Lampung 35353 Indonesia

<Fig 2> PV Plant Site

5. Sales Plan
❍ Electiry Generation (NASA solar radiation data) : 17,155 MWh/year (4.7hr/day)
- The solar energy at Negri Katon Village (-5.258897, 105.176788) in Pesawaran
Regency, which is a candidate for the PV power plant, was observed at
4.7kWh/m2/day (Global Solar Atlas).

- 3 -
 <Fig 3> Solat irradiance map for the PV plant site

❍ Power Sales Plan

- Sell to government owned power company PT. PLN (Perusahaan Listrik Negara)
after PPA unit price negotiation and contract with the Ministry of Energy and
Mineral Resources (ESDM) and PT. PLN.
- PPA unit price = $0.0735 (7.35cent) USD
- Basis of the unit price:
Ÿ Latest Regulations of the Indonesia Ministry of Energy and Mineral Resources
on Renewable Energy Resources(No 12/2017)1)
Ÿ If the base production unit price (BPP: Biaya Pokok Penyediaan) in the region
exceeds the national average price, the electricity sales price produced by solar
power resource is limited to 85% of the base production price in the region.
- Since the BPP in Lampung Province is $0.0777(USD) which exceeds the national
average BPP which is $0.0739(USD), we will negotiate with PT. PLN and ESDM
during the bidding to set the BPP to $0.0735 that will ensure 100%
compensation for this project.

1) In 2017, Indonesia ESDM announced the Ministry Decree No 12/2017 on amendment of FIT for renewable
energy.

- 4 -
6. Estimated total construction cost
❍ Total amount : $15M USD
(unit: USD)

Items Amount
1) Design & Engineering 500,000
2) Fixed investment cost
PV Modules 6,400,000
Power Inverters 800,000
Main Junction Box 240,000
Incoming Panel 800,000
Monitoring System 560,000
Structure Manufacturing 1,600,000
Electric Works 1,600,000
Land 1,400,000
Sub-total 13,400,000
3) Development expenses 100,000
4) Initial working capital 100,000
5) Reserve money 900,000
Total 15,000,000
<Fig 4> Estimated EPC cost

❍ Funding Plan

Source of funding Price Rate Funding Plan

($M USD) (%)
Dadam 20% of equity capital is covered
Consortium 1.35 9 by Dadam Consortium (Dadam
Equity Micro Inc. + Gaia Energy +
BUMD 1.65 11
(SPC) Strategic Investor) and the local
sub total 3.00 20 BUMD consisting of SPC with a
45:55 stake.
Interbank Interbank TC Loan program that
Debt TC Loan 12.00 80
is supported by Export-Import
(PF) sub total 12.00 20 Bank of Korea is used for PF.
Total 15.00 100
<Table 1> Funding plan for the project

7. Economic Feasibility
❍ To review the economic feasibility of investment in this project, both NPV2)
method and IRR3) method is applied and sensitivity analysis is also performed.

- 5 -
 ❍ The economic feasibility study using the NPV method and the IRR method was
based on the information received from the Indonesian Persawaran Government in
advance and the contents of various laws and regulations related to renewable
energy in Indonesia.

❍ The forecast period for explicit development is set at 30 years. The 20 years from
June 2018 until the end of June 2038 is the PPA contract period with the
Indonesian government, and the 10 years thereafter from July 2038 to June 2048 is
thecommercial production period.

❍ It is generally assumed that the actual operating period of the solar power plant
can last for 30 years or more and that the long-term demand for renewable energy
in Indonesia will steadily increase.

❍ It is assumed that systematic O&M by the SPC results in 0.5% efficiency decrease
over the previous year.

❍ Basic prerequisites for reviewing the economic feasibility of the investment in this
project:

No 항 목 조 건
1 PPA Unit Price $0.0735(USD)/kWh
2 Annual Power Production Amount 17,155MWh/y
3 WACC4) 5.098%
4 Cost of equity in NPV 10.49%
5 Menimum return of investment in IRR 10.49%
6 Funding Plan Equity (20%) + Debt (80%)
7 PF method Interbank TC Load by KEXIM
8 Debt Finance Interest Rate 5%
10 Land Purchase $1.4M(USD) / 140,000m2
Ÿ Investment Period: 7/1/2018~
6/30/2048
Ÿ No cash flow after the investment
11 Other Investment Prerequisites period
Ÿ During the investment period, the
initial project structure will be
maintained, and no new projects
will take place.
<Table 2> Basic conditions for economical feasibility study

2) NPV(Net Present Value): NPV is one of the measures of business value (feasibility). If it is smaller than 0, it
has no feasibility (value). If it is larger than 0, it is a feasibility.
3) IRR(Internal Rate of Return): IRR is the interest rate that discounts the cash flow of a business during a
business period to the present value, so that the combined value is equal to the investment expenditure.
4) WACC : Weighted Average Cost of Capital

- 6 -
❍ With the agreed procedures and assumptions provided for the economic feasibility
of the investment plan, the NPV is USD 364,875 and the IRR is 12.51%.

8. Conclusion and Future Plan

❍ Conclusion of the economic feasibility of the investment proposal:
Economically Feasible

Method Calculation Comparison Basis Conclusion

NPV USD 364,875 (+)? Feasible
IRR 12.51% > 10.49% ? Feasible

<Table 3> Result of economic feasibility using NPV and IRR methods.

❍ Future Plan

<Fig 5> Future schedule

- 7 -
 Chapter 2. Project Plan
1. Project Outline
1.1. Objectives and Background
n Objectives

❍ The goal of this project is to build a 10MW solar power plant in the Pesawaran
Regency in Lampung Province, Indonesia and sell the generated power to the
Indonesian government owned power company (PT. PLN) in the form of PPA for
20 years and then sell it to the commercial market.

❍ This project is well aligned with Indonesia’s effort for the promotion of renewable
energy, solving power supply problems, and reducing GHG emissions.

❍ Objectives include providing stable supply of electricity and promoting eco-friendly

image through installation of grid-connected high efficient solar power facility and
expanding tourism business by establishing eco-friendly energy complex.

❍ Once this project is completed, we will be able to get more business opportunities
for additional projects (grid-type or ESS-based standalone type systems) in
surrounding areas using the engineering knowledge and know-hows acquired
through this project.

n Background

❍ The Indonesian government announced a new national energy policy (GR

No.79/2014) on Oct. 17, 2014 designating new & renewable energy as the nation’s
major source of energy. The government is planning to increase the proportion of
new & renewable energy, 6% as of 2014 to 23% in 2025, 31% in 2050.

❍ Indonesia is located around the equator and its average daily solar radiation is
about 4.8kWh/m2. Thus the country is favorable for the photovoltaic power
generation. About 22MW solar photovoltaic power stations are only installed
currently in Indonesia, and most of them are photovoltaic power generating stations
for family use or small-sized ones. Photovoltaic power generation has not been
universalized yet.

❍ Solar photovoltaic energy has been used for energy supply to the provinces. It has
competitive price in the area like Pesawaran Regency, Lampung which is thinly
populated. MoEMR (Ministry of Energy and Mineral Resources) and PLN
(Perusahaan Listrik Negara) implemented PV program (solar photovoltaic energy
program) to about 1,000 islands, where electricity, water and sewerage had not

- 8 -
 been supplied yet, with the aim of building up to 245MW facilities.

❍ SGI-Mitabu entered into a partnership with the local government in the southern
Sumatera and announced PV project (photovoltaic power) to build an 100-hectare
site (mount grounded) in Tanjung Api-Api, southern Sumatera in 2014. Currently
in Feb. 2015, fund-raising is in progress, for the same project.

❍ PT. INKO SAMSAMU INDONESIA, Korean SPC subsidiary company located at

Pesawaran Regency, Lampung Province, Indonesia invited Pesawaran Regency
governmental officials to Korea to proceed with photovoltaic LED streetlamp ESPC
(Energy Saving Performance Contract) project. After visiting LED operators, solar
module/inverter companies, and the photovoltaic power generation systems installed
in southerneast power plant in Yeongheung Island, they entered into a MOU
agreement with Korea (Apr. 6, 2017 to Apr. 10, 2017).

❍ Dadam Micro entered into LOI with government officials of Pesawarn Regency,
Lampung Province, Indonesia at Pangyo Inno Valley, Korea on Apr. 7, 2017 to
proceed with the 10MW solar photovoltaic power station in Pesawaran Regency.

❍ The governmental officials of Pesawaran Regency, Lampung Province discussed with

PLN the provision and selection of project site for establishing a solar photovoltaic
power station.

❍ As a result, entered into LOI on construction and operation required for 10MW
photovoltaic power generation in Pesawaran Regency, Lampung province.

<Fig 6> LOI agreement between Dadam Micro and Farsawaran officials (2017.4.7.)

- 9 -
 <Fig 7> LOI letter signed

1.2. Project Outline

n Project type
❍ BOT (Build-Operate-Transfer) based PPP (Public-Private-Partnership)
- Project feasibility study, Licensing, PPA contract, PF, and EPC company selection
- Power plant construction by EPC company
- O&M by SPC

n Technology applied
❍ Size of the site : 140,000㎡

❍ Construction area required for building facility : 130,000㎡

❍ Applicable technology
- The technology related to the PV power generation and grid connection system
used in this project has many commercialized solutions all over the world, and in
particular has many cases installed/operated in the Southeast Asia including the
equatorial region.

- 10 -
❍ Main Equipment List

No. Main Equipment Spec Q’ty(ea) Photo

335W Solar
PV Module
1 Module 40,000
polycrystalline

Inverter 500kW
2 5
(Grid connected) 350kW

PV DC
3 12 Channel 6
Connection board

Electrical panel
4 (Incoming panel 10,000kW 1
switchboard)

5 Monitoring system Web-based 1

Fixed, hot
6 Construction Work 1
galvanized

7 Electric work 10,000kW 1

- 11 -
n Ordering agency

❍ Introduction

Class JV 공공 민간 기타

PT. INKO ERIAWAN, SH

Ordered by Representative
Usaha Patungan Surya WAKIL BUPATI

Padang Cermin, Pesawaran Regency, ☏

A ddress +62-813-6704-1970
Lampung 35451, Indonesia
Business Type Facility Management, Operation, Distribution, Tourism
No of full-time 10명 Established on ‘07.05.27
employee
Credit rating N/A Revenue N/A
Capital Fund N/A Capital ratio N/A %
USMAN ROHIM RASIM
Head of Pesawaran KPBU
☏ *
Staff in charge (Public Private Partnership +62-813-6704-1 simpulkpbu.pesawaranka
970 b@gmail.com
Support Division)
President of PPP
<Table 4> Info of ordering agency (SPC)

- Estimated customer PT. INKO Usaha Patungan Surya is a SPC (Special Purpose
Company) for the purpose of the business for renewable energy, LED, and
tourism business in Pesawaran Regency.
- The SPC, the prospective client, is a joint venture between Dadam Consortium of
Korea and government owned local company PT. Laba Jaya Utama (BUMD). The
Dadam consortium has 45% stake, PT.Jaya Laba Jaya Utama has 55%.
- In the case of power generation projects under 10MW, MoEMR Regulation No.
3/2015 restricts the foreign share to be less than 49%.
- The contractor cooperates with the Persawaran Public Private Cooperation Support
Department (KPBU - Kerjasama Pemerintah dan Badan Usaha) responsible for
the economic development of the Persawaran regency.
- This business structure naturally helps the SPC negotiate the PPA unit price with
PT. PLN smoothly through the KPBU.
- The SPC selects the best performing EPC company within the budget through
bidding process based upon the recommendations from Investors and project
devlopers after this feasibility study is completed

❍ Project impementation competence of SPC

- Since the government owned BUMD company has 55% stake of the SPC, it would

- 12 -
 be easier for the SPCE to take part in bids for public development projects in
Persawaran Regency and get successful project award.
- The majority shareholder of SPC (BUMD) maintains a friendly relationship with
government officials who manage various PPP (Private Public Partnership)
projects through the Public Private Partnership Department (KPBU) and has the
ability to carry out business in a way favorable to foreign operators.

2. Project Execution Plan

2.1. Project Organization Structure
❍ Organization structure of stakeholders

<Fig 8> Business & organization structure of stakeholders

- The orgamizatino structure for this project was confirmed after the meeting with
Mr. Usman Rohim Rasim (Pesawaran Gov. Official, KPBU department director),
Mr. Adhytia Hidayat Ronald (Local government official for infrastructure
planning), Mr. Abimanyu (ESDM central government official). The meeting held
on Jan. 19, 2018 during the 2nd visit to Pesawaran Regency.

- 13 -
<Fig 9> Meeting minutes for business structure and schedule (2018.1.19)

- 14 -
 - The Dadam consortium in the SPC consists of Dadam Micro Co., Ltd., Gaia
Energy Co. and Destin Power Co., Ltd who is a strategic investmentor.
- Dadam Consortium:
Ÿ SPC 45% fund raising
Ÿ EPC company selection
Ÿ PPA contract negotiation
Ÿ Export-Import Bank of Korea, Interbank TC loan based PF
Ÿ Power Plant Management
Ÿ Local staff training and technology transfer

- BUMD :
Ÿ Purchase contract with the landowers of the plant site 140,000m2
Ÿ Level 2 Environment Impact Assessment
Ÿ Licenses for solar power plant business
Ÿ PPA unit price negotiation and contract with the Ministry of Energy and
Mineral Resources (ESDM) and the government owned Power Company (PT.
PLN)
Ÿ Operation after the plant is built

❍ Organization structure and role for KEA feasibility study project

- Dadam Micro Inc.
Ÿ Host company for KEA FS project
Ÿ Establish project master plan and funding plan
Ÿ Manage the FS project and perform economical feasibility study for PV power
plant business
Ÿ Solar energy availability and climate analysis
Ÿ Indonesia energy related policy and market trend survey

- GAIA Energy Co. Ltd.

Ÿ Participating company
Ÿ Solar power system desing
Ÿ Layout plan (status survey, slope utilization, ground review, directionality
review)
Ÿ Design of optimum truss structure

- Nexia Samduk Accounting Co.

Ÿ Service company
Ÿ Calculation of annual power generation based on NASA daylight data and
actual daylight data measured at the plant site.

- 15 -
 Ÿ Business structure and economic feasibility according to laws and regulations
of Indonesia.

<Fig 10> Roles for feasibility study project

2.2. Schedule
❍ Current Status

<Fig 11> Project processing schedule

❍ Detailed schedule

- 16 -
 <Fig 12> Detailed schedule

3. Expected Effect
3.1. Export Aspects
❍ This is the first project in the Lampung Province and if this project is successful,
similar projects are likely to be carried out.

❍ As similar projects are expected to use the techniques applied for this project,
additional exports are expected to occur.

❍ As there are difficulties in exporting due to lack of performance by domestic

companies, additional exports are expected to take place if we solve the problem.

❍ Items to procure and expected amount

- 17 -
 (unit: USD)

Ratio
Items Amount Suppliers
(%)
1) Design & Engineering 500,000 3.3 EPC company
2) Fixed investment cost
Hyundai Heavy Industries,
PV Modules 6,400,000 42.7 Shinsung Solar Energy, Hanwha
Solar
KACO, DIK, Dasstech,
Power Inverters 800,000 5.3
YASKAWA
Main Junction Box 240,000 1.6 KACO, DIK, KDT, YASKAWA
Gwangsan Electricity, KD
Incoming Panel 800,000 5.3
Power
Monitoring System 560,000 3.7 KDT
Indonesian local company
Structure Manufacturing 1,600,000 10.7
contracted by SPC
Electric Works 1,600,000 10.7 Indonesian local enterprise
contracted by SPC
Land 1,400,000 9.3
Sub-total 13,400,000 89.3
3) Development expenses 100,000 0.7 SPC
4) Initial working capital 100,000 0.7 SPC
5) Reserve money 900,000 6.0 SPC
Total 15,000,000 100.0

<Table 5> Procurement Items and Expected Amount

3.2. Technical Aspects

❍ Ability to measure and develop electronic and waterproofing technologies
appropriate for subtropical climate

❍ Ability to measure the performance of electronic equipment in the climatic

environment characterized by division of rainy and dry season and instantaneous
rain, and based on this, develop new technology and equipment.

❍ Ability to measure and develop a remote control system depending on

communication conditions by running a web-based monitoring system in the regions
whose communication environment is poor.

3.3. Economic Aspects

❍ This project is expected to help boost the construction business in Pesawaran
Regency, Lampung Province, Indonesia and create stable jobs and circulate the
capital.

❍ Since it is required to procure large-size PV power generation equipments from

- 18 -
 Korea, the project is expected to help recover the sluggish economy of Korean
solar power plant related manufacturers.

3.4. Environmental Aspects

❍ Expected to contribute to a clean climate environment by establishing a photovoltaic
power station without emitting greenhouse gases and environmental pollutants.

❍ Provide an aesthetically clean environment and prevent the 2nd environmental

pollution by developing the site where wastes are being accumulated in a state of
neglect.

3.5. Possibility to obtain future orders

❍ By establishing the foundation of the independent green energy city in Pesawaran
Regency area suffering from power shortage, it is expected to apply additional and
expansion of new and renewable energy generation business or additional application
through new application to similar areas.

❍ Unlike other projects in Indonesia where somewhat low-quality, low-priced

products are mainly applied, this project uses high-quality Korean products and
services to guarantee maximum performance and durability for the PV power plant
to be built. This will improve the natural promotion of Korean products and its
reliability. In addition, since the application of remote monitoring and automatic
control is expected to favor PV products in the future, we expect more additional
orders in this regions.

- 19 -
 Chapter 3. Overview of Indonesia
1. Overview
1.1. Basic Information

Central
North and
Middle
Continent Asia Americ Europe Oceania CIS South Africa
East
a Americ
a

Official name of
(Korean)인도네시아공화국 (English)Republic of Indonesia
country

Capital Jakarta

Form of
Presidential system, Republican government
governm ent

Location south latitude 5°, Area 1,904,569km²

east latitude 120° (15th worldwide)

Population 263,092,000 (‘17) Climate tropical climate

(4th worldwide)

Islam:87%
9300B dollar(‘16) Christian: 6%
GDP (17th worldwide)
Religion Catholic: 3%
Hindu: 2%

Major export items : include crude oil, natural gas, fiber,

hardwood floor, shoes, rubber, etc and exported largely to
Japan, United States, Singapore, and Korea.
Key industries
Major import items : include machinery, chemical product,
nonmetal, automobile parts, steel plates, etc and exported
largely to Japan, United States, and Singapore.

Credit rating of Indonesia by agency

- Moody"s(2018.3) : Baa2 (stable)

Credit rating
- S&P(2017.5) : BBB- (stable)
- Fitch(2017.12) : BBB (stable)
- Export-Import Bank of Korea(2014.6) : C1 (stable)

Other Foreign policy : nonaligned, neutral

<Table 6> Basic information of Indonesia

❍ Indonesia is the world's largest archipelago with 17,508 islands, and it has the
largest size of Southeast Asia with a land area of 181.15 million km².

- 20 -
 ❍ Indonesia is the fourth most populated country in the world, with a total population
of 2263.02 million in 2017 (4th in the world)

❍ More than half of the Indonesian population lives in the Java-Bali area, and
economic activity is concentrated in the region. The remaining 50% of the
population live in Sumatra, Sulawesi, Kalimantan, Nusa Tenggara, Maluku, Papua and
about 6,000 islands.

<Fig 13> Regional divisions in Indonesia

❍ Indonesia's gross national income (GNI) per capita in 2015 is $ 3,440, and
Indonesia is considered a lower-middle income country under the World Bank
classification.’5)

❍ Indonesia is the largest economy in Southeast Asia. Indonesia's Gross Domestic

Product (GDP) has grown at a CAGR of 4-6% since 2000, reaching $ 930 billion
(17th in the world) in 2016.

❍ The sustained economic growth contributed to the poverty alleviation in Indonesia,

and the share of the poor6) in Indonesia decreased from 23.4% in 1999 to 11.47%
in 2014, which is equivalent to about 27,600,000 people. However many people in
Indonesia are still suffering from livelihood difficulties.

1.2. Relationship with Korea

❍ Diplomatic relations
- Establishment of diplomatic relations : Sept. 18, 1973 (Apr. 16, 1964 with North
Korea)

5) The World Bank classifies countries with GNI per capita in the range of $ 1,026 to $ 4,035 as low and middle
income countries.
6) The poverty line stipulated by the Indonesian government is $ 21.20 per month, and the Indonesian government
classifies those who do not earn below this income as poor.

- 21 -
 - Key agreements:
Ÿ Economic and technical cooperation agreement (1971)
Ÿ Forestry cooperation agreement (1987)
Ÿ Double tax avoidance agreement (1989)
Ÿ Investment promotion and protection agreement (1991)
Ÿ Cultural cooperation agreement (2000)
Ÿ Convention on extradition (2000)
❍ Korean companies in Indonesia
- Indonesia is Korea’s 7th exporting country and 7th importing country as of 2011,
and Korea is importing natural resources such as oil, natural gas, crude oil,
copper ore, etc from Indonesia.
- The trade scale with Indonesia is 22.9 billion dollar in 2010 and 20.8 billion
dollar in 2011.
- Current status of major investment enterprises in Indonesia (order of advance to
Indonesia, 5 million dollar or more)

Amount Mother
Corporation Invested compan
No. Company Year Type Biz Items (thousad y in
dollar) Korea
Manufactuin timber,
1 Corinth 1969 Production g afforestation, 550,000 -
non-forest land
Manufactuin
2 CJ Indonesia 1988 Production g articles of food 800,000 CJ

electric Samsun
Samsung Manufactuin g
3 Electronics
1991 Production
g
communication 68,000
Electro
equipment
nics
Manufactuin thread, cotton
4 Hanil Indonesia 1995 Production g yarn 5,000
Transportati marine
5 SMS Shipping 1993 Service
on transportation
50,000
Manufactuin monitor, audio,
6 LG EDI 1995 Production g etc 75,000 LG

Manufactuin Manufactuin food wrapping

7 KOLON 1995
g g film
100,000 KOLON

Korin Manufactuin afforestation and

8 Tigahutani 1998 Production g wooden 50,000
processing
Sinar Api Rel Manufactuin jacket, coat,
9 International
1998 Production
g pants, etc
150,000

Manufactuin
10 COSMOS India Ink 2000 Production
g
plastic, bags 80,000
sales of machine
11 Corinna 2001 Sales Service part 500,000

Daesan
12 KIRIN Miwon Food 2006 Production Distribution articles of food 100,000
g

❍ Since 2000, Korean companies have entered the Indonesian construction market in

- 22 -
 an overall increasing trend. In particular, overall order volume has risen sharply in
2011.

(Source: Overseas Construction Comprehensive Information Service

http://www.icake.or.kr/)
<Fig 14> Domestic Construction Projects in Indonesia (2000-15) (Unit: US $ Million)

- Domestic companies' penetration into the Indonesian construction market is on the

rise, but the amount of construction orders varies according to one or two large
projects.
- In 2007 and 2011, the rate of increase was remarkable. In 2007, orders for the
Chiribon coal-fired power plant and the construction of the iron and steel mill in
2011 were the major factors.
- Doosan Heavy Industries & Construction Co., received a $ 590 million contract to
build a Chiribon coal-fired power plant.
- In 2011, POSCO E & C received orders for construction of integrated steelworks
(blast furnace and main facility) and integrated steelworks (coke / steel /
performance / heavy plate) ordered by Krakatau POSCO (joint venture) USD, US
$ 79 million.
- In December 2015, POSCO Engineering got awarded to construct a $ 113 million
Hasang hydroelectric power plant as a EPC company.

❍ From 2000 to 2015, Indonesian construction orders for domestic companies

accounted for the largest portion of industrial facilities (plants) by value, and the
civil engineering and construction sectors have been growing for the past five
years.

- 23 -
 (Source: Overseas Construction Comprehensive Information Service http://www.icake.or.kr/)
<Fig 15> Indonesian construction orders by Korean companies (2000-15) (Unit: US $ million)

- Especially, the growth of industrial facilities has been remarkable since 2011. In
particular, orders for power plant, refinery and chemical plant construction led to
this.
- Although the number of service(engineering) projects accounts for a large number
of successful cases, the proportion of orders received is low due to relatively low
unit prices.

2. Indonesia Industry Trends

❍ Indonesia has achieved a rapid growth based on rich human/material resources and
huge internal markets. Its growth potential is highly regarded in the form of ‘the
first runner in the era of Post BRICs’, going further, ‘BIICs (Brazil + India +
Indonesia + China)’ replacing Russia as a member of BRICs.

❍ Indonesia has become the representative emerging market in Southeast Asia.

Foreign Direct Investment (FDI) aiming at the potential of Indonesian domestic
market tends to grow rapidly, in addition to the investment into the labor-intensive
industry or resources development sector for detour export.

❍ To accelerate such growth trends, the Indonesian government pushed ahead with
‘Master Plan 2011-2025 (MP3EI: The Master Plan on Acceleration and Expansion
of Indonesia Economic Development 2011-2025)’ for accelerating and expanding the
Indonesian economic development and achieved GDP 4-4.5 trillion dollar in 2025,
and made an ambitious blueprint “Make a new leap into the world’s 9th economic
power.”

- 24 -
❍ Indonesia also continues to maintain an important partnership with Korea in multiple
fields of economic cooperation including trade, investment, aid, and FTA.

❍ Indonesia’s promising business includes ‘energy/mineral resources’, ‘new and

renewable energy’, and ‘infrastructure construction.’ Indonesia is not only the
biggest oil and gas producer in Southeast Asia but also rich in coal, tin, copper, and
nickel. Indonesia has recently been promoting the resources related industry
through New Mining Policy. Its new and renewable energy is also a promising
industry in that the country is likely to cooperate and invest into bio resources,
geothermal heat, and hydroelectric power. The country is seeking to expand the
infrastructure construction through Master Plan (MP3EI), especially IEDCs.

❍ Indonesia is the biggest oil and gas producer in the Southeast Asia. It has a high
potential in developing resources with the reserve and production of mineral
resources including coal, tin, copper and nickel being in the world’s top rank. In oil,
Indonesia is ranked 22nd in terms of reserve, but both potential reserve and
confirmed reserve tend to be reduced. In natural gas, Indonesia ranks 10th in terms
of reserve, but the confirmed reserve tends to be increased, but the potential
reserve tends to be reduced. In abundance of coal, it is concentrated in both
southern Sumatera and eastern Kalimantan. Among mineral resources, tin is
distributed a lot in Sumatera, nickel in Kalimantan and Sulawesi, and copper in Irian
Jaya.

❍ To look at the production and export trends by sector, in energy sector, the
production and export of oil and natural gas tends to be reduced due to lack of
new oilfield development and investment, but in coal sector, its production tends to
be increased greatly. In mineral resources, tin and nickel rank the 2nd in terms of
production, and the production of copper ranks the fifth in the world. The
representative successful case in the field of Indonesian energy/mineral resources is
Samtan’s coal mine project in Paser, eastern Kalimantan. In 2000, the country’s
investment environment into resources improved greatly. Indonesia is planning to
invest more into productivity improvement and added value enhancement in
connection with large-size development project like master plan. Indonesia’s future
development of resources is likely to be concentrated in the development of energy
including gas and coal and rich mineral resources development. Especially influenced
by the New Mining Policy, the investment into the smelting facility for various
mineral resources is expected to increase greatly.

3. Economic and Financial Trends

3.1. Indonesia’s Economy & Outlook (2017)

- 25 -
3.1.1. Indonesia economic recovery

<Fig 16> Recent economic growth in Indonesia

❍ The International Monetary Fund (IMF) expects the global economy to recover
gradually, and the Indonesian economy is also expected to be positive. The
economy will grow by 5.1% in 2017 from 5.3% in 2018, up about 3.9% from 2018.

❍ The IMF expects the world economy to grow by 3.8%

❍ Domestic demand is relatively sluggish, but demand for domestic demand is

expected to increase moderately.

❍ The budget of the Indonesian government is set at about 163.7 billion.

3.1.2. Status of Exchanges with Korea

<Fig 17> Korea-Indonesia export and import performance

❍ Korea is the seventh largest export destination ($7 billion) in Indonesia and the
target country ($6.7 billion) for import

❍ No.3 in 2011 and 6th in exports for the next four years, then dropped to 7th in
2016

❍ Indonesia's exports to Korea in 2016 fell 8.4% YoY to USD7bn, while imports from
Indonesia to Korea declined 20.8% YoY to USD6.7bn in 2016

❍ From the past to the present, natural resources such as natural gas, crude oil and
coal are at the top of the list of imported goods from Indonesia to Korea.

❍ Korea's exports to Indonesia are high-tech products such as semiconductors, ships,

automobiles and parts, mobile phones, and petroleum products.

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3.2. Major issues and prospects
3.2.1. Accelerating privatization for infrastructure projects in Indonesia

❍ President Joko Widodo has organized Rp. 20.7 trillion (about $ 1.53 billion) budget
for the 2018 infrastructure projects. This will bring the infrastructure budget to
privatize public enterprises at a lower price than in 2017.

❍ In October, it announced the privatization of 30 ports and airports nationwide to

finance infrastructure projects.

❍ It will speed up infrastructure reform by accelerating private investment, and

investment will be stable.

❍ The government of Indonesia will privatize the project to increase private

investment and improve the performance of the project.

3.2.2. 2018 Asian Game

❍ Indonesia will host the 108th Asian Games in August 2018. To this end, Indonesia
is willing to construct facilities and related transportation infrastructure facilities for
the Asian Games.

❍ The Asian Games will be held in Jakarta and Palembang, as well as in various parts
of Indonesia including the Western Java Games, Ratu, Anchor, and Lead Sumatra
Rookbugging.

❍ Indonesia predicts that it will cost 10 trillion Rupiahs to build infrastructure for
Asian games and that the government budget will cover 5 trillion Rupiahs..

❍ After the announcement of the Asian Games as a host country, many companies
seeking investment opportunities in Indonesia are expected to increase their entry,
financial income and household consumption expenditure. Especially, GDP growth
and job creation are expected.

3.2.3. Promote employment and purchasing power with labor-intensive programs

❍ From January 2018, Joko Widodo has presented a new pattern of village funding
throughout Indonesia.

❍ This is a labor-intensive program managed by the Ministry of Construction and

Public Housing, the Ministry of Agriculture and Forestry, and the Ministry of
Transport. Infrastructure projects in each village are managed by towns and local
residents work as project workers.

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❍ It aims at solving the infrastructure problems of each village and at the same time
creating jobs for the villagers.

❍ This project will be implemented with government support in over 100 districts.
The government expects the project to boost welfare, public purchasing power,
promote employment and raise funds.

3.2.4. Minimum wage

❍ The Ministry of Labor decided to raise the minimum wage this year by 8.71% in
November last year. The minimum wage is calculated to combine the rate of
inflation (3.72%) and the gross domestic product growth rate (4.99%).

❍ Minimum wages in all provinces except Bengkulu and West Noosa Deong Gaara
province will increase by 8.71%.

❍ Jakarta has the highest weekly minimum wage of Rp.3,064,035. After that, Papua
province ranks second with 2.896550 Rupees, and then followed by northern
Sulawesi, Bangakaburi, Aza provinces.

❍ There are a lot of job seekers in Indonesia. Especially, Indonesian people are very
sensitive about the minimum wage because there are many people who do not go
to university and work. Therefore, Korean firms should keep an eye on the
Indonesian minimum wage regulations.

❍ According to a survey on a job information site in Hong Kong, there are about 30
million people in Indonesia who are 18 to 40 years old.

❍ ❍ Indonesia is the lowest among neighboring countries even after the minimum
wage increase. Still, Indonesia is attractive in terms of labor costs among ASEAN
countries.

4. Indonesia Texation System

4.1. Status
4.1.1. Current texation system

❍ The Indonesian tax system has been improved in accordance with the Indonesian
social and economic conditions during the economic development plan
implementation process. The tax reform has been carried out in order to strengthen
the economic function of the tax through the revision of the main tax law
implemented since 1995. For example, Indonesia is expanding the scope of
withholding tax, strengthening taxation efforts for tax-exempt beneficiaries,
subdivision of taxation zones, encouraging the registration of personal tax numbers,

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 and pre-approval system (APA), and the introduction of a transfer pricing system.

❍ Indonesia's tax system is divided into three categories: national tax (personal
income tax, corporation income tax, value added tax, special consumption tax, stamp
tax, property tax, departure tax), local tax (reconstruction tax, automobile tax,
entertainment tax, etc.), and income tax.

4.1.2. National Tax Administration

❍ There is a Direction General Taxation (DGT) under the Treasury Department, and
the Internal Revenue Service (DGT) has subordinate local tax offices and regional
tax offices. All local taxpayer registration and filing procedures, processing of
taxation data, and taxpayer file management are handled by the local tax office
notification and management section. Based on the taxpayer's factual data and field
reports of the investigation department, (Or taxpayers) tax return through a regular
tax audit.

❍ Most of the taxpayers are managed by the local tax office in the province, but the
three tax offices in Jakarta manage foreign corporations, state enterprises, foreign
corporations and non-residents.

① Taxpayer responsible for foreign corporations: The taxpayers who have invested
foreign capital under the Foreign Investment Law

② State enterprise tax administration: Indonesia national state enterprise tax

liability management

③ Tax offices for foreign corporations and non-residents: tax liability management
of foreign corporations and residents who have permanent business sites in
Indonesia

4.2. Major Tax Breakdown

4.2.1. Corporate tax

❍ Indonesian Foreign Investment Company (PMA) is obliged to pay corporation tax on

domestic and foreign source income in Indonesia. In addition, foreign corporations
with permanent establishment in Indonesia are obliged to pay corporation tax on
domestic source income in Indonesia.

❍ Indonesia is obliged to jointly invest in Indonesian subsidiaries in the field of

resource development such as SOC projects and oil drilling. Also, even if a
foreign-invested company is approved for independent investment, Article 8 of
Presidential Decree No. 20 By 1994, a minimum of 1% of the shares must be
transferred to the Indonesian corporation or residents within 15 years from the date

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 of the investment start, so that the investment error is not unilaterally attributed to
foreign investors.

❍ Indonesia does not allow the establishment of branch offices or branches where
foreign corporations can directly conduct commercial activities. Only permits the
opening of a representative to conduct market research, public relations and liaison
offices.

❍ Commercial activities are prohibited and commercial activities such as ordering,

bidding, contracting parties, import / export and distribution are prohibited and trade
documents such as Offer and Invoice should be executed in the name of foreign
head office. In this respect, Indonesia preferred to enter into the form of a
long-term, easy-to-tax foreign-invested enterprise rather than a foreign
investment through a permanent establishment in Indonesia.

❍ A domestic corporation shall have a registered office in Indonesia, a joint stock

company, a limited liability company, other companies and organizations in which all
or part of the capital is divided into shares, cooperatives, mutual insurance
companies, Means a group in which a portion is not divided into shares or a group
that earns profit from public interest activities, and is taxed on all domestic and
foreign income in Indonesia.

❍ On the other hand, foreign corporations are all kinds of companies and organizations
that do not have a domestic address, and income from real estate (including the
attached rights) located in Indonesia is equivalent to the amount of product obtained
from the property development, Corporate tax imposed on profit.

❍ Since 2010, corporate tax rate is 25% single tax rate. However, a 20% tax rate is
applied to listed corporations whose IPO is 40% or more of the vested stocks.

❍ Small businesses less than Rp 50 billion (KRW 6 billion in annual sales) apply
12.5% from taxable income of the target business year to Rp 4.8 billion (KRW 600
million).

4.2.2. Withholding

❍ The amount of withholding tax paid by the residents of Indonesia is deducted from
the amount of tax paid upon payment of the relevant income tax return. The
withholding tax paid by non-residents in Indonesia is subject to taxation on income.

❍ A person with a withholding tax shall pay the amount of tax collected from the
income earner by the 10th day of the following month, and if the refund occurs,
submit the withholding tax payment document instead of paying the withholding tax
amount by the 20th.

❍ If a foreign corporation or a non-resident is a beneficial owner of income subject

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 to withholding tax, the withholding tax rate may be reduced or exempted according
to the tax treaty between Indonesia and the relevant country.

❍ If the person subject to withholding tax has no tax registration number (Nomor
Pokok Wajib Pajak, NPWP), an additional 100% of the basic tax rate is imposed. In
addition, if the goods are exempted from import duty and VAT exemption,
temporarily imported for re-export purposes, and are subject to re-import, they
may not be subject to withholding from the beginning.

4.2.3. VAT

❍ The obligation to pay VAT on value added resulting from the provision of goods
subject to taxation and the provision of services. As in Korea, VAT is imposed at
all stages where goods and services subject to taxation are transferred by adopting
the Multi Stage Levy.

❍ In the case of delivery of goods subject to taxation or provision of services, a

person who supplies goods or services issues a VAT tax invoice and regularly
declares payment . In the case of goods imports, the customs officer shall impose
the import tax value tax bill on behalf of the tax office director, and the importer
shall reflect this in the VAT declaration payment.

❍ Companies with an annual turnover of less than Rp.600 million (KRW70 million) are
exempt from VAT reporting obligations.

❍ The basic tax rate is 10%, but exceptional tax rate (5%) can be applied if it is
prescribed otherwise in the related tax law. 0% zero rate applies for exports of
short products, exports of intangible goods, and exports of services.

4.2.4. Personal Income Tax

❍ If the resident country of an economic person in Indonesia is an Indonesian citizen,

he / she has a tax liability for all domestic and foreign income. If the country of
residence is not Indonesia, he / she is obliged to pay taxes on the domestic source
income in Indonesia.

❍ The criterion judged to be a resident of Indonesia at present:

① Those who stay in Indonesia for 183 days or longer regardless of whether you
are living in a one-year residence or not.
② Those who intend to stay on a permanent basis, such as having a job
recognized for more than one year in Indonesia
④ Those who meet the criteria of other residents as defined in foreign and tax
treaties.

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 ❍ The tax rate adopts the 4-step progressive tax system as shown below.

Taxable Income Amount Tax rate

Less than Rs 50 million 5%
Rp. 50 million to 200 million 15%
Rp.200 million to Rp.250 million 25%
More than Rp. 2.5 billion 30%
<Table 7> Personal income tax rate

❍ In accordance with Regulation No.1 / 2007, if the conditions listed below are met,
investment in government-designated 22 high-tech industrial sectors made to the
Java and Bali regions (3-year income tax exempt) or elsewhere (5-year income
tax exemption), employees are exempted from income tax for up to 8 years.
① If you employ more than 2,000 employees, you will be exempted from income
tax for an additional year
② If the Indonesian SME owns more than 20% stake in the investment in
Indonesia, the income tax is exempted for one additional year.
③ If the investment amount (excluding land and buildings) is over $ 200 million,
the income tax is exempted for one additional year.

4.2.5. Double Taxation Agreement

❍ Indonesia's double taxation treaty exempts withholding tax on commission income
received by taxpayers residing in the tax haven of the partner country and deducts
the withholding tax rate on dividend, interest, royalties, and branch profit tax.

❍ Exemption from service fees generally applies only if the foreign resident receiving
income does not have a permanent establishment in Indonesia.

❍ Foreign residents are required to submit a Certificate of Domicile to the Indonesian

taxation authorities in order to be eligible for reduced tax rates.

❍ If you do not submit the form specified by the Tax Office or the form specified by
the tax treaty partner country, you will not be eligible for tax and you will
withhold at 20% tax rate.

❍ Korea and Indonesia signed the double taxation agreement '88. 11.10 (concluded),
'89. 5. 3 (enacted)

❍ Withholding tax rate: 15% for dividend, 10% for interest, 15% for royalties

4.2.6. Project related tax

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❍ A foreign corporation with a permanent establishment in Indonesia is obliged to pay
corporation tax on Indonesian domestic source income from business income from
the Indonesian workplace and from real estate rental and sale (real estate income)
in Indonesia.

❍ According to Article 5 of the Indonesian tax treaty, the Indonesian tax authorities
will determine whether a fixed business establishment

❍ Based on the Force of Attraction of Indonesia, the Indonesian tax authority will
only transfer the income to a fixed workplace if it proves that the income received
by the foreign corporation is received regardless of the permanent establishment in
Indonesia. If you can not prove that you are not taxable, there is a possibility of
taxation in Indonesia irrespective of the economic realities of income received from
foreign corporations.

❍ A foreign corporation or a non-resident is required to obtain a residence permit

(KITAP / 5-year validity period) or a periodical residence permit (KITAS / valid
for one to two years), while the Indonesian corporation or resident accepts the
right to use construction rights, land use rights, The right to dispose of profit only
for the real estate located in the land where the land use right is set.

❍ Land and building taxes are land and building taxes that are levied on acquired land
and buildings. Land and building taxes are calculated by using the real estate tax
value (NJKP) of the taxable object to obtain the tax base, and then apply the tax
rate of 0.5%.

❍ The value of the real estate tax is applied to the value of the application price of
Rp.1 billion (KRW 120 million) or less on the value of real estate taxation (NJOP)
announced by the Internal Revenue Service (DGT) on behalf of the Indonesian
Ministry of Finance Multiplied by 20%, multiplied by 40% for assets subject to
applied value over Rp.1 billion.

5. Investment Environment in Indonesia

5.1. Overall investment environment

❍ Indonesia's macroeconomic environment is a result of corporate growth and policy

environment is still favorable to further economic growth.

❍ In addition, S & P decided to increase its credit rating in Indonesia, allowing it to

lower funding costs and expand its investor base, giving additional momentum to
economic growth. Therefore, Indonesia's GDP growth forecast for 2017-18 is
expected to be raised by about 0.1% from the previous forecast.

❍ It is expected that economic growth will accelerate due to the elimination of

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 temporary uncertainty factors (tax amnesty system, election of governor of Jakarta,
and anxiety caused by Trump), and Indonesia's GDP growth forecast for 2017 will
change from 5.2% to 5.3%. So the investment situation in Indonesia is continuously
improving.

<Fig 18> Growth of Indonesian GDP by expenditure component

❍ The president and his administration continue to announce a series of economic

reform measures. To date, more than 14 economic packages have been announced
to improve the investment environment. Most of them focus on deregulation and
de-bureaucracy, and are focusing on improving regulations and systems that hinder
investment attractiveness.

❍ We do not expect immediate results, but we expect these economic reform

measures to have a positive impact on the Indonesian economy in the long term.
Based on the improvements achieved so far, Indonesia's business eco- nomacy has
been ranked among the top 10 countries with the highest improvement in 2017

❍ Moody's, Fitch and S&P recently upgraded Indonesia's national credit rating to
investment grade thanks to careful macro / fiscal policy management in Indonesia.

❍ The effective rate of Rupiah is currently at 95pt, a 5% discount to the benchmark

(2010), but it is expected to rise to the normal level due to the ongoing economic
recovery.

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 <Fig 19> Indonesian Rupee to rise to normal level

❍ In 2005, a new "Public-Private Partnership" (PPP) legislation was enacted through

Presidential Decree No. 67/2005 as a new effort to re-expand private sector
investment in electricity, This legislation allowed private bidding to IPP projects.

❍ IPP investments are classified according to the type of related purchase contracts,
especially PPA.

❍ ❍ Third generation IPP projects are classified into 1) PPP projects, 2) FTP II
projects, and 3) IPP projects under the regular program of PLN. The risk allocation
has become clearer and more advantageous to investors. This project will be
implemented as a PPP project.

❍ PPP project
- A new Presidential Decree No.38 / 2015 on PPP was issued on March 20, 2015 to
address some of the problems that arise under the existing PPP scheme.
- These regulations cover a wide range of areas such as oil and gas infrastructure
(eg refineries), urban infrastructure, industrial complexes and infrastructure (eg
healthcare).
- State owned enterprises (SoE) and local government owned enterprises (RoE) can
serve as Government Contracting Agencies (GCA)
- The government must complete the procurement of land prior to the bidding of the
PPP project.
- Project developers are encouraged to develop project through arbitrary bidding by
providing relative compensation to the developers.
- It provides government support in the form of money contribution in connection with
the construction cost through the business performance guarantee letter, and

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 provides separate tax incentives.
- It provide a government guarantee to define the financial burden of the GCA.

n PIP: Pesawaran Investment Promotion

❍ When: 2017.11.14

❍ Where: Mayflower Marriott Hotel

❍ Proceeding with the purpose of attracting investors mainly in Lampung provincial

government officials, central government officials and investment company VIPs in
power, tourism, agriculture, mining, foreign investment and laws in the Persawan
area.

<Fig 20> PIP: Pesawaran Investment Promotion (2017.11.14.)

5.2. Investment Incentive

❍ The Government of Indonesia is implementing a tax incentive program that provides
various tax benefits to certain investors in order to continuously attract investments
in Indonesia. The following tax incentive programs are currently being implemented:
- Corporate income tax (CIT) exemption
- Investment tax credit - applicable to companies in specific industries or specific
regions
- Integrated Economic Development Zone (KPET)

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 - Bonded area (KB)
- Free Trade Zone (KPB)
- Special Economic Zone (KEK)
- Industrial Complex (KI)
- PPP project (Public Private Partnership)

❍ Corporate Tax Reduction Benefits for Leading Industry

- In the case of leading industries, 10% -100% of income tax may be deducted
for 5-15 years from commencement of commercial production, and some of the
leading industries have been revised as follows:
§ Upstream Metal Industry
§ Oil refining industry - New: Including projects under PPP project
§ Chemical industry related to oil and natural gas industry
§ Industrial machinery production-related machinery industry
§ Manufacturing, processing related to agriculture, forestry, and fisheries
§ Telecommunication industry and information
§ Marine transportation industry
§ Economic infrastructure industry other than those using KPBU
(Government-Enterprise Cooperation)

❍ Industrial Complex (Kawasan Industri / KI)

- Indonesia will provide incentives for taxation and tariffs on taxpayers who create
industrial complexes or perform business activities in government-created or
approved industrial complexes (Ministry of Finance PMK.105 / 2016 )
- This will encourage the creation of industrial complexes by private operators and
provide tax benefits to promote development and economic development in areas
other than Jakarta.

❍ Investment Promotion Agency: Capital Investment Coordinating Board (BKPM :

Badan Koordinasi Penanaman Modal)
- Since the establishment of the Foreign Capital Investment Advisory Board in
1967, the name was changed to Technical Committee on Investment in 1968, and
the name was changed to BKPM as of 1973.
- Promoted to Presidential Organization in 2009 (equivalent to Ministry of the
Central Government)
- Issuance of foreign investment licenses for general industry (excluding mining,
banking, and financial industry) on behalf of foreign investment promotion
agencies and foreign investment licensing organizations and departments.
- Execution of investment policy implementation of each department, approval of

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 investment (excluding mining and banking industry), processing of license related
to establishment of corporation, investment information service, investment
monitoring
- As of October 2014, Indonesia has 34 provinces and municipalities. Local
governments have local investors, but foreign investors only provide investment
information for each region.
- From 2015, BKPM is issuing a power supply business license. As part of the
'one-stop' service, BKPM also handles services related to the establishment and
licensing procedures and permits for foreigners to work. The BKPM also has an
Investor Relations Unit for handling inquiries and providing information from
existing investors and potential investors.

5.3. Foreign Investment Incentives

❍ Equal incentives are supported without discrimination between domestic companies

and foreign-invested companies

❍ According to BKPM (Investment Coordination Agency of Indonesia), as of 2014,

there are tax-related benefits of Tax Holiday (exemption) and Tax Incentive.

❍ Indonesia's investment promotion incentive regulations are changing frequently, and

despite supporting regulations there are many cases that do not benefit them:
- Tax Allowance Government Regulation, No.144/2012
- Tax Holiday Regulation, Ministry of Finance No.130/PMK.011/2011

❍ Corporate tax exemption for attracting specific industrial investment

Industry subject to Division Sub Content Condition

tax reduction Division

Corporate tax
Pioneer Industries Ÿ 14.8.15 Establishment / corporation
exemption for 5 to 10
(Leading Industry) If it approved by the corporation (debate
years from the
falls under the reduction over the enforcement of the regulation
commencement of
requirement by the Ministry of Finance)
commercial production.
- Base metal New or Corporate Ÿ • At least one trillion Indonesian
Additional 50%
- Refinery increased Tax dollars (approx. US $ 90 million)
corporate tax
- Oil-gas originated investment Reduction Ÿ A company that has deposited at least
exemption for two
organic chemistry 10% of its planned investment in a
years after term
- Renewable Energy bank in Indonesia
- Decided by BKPM
- Machinery industry Ÿ Not withdrawing of the deposit before
on behalf of the
and communication realizing the investment plan.
Ministry of Finance.

<Table 8> Corporate tax exemption system for inducing specific industrial investment

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 Chapter 4. Energy Market Analysis
1. Global Energy Market
1.1. Global Energy
❍ According to the International Energy Agency (IEA), the World Energy Sector in
2040 predicts that oil, gas, nuclear, and low-carbon energy sources will be almost
uniformly weighted, Despite the ongoing trend, it is expected that fossil fuels will
continue to be a main energy source in 2040 and is expected to increase by 57%
than in 2012.

<Fig 21> 2040 World Energy Sources (Source: IEA)

❍ Electricity demand in 2040 is expected to increase by 78% from 2012 to 34,887

TWh. While the global demand growth rate is 2.1% per annum, the growth rate of
electricity demand in non-OECD countries such as China and India will reach 3.0%
per annum

❍ Capacity of power generation facilities will be 10,716GW in 2040, with 42% of new
and renewable energy including hydro power, 25% of gas and coal, 6% of nuclear
power and 2% of oil prediction. In 2040, the generation amount is 40,104 TWh, so
that the share of coal and oil in power generation will decrease, nuclear power will
remain stagnant, while the proportion of gas and renewable energy will increase

❍ From 2014 to 2040, the total investment in the electric power industry is
estimated at USD 20.8 trillion, of which the non-OECD countries will account for
63.4%. Renewable energy investments are expected to be USD 12 trillion, 61% of
which will be invested by renewable energy sources. Wind power, hydro power and
photovoltaic power generation will be the largest investment sources. Global power

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 generation costs will increase by 81% from US $ 1.6 trillion in 2012 to USD 2.9
trillion in 2040, which is likely to be fueled by fuel costs and carbon price hikes.
The US and Europe are expected to increase carbon-cost burdens due to the
expansion of capital-intensive renewable energy sources, and China's dependence
on fossil fuels.

❍ ❍ The growth of CO2 emissions in the power generation sector will be more
moderate than in the past, but emissions will increase from 17.2 billion tons in
2012 to 17.5% in 2040 to 15.4 billion tons and 71% of the emissions will come
from coal-fired power generation.

❍ ❍ OECD countries will reduce their carbon dioxide emissions to 67%, but
non-OCED countries will increase their carbon dioxide emissions by 44%. It should
be noted that China's implementation of post-carbon policy was not implemented as
planned and the possibility of global carbon dioxide emission increases

❍ ❍ The world power industry has the largest growth in Asia, and the Middle East,
Central and South America and Africa are small but expected to grow rapidly. Asia
is expanding its power generation facilities in line with the high economic growth
rate. Considering the possibility of entering the electric power industry by country,
it is expected that Southeast Asia (Indonesia, Malaysia, Vietnam, Philippines) are
attractive.

1.2. Global PV market

❍ Since 2000, photovoltaic power generation has achieved a CAGR of 40% under the
systematic support of FIT.

❍ However, the Spanish market shrank in 2008 (the Spanish solar PV market shrank
quickly due to a decline in support and a sharp fall in oil prices amid the
government's policy support), German FIT cutbacks, and unstable financial markets
after the Lehman crisis, the global PV market entered the second downturn.

❍ Since then, the solar PV market has entered a second phase of growth due to
falling product prices and expanded support for solar power generation in Germany
and Italy. However, due to the fiscal cutbacks in post-2012 European countries,
further FIT cuts and China PV production capacity expansion entered the second
recession due to oversupply.

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 (Source: The Korea Export-Import Bank, Institute for Overseas Economy, 2015.09)

<Fig 22> Life Cycle of global PV industry

❍ Due to this, the market has declined and stagnated, leading to a first structural
adjustment due to oversupply until 2013, and some supply and demand conditions
improved thanks to large-scale installations of emerging economies such as China
and Japan in 2013-14.

❍ In the solar industry, the initial high-cost structure has been remarkably improved
due to economies of scale, cost reduction due to intensified competition, process
improvement and conversion efficiency enhancement.

❍ According to the data of the Korea Economic Research Institute (the global solar
market trend and major financial support model, 2015.09), the cost of power
generation is expected to decline to the level of grid parity for solar power
generation in 2016.

❍ In addition, demand for photovoltaic power generation in Japan and China is

projected to increase from 45GW in 2014 to about 58GW in 2015 and 64GW in
2016 due to a surge in demand for photovoltaic power in Japan and China.
However, since 2017, the growth rate is expected to be lowered due to changes in
solar power generation support systems in Japan and the United States.

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 (Source: Source: EPIA, Shinhan Financial Investment Research Center, 2015.06)

<Fig 23> Trends and Prospects for PV Installations

❍ The center of the global solar market is moving to non-Europe centered on the
United States, China and Japan centering on policy support from the US, such as
the ITC system in the US and the FIT system in Japan.

❍ However, since 2012, structural restructuring has been achieved due to structural
oversupply, and companies that have survived the restructuring have entered a
competition to improve costs and efficiency.

❍ In this situation, it will be possible to reduce the policy support of the ITC, FIT,
etc., which are the driving force of the solar PV market growth, and it will take
more time than expected to reach the grid parity. There is a possibility that growth
potential will slow down.

❍ Characteristics of industrial fluctuations:

- The PV market, which has a high initial input cost and high power generation
cost compared to existing power generation such as firepower, hydropower, and
nuclear power, is largely affected by government support policies and institutional
changes.
- Although many solar PV companies' growth has been temporarily diminished due
to the solar PV subsidy reduction policies that have been in effect since the end
of 2009, many solar PV companies are increasingly reliant on subsidies due to
the efficiency improvement and continuous investment in technology development.

❍ Change in Solar Value Chain

- The Value Chain of the PV industry is classified as the installation and service of
polysilicon, ingot and wafer, solar cell, module and power generation system.
- As the oversupply situation has become extreme from 2010, the business
strategies of PV companies are shifting from vertical integration to secure cost
competitiveness to downstream integration to secure demand base.

- 42 -
 - The value added in the photovoltaic industry is 10% in the manufacturing sector,
10% in the construction sector, and 80% in the business development, finance
and operation.
- There are more and more companies entering the project development business in
order to overcome the low margin of solar cell and module, and the gap between
the companies that have economies of scale and the late buyers is getting bigger

<Fig 24> Long-term Global Solar Market Forecast

- In recent years, utility-grade photovoltaic power generation has been spreading,

and here are the background of these trends:
First: Installation costs tend to decline. The rate of utility-grade power plant
installation price decline is faster than that of residential buildings, and
installation cost is low, which makes it easier to secure economic
efficiency.
Second: Utilization rate of installed facilities is improved. Even though the
equipment of the same capacity is used, the utility rate of the utility class
(production rate) is excellent due to economies of scale and optimized
configuration of the equipment.
Third: The effect of emission is reduced. When solar power generation replaces
fossil fuels, utilization rate of utility grade is high and power generation is
high, contributing to reduction of exhaust gas.
- According to the <World Solar Industry Trends and Domestic Photovoltaic
Industry Status Report, 2015> announced by the Korea Export-Import Bank of
Korea, in order to secure the competitiveness of solar photovoltaic industry, it is
necessary to shift the industrial structure concentrated only in the manufacturing
field to downstream fields such as project development, EPC, and finance.

❍ Market move
- In Europe, where the early solar photovoltaic industry has been leading, the
European market has entered a mature stage. Demand growth has slowed since
2013, and discussions on the 'new climate change regime' Of major demand

- 43 -
 countries moving to the US, China and Japan
- Recently, demand is spreading to the Middle East and Southeast Asia, North
Africa and Central and South America, where actual solar energy generation
efficiency is high.
- The rapid growth and diffusion of this demand is due to the fact that the solar
power industry has achieved economies of scale and the cost of power generation
has been lowered.

❍ USA
- In the United States, due to the nature of the market with a relatively
well-developed financial system, it is easy to raise funds necessary for solar
power generation. Therefore, the installed capacity of solar power in 2010 is
steadily growing from 1.1GW to 7.0GW in 2014
- In terms of environment and energy independence, solar power generation is
receiving policy support as a substitute because it is closing coal power
generation with less resources in its own country.
- US photovoltaic installation demand maintains robust growth as ITC (investment
tax credits) system has reduced 30% of solar installation cost to tax benefit.
- However, the demand for photovoltaic installations will be directly affected by the
reduction of the ITC system, which led to the growth of US photovoltaic
installation demand, at the end of 2016 (30% → 10%).
- According to SEIA and other research institutes, the demand for photovoltaic
installations in the US in 2017 is expected to decline from 2016 to 6 ~ 7GW.

(Source: EPIA et al., Dongbu Securities Research Center 2015.09)

<Fig 25> Demand Trend of US Solar Installations

❍ China
- In China, demand for photovoltaic power generation has grown dramatically from
0.5GW in 2010 to 11.5GW in 2013, but in 2014, due to the lack of a stable

- 44 -
 financial system and a lack of stable power supply network, the solar power
demand of 10.6GW Solar power plant was built, which is less than the initial
target 14GW.
- In 2015, the allocation of dispersed photovoltaic power generation facilities by
local governments in China was actively managed, and as a result, the installation
of new photovoltaic power generation facilities by the end of the third quarter of
2015 was 9.3GW.
- In China, solar PV companies install more than 16GW / year in 2015, considering
that the annual solar PV installation capacity is about half of that in the fourth
quarter.

(Source: EPIA et al., Dongbu Securities Research Center 2015.09)

<Fig 26> China's solar installation demand trend

❍ India
- The Indian solar market will continue to grow mainly in large power plants in
2016.
- India plans to increase the cumulative capacity of photovoltaic power generation
to 100GW by 2022 by raising its target (22GW).
- The government of India is making efforts to participate in foreign companies and
capital inflow of the photovoltaic industry after the announcement of the
enlargement policy of solar power.
- US dollar-based contracts to induce foreign investors who are reluctant to invest
for a long time due to concerns about foreign exchange losses. In fact, Japan,
Korea and other countries are announcing plans to invest in solar power and
overseas investment is expanding (Japan Softbank , Korea Hanhwa Quseel, Korea
OCI, etc.)
- The Indian market, which created the 1.8GW solar PV market in 2015, will be
increased to 3.5 ~ 4.0GW, more than double the 2016

- 45 -
 - Large electric power companies are in the solar power development business, and
the household market is being activated by the introduction of the net-metering
system that can deal with the electricity that is left to use. It is expected to
reach 350MW this year.

2. Indonesia Power Market

2.1. Status

❍ In Indonesia, which is likely to enter the power industry, power consumption has
been surging for the past five years due to the expansion of private sector
electricity demand along the economic growth.

❍ In response to the recent surge in power consumption, the Indonesian government

has been using the electric power generated by thermal power generation to supply
electricity, which has soared due the abundance of raw materials such as coal, oil
and natural gas.

❍ As a result, thermal power generation accounted for more than 80% of the total
power generation, and the price of coal-fired power generation increased by an
average of 9.5% over the past five years owing to the price increase of oil-fired
power plant due to rising oil prices. So the share of coal-fired power generation
will increase by 3.3% and the share of petroleum thermal power generation by
2.7%

❍ The share of renewable energy sources (TPES, total primary energy supply) in
Indonesia was 33.4% in 2012 (25.3% for biofuels and wastes, 7.6% for geothermal
energy sources, 0.5% for hydroelectric power) Renewable energy sources accounted
for 11.4% (6.5% of hydroelectricity, 4.8% of geothermal energy sources, 0.1% of
biofuels and wastes).

❍ Despite the high hydropower potential, Indonesia has not been able to build a
visible hydroelectric power station recently. As a result, the average annual growth
rate of power generation in the last five years is only 3.9%

❍ Indonesia's geothermal power generation and bioenergy have boosted renewable

energy generation by more than 10% over the past five years, and the proportion
of total power generation has increased from 6.0% in 2010 to 9.8% in early 2015.

❍ According to the national energy policy, it will develop new and renewable energy
sources such as geothermal, hydro, bio energy, and solar energy, and increase the
proportion to 16.9% in 2020 and 31.0% in 2050.

❍ The total amount of electricity generated in Indonesia in 2015 is 200.4 TWh, which
has grown at a CAGR of 8.1% over the past seven years.

- 46 -
 (Source: Amendment to the Indonesian Power Development Project Plan (RUPTL 2016-2025))

<Table 9> Power Generation Trend in Indonesia (Unit: TWh)

❍ Indonesia's power generation has steadily increased since the 1990s in line with
population growth, economic growth, and electricity demand growth due to improved
electricity penetration.

❍ The electricity generation capacity of Indonesia is 53,585MW in 2014, 37,280MW

of PLN, 10,995MW of Independent Power Producer (IPP) and 2,634MW of Private
Power Utilities (PPU)

❍ The Indonesian Power Corporation (PT PLN) is leading the Indonesian power
generation sector, with the Electricity Corporation accounting for 84% (36,897 MW
out of 44,000 MW) of the total power generation capacity in Indonesia. The
remaining 26% is owned by independent power producers (IPPs).

❍ Independent power producers can participate in transmission activities through five

types of power contracts: (i) powering the power utility through the PPA; (ii)
supply power to the state via PPA; (iii) Public-private partnership with the
municipal government through PPP; (iv) constructing transmission and distribution
networks on their own and supplying power to the final consumer; (v)
self-generation.

❍ Indonesia has been operating the Fast Track Program since 2006 (revised in 2009)
to address the power shortage problem, and plans to secure a total capacity of 42
GW by 2019 .
- This expansion program mainly supported by Indonesia PT PLN is composed of
FTP-1, FTP-2 (2009-2018) and FTP-3 (2015-2024), the content of which
was codified by PT PLN in the Electricity Power Supply Business Plan (RUPTL).
- FTP-1 is a coal-fired power plant with a capacity of 9,975 MW. FTP-2 is a

- 47 -
 coal-fired thermal power plant with 4,000 MW of geothermal energy, 1,1735 MW
of coal, 280 MW of coal gas, ) The construction of the power plant is included.
- The FTP-3 plan is a separate plan for FTP-1 and 2, with the goal of capacity
expansion of 35 GW by 2019, 56% coal-fired power, 36% gas and the remaining
6% Will be built through the construction of other energy sources including hydro
and geothermal energy.

<Table 10> Indonesia Electricity Expansion Program, 2015-2019

<Fig 27> Indonesian Power Industry Development Plan (Source: ESDM)

❍ Indonesian Power Corporation (PT PLN) plays a dominant role in the power
transmission sector in Indonesia.

❍ Since Indonesia Electric Power Corporation has the right to refuse to provide power
supply service, in case of IPP, electric power will be supplied only to the area
where the electric power corporation refused to supply electric power.

❍ The transmission system in Indonesia consists of 7 power grids and 600 individual
grids. Indonesia Electric Power Corporation had about 39,900 circuit-km power grid
(86,500 MVA capacity) as of 2013

❍ As part of the ASEAN Power Grid Project, Indonesia is planning to expand the

- 48 -
 connection between Malaysia and the country, and is also planning to establish a
connection with Singapore for the first time ever.

(Source: PLN)
<Fig 28> Sumatra Island Power Supply and Demand Plan 2017-2019 (Source PLN)

2.2. Energy resource status

❍ Indonesia has abundant fossil fuel resources. According to a survey by Ministry of
Energy and Mineral Resources (MEMR) of Indonesia, confirmed coal reserves in
Indonesia are 120.5 billion tons, confirmed oil reserves are 4.04 billion barrels,
Natural gas reserves amount to 101.5 trillion cubic feet.

❍ Indonesia is known to have a significant amount of renewable energy resources. To

date, estimated resource potentials are 75,000 MW for large hydro, 1,013 MW for
small hydro, 4.80 kWh / m2 / d for solar energy, 32,654 MW for biomass, Wind
power of 3-6 m / s, geothermal energy of 28,000 MW

❍ Indonesia has very rich renewable energy sources such as geothermal energy,
hydropower, and biomass, but currently uses only about 5% of renewable energy
potential.

- 49 -
 <Table 11> Indonesian renewable energy potential and secured generation capacity, 2013

❍ New & renewable energy

- Hydro:
Indonesia has abundant hydropower resources, but most of the hydroelectric
energy resources that can be developed are located in remote areas (such as
West Papua region) from the demand centers. In order to revitalize the
development of hydropower resources, the Indonesian government is now planning
to form an industrial complex near the hydroelectric energy source.
- Geo-thermal:
Indonesia has the world's largest geothermal energy resources (about 40% of the
world's geothermal energy potential) and the third largest geothermal power
producer in the world after the US and the Philippines. Geothermal energy
resources in Indonesia are distributed throughout the country, mainly in the
Sumatra, Java and Sulawesi areas. The Indonesian government has been steadily
implementing geothermal energy resource development policies for the past 10
years. However, the development of geothermal energy resources in Indonesia is
complicated licensing and regulatory It is also experiencing chronic problems due
to the system. The Indonesian government is reportedly in the process of
preparing for the revision of related laws.
- Solar:
Indonesia is an equatorial country with abundant solar power generation
potential, and is implementing policies to promote small- and medium-sized
off-grid PV systems in remote areas. The Indonesian government has set the
goal of securing a PV capacity of 1,000 MWp (megawatts peak) by 2025, but
due to the lack of technical understanding of local government officials, business
and financial institutions, and the difficulties associated with relatively high PV
prices, the Indonesian government is having difficulties.

- 50 -
2.3. Policy
2.3.1. National Energy Policy

❍ The energy law of Indonesia (EL7, Energy Law No. 30, 2007), which was
established in 2007, is the basis of energy sector management, basic principles of
national energy mix, institutional structure of energy sector and government
Establishment of role-sharing structure among ministries

❍ The overall plan for the development of the Indonesian energy sector is the
National Energy Policy (NEP).

❍ The overall goal of the development of the Indonesian energy sector through the
National Energy Development Plan (NEP14), which was revised in 2014, is to
improve the domestic consumption7) of Indonesian energy resources used for
export. By reorganization of the national energy mix8) centered on domestic energy
sources, Indonesia will reduce national subsidies on fossil fuels and electricity to
reduce dependence on imported fuel. This will ensure energy security, and
Indonesia will promote the following policies to achieve its goals.
1) Reduced oil consumption
2) Development of coal and renewable energy sources, promotion of consumption
3) Optimization of gas consumption and production
4) Considering the introduction of nuclear power (as a last resort)

<Fig 29> National energy mix target including NEP14

❍ Indonesia plans to maintain the share of renewable energy sources in the total
primary energy supply (TPES) by 23% in 2025, 25% in 2030 and 31% in 2050
through the National Energy Development Plan (NEP14)

❍ The NEP14 of Indonesia is composed of the National Energy General Plan (RUEN),
the National Electricity General Plan (RUKN) and the Electricity Power Plan Supply

7) Indonesia has announced plans to halt exports of coal and natural gas in the future, and eventually to finalize
the export through NEP14.
8) Indonesia will cut state subsidies on fossil fuels and electricity to reduce dependence on imported fuel.

- 51 -
 Business Plan '), which will be developed as a detailed policy plan.

❍ The Government of Indonesia operates a feed-in-tariff (FIT) system to encourage

the development of renewable energy (hydropower, geothermal energy, biofuels and
waste, solar energy), geothermal energy funds Geothermal Fund 'to support
large-scale geothermal energy projects.

<Fig 30> Indonesian renewable energy FIT program

❍ In order to achieve the target ratio of new and renewable energy, utilization of new
and renewable energy is prioritized. Central and local governments provide the
following types of support: (1) tax benefits (such as investment tax credit), (2)
mitigation of licensing and non-licensing, (3) FiT for renewable energy, and (4)
(5) Additional subsidy for renewable energy. This support will depend on the
feasibility and economics of power infrastructure development. PR No. 4/2016
defines a variety of tax benefits related to the development of renewable energy.

❍ According to the PR, the government plans to develop a renewable energy

aggregator. The renewable energy cluster will purchase all the electricity generated
from renewable energy, sell it to PLN, and receive a separate subsidy for
renewable energy. However, the timing of the establishment of such a collective is
unclear, and it is unclear whether the collective shall become a PLN or a state
enterprise.

❍ PR No. 4/2016 specifies that hydropower, geothermal and wind power plants and
their transmission facilities can be developed within the Natural Reserve Area
(Natural Reserve Area) according to the current regulations.

- 52 -
2.3.2. Climate Change Response Policy

❍ Through Nationally Determined Contributions (NDC) submitted to the United

Nations Framework Convention on Climate Change (UNFCCC) in 2015, the
Government of Indonesia has set a greenhouse gas emission reduction target to
reduce greenhouse gas emissions by 29% (equivalent to 2,881 GtCO2 of CO2) by
2030 under the new era.

❍ The Government of Indonesia did not specify specific plans for achieving the GHG
emission reduction targets in the country-specific mitigation plans. But focusing on
the National Action Plan for GHG Emissions Reduction (RAN-GRK), established in
2011 based on the NAMA (Nationally Appropriate Mitigation Action), the
Indonesian government is expected to make efforts to achieve the NDC goal.

❍ Indonesia will establish a Directorate-General of Climate Change under the

Presidential Regulation No. 16 of the Ministry of Environment of Indonesia in 2015
to play a central role in overall activities related to achieving GHG emission
reduction targets.

2.3.3. Energy Price and Subsidy Policy

❍ Indonesia supports FIT subsidy system (2009) to support all renewable energy
sources (solar, wind, biomass, biogas, geothermal, hydroelectric power plants, less
than 10 MW)

❍ Electricity prices in Indonesia are set by the government and approved by

Parliament.

❍ Indonesia has long supported the difference between electric production and
transportation prices and consumer prices through electric subsidy schemes.

❍ The Indonesian government announced that it will abolish the power subsidy system
for large enterprises (industrial sector) in 2008 and plan9) to gradually reduce the
electricity subsidies to SMEs (industrial sector) and other consumers in 2014.

9) In 2014, the Indonesian government introduced the Automatic Tariff Adjustment Mechanism (ATAM). By 2018,
the government will abolish the electricity price subsidy for all types of power consumers except for extreme
households, and supply electricity to market prices. Announced plans

- 53 -
 <Fig 31> Status of Indonesian Electricity Grant Support System, 2003-2012

<Table 12> Indonesia FIT grant system: Photovoltaic sector(July 2017)

2.3.4. Act on Electricity Fee and Bidding of New & Renewable Energy Business
(No. 12/2017)

❍ The Ministry of Energy and Mineral Resources of the Indonesian Government

promulgated the Decree No. 12 of 2017 on "Use of renewable energy resources for
electric power supply" which came into effect on January 27.

❍ The new regulations are different for each type of resource such as solar, wind,
hydro, biomass, biogas, waste, and geothermal.

❍ The regulation stipulates that electricity generated from renewable energy should be

- 54 -
 sold and supplied to PT PLN Persero, an Indonesian energy state company, and
specifies the guidelines for PLN to procure electricity from power plants using
renewable energy.

❍ The regulation limits the unit price of renewable energy. If the basic production
unit price (BPP, basic production unit price) exceeds the national average price, the
electric power charge is limited to 85% of the rate through the system applied to
all renewable energy power plants. There are no restrictions if the basic unit price
of the region does not exceed the national average unit price.

<Table 13> Indonesian Government Renewable Energy Electricity Production Rate Table (2017 year)

❍ Until now, coal-fired power generation has a large share in the energy market, and
thus the renewable energy production fee is expected to be in competition with the
electricity production cost of the coal-fired power plant. However, PLN continues
to limit the cost of producing coal power plants from $ 0.04 to $ 0.07 per kWh.

❍ Problem
- The new production standard price specification conflicts with other existing
regulations. It is said that the local BPP and the national BPP are determined
annually by the Ministry of Mineral Resources and Energy based on the proposals
of PLN, but the other regulations are to report PLN local governments BPP
quarterly to Mineral Resources and Energy Department.
- In addition, there are no codified provisions for whether to display the price in

- 55 -
 rupiah or in dollars. The BPP announced by the government is in dollars, but the
BPP announced by PLN is marked as Rupiah.
- There is a controversy in the interpretation because the government does not
specify at what level the rate system should be used if the developer has to
decide whether or not it can meet the condition of performing the project with
less than 85% of the local production unit price.
- The government's price cap rule provides PLN with the possibility to impose
lower rates on energy developers than local production costs.

3. Indonesian power industry structure and management system

3.1. Power industry structure

❍ In Indonesia, the private sector has begun to introduce private capital in the
electric power sector since 1992, when it has become difficult to respond to the
surge in electricity supply and demand in the late 1980s. At the end of 2013, 24
IPPs and 24 captive power plants (CPP) , And the electricity production ratio is
72% for PLN, 21% for IPP, and 4% for other small private power generation
companies.

❍ The PLN has tremendous power over Indonesia's power generation business and can
veto the power generation business. IPP can only develop in areas not included in
the power generation plan of PLN, The IPPs must enter into a Power Purchase
Agreement (PPA) with the PLN. Also, IPPs that want to sell electricity directly to
the end consumer need to build their own power grid.

- 56 -
 <Fig 32> Indonesian power industry sales structure

3.2. Electric Power Industry Management System

❍ The management of the electric power industry in Indonesia is centered on the

Ministry of Minerals and Energy's General Electricity Authority. The Electricity
Authority establishes and implements electricity and energy policies and establishes
and manages related standards. However, And maintenance is in charge of PLN.
PLN, a wholly-owned subsidiary of the government, and its subsidiaries and IPP
are responsible for the power generation sector.

❍ Perusahaan Listrik Negara (PLN), a state-owned power company, was established

in 1961 and has led the Indonesian power generation sector with about 83.5% of
the total capacity of Indonesia. In case of transmission and distribution, some PPU
Excluding the area in charge, PLN is a monopoly structure. Under the supervision
of the Indonesian government, PLN is engaged in a variety of related sectors such
as telecommunication, transportation, coal trading, power engineering, construction
and finance as well as power generation, transmission and distribution through
eleven subsidiaries and 13 grandchildren.

❍ All power generated by the IPP is to be bought at PLN.

❍ As a general principle, IPP private companies are able to sell electricity only
through competitive bidding. However, in the case of electricity generation (small
hydro, geothermal, biomass, wind, solar heat), surplus electricity, If you supply, you

- 57 -
 can directly designate without going through bidding.

❍ In addition, the Indonesian government is encouraging the participation of IPP and

CPP in the power industry to regulate PLN's exclusive power.

<Fig 33> PLN Subsidiary Organization Chart

<Fig 34> Indonesia PLN Location of Regional Office

- 58 -
3.3. Electric Power System / Supply / Development
❍ Indonesia PLN is a power supplier and is in charge of the construction, operation
and maintenance of transmission and distribution facilities. PLN has been
continuously developing the power supply system of the government, taking into
consideration the need for effective response to the increase of power generation
capacity and power generation And the total length of the transmission plan
operated as of 2013 reaches 828,283 km (including high / medium voltage grid).

❍ The main transmission system is divided into the islands of Sumatra, Sulawesi, and
Karimantan islands in Java and Bali, and is divided into Southeast and
South-eastern parts of Sulawesi and Karimantan. have. As the transmission
network is constructed on each island, it is a constraint factor of efficient power
management and power import and export through the grid connection with
neighboring countries is not done.

❍ The power loss rate fell from 17% to 18% in the early 2000s due to the aging of
the transmission forecast, but dropped to about 10.7% as of 2013 due to
investment in the transmission and distribution sector. The voltage of the
transmission system is 500 kV, 275 kV, 150 kV and 70 kV.

❍ The Indonesian government is pushing for a large-scale project to connect power

grid in the region as well as expansion of power generation capacity and expansion
of transmission plan through PLN and power supply expansion program.
- The second stage of the Crash program will be to build a 3,490 km transmission
line with USD $ 380 million.
- Currently, PLN has 26,000km of high-voltage transmission line and 530,000km of
low-voltage line, and the government plans to select a company other than PLN
to conduct transmission and distribution line construction business.
- Distribution voltage is divided into low voltage and medium voltage, low voltage
is 220 / 380V and medium voltage is mainly 20kV. Some 6kV ~ 7kV medium
voltage distribution is applied to Karimantan Island and Sulawesi Island, but it
will be integrated to 20kV in the future.
- By 2020, a total of 49,299 km of transmission lines should be added (500 kV
and 150 kV lines - Java-Bali system, except for the 500 kV, 275 kV and 70 kV
lines).
- The total length of the distribution lines to be constructed by 2020 is 416,906
km, and the development of the distribution network should be planned to
maintain system stability and accommodate the increase of new customers.
- In order to improve the stability and efficiency of power supply, 250kV or 500kV

- 59 -
 transmission network construction project will be implemented in Sumatra and
Java-Bali grid, and Kalimantan and Sulawesi will strengthen power grid
connection system.
- The expansion of the distribution plan will focus on improvement of supply
voltage, minimization of losses, and maintenance of the old system.

(source: Electricity Policies, Ministry of Mineral Resources)

<Fig 35> Status and development plan of electric power supply infrastructure in Indonesia

(source : RUPTL PLN 2011-2020)

<Fig 36> Indonesian transmission and distribution network development plan

- 60 -
 - The investment required to develop power infrastructure by 2020 is
approximately USD 96,205 mil. (USD 9,621 mil. Average per year), USD 67,815
mil. In terms of electricity production, USD 14,928 mil. To the transmission
facility, USD 13,461 mil. Is required for power distribution facilities.
- Following the transmission, substation and distribution system, the biggest
investment is power plant development.

(source : RUPTL PLN 2011-2020)

<Fig 37> Electric power infrastructure investment scale 2011-2020

3.4. Electricity Bill

❍ The electricity rate in Indonesia is determined by the government considering the

power generation cost and subsidy budget proposed by the PLN. In order to keep
the electricity rate lower than the electricity generation cost, the government
subsidizes electricity subsidies equivalent to 1.1% of Indonesia's GDP in 2013 . In
accordance with the Public Enterprises Act (State-On Enterprises Law No.
19/2003), the Indonesian government regarded PLNs as electricity services at
electricity prices below the generation cost as public services, and maintained the
difference between the electricity costs and the electricity costs as subsidies.

❍ The PSO (Public Service Oblate) in Indonesia is a government agency that

maintains the difference between the electricity price produced by the diesel
generator and the consumer, and the unit price to produce electric power by the
diesel generator is an average of 2,400 Rp per kWh. The Indonesian government
subsidizes huge amounts of electricity every year because the power generation
method in Indonesia is mostly diesel power generation.

- 61 -
❍ However, in 2013, the Indonesian government hiked electricity rates by 15% in
order to meet the rising fuel prices and the need to reduce subsidies to reduce the
budget deficit.

❍ In addition, although the 2014 budget allocated 0.8% of Indonesian GDP, there is a
need to increase the electricity bill. In accordance with the ministerial order of the
Minister of Mineral Resources and Energy of Indonesia, Announced in April 2014
the Minister of Energy and Mineral Resources. According to the announcement, the
regulations, signed by Minister of Mineral Energy, Jero Wacik, have been approved
by the Indonesian Parliamentary Mineral Energy Commission (Komsi VII DPR) for
industrial electricity tariff hikes (including adjustments) The main contents of No. 9
of 2014 are as follows.

Ÿ Four large-scale industrial electricity rate hikes

- May 1, 2014, July 1, September 1, November 1, 2014

Ÿ Electricity tariffs are applied to large-scale industries such as the listed

industry (classification code I-3) using medium voltage of 200kVA or more
and the industry using high voltage of 30,000kVA or more (classification code
I-4).

Ÿ Electricity billing will be conducted for four classification codes that no longer
receive government subsidies as of October 1, 2013.

- After October 1, 2013, the government will issue a non-supplementary

four-electricity fare classification code :
Ÿ Large-scale housing with voltage of 6,600VA or more(R-3)
Ÿ Medium-scale business using voltage of 6,600VA ~ 200kVA(B-2)
Ÿ Large-scale plant using voltage of 200kVA or more(B-3)
Ÿ Medium-sized government agencies using voltages from 6,600VA to
200kVA(P-1)

Ÿ Electricity rate adjustments for consumers belonging to the above four

classification codes are considered to have sufficient electricity purchasing
capacity and are based on a calculation method using several indicators such as
rupiah exchange rate, inflation, and crude oil price (ICP) This fluctuates from
time to time.

Ÿ Rupiah, exchange rate, inflation, and crude oil prices are factors that affect
electricity supply, and are not artificially controllable by the government.

Ÿ Electricity tariffs will be determined by the PLN Board of Directors in

accordance with the prescribed calculation method, and will be reported to the
Minister of Minerals and Energy every month.

- 62 -
 Ÿ In accordance with the announcement of the Ministerial Decree, the existing
relevant provisions (the Ministerial Ordinance on Mineral Energy, No. 30,
2012) are no longer valid and have been abolished.

❍ According to Ministerial Decree No. 30 of 2012 of Mineral Energy Department, the

electricity tariff that was the IDR 723 Rp in 2012 will be the IDR 819Rp in 2013
with a 15% increase, and the electricity tariff in Indonesia in 2014 will be the
Minister of Mineral and Energy The I-3 group has a 38.9% increase in the rate of
industrial electric charges, while the I-4 group is the largest in the I-4 group.
64.7%.

❍ The I-3 group refers to SMEs that use an intermediate voltage of 200 kWA or
more, and the I-4 group refers to a large company using high-voltage power of
30,000 kWA or more.

May 2014 July 2014 September 2014 November 2014

Tariff I-3 872 946 1,027 1,115
(Rp/kWh) I-4 819 928 1,051 1,191
Tariff I-3 8.5% 8.5% 8.6% 8.6%
Adjustment I-4 13.3% 13.3% 13.3% 13.3%

<Table 14> Increase in electricity rates in Indonesia in 2014 (source:PLN)

❍ In addition, electricity for households 3.5kW ~ 5.5kW is 5.7%, electricity for

government 200kW is 5.36%, electricity for household 2.2kW is 10.43%, electricity
for household 1.3kW is 11.36%, electricity for street lamp is 10.69% The
electricity tariff subsidies mentioned above have been lifted, and electricity rates
have been adjusted according to the Rupiah rate and global oil prices. Electricity
charges are expected to continue to rise in the future, and the solar power industry
is expected to grow significantly due to the rise in electricity rates.

❍ Electricity prices for each customer in Indonesia are set differently depending on
the usage group. Electricity charges for each group announced by PLN in June 2015
are shown in the figure below. The most expensive electricity bill is IDR
1,661.01Rp, which is a high of USD 0.13 USD. The Indonesian government is
trying to eliminate electricity subsidies in the future and to raise electricity rates
by more than 10% in 2015.

- 63 -
<Table 15> Electricity bill for each group in Indonesia (June 2015, source: PLN)

- 64 -
3.5. Electric Power Supply Plan in Indonesia

❍ The Indonesian electric power supply plan is largely divided into a national power
plan established by the central government, a power supply plan established by the
PLN, and a regional power plan established by the local government.
Establis
DIVISION Unit Contents
hment
Ÿ Power demand and supply, investment and
National Central
financing, renewable energy use
Power Plan governm 10 year
Ÿ Expansion of new renewable energy ratio from
(RUKN) ent
current 4.9% to 17% by 2020
Power 10 year Ÿ Supply planning, demand forecasting, power
Power
construc (yearly generation, production and fueling and indexing
Supply Plan
tion readjust Ÿ Target of securing additional power of 57.3GW by
(RUPTL)
(PLN) ment) 2021
Ÿ Establishment based on RUKN
Regional Local Ÿ Strengthen the role of local governments in
Power Plan governm - determining permits and power tariffs
(RUKD) ent Ÿ Strengthen private-sector investment opportunities
in the power supply sector
<Table 16> Electric power supply plan in Indonesia

❍ The Indonesian government plans to supply about 35 GW by 2019 by establishing

national power plans, power supply plans and regional power plans based on the
National Long-term Economic Development Plan (MP3EI), and plans to increase
the electricity penetration rate to 97.4% . In order to diversify the energy sources
needed for power generation, we are focusing on optimizing the use of gas,
reducing the use of petroleum fuel, increasing the use of coal, and developing new
and renewable energy sources.

❍ According to the Ministry of Mineral Resources and Energy of Indonesia, capacity

of power generation facilities in Indonesia will increase to 51,981 MW in 2014, an
average annual increase of 6.4% from 34,517 MW in 2010. In 2014, thermal power
generation capacity will reach 40,675MW, accounting for 78% of total power
generation capacity, and 11,306MW for hydroelectric power generation and other
renewable energy generation.

❍ In spite of the fact that the capacity of power generation facilities has been
expanded to include coal-fired power generation for the last five years, the share
of thermal power generation decreased from 82.1% to 78% due to the development
of new and renewable energy sources such as geothermal and hydroelectric power.

❍ By 2019, the PLN is planning to develop 10.2GW and 25.3GW through IPP, and the
power development capacity of IPP is 2.5 times that of PLN, which shows that the

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 Indonesian government's finances have deteriorated.

❍ By region, more than half of Indonesia's population is inhabited, industrial facilities

are abundant, the development capacity of islands and Sumatra is much higher, and
the energy source to be developed is geothermal, gas, hydropower and thermal
power.

(source: Ministry of Energy and Mineral Resources)

<Fig 38> Detailed plan for 35GW power plant construction

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4. PV Market in Indonesia
4.1. Solar Power

❍ Indonesia has an average solar radiation of 4.8 kWh / m2 per day, which is
favorable for solar power generation. Although solar radiation varies across the
islands of Indonesia, international standards are considered favorable for solar
energy development and are considered a viable energy source for off-grid islands
and remote people

<Fig 39> Indonesia solar energy potential

❍ Surveillance visuals of countries around the world

<Fig 40> Global insolation

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4.2. Photovoltaic Power Generation Status

❍ Currently installed capacity is about 80 MW, mostly off-grid solar home systems
or small-scale off-grid systems (mostly hybrid systems10) combined with
small-scale diesel plants)

❍ Indonesia plans to build an additional capacity of 189.3 MW for a period of five

years until 2019, with a total capacity of 260.3 MW, which is regarded as a
relatively reasonable target.

<Table 17> Solar power On-stream development Plan (in MW)

❍ According to LAKIP KESDM 2015, the currently installed solar power plant is
about 85.2 MW, slightly higher than the planned 76.9 MW. This is due to the
construction of a 5 MW solar power plant in Kupang, East Nusa Tenggara.

❍ In the PV Development Program for 1,000 island regions, the PV development

strategy is to reduce the use of diesel fuel, to increase the power conversion rate
in remote island areas that still produce electricity using HSD / MFO fuel

<Fig 41> Photovoltaic development program of 1000 islands

10) IEA(2015), Indonesia 2015

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❍ For this reason, solar power development will be conducted mainly in remote areas,
with the power generation ratio being low (less than 60%) in the eastern part of
Indonesia. In addition, solar energy is suitable as renewable energy that does not
increase the power generation cost compared with current power system

❍ In addition to the PV development program, the government announced plans to add

5,000 MW of solar power by 2020 in February 2016. Strategies to achieve the
5,000 MW program are as follows:
- Cooperation with financial authorities, MoEMR and 10 local governments
- Development of "Program Energi Terbarukan Listrik Desa" with the aim of
powering 10,300 villages that are not supplied by 2019
- Subsidies for PV of Fiat
- Development of regulations for hybrid PV, on-grid PV and roof-type PV
- Development of standard solar panels with suitable resource experts

❍ Solar power distribution plan of 5,000 MW

- On-grid general distribution. 1.5 GW
- Hybrid (diesel and PV). 1GW
- Government and private buildings. 0.5 GW (roof type PV)
- Industrial district. 0.5 GW (roof type PV)
- Residence . 0.5 GW (roof type PV)
- Towns where power is not available. 1GW

❍ In July 2013, DGNREEC released details of the bid for a total of 140 MW of
ongrid solar power plants in Indonesia's remote area (approximately 80). This is
due to the fact that in 2013, the MoEMR Regulation No. 17/2013 and DGNREEC
Regulation No.979.K / 29 / DJE / 2013. It is also known as the PV IPP structure
and is priced at USD 0.25 for a bidding project of 140 MWp. USD 0.30 / kWh FiT
applies (depending on domestic goods and service use)

❍ The Gorontalo power plant commenced operations in February 2016 and is operated
through PT Brantas Energy, a subsidiary of PT Brantas Abipraya (Persero). Sumba
Power Station is built by Conergy, PT Buana Surya Energi Persada and PT Indo
Utama Solutions

❍ MoEMR is the MoEMR Regulation No. MoMR Regulation No.19 / 2016 to replace
the 17/2013, which is expected to lead to more solar PV projects. It will also
support the 5,000 MW target announced in early 2016

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 Chapter 5. Field Analysis
1. Climatic Conditions
❍ Indonesia, which is adjacent to the equator, has an average daily radiation of 4.8
kWh / ㎡, which is a favorable climate for photovoltaic power generation. There is
no big difference by region, but there is a lot of solar radiation in the eastern part
where there is less pollution damage or air pollution.

Area Name Irradiance(kWh/㎡)

Pidie 4,097
Sumatra Ogan Komering Ulu 4,951
Lampung Selatan Regency 5,234
Jakarta Utara 4,187
Tangerang 4,324
Java Lebak 4,448
Semarang 5,488
Yogyakarta 4,500
Pontianak 4,552
Kalimantan Berau Regency 4,172
Kota Baru 4,798
Gorontalo 4,911
Sulawesi
Donggala 5,512
Jayapura 5,720
Denpasar 5,263
Bali-Nusa Tungara
Sumbawa Regency 5,747
Ngada 5,117
(Source: BBRT, BMG, Indonesia Power Investment and Legislation Guide, PwC Indonesia 2016)

<Table 18> Average solar irradiance in the main regions of Indonesia

❍ Local solar radiation and climate are not affected by typhoons, less influenced by
wind,

❍ Local climate is affected by the rainy season, so Sumatera Island and Surabaya
Island areas except Jakarta are suitable for solar irradiation.

2. Location and Site Survey Status

2.1. Power Plant Location

❍ Among the two candadate sites in the Pesawaran area, Negri Katon Village was
selected because land slope is gentle and is located close to the power connection

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 point.
- Location of the site : (S 5°18‘06.56’‘, E 105°06’02.73‘’)
- Negerikatun, Negeri Katon, Kabupaten Pesawaran, Lampung 35353 Indonesia

<Fig 42> Location of Final Solar Power Plant: Negeri Katon Village

2.2. Site Survey Status

❍ Two candidate areas in Pesawaran area were received from the local government
KPBU (government and business cooperation) department.

1. Lumbi Rejo Village 2. Negeri Katon Village

<Fig 43> Two candidates in the Pesawaran region

❍ Local exploration for the plant location: 2018.01.18

- Confirmation of the topography and power linkage point of PV installation site

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- Candidate Site #1 Lumbi Rejo Village
Ÿ Jalan PT Gramer, Lumbi Rejo, Negeri Katon, Kabupaten Pesawaran, Lampung
35353 Indonesia
Ÿ S 5°18‘14.1336’‘ E 105°04’16.5576‘’
Ÿ It is decided that this area is not suitable because it is composed of reverse
slope terrain (southward) and it will cause excessive civil engineering cost
since it is about 2km away from power connection point (3 phase pole)

<Fig 44> Survey of the site #1 and its power connection point

- Candidate site #2 Negeri Katon Village

Ÿ Negerikatun, Negeri Katon, Kabupaten Pesawaran, Lampung 35353 Indonesia
Ÿ S 5°18‘06.56’‘ E 105°06’02.73‘’
Ÿ The area is made up of gentle slopes and is about 1 km away from the point
of power connection (3 phase pole), so it is decided to be the final candidate

<Fig 45> Field survey of final candidate site

Ÿ Checked the electricity-connected points for installing the final PV stations.

° Power frequency : 50Hz
° Power low pressure : 230V(single phase)/400V(3-phase)
° Power high pressure and extra-high pressure : 25, 30, 70, 150kV

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 <Fig 46> Power linkage site survey

❍ Measuring equipment for climate analysis of final candidate area

- Weather research craft VANTAGE PRO2 manufactured by Davis Digital, US
- Data loger for securing the data on solar radiation.
- Wireless communication KITs and tripod trail supports.
- Pyreheliometer, thermo-hygrometer, airflow meter, Data Loger

<그림 1> Climate measuring equipment

❍ Equipment Installation
- Measurement equipment is installed near the final candidate site to collect
measurements and data such as rainfall, temperature, solar irradiation for 4
months.
- Measuring device was installed for loss prevention and easy management by the
help of local Pesawaran official, measuring instrument on the local village
headman’s roof of house, and Data loger in the village headman’s livingroom of
house (Unnamed Road, Negerikatun, Negeri Katon, Kabupaten Pesawaran,
Lampung 35353 Indonesia) (S 5°18‘06.56’‘, E 105°06’02.73‘’)

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 <Fig 47> Installation of measuring equipment in the final destination Negeri Katon village

❍ Verification of measuring instrument data (January 17, 2018)

- Field survey according to the arrangement of PV facilities (data analysis)
- Collected the data on electricity demand and supply status after investigating into
the site installation in Indonesia

<그림 1> Verification of measurement equipment data (January 17, 2018)

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❍ Measurement data collection and equipment dissemble (March 19, 2018)
- Conducted actual local data analysisFrom January 17, 2018 to March 21, 2018
Collected measured solar radiation, temperature, and rainfall data for about 2.5
months
- Disassemble measurement equipment

<Fig 48> Data confirmation and measurement equipment dissemble (March 19, 2018)

3. Local PV Plant related company survey

3.1. Survey on PV business

❍ The solar PV business in Indonesia is in the process of being mainly focused on

street lamps and the solar power generation business is not in the pilot business.

❍ In order to proceed with the project, domestic products such as solar modules,
inverters and electric appliances are used in domestic Hyundai and Hyosung
products, and solar photovoltaic structures are being built in the production
infrastructure.

❍ Recently, commercialization has been increasing to promote business with Korea.

❍ Local climate is affected by the rainy season, so Sumatera and Surabaya Island
areas except Jakarta are suitable for solar irradiation.

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 <Fig 49> PT. EST INT meeting and field survey (Nov. 2017)

3.2. Status of local manufacturers of photovoltaic structures

❍ Visited the photovoltaic structure manufacturer locally in Surabaya Tuvan and

identified the current status.

❍ ­ Held a meeting at the site to see if any local manufacturer can make the
structure(s)
- Evaluated the local engineer’s technical skills
- The number of local manufacturing workers was 15. Among which, there were
three electric engineers, four structure machine engineers, and the rest were
installation engineers.
- Their work experience was three years or more.
- PT EST was largely specialized in manufacturing, installing, and selling
refrigerator structures and electric devices.
- The area for the factory was 600 pyeong or so and judged to be appropriate for
manufacturing structures.

❍ ­ Discussed the engineering works by the local enterprises.

- Necessary to conduct foundation works and manufacturing and installing fences
(for connecting structures) by selecting the local enterprises → checked future
quotes and delivery schedules
- RFQ for manufacturing concrete and L-anchor for basic engineering

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<Fig 50> Visits and Survey of Local Photovoltaic Manufacturers (March, 2018)

- 77 -
 Chapter 6. Technical Analysis
1. General Design Criteria for Photovoltaic Systems
❍ PV power plant design plan
- Photovoltaic system design plan should choose a place without shade as a
principle of southward installation
- It is general to design with an inclination angle of about 25 ~ 35 degrees
considering installation condition and local terrain characteristics.
- It is important to determine the installation capacity relative to the area to be
installed, and it should be designed so as to minimize the generation of shadows
due to the generation of shadows when many modules are installed.

❍ Design Considerations
- Solar power generation system design is a complex design that needs to consider
civil engineering, structure, electricity,
- It is necessary to maximize the efficiency and business efficiency by further
reviewing the regulations by the local government before the design, availability
of grid linkage, confirmation of the occurrence of shading and various RISK items.

Process Consideration
Civil Design Cadastral map, installation area, cross section, etc.
Structure Design Array structure, wind pressure load, fixed load, etc.
Serial, parallel calculation, trunk line, connection board,
Electrical Desing
inverter etc.
Construction Design Electric room, etc.
<Table 19> Process-specific considerations

- The support of the solar power generation facility should be safe structure

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 against structural load and other vibration and shock including self weight, load
load, snow load, wind load etc.
- The connection between the support and the module-support is to be fastened
with a bolt. The cutting and welding parts (plated products only) must be
galvanized or coated with epoxy-zinc paint at least twice.
- Module support material
Ÿ Mild zinc or molten zinc - Aluminum - Magnesium alloy plated sections
Ÿ Stainless steel (STS)
Ÿ Aluminum alloy
- Use a module dedicated line or TFR-CV (one core, 1C) wire for wiring from the
module to the inverter. If the wires are installed or installed on the ground, take
extra measures to prevent damage to the sheath. You must take it.
- Each serial group of modules shall be composed of modules with the same
short-circuit current. When two or more solar cell series connected to one
inverter (MPPT, one multi-string, So that the output voltage and the output
current of the inverter circuit are equal to each other.

❍ Determine the inclination angle, incidence angle, and separation distance for the
array of PV modules

<Fig 51> Identify the latitude and longitude <Fig 52> Determining the separation
of the installation site distance between modules

❍ Critical load review when designing structures

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 Load Type Consideration
Wind pressure It is the most important load, calculated by the wind force coefficient,
load the design speed pressure and the flow area.

The weight of the main body of the base unit and the weight of the
Fixed load load such as the solar cell module to be loaded on the base unit and the
weight of the excretion material necessary for the array construction.

Earthquake Generally, it is smaller than the wind pressure load, but it is necessary
to be careful when it is used for the stand and the disaster prevention
load such as the street lamp etc.

<Table 20> Critical load review when designing structures

❍ Review the shading loss of the photovoltaic module

- Efficiency losses due to array shading can be reduced by solar cell layout and
wiring between modules
- In the figure below, the shading loss due to the vertical connection method (a) is
reduced by 80% or more, while the horizontal wiring method (b)

(a) Vertical solar cell connection (b) Horizontal solar cell connection
<Fig 53> Shading loss of solar cell

❍ Maximum Power Point Tracking of Inverter (MPPT)

- Since the solar cell acts as a current source and the output characteristic changes

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 according to the irradiation / temperature condition, the inverter needs MPPT
control to achieve maximum output and efficiency under all conditions.

<Fig 54> Maximum Power Point Tracking Algorithm for Interter

2. Local Climate Data Analysis

❍ Measuring Period: 2017.11.16 ∼ 2018.03.21 (5months, rainy season)

❍ Location: Roof of a local residence

- Negerikatun, Negeri Katon, Kabupaten Pesawaran, Lampung 35353 Indonesia
- Latitute: S 5°18‘06.56’‘, Longitute: E 105°06’02.73‘’

❍ Measuring device : weather research craft VANTAGE PRO2 manufactured by Davis

Digital, the United States

❍ Analysis method
- The analytical method is on a monthly or weekly basis. The changes in rainfall
were analyzed depending on surrounding temperature and rainfall.

❍ Result
- Collected solar irradiation data according to temperature and precipitation for 4
months from November 15, 2017 to March 21, 2018, which is the rainy season
in Indonesia (October to March).

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 <Fig 55> Irradiance data for 5 months in Pesawaran area

- Ambient temperature is analyzed as maximum 35.9 ℃, minimum 21.6 ℃, average

26.48 ℃
- In analyzing the rainfall, it was found that it rained from 0.2 ㎜ min. to 41.2 ㎜
max.
- In analyzing the solar radiation, it was found that the radiation was 1026 W/㎡
max. and 170.04 W/㎡ on average, and the solar radiation hour at 4.1 hr and the
maximum solar radiation hour at 6.1 hr.
- The average solar radiation on a clear day ranged 5 ∼ 6.1 hr when it was
measured by considering the average solar radiation hour during dry seasons
(Apr. to Sep.) in Indonesia.
- Given that the average solar radiation during dry season in Indonesia (average
solar radiation hour on a clear day) is 5.6 hr, the average solar radiation in
Pesawaran Regency, Indonesia is 4.85 hr, which is proven to be appropriate for
PV power generation.

- 82 -
 Mean Mean rainfall Mean solar Mean solar
Month temperature irradiance radiation hour
(℃) (㎜) (w/㎡) (hr)
Nov. 2017 27.19 0.13 171 4.0
Dec. 2017 26.67 0.32 171 4.1
Jan. 2018 26.48 0.21 169 4.1
Feb. 2018 26.22 0.34 167 4.0
Mar. 2018 26.01 0.43 172 4.2
Total Average 26.48 0.29 170 4.1
<Table 21> Analysis of solar radiation data at installed area

❍ Monthly climatic data from Nov. 16, 2017 to Nov. 30, 2017 (15 days)
- The picture below represents the data on temperature and rainfall on a monthly
or weekly basis from Nov. 16, 2017 to Nov. 30, 2017 for one month.
- In analyzing ambient temperature, it was proven that the temperature was 35.1 ℃
max., 23.1 ℃ min., and 27.19 ℃ on average.
- For the rainfall, it was found that it ranged from 0.2 ㎜ min. to 11.2 ㎜ max.
- In analyzing the solar radiation, it was found that the radiation was 970 W/㎡
max. and 171 W/㎡ on average, and the solar radiation hour was 4.0 hr.

<Fig 56> Climatic conditions of the Pasawaran solar installation area (Nov. 2017)

❍ Monthly climatic data from Dec. 1, 2017 to Dec. 31, 2017 (one month)
- The picture below represents the data on solar radiation depending on
temperature and rainfall on a monthly or weekly basis from Dec. 1, 2017 to

- 83 -
 Dec. 31, 2017 for one month.
- In analyzing ambient temperature, it was proven that the temperature was 35.1
℃ max., 22.3 ℃ min., and 26.67 ℃ on average.
- For the rainfall, it was found that it rained from 0.2 ㎜ min. to 25.4 ㎜ max.
- In analyzing the solar radiation, it was found that the radiation was 983 W/㎡
max. and 171 W/㎡ on average and the solar radiation hour was 4.11 hr.

<Fig 57> Climatic conditions of the Pasawaran solar installation area (Dec. 2017)

❍ Monthly climatic data from Jan. 1, 2018 to Jan. 31, 2018 (one month)
- The picture below represents the data on solar radiation depending on
temperature and rainfall on a monthly or weekly basis from Jan. 1, 2018 to Jan.
31, 2018 for one month.
- In analyzing the ambient temperature, it was proven that the temperature was
35.9 ℃ max., 21.6 ℃ min., and 26.48 ℃ on average.
- For the rainfall, it was found that it rained from 0.2 ㎜ min. to 30.4 ㎜ max.
- In analyzing the solar radiation, it was found that the radiation was 924 W/㎡
max. and 169 W/㎡ on average and the solar radiation hour was 4.05 hr.

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 <Fig 58> Climatic conditions of the Pasawaran solar installation area (Jan. 2018)

❍ Monthly climatic data from Feb. 1, 2018 to Feb. 28, 2018 (one month)
- The picture below represents the data on solar radiation depending on
temperature and rainfall from Feb. 1, 2018 to Feb. 28, 2018 for one month.
- In analyzing the ambient temperature, it was proven that the temperature was
33.5 ℃ max, 22.2 ℃ min., and 26.22 ℃ on average.
- For the rainfall, it was found that it rained from 0.2 ㎜ min. to 41.2 ㎜ max.
- In analyzing the solar radiation, it was found that the radiation was 1,022 W/㎡
max. and 167 W/㎡ on average and the solar radiation hour was 4.01 hr.

<Fig 59> Climatic conditions of the Pasawaran solar installation area (Feb. 2018)

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❍ Monthly climatic data from Mar. 1, 2018 to Mar. 31, 2018 (one month)
- The picture below represents the data on solar radiation depending on
temperature and rainfall on a monthly basis from Mar. 1, 2018 to Mar. 21, 2018
for one month.
- In analyzing the ambient temperature, it was proven that the temperature was
35.0 ℃ max., 22.3 ℃ min., and 26.01 ℃ on average.
- For the rainfall, it was found that it rained from 0.2 ㎜ min. to 35 ㎜ max.
- In analyzing the solar radiation, it was found that the radiation was 1026 W/㎡
max. and 172 W/㎡ on average and the solar radiation hour was 4.21 hr.

<Fig 60> Climatic conditions of the Pasawaran solar installation area (Mar. 2018)

3. PV power generation analysis

3.1. PVSYST based power generation analysis
n Analysis condition

❍ Module spec
- Maker: Hyundai Heavy Industries Green Energy
- Nominal output (Pmpp): 335 W(Multi)
- Solar Cell Type: Muti 72 cells
- Array configuration: 16 sets serial, 186 sets parallel
- Array output: 9,986 kW(50 ℃)

❍ Inverter spec

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 - Maker: HYOSUNG
- Nominal output (Pmpp): 1,000 kWac· Q’ty: 10 sets
- Q’ty: 10 sets

<Fig 61> PVSYST Analysis condition of grid-connected system

n Power generation loss rate

❍ The loss rate is assumed on the premise that earth radiation loss is 3.3％, PV
modular connection, temperature, & wire connection loss 9.3％, inverter loss 2.3％
and entire loss rate 14.9％.

- 87 -
 <Fig 62> PVSYST loss rate of the grid-connected system

❍ The generation quantity of the grid-connected system in Negeri Katon to install

the PV station(s) was analyzed with PVSYST Program. It was proven that the
annual predicted generation quantity was produced at 14,102 MWh/year(4.69hr/day).

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<Fig 63> PVSYST power generation analysis of grid-connected power generation system

- 89 -
3.2. Analysis of power generation using local climatic data

❍ Conditions
- Data accumulated locally for 4 months (2017.11.15~2018.03.19)
- Solar radiation (radiation of the sun compared to the area = kWh/m2/day)
appears to be 4.1kWh on average. Despite the rainy season, the data is good.
- Solar radiation for dry season : 5.9kWh
- Entire solar radiation on average = 5.1kWh/m2/day (simulation analysis – good)

❍ 실측 데이터를 이용하여 태양광발전소를 설치할 Negeri Katon지역의 계통연계 발전시스

템 발전량을 해석한 연간 예측 발전량은 15,932MWh/year(5.0hr/day)로 예측

4. Design and Installation Drawings

4.1. Spec for major components

❍ PV module spec
- Maker: Hyundai Heavy Industries Green Energy
- Nominal output (Pmpp): 335 W(Mono)
- Solar Cell Type: Muti 72 cells
- Open Circuit Voltage(Voc) : 46.5 V
- Short Circuit Current (Isc) : 9.4A
- Voltage at Max. : 38.2V
- Current at Max. Power (Impp) : 8.8A
- Module Efficiency (%) : 17.1%
- Temp. Coefficients of Pmax : -0.42% / °C

- 90 -
<Fig 64> PV module spec

- 91 -
❍ Inverter spec
- Maker: HYOSUNG
- Rated Output Power : 1,000 kW
- Max Input Voltage: 1,000 Vdc
- MPP Range : 600 Vdc ∼ 850 Vdc
- Rated Input Voltage : 1,000 Vdc
- Max Input Current : 1,667 A
- Rated Output Voltage : AC 380 Vac(+10/-12%)
- Rated Output Current : 1,520 A
- Output Frequency : 60 Hz
- Max Efficiency: 98.1%

<Fig 65> Inverter spec

4.2. Optimum Photovoltaic System Layout Design and Installation

Drawing

❍ 10MW photovoltaic system diagram

- The picture below represents the 10MW photovoltaic system diagram. It is a
design diagram composed of the connection board (consisting of PV modular
array, fuse and diode), inverter, AC panel board, monitoring, and system.

- 92 -
 <Fig 66> 10MW photovoltaic system diagram

❍ Structure Concept Drawing: 10MW photovoltaic system layout sketch

<Fig 67> 10MW PV system layout sketch

- 93 -
 - Gross generation: 9,969.6 kWP
- Module specification: 335 WP, 72 cells, Multi
- Module installation q’ty: 29,760 ea
- Module Size: 1960 W × 998 L × 40 t
- Inverter specification: grid-connected, 10ea, 1000 kWP
- Array q’ty : 1,860 ea(18 serial, 1,060 parallel)
- Module angle of inclination: 10°, detergency considered (sun angle: 5° in summer
season, - 5° in winter season)

❍ 10MW PV electrical diagram

- PV electrical diagram is largely consisted of PV system diagram, 10MW
transmission and distribution skeleton diagram, transmission and distribution
facility layout, and the related drawings are as follows.

<Fig 68> 10MW PV transmission and distribution facility skeleton diagram #1

- 94 -
 <Fig 69> 10MW PV transmission and distribution facility skeleton diagram #2

4.3. Structure design with geotechnical & directivity review

❍ Geotechnical and directivity review
- Needs to check the modular distribution directivity depending on the location to
be installed.
- Prepare a countermeasure against the shadow cast over the surrounding
trees(removal of twigs, etc)
- Select a solar facility considering the convenience of neighboring residents.

❍ Optimal structure design to the topography

- Optimal design considering the load for structures and wind load by designing a
fixed variable type, as the location of the sun changes from south in summer
season to north in winter season.
- Design considering the corrosion of modules and structures during rainy season
- Design considering the modular angle of 10° to obtain the cleansing effects by
rainfall.

❍ 최Optimal trussed work concept design

- Selection of structure specification
Ÿ 4-angle Beam: SS400, hot dip galvanize, □-75 ㎜ × 75 ㎜ × 2.5 ㎜
□-50 ㎜ × 50 ㎜ × 2.3 ㎜
Ÿ C shape steel: SS400, hot dip galvanize, C-75 ㎜ × 45 ㎜ × 15 ㎜ × 2.3 ㎜

- 95 -
 Ÿ L shape steel: SS400, hot dip galvanize, L-50 ㎜ × 50 ㎜ × 5 ㎜
Ÿ Basic Base Plate: SS400, hot dip galvanize
Ÿ Structure connecting support: SS400, hot dip galvanize
Ÿ Anchor: SS400, hot dip galvanize
Ÿ Bolt and nut : SS400, hot dip galvanize

❍ Structure Concept 3D drawing

<Fig 70> 10MW PV system structure drawing

❍ Structure Layout and 3D Modeling for each zone for 10MW PV system
- Modular angle of inclination: -20° ~ 20°
Ÿ It is good to install the modular angle of inclination according to the latitude

- 96 -
(latitude of this site is 5°), but the modular angle of inclination ranges from –
20° to 20° as the solar altitude moves from south ↔ north (from summer to
winter) at the PV stations. Thus it was designed to obtain the max.
generating efficiency by season by adjusting the angle by 5°. (angle of altitude
in summer 65° southward, angle of altitude in winter 73° northward at PV
stations in Indonesia)

- 97 -
 0° 5° 10°

15° -5° -10°

0° 5° 10°

15° -5° -10°

<Fig 71> Cross-sectional diagram & 3D Modeling of 5kW structure for 10MW PV system

- 98 -
 Chapter 7. Environment Impact Assessment
1. Overview
❍ This EIA reprt is to provide foundation to sell the electricity produced at 10MW
solar photovoltaic power station, Pesawaran Regency, Indonesia to PT. PLN for
supply to Lampung Province.

❍ Contributed to Indonesian new & renewable energy encouragement policy, demand

and supply problem solving, and greenhouse gas emissions reduction.

❍ Stabilized electricity demand and supply by installing grid-connected high efficiency

photovoltaic power generation system, provided ecofriendly image promotional
material, and established an ecofriendly energy park.

<Fig 72> Environment Impact Assessment Progress

2. Background
2.1. Geographic Environment

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❍ Indonesia has an advantage for photovoltaic power generation at the average daily
solar radiation of about 4.8kWh/m2 as it is located around the equator.

<Fig 73> Indonesia Solar Irradiance (SOLARGIS, 2014)

❍ Average solar radiation across the entire Indonesia : 4.8 kWh/m2/day

❍ Pesawaran Regency has a high solar radiation : about 5.1kWh/m2/day
❍ It is judged that the average solar radiation is about 30% more than Korea.

2.2. Current Status

❍ 22MW solar photovoltaic power stations are only installed in Indonesia. They are
mostly for domestic or small-sized solar photovoltaic stations. Solar photovoltaic
stations have not been universalized yet.
❍ Autonomous district feasibility study and environmental impact assessment for
constructing 9.5 MegaWatts solar photovoltaic power stations (SPP; Solar Power
Plant) is in progress.

2.3. Future Values

❍ Solar photovoltaic energy has been used for energy supply to the district. The
underpopulated region like Pesawaran Regency, Lampung Province has competitive
price.
❍ MoEMR(Ministry of Energy and Mineral Resources) and PLN(Perusahaan Listrik
Negara) implemented PV program in about 1,000 islands where electricity,
sewerage, etc have not been supplied yet, with the aim of building up to 245MW
facilities.

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3. Environment Impact Assessment Tasks
3.1. Progress

❍ In order to conduct Environmental Impact Assessment (EIA) for a confirmed local

site, a local outsourcing service company (CV dan Pengalaman Kerja) introduced by
the Pesawaran government officials was selected and carried out the EIA for the
period of 2017.11.1.~2018.3.31.
❍ Held an interview with the persons interested when visiting PT. PLN.
❍ If it is less than 10MW, the environmental impact assessment can be simplified
according to the regulation.
❍ Sent an official document for drawing up EIA research paper (Ministry of
Environment of Pesawaran Regency).
❍ Negeri Katon Subdistrict, Pesawaran Regency, Indonesia as investigated site is
composed of 15,465 Ha of agricultural area and 101,912 Ha of non-agricultural
area, from 117,377 Ha in total in Pesawaran Regency, Indonesia.

<Fig 74> Solar power plant scheduled for evaluation of environmental impact MAP

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3.2. PV Plant Site(Geography)

❍ Negeri Katon subdistrict is located at the northern part of Pesawaran Regency,

Indonesia.

❍ Total Area : 142.12 km2

❍ Composition : composed of 19 villages

❍ Capital : Negeri Katon Village

- North : Tegineneng Subdistrict, Pesawaran Regency;
- South : Gedong Tataan Subdistrict, Pesawaran Regency;
- West : Sukoharjo Subdistrict, Tanggamus Regency;
- East : Natar Subdistrict, South Lampung Regency
- Population Density of Negeri Katon subdistrict : 19 villages

<Table 22> Population Density of Negeri Katon

- Population of Negeri Katon is 65,298 people(2017Y)

- Population Density of Negeri Katon is 524.28 people/km2
- The most populated village is Poncokresno, Population is 5,033 people.
- The most densely populated village is Karang Rejo, Population Density is 821.58
people/km2

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3.3. Climate Characteristics: Precipitation, Atmospheric Pressure,
Wind speed & Duration of Sunshine

❍ Tropical climate that is similar to Lampung Province generally.

❍ Annual precipitation : approx. 2264 mm ~ 2868 mm
❍ No. of rainy days : 90~176 days/year
❍ Wind : 70km/day or 5.83 km/hour
❍ Temperature : 26 ~ 29℃ (mean temperature 28℃)
❍ Pesawaran Regency Precipitation

<Table 23> Pesawaran Regency Precipitation

- The month with the highest rainfall was January, 456mm recorded, and the month
with the lowest precipitation was recorded at 52.9mm in June.
- The most frequent month was January to February, 20 days to rain, and the
lowest rain frequency to June was 6 days.

❍ Pesawaran Regency Atmospheric Pressure, Wind speed & Duration of Sunshine

- The month in which the atmospheric pressure was highest was January, and
1012.9Mb.
- The month in which the number of clear days was the most in August was
69.9%.

3.4. Flora & Fauna Distribution

❍ The flora and fauna distribution around the solar power plant development
project areas was researched.
❍ It is judged that there will be no ecosystem damage resulted from the

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 <Table 24> Pesawaran Regency Atmospheric Pressure, Wind Speed & Duration of Sunshine

construction of solar energy generation plant.

❍ Flora distribution :
Ÿ Waru tree (Hibiscus tiliaceus L)
Ÿ Teak tree (Tectona grandis sp.)
Ÿ Mahogany tree (Swietenia mahagoni)
Ÿ Coconut tree (Cocus nucifera)
Ÿ Jengkol tree (Archiedendron pauciflorum)
Ÿ Banana tree (Musa paradisiaca)
Ÿ Mango tree (Mangifera indica)
Ÿ Rubber tree (Hevea brasiliensis)
Ÿ Cassava tree (Manihot esculenta)
Ÿ Randu tree (Ceiba pentrandra)

❍ Fauna distribution :
Ÿ Butterfly (Appias libythea)
Ÿ Sooty-headed bulbul bird (Pycnonotus aurigaster)
Ÿ Prenjak bird (Prinia familiaris)
Ÿ Ground pigeon (Coturnix coturnix)
Ÿ Snake (Oxyuranus microlepidotus)
Ÿ Dederuk bird (Spteptopelia bitorquata)
Ÿ Zebra dove (Geopelia striata)

3.5. Flood & Storm Disaster

❍ Data of Flood and Storm Disaster in Pesawaran Regency in 2013-2017. Given this
data, solar photovoltaic plans are all safe from blood and storm disaster.

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 Disaster Report 2016 Disaster Report 2017
<Table 25> Pesawaran Regency Disaster Report(2013 ~ 2017)

3.6. Soil Analysis

❍ Using the hand drill method two soil samples used for soil analysis were collected
research the constituents of soil, Analysis of whether soil bearing capacity can
support solar modules

<Fig 75> Sampling Soil February 22, 2018

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❍ Sampling Position

(a) 1st soil sampling area (b) 2nd soil sampling area
<Fig 76> Soil sampling area map of PV plant site

❍ Final Result of Soil Analysis

<Fig 77> Final Result of Sampling Soil Analysis

❍ The soil support capacity of the preliminary area of the power plant was estimated
to be 164.70 tons at the maximum load of 2 x 2m2 in the soil of 3m depth.
Confirm there are no problems.

❍ Soil composition Analysis

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 1st Sample 2nd Sample
<Fig 78> Soil sample component structure

- According to the classification of the soils, the primary soil samples consisted of
7.17% of gravel, 20.56% of sand and 72.27% of silt.
- The second soil sample consisted of 8.31% of gravel, 19.11% of sand and 72.58%
of silt.

❍ Water Content

1st Sample 2nd Sample

<Fig 79> Moisture content

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❍ Gravity of Soil

1st Sample 2nd Sample

<Fig 80> Gravity Analysis

❍ Sieve Analysis

1st Sample 2nd Sample

<Fig 81> Sieve Analysis

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❍ Atterberg Limit

1st Sample 2nd Sample

<Fig 82> Atterberg Limit

3.7. Water Analysis

❍ According to WHO calculations, 60-120 liters / day of water per person is needed
in developed countries and 30-60 liters of water per person in developing countries
including Indonesia.

❍ Healthy water must meet the following requirements:

a. Result for Physical Requirements : colorless/ odorless/ taste/ temperature/ pH
6.8 - 72 (normal).
b. Bacteriological Requirements
- Should measure the contaminated sample with pathogenic bacteria.
- Analysis result : less than 4 colon bacillus/water 100cc
c. Chemical Requirements
- Should not include particular materials and exceed the recommended quality
standards.
❍ Results of measurement in Tresno Maju Village, Negeri Katon, Pesawaran Regency

❍ As a result of the analysis, all of the ingredients were found to be in conformity

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 with the Andonian water quality standards.

<Fig 83> Well water sample February 22, 2018

<Table 26> Criteria for chemical substances to be included in drinking water(1996)

3.8. Social Impact Analysis

❍ The development of a solar power plant in a specific area will have a social impact
on the society around the solar power plant, except for the outlying areas where
the locals do not live much.

❍ Its social impacts include both positive and negative impacts.

❍ An example of the positive impact of a solar power plant is the acceptance of the
community on the existence of a solar power plant that can create jobs and the
community can participate directly or indirectly in plant operation as a construction
or worker.

❍ While the negative impact of community rejection on the presence of solar power
plants.

❍ For example, conflicts between communities and the management of solar power
plants and conflicts between communities divided into pros and cons of the
presence of solar power plants are negatively affected.

❍ Therefore, to minimize these negative effects, the planned solar power plant
development in Tresno Maju village of Negri Katon Sub District of Pesawaran
Regency needs to involve surrounding communities at the planning stage.

❍ Involving the surrounding communities in the planning phase can prevent negative

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 <Table 27> Analysis of the composition of drinking water in Negri Katon solar power plant
area

problems in advance.

❍ According to the regulations of the Ministry of Environment of the Republic of

Indonesia, No. 16 (2012) on Guidelines for the Preparation of Environmental
Documents, feasibility studies are included in the pre-construction phase.

❍ The type of social impact that usually occurs at the pre-construction stage is the
employment creation for the community in Tresno Maju Village. Therefore, the
power plant construction management team should engage with local communities,
relevant organizations and stakeholders to discuss on the issues that may become
conflicts together.

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<Table 28> Matrix for Social Impact Analysis

- 112 -
 Chapter 8. Economic Feasibility
1. Key Points
❍ The economic analysis data provided hereafter is the result of Samduk Accounting
Corporation as a service provider who was contracted to carry out economic
feasibility of 10MW solar power plant project in Pesawaran Regency in Lampung
Provice, Indonesia.

❍ Economic feasibility was assessed according to agreed economic review procedures

and assumptions.
❍ For the economic feasibility of investment in this project, Net Present Value
method(NPV11)) and Internal Rate of Return method(IRR12)) were applied along
with sensitivity analysis.

❍ The economic feasibility study using the NPV method and the IRR method was
based on the information received from the Indonesian Persawaran Government in
advance and the contents of various laws and regulations related to renewable
energy in Indonesia.

NPV IRR

Basis Amount Rate

Ÿ Estimate future cash flows
Contents taking into account time
value
Ÿ Consider all cash flows
Advantages Ÿ Consider the time value of
money
Ÿ Maximize enterprise value
Ÿ Cost of capital with a net cash
flow value of zero in the
investment
Ÿ Consider all cash flows
Ÿ Consider the time value of
money

Ÿ Imaginary or multiple IRR

possible
Disadvantages Ÿ Capital cost calculation Ÿ Possibility of maximization of
corporate value
Ÿ Reinvestment rate assumption
irrational existence
<Table 29> Comparison between NPV method and IRR method

❍ The economic analysis used the financial plan and other data from the investment
plan and investment period (from June 30, 2018 to June 30, 2048) proposed by the

11) NPV(Net Present Value): NPV is one of the measures of business value (feasibility). If it is smaller than 0, it
has no feasibility (value). If it is larger than 0, it is a feasibility.
12) IRR(Internal Rate of Return): IRR is the interest rate that discounts the cash flow of a business during a
business period to the present value, so that the combined value is equal to the investment expenditure.

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 company without verification or additional confirmation, and did not carry out due
diligence on assets and liabilities.

❍ With the agreed procedures and assumptions provided for the economic feasibility
of the investment plan, the NPV is USD 364,875 and the IRR is 12.51%..

❍ Conclusion of the economic feasibility : Economically Feasible

Method Calculation Comparison Basis Conclusion

NPV USD 364,875 (+)? Feasible
IRR 12.51% > 10.49% ? Feasible

2. Prerequisites
❍ Basic prerequisites for reviewing the economic feasibility of the investment in this
project:

No 항 목 조 건
1 PPA Unit Price $0.0735(USD)/kWh
2 Annual Power Production Amount 17,155MWh/y
3 WACC13) 5.098%
4 Cost of equity in NPV 10.49%

Menimum return of investment in

5 10.49%
IRR

6 Funding Plan Equity (20%) + Debt (80%)

7 PF method Interbank TC Load by KEXIM
8 Debt Finance Interest Rate 5%
10 Land Purchase $1.4M(USD) / 140,000m2

Ÿ Investment Period: 7/1/2018~ 6/30/2048

Ÿ No cash flow after the investment period
11 Other Investment Prerequisites Ÿ During the investment period, the initial
project structure will be maintained, and
no new projects will take place.

<Table 30> Prerequisites for Economic Feasibility

3. Basis for Prerequisites

3.1. PPA unit price

❍ We will have a PPA contract with the government owned power company PT. PLN
(Perusahaan Listrik Negara) through series of PPA unit price negotiation with the

13) WACC : Weighted Average Cost of Capital

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 Ministry of Energy and Mineral Resources (ESDM) and PT. PLN.

❍ Latest Regulations of the Indonesia Ministry of Energy and Mineral Resources on

Renewable Energy Resources(No 12/2017)14) defines new BPP regulation on new &
renewable energy.

❍ If the base production unit price (BPP: Biaya Pokok Penyediaan) in the region
exceeds the national average price, the electricity sales price produced by solar
power resource is limited to 85% of the base production price in the region.

❍ Since the BPP in Lampung Province is $0.0777(USD) which exceeds the national
average BPP which is $0.0739(USD), we will negotiate with PT. PLN and ESDM
during the bidding to set the BPP to $0.0735 that will ensure 100% compensation
for this project.

Page #1 BPP Regulation Page #5: Regional BPP

14) In 2017, Indonesia ESDM announced the Ministry Decree No 12/2017 on amendment of FIT for renewable
energy.

- 115 -
 Page 6 BPP for Lampung $0.0777(USD) Page 8: National Average BPP $0.0739(USD)
<Fig 84> Indonesia Ministry of Energy and Mineral Resources on Renewable Energy
Resources(No 12/2017) (No 1401/2017)

❍ According to the latest regulation (No. 12/2017) of the Minister of Energy and
Mineral Resources of Indonesia concerning the use of renewable energy resources
for power supply, the cost of renewable energy production is limited.
- The new regulation on the price of power standard for renewable energy
resources was announced in Jakarta on January 30, 2017, and the new regulations
defines that different production unit prices are used based on the types of
resources such as solar, wind, hydro, biomass, and biogas.
- The regulation stipulates that electricity generated from renewable energy should
be sold and supplied to PT PLN Persero, an Indonesian energy state company,
and specifies guidelines for PLN to procure electricity from power plants using
renewable energy.
- If the base production price (BPP) in the region exceeds the national average
price, the electricity rate is limited to 85% of the rate through the system
applied to all renewable energy power plants. There are no restrictions if the
local BPP does not exceed the national average unit price.
- The government authorities of Indonesia are highly likely to grow the electric
power generation market using renewable energy sources and expect to lower the

- 116 -
 electricity production cost using renewable energy sources.

page #1 Production Unit Price Act (No 12/2017) page #8 NRE Unit Price Regulation (85%)
<Fig 85> Ministry of Energy Mineral Resources Restricted Specification of Renewable Energy
Production Unit Price(No 12/2017)

<Table 31> Interpretation of the Ministry of Energy and Mineral Resources Act (No 12/2017)
(Filed by KOTRA 2017)

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3.2. Annual Power Generation

❍ Conditions for calculating the amount of electricity

- Use NASA data base Global Horizontal Irrandiance (GHI) in the area (Negri
Katon Village)

- The solar radiation of Negri Katon Village (-5.258897, 105.176788) in

Pesawaran Regency was observed at 4.70kWh/m2/day (Global Solar Atlas)
- Total annual power generation = 10MW * 4.7h/day * 365day = 17,155MWh/y

<Fig 86> Solar irradiance of PV plant candidate site (Global Solar Atlas)

❍ Actual Data
- Based on actual data acquired using the measuring devices installed at the

- 118 -
 cadidate site for 4 months, average solar radiation was calculated at 5.15 kWh/m2
/day, but not used as data for economic feasibility analysis.
- Actual data-based solar radiation is estimated to be 9.8% more than NASA solar
radiation data
- Vision Pro2 model of weather forecasting instrument by USA David Digital
- Actual data based irradiation time for the period (2017.11.15~2018.3.20): 4.1h
- Average sunlight time per day for 4 monts of measurement:: 5.9h
- Average annual irradiation time through simulation: 5.15h

3.3. Weighted Average Cost of Capital (WACC)

❍ Calcuated WACC = 5.098%

- The weighted average cost of capital means the average cost calculated by
multiplying the cost of funding by type (equity capital, other capital) by the
weight of each item.
- Calculation:
WACC =Ke * S/V + Kd *(1-t) * B/V = 5.098%
Ÿ Ke (Cost of Equity) = 10.49%
Ÿ S/V (Equity Ratio) = 20%
Ÿ Kd (Other Capital Cost) = 3.75%
Ÿ B/V (Other Capital Ratio) = 80%

❍ WACC Factors for Calculation

n Levered  = 91.5%
- An index that measures the risk of volatility in a company with a capital
structure liability and equity (risk beta of the company)
- Calculation:
Levered = Risk free beta * (1 + (1 – Corporate tax) * External fund ratio)
= 22.88% * (1 + (1 – 25%) * 400%)
= 91.5%

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n Risk free rate of return(Rf) = 2.161%
- Average annual return of 5-year government bonds(as of March 30, 2018)

국고채권 국고채권 통안증권 통안증권 회사채 CD

일자 (무보증3년)
(3년) (5년) (1년) (2년) AA- (91일)
최고 2.316 2.592 1.919 2.231 2.858 1.66
최저 1.621 1.808 1.429 1.573 2.157 1.38
2018-03 2.271 2.501 1.894 2.181 2.831 1.65
2018-02 2.277 2.537 1.856 2.181 2.815 1.65
2018-01 2.190 2.444 1.838 2.125 2.722 1.66
2017-12 2.100 2.298 1.833 2.063 2.649 1.66
2017-11 2.150 2.355 1.785 2.106 2.709 1.45
2017-10 2.026 2.247 1.649 1.957 2.574 1.38
2017-09 1.785 1.989 1.488 1.716 2.333 1.38
2017-08 1.780 1.987 1.471 1.693 2.320 1.39
2017-07 1.740 1.942 1.455 1.655 2.278 1.39
2017-06 1.673 1.864 1.462 1.615 2.208 1.38
2017-05 1.690 1.906 1.461 1.613 2.216 1.39
2017-04 1.678 1.859 1.472 1.608 2.195 1.43
평균치 1.947% 2.161% 1.639% 1.876% 2.488% 1.484%
<Table 32> - Average annual return of 5-year government bonds

n Risk Premium = 9.098%

- The average annual return (11.26%) of the KOSPI index from 1980 to March
30, 2018 is deducted from 2.161% of the 5-year KTB interest rate average
- Calculation:
Risk Premium = Market average return – Risk free rate
= 11.26% - 2.151%
= 9.098%
n Cost of Equity(Ke) = 10.49%
- The minimum expected rate of return required by the company, reflecting the
consideration of management risks and financial risks.
- Caluculation:
Cost of Equity = Risk free rate + Risk premium * Levered 
= 2.1611% + 9.098% * 91.5%
= 10.49%
n Other capital cost(Kd) = 3.75%
- The average cost of capital for debt items that make up other capital
- Calculation:
Other capital cost = Other capital interest rate * (1 – Income tax rate)
= 5% * (1 – 25%)
3.75%

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3.4. Capital cost in NPV method

n Concept
❍ The net present value method (NPV) is a method of examining the economic
feasibility of an investment based on the company's future cash flow. It is a typical
analytical method, which is one of the most commonly used analytical techniques.

❍ The NPV Act reflects the future profitability of the company to be evaluated. It
can identify the future flow of profits, and can reflect the corporate environment at
the time of evaluation.

❍ Considering the temporal factors, we value the current cash flow more than the
future cash flow. The capital cost used as the discount rate is the minimum rate of
return for the investment. It is also a guideline to determine the capital structure
of future business by presenting the criteria for the future.

❍ In the end, it is theoretically the most reasonable evaluation method to evaluate the
intrinsic value of a company when considering the purpose of the business and the
purpose of investing in the business.

❍ NPV method is reflected in the investment decision based on the result calculated
by subtracting the investment amount from the present value of the investment. If
the NPV is larger than 0, the investment plan will be adopted. The same applies to
whether NPV is greater than zero.

n Steps to review economics feasibility using NPV method

- Step 1: Calculation of cash flow in investment
- Step 2: Determine the cost of capital
- Step 3: Estimate the present value of the investment
- Step 4: Estimate the NPV (investment value in the investment - total investment
amount) in the investment
- Step 5: Economical review based on net present value (NPV) results

n Main contents of each step

❍ Free Cash Flow is generally calculated from the accounting financial statements
through the following calculation method.:

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 Sales revenue
- Cost of sales, SG & A expenses
= Operating profit
+ Interest income
- Interest expense
= Pre-tax profit
- Income tax expense on pretax profit
+ Cost without cash outflow such as depreciation cost

- Investments in the amount of investment (investment in working

capital, investment in tangible assets, etc.)
= Surplus cash flows of capital investors (equity and other capital)

❍ The value of the enterprise (the value of the equity capital and the value of the
other capital) is evaluated on the basis of the surplus cash flow of the capital
investor and is calculated by discounting the surplus cash flow of the capital
investor at an appropriate discount rate.

❍ The appropriate discount rate is the 'Weighted Average Cost of Capital' (WACC),
which reflects the required rate of return of shareholders and creditors, which is
the capital donor. This economic evaluation is based on the principle of applying the
cash flow for calculating the value of equity capital, since ultimately the value of
equity capital calculated should exceed the amount of equity capital procurement.

❍ Discount rate (cost of equity)

- In order to calculate the enterprise value, the future free cash flow calculated
based on the estimated profit or loss of the evaluated company should be
discounted at an appropriate discount rate.
- The decision of this discount rate is basically a matter of judgment and there is
a modern financial theory that can be used in the discount rate calculation, but it
is difficult to completely rule out subjective judgment in applying this theory.
There is no way to determine one exact discount rate.
- The valuation company used the capital cost of the investor in the market when
determining the discount rate for calculating the value of equity capital. The
calculation of the cost of equity is calculated according to the CAPM model as
follows:

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 Ke=Rf + β ╫ {E(Rm) Rf)} + α
Rf : Risk-free rate of return
β : The relative risk of the investment relative to the overall market
portfolio (systemic risk)
E(Rm) Rf : Market risk premium(Systematic risk premium)
α : Specific Premium

- In theory, risk-free rate of return means the rate of return on a portfolio of

bonds or bonds that does not have default risk, and the rate of return on assets
that is not correlated with anything else in an economy. However, in reality,
these risk-free assets do not exist, and the risk-free interest rate related to the
calculation of the enterprise value of the subject company is applied to the annual
average return rate (2.161%) of 5-year government bonds as of the evaluation
date (2018.31).
- Estimates of the beta coefficients can be obtained by different methods,
depending on whether the stocks of the companies conducting the business are
traded in the market. If your company's shares are traded in the market, you can
use published estimates. However, in the case of unlisted companies, a method of
using substitute beta is often used, as in the case of the evaluation target
company. This method is a method of estimating a company's beta using the beta
coefficient of a listed company most similar to the business environment.
However, since the capital structure of the substitute companies and the capital
structure of the valuation companies may be different, the above beta coefficient
can not be used as it is. In order to solve this problem, the target company
calculated the debt-free beta that does not reflect the financial risk in the beta
of the comparative companies, and then converted it into the beta reflecting the
target capital structure.
- On the other hand, since the company to be evaluated is an unlisted SME for PV
EPC business, there is no beta coefficient formed in the market. Therefore, the
debt-to-equity ratio calculated using the risk-free beta coefficient of S- The
unlevered β was 0.2288. The target capital structure was calculated by assuming
a target capital structure of 400% considering the past financial structure and
financing ability. The beta coefficient of the target company is calculated as
0.9154.
- Market risk premium is defined as the difference between the expected and the
risk free rate of return for the market portfolio. In other words, it can be said
that the average return of stocks is less than the average return of risk-free
assets during the analysis period. Therefore, the expected return on the market
portfolio was calculated by subtracting 2.161% of the five-year Treasury bond

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 interest rate from the KOSPI index average annual return of 11.26% from 1980
to March 31, 2018.
- The result of the cost of equity (discount rate) calculated by applying the above
factors to the CAPM model

Item Value Note

Calculated by reflecting target capital
Levered β 0.9154 structure in debt-free debts of similar
companies
Risk-free Average annual return of 5-year
Cost of rate of return 2.161% government bonds (as of March 30,
Equity (Rf) 2018)
(Ke)
The average annual return (11.26%)
of the KOSPI index from 1980 to
Risk Premium 9.098% March 30, 2018 is deducted from
2.161% of the 5-year KTB interest
rate average
Calculated Value 10.49% Ke = 2.161% + (9.098% ×0.9154)

<Table 33> Cost of Equity

3.5. Minimum return on investment in IRR method

❍ The IRR (Internal Revenue Law) is a method of determining the economic value of
an investment by applying the cash value of the time value of the money and the
cash flow in the same way as the NPV method. Therefore, the minimum ROI of the
IRR method is 10.49%.

❍ In this case, we compare the calculated IRR with the minimum rate of return
(Hurdle rate) that determines whether to invest or not. If the IRR exceeds the
minimum ROI, we believe the investment is economical.

❍ Steps for determining the economic feasibility using IRR method

- Pre-stage: Determine whether to reject the investment. Estimate the minimum
hurdle rate
- Step 1: Calculation of cash flow in investment
- Step 2: IRR calculation in investment
- Step 3: Investigate the economic feasibility of investment by comparing the
minimum ROI with the IRR.

3.6. PF funding method

❍ PF funding for this project will be made using the overseas business re-lending
program supported by Export-Import Bank of Korea (KEXIM).

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 <Fig 1> Overseas business finance loan structure

❍ Sub-financing is an indirect financial instrument that allows local banks to lend

funds to their local customers / companies within the credit line if the KEXIM
(Export-Import Bank of Korea) establishes a credit line with the overseas bank.

<Table 34> Oversee re-lending products

❍ There are three types of products in the first-tier financing. We will use the funds
for overseas business activation (Interbank TC Loan) for this project.

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 ❍ As of May 31, 2018, the Korea Export-Import Bank of Korea has signed a credit
line of USD 200 million with the Export-Import Bank of Indonesia, so it is not
difficult to raise funds for this project.

<Fig 87> Global credit line for oversee re-lending

3.7. Other capital interest rate

❍ The cost of other capital will ultimately be taken into account for the net cash flow

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 for the economic evaluation of the investment. Therefore, it is necessary to make
assumptions about the borrowing condition. In order to invest in this project, we
plan to use the ex-bank financing of the Export-Import Bank (5-year grace period
15-year installment repayment). As a condition of lending to the Export-Import
Bank, the interest rate is usually determined by taking into account the amount of
risk added (the export-import bank's funding rate + the borrowing institution or
the risk of the project). Considering these requirements, the cost of other capital
for this project is 5%.

❍ the Indonesian lending rate is 6% (as of the end of June 2018)

<Fig 88> Indonesian lending rate

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 ❍ The Indonesian Export-Import Bank confirmed that the discount rate for the bank
interest rate was 2% ~ 3%.

❍ Therefore, the interest rate on PF loans is conservatively set at 5%.

3.8. Purchase of land

❍ Power plant site area : 140,000m2

❍ Unit price : $10(USD)/m2

❍ Total purchasing price : $1.4M(USD)

❍ The following statement is from Mr. Usman, the head of PPP program in the
Pesawaran Regency, which contains the price of the land and the total purchase
price.

<Fig 89> Mr. Opinion on land purchase by Usman (President of PPP @ Pesawaran)

3.9. Investment environment

❍ Assumptions about business year

- We set the explicit forecast period to 30 years through mutual agreement. From
June 2018 until the end of June 2038, the PPA contract with the Indonesian
government for 20 years and then from July 2038 to June 2048 Estimated as
production period.

- 128 -
 - This assumes an estimated period of time considering the actual operating period
of the solar power plant, since the actual operating period of the solar power
plant can last for more than 30 years and the demand for long-term renewable
energy in Indonesia is expected to steadily increase.

❍ Assumptions on period of cash flow

- Assuming that cash inflows and outflows that occur during each business year
through the mutual agreement with the company under evaluation occur at the
end of each year.

❍ Assumptions about the tax payment effect

- Future cash flows are estimates of expected cash flows, and the taxes payable
are also expected to be tax expense. In this case, deferred income tax is not
considered. Since the corporate tax rate in Indonesia is 25% single tax rate as of
the evaluation date, it is assumed that the corporate tax rate does not change.

4. Economic Analysis
4.1. Investment Plan
4.1.1. Investment Breakdown
❍ For the normal operation of the project, investment in tangible assets such as
building basic plant facilities and acquisition of land use rights should be
concurrently carried out. Total investment by each investor is as follows.
(unit: USD)

Item Amount Note

1) Design & Engineering 500,000 (*2)
2) Fixed cost
PV Modules 6,400,000 (*2)
Power Inverters 800,000 (*2)
Main Junction Box 240,000 (*2)
Incoming Panel 800,000 (*2)
Monitoring System 560,000 (*2)
Structure Manufacturing 1,600,000 (*2)
Electric Works 1,600,000 (*2)
Land 1,400,000 (*3)
소 계 13,400,000
3) Development expenses 100,000 (*4)
4) Initial working capital 100,000 (*2)
5) Reserve Fund 900,000 (*5)
합 계 15,000,000
<Table 35> EPC cost breakdown

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 (*1) In the case of Power Inverters requiring reinvestment during the total estimated
period of 30 years, it is assumed that the same amount will be reinvested in June of
2026, June of 2034 and June of 2042, respectively, by applying the useful life of 8
years.

(*2) Basic equipment

(unit: USD)

Item $/Wp Capacity (W / AC) Expenditure

PV Modules 0.64 10,000,000 6,400,000
Power Inverters 0.08 10,000,000 800,000
Main Junction Box 0.03 10,000,000 240,000
Incoming Panel 0.03 10,000,000 800,000
Monitoring System 0.06 10,000,000 560,000
Structure Manufacturing 0.16 10,000,000 1,600,000
Electric Works 0.18 10,000,000 1,600,000
Total　 12,000,000
<Table 36> Basic equipment list

(*3) Assume that land is purchased in bulk. Assuming that the purchased land will
be transferred to the amount of 4,540,757 won, which is the end of the estimated
period, which is 4% increase per year. In this case, the total transfer of the PV
plant value can be shown, but it is assumed that the value is already reflected in the
land transfer price for conservative estimation.
(unit: USD)
구분 금 액
Land Cost ($/square meter) 10
square meter 140,000
Land Cost($) 1,400,000
<Table 37> Land cost

(*4) Amount spent on pre-development costs such as licenses and licenses

(*5) Investments in addition to other investments

4.1.2. Depreciation cost estimation

n Assumptions for depreciation cost estimation

(unit: USD)
Item Equipment Price Depreciation method Life span
PV Modules 6,400,000 Straight-line method 20y
Power Inverters 800,000 Straight-line method 8y

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 Main Junction Box 240,000 Straight-line method 20y
Incoming Panel 800,000 Straight-line method 20y
Monitoring System 560,000 Straight-line method 20y
Structure Manufacturing 1,600,000 Straight-line method 20y
Electric Works 1,600,000 Straight-line method 20y
투자 전 프로젝트 개발비용 500,000 Straight-line method 20y
합 계 12,500,000
(*) Most equipment is assumed to be capable of continuous operation for 30 years through continuous maintenance management.

<Table 38> Assumptions for depreciation cost estimation

n Depreciation cost estimation

(unit: USD)
Financial Year 2018.12 2019.12 2020.12 2021.12 2022.12 2023.12 2024.12
PJT Year 0.5 1.5 2.5 3.5 4.5 5.5 6.5
PV Modules 160,000 320,000 320,000 320,000 320,000 320,000 320,000
Power Inverters 50,000 100,000 100,000 100,000 100,000 100,000 100,000
Main Junction Box 6,000 12,000 12,000 12,000 12,000 12,000 12,000
Incoming Penel 20,000 40,000 40,000 40,000 40,000 40,000 40,000
Monitoring System 14,000 28,000 28,000 28,000 28,000 28,000 28,000
Structure Manufacturing 40,000 80,000 80,000 80,000 80,000 80,000 80,000
Electric Works 40,000 80,000 80,000 80,000 80,000 80,000 80,000
Design & Engineering 12,500 25,000 25,000 25,000 25,000 25,000 25,000
Sub-total 342,500 685,000 685,000 685,000 685,000 685,000 685,000
Financial Year 2025.12 2026.12 2027.12 2028.12 2029.12 2030.12 2031.12
PJT Year 7.5 8.5 9.5 10.5 11.5 12.5 13.5
PV Modules 320,000 320,000 320,000 320,000 320,000 320,000 320,000
Power Inverters 100,000 100,000 100,000 100,000 100,000 100,000 100,000
Main Junction Box 12,000 12,000 12,000 12,000 12,000 12,000 12,000
Incoming Penel 40,000 40,000 40,000 40,000 40,000 40,000 40,000
Monitoring System 28,000 28,000 28,000 28,000 28,000 28,000 28,000
Structure Manufacturing 80,000 80,000 80,000 80,000 80,000 80,000 80,000
Electric Works 80,000 80,000 80,000 80,000 80,000 80,000 80,000
Design & Engineering 25,000 25,000 25,000 25,000 25,000 25,000 25,000
Sub-total 685,000 685,000 685,000 685,000 685,000 685,000 685,000
Financial Year 2032.12 2033.12 2034.12 2035.12 2036.12 2037.12 2038.12
PJT Year 14.5 15.5 16.5 17.5 18.5 19.5 20
PV Modules 320,000 320,000 320,000 320,000 320,000 320,000 160,000
Power Inverters 100,000 100,000 100,000 100,000 100,000 100,000 100,000
Main Junction Box 12,000 12,000 12,000 12,000 12,000 12,000 6,000
Incoming Penel 40,000 40,000 40,000 40,000 40,000 40,000 20,000
Monitoring System 28,000 28,000 28,000 28,000 28,000 28,000 14,000
Structure Manufacturing 80,000 80,000 80,000 80,000 80,000 80,000 40,000
Electric Works 80,000 80,000 80,000 80,000 80,000 80,000 40,000
Design & Engineering 25,000 25,000 25,000 25,000 25,000 25,000 12,500
Sub-total 685,000 685,000 685,000 685,000 685,000 685,000 392,500
Financial Year 2039.12 2040.12 2041.12 2042.12 2043.12 2044.12 2045.12
PJT Year 21.5 22.5 23.5 24.5 25.5 26.5 27.5
PV Modules - - - - - - -

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 Power Inverters 100,000 100,000 100,000 100,000 100,000 100,000 100,000
Main Junction Box - - - - - - -
Incoming Penel - - - - - - -
Monitoring System - - - - - - -
Structure Manufacturing - - - - - - -
Electric Works - - - - - - -
Design & Engineering - - - - - - -
Sub-total 100,000 100,000 100,000 100,000 100,000 100,000 100,000
Financial Year 2046.12 2047.12 2048.06
PJT Year 28.5 29.5 30
PV Modules - - -
Power Inverters 100,000 100,000 50,000
Main Junction Box - - -
Incoming Penel - - -
Monitoring System - - -
Structure Manufacturing - - -
Electric Works - - -
Design & Engineering - - -
Sub-total 100,000 100,000 50,000

<Table 39> Depreciation cost estimation

4.1.3. Operating profit (EBIT) estimate

n Sales Volume
❍ The sales in the investment are assumed to be 30 years including the PPA contract
period of 20 years and the general commercial production period of 10 years.

❍ PPA contract terms

- Assuming that $ 0.0735 will continue on 1Wac basis for 20 years under the
terms of the PPA contract.
- Assume that PPA unit price is contracted until June 20, 2038.

❍ Commercial production period

- Unit Price: Assuming that unit price will continue to be $ 0.0942 based on 1Wac
after the PPA contract termination
- This unit price is the sum of the power purchase price of 1,311.8 Rp, the price
announced by the Indonesian Electricity Authority, converted by the exchange
rate of USD at 18 June 2018.
- Since the price of power purchase has been steadily rising recently, it is highly
probable that the current purchase price level will rise above this price level at
the end of June, 2038 when the PPA contract period ends. However, it is
assumed that the current unit price will be maintained conservatively.
- Estimated period: 10 years from June 2038 when the PPA contract is terminated
until June 2048
(unit: USD)

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Financial Year 2018.12 2019.12 2020.12 2021.12 2022.12 2023.12 2024.12
PJT Year 0.5 1.5 2.5 3.5 4.5 5.5 6.5
Price(USD) 0.0735 0.0735 0.0735 0.0735 0.0735 0.0735 0.0735
Quantity(Kw) 8,577,500 17,069,225 16,983,450 16,897,675 16,811,900 16,726,125 16,640,350
Revenue(USD) 630,446 1,254,588 1,248,284 1,241,979 1,235,675 1,229,370 1,223,066
Financial Year 2025.12 2026.12 2027.12 2028.12 2029.12 2030.12 2031.12
PJT Year 7.5 8.5 9.5 10.5 11.5 12.5 13.5
Price(USD) 0.0735 0.0735 0.0735 0.0735 0.0735 0.0735 0.0735
Quantity(Kw) 16,554,575 16,468,800 16,383,025 16,297,250 16,211,475 16,125,700 16,039,925
Revenue(USD) 1,216,761 1,210,457 1,204,152 1,197,848 1,191,543 1,185,239 1,178,934
Financial Year 2032.12 2033.12 2034.12 2035.12 2036.12 2037.06 2038.06
PJT Year 14.5 15.5 16.5 17.5 18.5 19.5 20
Price(USD) 0.0735 0.0735 0.0735 0.0735 0.0735 0.0735 0.0838
Quantity(Kw) 15,954,150 15,868,375 15,782,600 15,696,825 15,611,050 15,525,275 7,719,750
Revenue(USD) 1,172,630 1,166,326 1,160,021 1,153,717 1,147,412 1,141,108 647,189
Financial Year 2039.06 2040.06 2041.06 2042.06 2043.06 2044.06 2045.06
PJT Year 21.5 22.5 23.5 24.5 25.5 26.5 27.5
Price(USD) 0.0942 0.0942 0.0942 0.0942 0.0942 0.0942 0.0942
Quantity(Kw) 15,353,725 15,267,950 15,182,175 15,096,400 15,010,625 14,924,850 14,839,075
Revenue(USD) 1,445,873 1,437,796 1,429,718 1,421,641 1,413,563 1,405,486 1,397,408
Financial Year 2046.06 2047.06 2048.06 　 　 　 　
PJT Year 28.5 29.5 30 　 　 　 　
Price(USD) 0.0942 0.0942 0.0942 　 　 　 　
Quantity(Kw) 14,753,300 14,667,525 7,270,900 　 　 　 　
Revenue(USD) 1,389,331 1,381,253 684,707 　 　 　 　

<Table 40> Sales during production period

❍ Estimation of production
- Since July 2018 when the production is started, the annual production is
estimated as follows, assuming a 0.5% decrease in power generation efficiency
compared to the previous year.
- Based on the NASA data, the amount of solar radiation in the region is assumed
to be 4.7 hours.
- Assuming that the efficiency decrease by 0.5% compared to the previous year
will continue due to systematic management
(unit: USD)
Financial Year 2018.12 2019.12 2020.12 2021.12 2022.12 2023.12 2024.12
Pjt Year 0.5 1.5 2.5 3.5 4.5 5.5 6.5
Capacity kW 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Irradiance(h) 4.70 4.70 4.70 4.70 4.70 4.70 4.70
Op. days(day) 182.5 365 365 365 365 365 365
Efficiency(%) 100.00% 99.50% 99.00% 98.50% 98.00% 97.50% 97.00%
Yield(Kwh) 8,577,500 17,069,225 16,983,450 16,897,675 16,811,900 16,726,125 16,640,350
Financial Year 2025.12 2026.12 2027.12 2028.12 2029.12 2030.12 2031.12
Pjt Year 7.5 8.5 9.5 10.5 11.5 12.5 13.5
Capacity kW 10,000 10,000 10,000 10,000 10,000 10,000 10,000

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 Irradiance(h) 4.70 4.70 4.70 4.70 4.70 4.70 4.70
Op. days(day) 365 365 365 365 365 365 365
Efficiency(%) 96.50% 96.00% 95.50% 95.00% 94.50% 94.00% 93.50%
Yield(Kwh) 16,554,575 16,468,800 16,383,025 16,297,250 16,211,475 16,125,700 16,039,925
Financial Year 2032.12 2033.12 2034.12 2035.12 2036.12 2037.12 2038.12
Pjt Year 14.5 15.5 16.5 17.5 18.5 19.5 20.5
Capacity kW 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Irradiance(h) 4.70 4.70 4.70 4.70 4.70 4.70 4.70
Op. days(day) 365 365 365 365 365 365 182.5
Efficiency(%) 93.00% 92.50% 92.00% 91.50% 91.00% 90.50% 90.00%
Yield(Kwh) 15,954,150 15,868,375 15,782,600 15,696,825 15,611,050 15,525,275 7,719,750
Financial Year 2039.06 2040.06 2041.06 2042.06 2043.06 2044.06 2045.06
Pjt Year 21.5 22.5 23.5 24.5 25.5 26.5 27.5
Capacity kW 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Irradiance(h) 4.70 4.70 4.70 4.70 4.70 4.70 4.70
Op. days(day) 365 365 365 365 365 365 365
Efficiency(%) 89.50% 89.00% 88.50% 88.00% 87.50% 87.00% 86.50%
Yield(Kwh) 15,353,725 15,267,950 15,182,175 15,096,400 15,010,625 14,924,850 14,839,075
Financial Year 2046.12 2047.12 2048.06
Pjt Year 28.5 29.5 30
Capacity kW 10,000 10,000 10,000
Irradiance(h) 4.70 4.70 4.70
Op. days(day) 365 365 182
Efficiency(%) 86.00% 85.50% 85.00%
Yield(Kwh) 14,753,300 14,667,525 7,270,900

<Table 41> output

n Operation expense
❍ Aggregate of operating expense
(unit: USD)
Irradiance(h) 2018.12 2019.12 2020.12 2021.12 2022.12 2023.12 2024.12
Op. days(day) 0.5 1.5 2.5 3.5 4.5 5.5 6.5
Efficiency(%) 15,000 31,500 33,075 34,729 36,465 38,288 40,203
Yield(Kwh) 30,000 61,800 63,654 65,564 67,531 69,557 71,644
Insurance 1,500 3,090 3,183 3,278 3,376 3,477 3,581
Depreciation 342,500 685,000 685,000 685,000 685,000 685,000 685,000
Total 389,000 781,390 784,912 788,571 792,372 796,322 800,428
Financial Year 2025.12 2026.12 2027.12 2028.12 2029.12 2030.12 2031.12
PJT Year 7.5 8.5 9.5 10.5 11.5 12.5 13.5
A&M 42,213 44,324 46,540 48,867 51,310 53,876 56,569
O&M 73,793 76,007 78,287 80,636 83,055 85,547 88,113
Insurance 3,688 3,799 3,913 4,030 4,151 4,276 4,404
Depreciation 685,000 685,000 685,000 685,000 685,000 685,000 685,000
Total 804,694 809,130 813,740 818,533 823,516 828,699 834,086
Financial Year 2032.12 2033.12 2034.12 2035.12 2036.12 2037.12 2038.12
PJT Year 14.5 15.5 16.5 17.5 18.5 19.5 20.5
A&M 59,398 62,368 65,486 68,761 72,199 75,809 79,599
O&M 90,756 93,479 96,283 99,171 102,146 105,210 108,366
Insurance 4,536 4,672 4,812 4,956 5,105 5,258 5,416
Depreciation 685,000 685,000 685,000 685,000 685,000 685,000 392,500
Total 839,690 845,519 851,581 857,888 864,450 871,277 585,881

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Financial Year 2039.12 2040.12 2041.12 2042.12 2043.12 2044.12 2045.12
PJT Year 21.5 22.5 23.5 24.5 25.5 26.5 27.5
A&M 83,579 87,758 92,146 96,753 101,591 106,670 112,004
O&M 111,617 114,966 118,415 121,967 125,626 129,395 133,277
Insurance 5,578 5,745 5,917 6,095 6,278 6,466 6,660
Depreciation 100,000 100,000 100,000 100,000 100,000 100,000 100,000
Total 300,774 308,469 316,478 324,815 333,495 342,531 351,941
Financial Year 2046.12 2047.12 2048.06 　 　 　 　
PJT Year 28.5 29.5 30.0 　 　 　 　
A&M 117,604 123,484 64,829 　 　 　 　
O&M 137,275 141,393 72,818 　 　 　 　
Insurance 6,860 7,066 3,639 　 　 　 　
Depreciation 100,000 100,000 50,000 　 　 　 　
Total 361,739 371,943 191,286 　 　 　 　

<Table 42> Operating Expenses

❍ Administration & General (A&G) Expenses

- A&G expense is assumed that 0.5% of the investment amount of this project will
be spent during the first project period and then fluctuated by the yearly rate of
5%.
(unit: USD)
Financial Year 2018.12 2019.12 2020.12 2021.12 2022.12 2023.12 2024.12
PJT Year 0.5 1.5 2.5 3.5 4.5 5.5 6.5
Investment 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000
Ratio 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
A&G 30,000 30,000 30,000 30,000 30,000 30,000 30,000
Increase rate 　 5% 5% 5% 5% 5% 5%
A&G(Yearly) 30,000 31,500 33,075 34,729 36,465 38,288 40,203
Month 6 12 12 12 12 12 12
A&G Estimation 15,000 31,500 33,075 34,729 36,465 38,288 40,203
Financial Year 2025.12 2026.12 2027.12 2028.12 2029.12 2030.12 2031.12
PJT Year 7.5 8.5 9.5 10.5 11.5 12.5 13.5
Investment 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000
Ratio 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
A&G 30,000 30,000 30,000 30,000 30,000 30,000 30,000
Increase rate 5% 5% 5% 5% 5% 5% 5%
A&G(Yearly) 42,213 44,324 46,540 48,867 51,310 53,876 56,569
Month 12 12 12 12 12 12 12
A&G Estimation 42,213 44,324 46,540 48,867 51,310 53,876 56,569
Financial Year 2032.12 2033.12 2034.12 2035.12 2036.12 2037.12 2038.12
PJT Year 14.5 15.5 16.5 17.5 18.5 19.5 20.5
Investment 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000
Ratio 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
A&G 30,000 30,000 30,000 30,000 30,000 30,000 30,000
Increase rate 5% 5% 5% 5% 5% 5% 5%
A&G(Yearly) 59,398 62,368 65,486 68,761 72,199 75,809 79,599
Month 12 12 12 12 12 12 12
A&G Estimation 59,398 62,368 65,486 68,761 72,199 75,809 79,599
Financial Year 2039.12 2040.12 2041.12 2042.12 2043.12 2044.12 2045.12
PJT Year 21.5 22.5 23.5 24.5 25.5 26.5 27.5
Investment 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000
Ratio 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
A&G 30,000 30,000 30,000 30,000 30,000 30,000 30,000

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Increase rate 5% 5% 5% 5% 5% 5% 5%
A&G(Yearly) 83,579 87,758 92,146 96,753 101,591 106,670 112,004
Month 12 12 12 12 12 12 12
A&G Estimation 83,579 87,758 92,146 96,753 101,591 106,670 112,004
Financial Year 2046.12 2047.12 2048.06 　 　 　 　
PJT Year 28.5 29.5 30.0 　 　 　 　
Investment 15,000,000 15,000,000 15,000,000 　 　 　 　
Ratio 0.20% 0.20% 0.20% 　 　 　 　
A&G 30,000 30,000 30,000 　 　 　 　
Increase rate 5% 5% 5% 　 　 　 　
A&G(Yearly) 117,604 123,484 129,658 　 　 　 　
Month 12 12 6 　 　 　 　
A&G Estimation 117,604 123,484 64,829 　 　 　 　

<Table 43> A&G Expenses

❍ O&M Expenses
- O & M Expenses is the cost associated with plant operation by a company who
is specialized in solar power plant maintenance.
- This maintenance cost is estimated to be 0.5% of the investment cost for the
first year of the project and 3% annual increase rate.
(unit: USD)
Financial Year 2018.12 2019.12 2020.12 2021.12 2022.12 2023.12 2024.12
PJT Year 0.5 1.5 2.5 3.5 4.5 5.5 6.5
Invement 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000
O&M rate 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40%
O&M cost 60,000 60,000 60,000 60,000 60,000 60,000 60,000
Change rate 　 3% 3% 3% 3% 3% 3%
O&M(yearly) 60,000 61,800 63,654 65,564 67,531 69,557 71,644
Month 6 12 12 12 12 12 12
O&M estimate 30,000 61,800 63,654 65,564 67,531 69,557 71,644
Financial Year 2025.12 2026.12 2027.12 2028.12 2029.12 2030.12 2031.12
PJT Year 7.5 8.5 9.5 10.5 11.5 12.5 13.5
Invement 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000
O&M rate 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40%
O&M cost 60,000 60,000 60,000 60,000 60,000 60,000 60,000
Change rate 3% 3% 3% 3% 3% 3% 3%
O&M(yearly) 73,793 76,007 78,287 80,636 83,055 85,547 88,113
Month 12 12 12 12 12 12 12
O&M estimate 73,793 76,007 78,287 80,636 83,055 85,547 88,113
Financial Year 2032.12 2033.12 2034.12 2035.12 2036.12 2037.12 2038.12
PJT Year 14.5 15.5 16.5 17.5 18.5 19.5 20
Invement 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000
O&M rate 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40%
O&M cost 60,000 60,000 60,000 60,000 60,000 60,000 60,000
Change rate 3% 3% 3% 3% 3% 3% 3%
O&M(yearly) 90,756 93,479 96,283 99,171 102,146 105,210 108,366
Month 12 12 12 12 12 12 12
O&M estimate 90,756 93,479 96,283 99,171 102,146 105,210 108,366
Financial Year 2039.12 2040.12 2041.12 2042.12 2043.12 2044.12 2045.12
PJT Year 21.5 22.5 23.5 24.5 25.5 26.5 27.5
Invement 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000
O&M rate 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40%

- 136 -
O&M cost 60,000 60,000 60,000 60,000 60,000 60,000 60,000
Change rate 3% 3% 3% 3% 3% 3% 3%
O&M(yearly) 111,617 114,966 118,415 121,967 125,626 129,395 133,277
Month 12 12 12 12 12 12 12
O&M estimate 111,617 114,966 118,415 121,967 125,626 129,395 133,277
Financial Year 2046.12 2047.12 2048.06 　 　 　 　
PJT Year 28.5 29.5 30.0 　 　 　 　
Invement 15,000,000 15,000,000 15,000,000 　 　 　 　
O&M rate 0.40% 0.40% 0.40% 　 　 　 　
O&M cost 60,000 60,000 60,000 　 　 　 　
Change rate 3% 3% 3% 　 　 　 　
O&M(yearly) 137,275 141,393 145,635 　 　 　 　
Month 12 12 6 　 　 　 　
O&M estimate 137,275 141,393 72,818 　 　 　 　

<Table 44> O&M Expenses

❍ Insurance
- Insurance is the cost of insurance premiums for stable PV power plant.
- This maintenance cost is estimated to be 0.5% of the investment cost for the
first year of the project and 3% annual increase rate.
(unit: USD)
Financial Year 2018.12 2019.12 2020.12 2021.12 2022.12 2023.12 2024.12
PJT Year 0.5 1.5 2.5 3.5 4.5 5.5 6.5
Investment 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000
Insurance rate 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02%
Premium 3,000 3,000 3,000 3,000 3,000 3,000 3,000
Change rate 　 3% 3% 3% 3% 3% 3%
Insurance(year) 3,000 3,090 3,183 3,278 3,376 3,477 3,581
Month 6 12 12 12 12 12 12
Estimate 1,500 3,090 3,183 3,278 3,376 3,477 3,581
Financial Year 2025.12 2026.12 2027.12 2028.12 2029.12 2030.12 2031.12
PJT Year 7.5 8.5 9.5 10.5 11.5 12.5 13.5
Investment 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000
Insurance rate 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02%
Premium 3,000 3,000 3,000 3,000 3,000 3,000 3,000
Change rate 3% 3% 3% 3% 3% 3% 3%
Insurance(year) 3,688 3,799 3,913 4,030 4,151 4,276 4,404
Month 12 12 12 12 12 12 12
Estimate 3,688 3,799 3,913 4,030 4,151 4,276 4,404
Financial Year 2032.12 2033.12 2034.12 2035.12 2036.12 2037.12 2038.12
PJT Year 14.5 15.5 16.5 17.5 18.5 19.5 20
Investment 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000
Insurance rate 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02%
Premium 3,000 3,000 3,000 3,000 3,000 3,000 3,000
Change rate 3% 3% 3% 3% 3% 3% 3%
Insurance(year) 4,536 4,672 4,812 4,956 5,105 5,258 5,416
Month 12 12 12 12 12 12 12
Estimate 4,536 4,672 4,812 4,956 5,105 5,258 5,416
Financial Year 2039.12 2040.12 2041.12 2042.12 2043.12 2044.12 2045.12
PJT Year 21.5 22.5 23.5 24.5 25.5 26.5 27.5
Investment 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000
Insurance rate 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02%
Premium 3,000 3,000 3,000 3,000 3,000 3,000 3,000

- 137 -
 Change rate 3% 3% 3% 3% 3% 3% 3%
Insurance(year) 5,578 5,745 5,917 6,095 6,278 6,466 6,660
Month 12 12 12 12 12 12 12
Estimate 5,578 5,745 5,917 6,095 6,278 6,466 6,660
Financial Year 2046.12 2047.12 2048.12 　 　 　 　
PJT Year 28.5 29.5 30.0 　 　 　 　
Investment 15,000,000 15,000,000 15,000,000 　 　 　 　
Insurance rate 0.02% 0.02% 0.02% 　 　 　 　
Premium 3,000 3,000 3,000 　 　 　 　
Change rate 3% 3% 3% 　 　 　 　
Insurance(year) 6,860 7,066 7,278 　 　 　 　
Month 12 12 6 　 　 　 　
Estimate 6,860 7,066 3,639 　 　 　 　

<Table 45> Insurance cost

4.1.4. Net Income(NI) Estimate

❍ Yearly estimation of net income (loss)
(unit: USD)

Financial Year 2018.12 2019.12 2020.12 2021.12 2022.12 2023.12 2024.12

PJT Year 0.5 1.5 2.5 3.5 4.5 5.5 6.5

Op. revenue 630,446 1,254,588 1,248,284 1,241,979 1,235,675 1,229,370 1,223,066

Op. espense (389,000) (781,390) (784,912) (788,571) (792,372) (796,322) (800,428)

Op. profit 241,446 473,198 463,372 453,408 443,303 433,048 422,638

Interest income 0 17,149 34,522 52,124 69,955 88,020 94,138

Interest expense (300,000) (600,000) (600,000) (600,000) (600,000) (600,000) (600,000)

Pre-tax profit (58,554) (109,653) (102,106) (94,468) (86,742) (78,932) (83,224)

Corporate tax 0 0 0 0 0 0 0

NI (58,554) (109,653) (102,106) (94,468) (86,742) (78,932) (83,224)

Financial Year 2025.12 2026.12 2027.12 2028.12 2029.12 2030.12 2031.12

PJT Year 7.5 8.5 9.5 10.5 11.5 12.5 13.5

Op. revenue 1,216,761 1,210,457 1,204,152 1,197,848 1,191,543 1,185,239 1,178,934

Op. espense (804,694) (809,130) (813,740) (818,533) (823,516) (828,699) (834,086)

Op. profit 412,067 401,327 390,412 379,315 368,027 356,540 344,848

Interest income 88,549 71,501 54,821 50,700 47,331 44,729 42,911

Interest expense (560,000) (520,000) (480,000) (440,000) (400,000) (360,000) (320,000)

Pre-tax profit (59,384) (47,173) (34,766) (9,985) 15,358 41,269 67,759

Corporate tax 0 0 0 0 (14) (68) (172)

NI (59,384) (47,173) (34,766) (9,985) 15,344 41,201 67,587

Financial Year 2032.12 2033.12 2034.12 2035.12 2036.12 2037.12 2038.12

PJT Year 14.5 15.5 16.5 17.5 18.5 19.5 20.5

Op. revenue 1,172,630 1,166,326 1,160,021 1,153,717 1,147,412 1,141,108 1,294,377

Op. espense (839,690) (845,519) (851,581) (857,888) (864,450) (871,277) (585,881)

Op. profit 332,940 320,807 308,440 295,829 282,962 269,831 708,496

Interest income 41,892 41,299 28,834 16,643 16,932 17,842 20,315

- 138 -
Interest expense (280,000) (240,000) (200,000) (160,000) (120,000) (80,000) (20,000)

Pre-tax profit 94,832 122,106 137,274 152,472 179,894 207,673 708,811

Corporate tax (328) (26,114) (34,318) (38,118) (44,974) (51,918) (177,203)

NI 94,504 95,992 102,956 114,354 134,920 155,755 531,608

Financial Year 2039.12 2040.12 2041.12 2042.12 2043.12 2044.12 2045.12

PJT Year 21.5 22.5 23.5 24.5 25.5 26.5 27.5

Op. revenue 1,445,873 1,437,796 1,429,718 1,421,641 1,413,563 1,405,486 1,397,408

Op. espense (300,774) (308,469) (316,478) (324,815) (333,495) (342,531) (351,941)

Op. profit 1,145,099 1,129,327 1,113,240 1,096,826 1,080,068 1,062,955 1,045,467

Interest income 36,975 66,729 96,798 127,181 157,878 188,888 220,210

Interest expense 0 0 0 0 0 0 0

Pre-tax profit 1,182,075 1,196,056 1,210,038 1,224,007 1,237,946 1,251,843 1,265,677

Corporate tax (295,519) (299,014) (302,510) (306,002) (309,487) (312,961) (316,419)

NI 886,556 897,042 907,528 918,005 928,459 938,882 949,258

Financial Year 2046.12 2047.12 2048.06 　 　 　 　

PJT Year 28.5 29.5 30 　 　 　 　

Op. revenue 1,389,331 1,381,253 684,707 　 　 　 　

Op. espense (361,739) (371,943) (191,286) 　 　 　 　

Op. profit 1,027,592 1,009,310 493,421 　 　 　 　

Interest income 251,843 283,783 188,180 　 　 　 　

Interest expense 0 0 0 　 　 　 　

Pre-tax profit 1,279,434 1,293,094 681,601 　 　 　 　

Corporate tax (319,859) (323,273) (170,400) 　 　 　 　

NI 959,575 969,821 511,201 　 　 　 　

<Table 46> Year-to-year net income (NI)

❍ Estimation of interest cost

- Assuming the repayment of the principal in 15 years installments after 5 years
and the annual interest rate of 5% remains the same
(unit: USD)
Financial Year 2018.12 2019.12 2020.12 2021.12 2022.12 2023.12 2024.12
PJT Year 0.5 1.5 2.5 3.5 4.5 5.5 6.5
Basic principal 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000
Repayment(*) 　 0 0 0 0 0 (800,000)
Final principal 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 11,200,000
Interest rate(**) 5% 5% 5% 5% 5% 5% 5%
Month 6 12 12 12 12 12 12
Interest expense 300,000 600,000 600,000 600,000 600,000 600,000 600,000
Financial Year 2025.12 2026.12 2027.12 2028.12 2029.12 2030.12 2031.12
PJT Year 7.5 8.5 9.5 10.5 11.5 12.5 13.5
Basic principal 11,200,000 10,400,000 9,600,000 8,800,000 8,000,000 7,200,000 6,400,000
Repayment(*) (800,000) (800,000) (800,000) (800,000) (800,000) (800,000) (800,000)
Final principal 10,400,000 9,600,000 8,800,000 8,000,000 7,200,000 6,400,000 5,600,000

- 139 -
Interest rate(**) 5% 5% 5% 5% 5% 5% 5%
Month 12 12 12 12 12 12 12
Interest expense 560,000 520,000 480,000 440,000 400,000 360,000 320,000
Financial Year 2032.12 2033.12 2034.12 2035.12 2036.12 2037.12 2038.06
PJT Year 14.5 15.5 16.5 17.5 18.5 19.5 20
Basic principal 5,600,000 4,800,000 4,000,000 3,200,000 2,400,000 1,600,000 800,000
Repayment(*) (800,000) (800,000) (800,000) (800,000) (800,000) (800,000) (800,000)
Final principal 4,800,000 4,000,000 3,200,000 2,400,000 1,600,000 800,000 0
Interest rate(**) 5% 5% 5% 5% 5% 5% 5%
Month 12 12 12 12 12 12 6
Interest expense 280,000 240,000 200,000 160,000 120,000 80,000 20,000
<Table 47> Annual Interest Cost

❍ Estimation of corporate tax

- Applied 25% corporate tax rate in Indonesia
- In Indonesia, it is possible to deduct 5 years carry-over deficit.
(unit: USD)

Financial Year 2018.12 2019.12 2020.12 2021.12 2022.12 2023.12 2024.12

PJT Year 0.5 1.5 2.5 3.5 4.5 5.5 6.5
Pre-tax profit/loss (58,554) (109,653) (102,106) (94,468) (86,742) (78,932) (83,224)
Carryover 0 0 0 0 0 0 0
Taxable income (58,554) (109,653) (102,106) (94,468) (86,742) (78,932) (83,224)
Corporate tax rate 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%
Corporate tax 0 0 0 0 0 0 0
Financial Year 2025.12 2026.12 2027.12 2028.12 2029.12 2030.12 2031.12
PJT Year 7.5 8.5 9.5 10.5 11.5 12.5 13.5
Pre-tax profit/loss (59,384) (47,173) (34,766) (9,985) 15,358 41,269 67,759
Carryover 0 0 0 0 0 0 0
Taxable income (59,384) (47,173) (34,766) (9,985) 15,358 41,269 67,759
Corporate tax rate 25% 25% 25% 25% 25% 25% 25%
Corporate tax 0 0 0 0 14 68 172
Financial Year 2032.12 2033.12 2034.12 2035.12 2036.12 2037.12 2038.06
PJT Year 14.5 15.5 16.5 17.5 18.5 19.5 20
Pre-tax profit/loss 94,832 122,106 137,274 152,472 179,894 207,673 708,811
Carryover 0 0 0 0 0 0 0
Taxable income 94,832 122,106 137,274 152,472 179,894 207,673 708,811
Corporate tax rate 25% 25% 25% 25% 25% 25% 25%
Corporate tax 328 26,114 34,318 38,118 44,974 51,918 177,203
Financial Year 2039.12 2040.12 2041.12 2042.12 2043.12 2044.12 2045.12
PJT Year 21.5 22.5 23.5 24.5 25.5 26.5 27.5
Pre-tax profit/loss 1,182,075 1,196,056 1,210,038 1,224,007 1,237,946 1,251,843 1,265,677
Carryover 0 0 0 0 0 0 0
Taxable income 1,182,075 1,196,056 1,210,038 1,224,007 1,237,946 1,251,843 1,265,677
Corporate tax rate 25% 25% 25% 25% 25% 25% 25%
Corporate tax 295,519 299,014 302,510 306,002 309,487 312,961 316,419
Financial Year 2046.12 2047.12 2048.06 　 　 　 　

- 140 -
PJT Year 28.5 29.5 30 　 　 　 　
Pre-tax profit/loss 1,279,434 1,293,094 681,601 　 　 　 　
Carryover 0 0 0 　 　 　 　
Taxable income 1,279,434 1,293,094 681,601 　 　 　 　
Corporate tax rate 25% 25% 25% 　 　 　 　
Corporate tax 319,859 323,273 170,400 　 　 　 　

<Table 48> Annual corporate tax

❍ Interest income
- Interest income reflects the increase in interest earned through deposits in
financial institutions. It is assumed that the deposit interest rate of 3% will be
maintained conservatively because the interest rate on Indonesian deposits is 4%.
- Assuming that the deposit balance, which is the basis for calculating interest
income, is the same as the average and ending balance.
(unit: USD)

Financial Year 2018.12 2019.12 2020.12 2021.12 2022.12 2023.12 2024.12

PJT Year 0.5 1.5 2.5 3.5 4.5 5.5 6.5
Basic principal 0 283,946 859,293 1,442,187 2,032,718 2,630,977 3,237,045
Final principal 283,946 859,293 1,442,187 2,032,718 2,630,977 3,237,045 3,038,821
Average balance 　 571,619 1,150,740 1,737,453 2,331,848 2,934,011 3,137,933
Interest rate 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Month 0 12 12 12 12 12 12
Interest income 　 17,149 34,522 52,124 69,955 88,020 94,138
Financial Year 2025.12 2026.12 2027.12 2028.12 2029.12 2030.12 2031.12
PJT Year 7.5 8.5 9.5 10.5 11.5 12.5 13.5
Basic principal 3,038,821 2,864,437 1,902,265 1,752,498 1,627,513 1,527,857 1,454,058
Final principal 2,864,437 1,902,265 1,752,498 1,627,513 1,527,857 1,454,058 1,406,645
Average balance 2,951,629 2,383,351 1,827,381 1,690,006 1,577,685 1,490,958 1,430,352
Interest rate 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Month 12 12 12 12 12 12 12
Interest income 88,549 71,501 54,821 50,700 47,331 44,729 42,911
Financial Year 2032.12 2033.12 2034.12 2035.12 2036.12 2037.12 2038.12
PJT Year 14.5 15.5 16.5 17.5 18.5 19.5 20.5
Basic principal 1,406,645 1,386,149 1,367,141 555,097 554,450 574,371 615,126
Final principal 1,386,149 1,367,141 555,097 554,450 574,371 615,126 739,235
Average balance 1,396,397 1,376,645 961,119 554,774 564,411 594,749 677,180
Interest rate 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Month 12 12 12 12 12 12 12
Interest income 41,892 41,299 28,834 16,643 16,932 17,842 20,315
Financial Year 2039.06 2040.06 2041.06 2042.06 2043.06 2044.06 2045.06
PJT Year 21.5 22.5 23.5 24.5 25.5 26.5 27.5
Basic principal 739,235 1,725,790 2,722,833 3,730,361 4,748,366 5,776,825 6,815,707
Final principal 1,725,790 2,722,833 3,730,361 4,748,366 5,776,825 6,815,707 7,864,965

- 141 -
Average balance 1,232,512 2,224,311 3,226,597 4,239,363 5,262,595 6,296,266 7,340,336
Interest rate 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Month 12 12 12 12 12 12 12
Interest income 36,975 66,729 96,798 127,181 157,878 188,888 220,210
Financial Year 2046.06 2047.06 2048.06 　 　 　 　
PJT Year 28.5 29.5 30 　 　 　 　
Basic principal 7,864,965 8,924,540 9,994,361 　 　 　 　
Final principal 8,924,540 9,994,361 15,096,319 　 　 　 　
Average balance 8,394,753 9,459,451 12,545,340 　 　 　 　
Interest rate 3.0% 3.0% 3.0% 　 　 　 　
Month 12 12 12 　 　 　 　
Interest income 251,843 283,784 188,180 　 　 　 　

<Table 49> Interest income

4.2. Year-on-year free cash flow (FCF) estimation

❍ The year-on-year cash flow calculated considering current net income, depreciation
expense, investment spending, and borrowing fluctuation is as follows:
(unit: USD)

Financial Year 2018.06 2018.12 2019.12 2020.12 2021.12 2022.12

Total　
PJT Year - 0.5 1.5 2.5 3.5 4.5
NI 9,455,562 0 (58,554) (109,653) (102,106) (94,468) (86,742)
Depreciation cost 14,700,000 0 342,500 685,000 685,000 685,000 685,000
Investment (15,700,000) (14,100,000) 0 0 0 0 0
expenditure
Land sale 4,540,757 0 0 0 0 0 0
Debt 12,000,000 12,000,000 0 0 0 0 0
Debt repayment (12,000,000) 0 0 0 0 0 0
FCF 12,996,319 (2,100,000) 283,946 575,347 582,894 590,532 598,258
Financial Year 2023.12 2024.12 2025.12 2026.12 2027.12 2028.12 2029.12
PJT Year 5.5 6.5 7.5 8.5 9.5 10.5 11.5
NI (78,932) (83,224) (59,384) (47,173) (34,766) (9,985) 15,344
Depreciation cost 685,000 685,000 685,000 685,000 685,000 685,000 685,000
Investment 0 0 0 (800,000) 0 0 0
expenditure
Land sale 0 0 0 0 0 0 0
Debt 0 0 0 0 0 0 0
Debt repayment 0 (800,000) (800,000) (800,000) (800,000) (800,000) (800,000)
FCF 606,068 (198,224) (174,384) (962,173) (149,766) (124,985) (99,656)
Financial Year 2030.12 2031.12 2032.12 2033.12 2034.12 2035.12 2036.12
PJT Year 12.5 13.5 14.5 15.5 16.5 17.5 18.5
NI 41,201 67,587 94,504 95,992 102,956 114,354 134,920
Depreciation cost 685,000 685,000 685,000 685,000 685,000 685,000 685,000
Investment
expenditure 0 0 0 0 (800,000) 0 0
Land sale 0 0 0 0 0 0 0

- 142 -
Debt 0 0 0 0 0 0 0
Debt repayment (800,000) (800,000) (800,000) (800,000) (800,000) (800,000) (800,000)
FCF (73,799) (47,413) (20,496) (19,008) (812,044) (646) 19,920
Financial Year 2037.12 2038.12 2039.12 2040.12 2041.12 2042.12 2043.12
PJT Year 19.5 20.5 21.5 22.5 23.5 24.5 25.5
NI 155,755 531,608 886,556 897,042 907,528 918,005 928,459
Depreciation cost 685,000 392,500 100,000 100,000 100,000 100,000 100,000
Investment 0 0 0 0 0 0 0
expenditure
Land sale 0 0 0 0 0 0 0
Debt 0 0 0 0 0 0 0
Debt repayment (800,000) (800,000) 0 0 0 0 0
FCF 40,755 124,108 986,556 997,042 1,007,528 1,018,005 1,028,459
Financial Year 2044.12 2045.12 2046.12 2047.12 2048.6 0 0
PJT Year 26.5 27.5 28.5 29.5 30 0 0
NI 938,882 949,258 959,575 969,821 511,201 0 0
Depreciation cost 100,000 100,000 100,000 100,000 50,000 0 0
Investment 0 0 0 0 0 0 0
expenditure
Land sale 0 0 0 0 4,540,757 0 0
Debt 0 0 0 0 0 0 0
Debt repayment 0 0 0 0 0 0 0
FCF 1,038,882 1,049,258 1,059,575 1,069,821 5,101,957 0 0

<Table 50> Year-on-year free cash flow (FCF) estimation

4.3. Results of economic feasibility study based on NPV method

❍ Key assumptions
- Cash flow assumptions: Based on the yearly cash flow (FCF) estimates described
in the previous section.
- Discount rate: Capital cost 10.49% applied
- Total investment amount: USD 15,000,000
- Investment fund source: Equity capital USD 3,000,000 (20%) + Other capital
USD 12,000,000 (80%)
- Estimated duration:
Ÿ PPA production period (20years)(2018.7.1~2038.6.30)
Ÿ Commercial production period (10years)(2038.7.1~2048.6.30)
- Cash flow after investment period: Assuming no additional cash flow

❍ Investment value (PV) calculation result

- The present value (PV) of this investment under the above assumption is USD
3,364,875

- 143 -
❍ Economic Feasibility Review Conclusion
- In making this investment decision, NPV is USD 364,875, which is the total
investment amount of USD 3,000,000 or more of total investment amount, which
means that if the capital cost is 10.49%, the the positive net cash flow is
expected.
- Therefore, it is expected that the economic value of this investment decision will
exist because the net present value (NPV) of the investment exceeds the net
present value zero (0).
(unit: USD)

Total investment Net investment

value amount (equity) Net present value Economy Review
3,364,875 (3,000,000) 364,875 Economically Feasible
<Table 51> Result of economic feasibility (NPV)

❍ Discounted Cash Flow calculation

(unit: USD)

Financial Year 2018.06 2018.12 2019.12 2020.12 2021.12 2022.12

Total　
PJT Year 0 0.5 1.5 2.5 3.5 4.5
FCF 12,996,319 (2,100,000) 283,946 575,347 582,894 590,532 598,258
Current price 1.00000 0.95135 0.86103 0.77928 0.70530 0.63834
discount factor
Discounted FCF 364,875 (2,100,000) 270,131 495,390 454,240 416,502 381,892
Financial Year 2023.12 2024.12 2025.12 2026.12 2027.12 2028.12 2029.12
PJT Year 5.5 6.5 7.5 8.5 9.5 10.5 11.5
FCF 606,068 (198,224) (174,384) (962,173) (149,766) (124,985) (99,656)
Current price 0.57774 0.52289 0.47325 0.42832 0.38765 0.35085 0.31754
discount factor
Discounted FCF 350,148 (103,649) (82,526) (412,114) (58,057) (43,851) (31,645)
Financial Year 2030.12 2031.12 2032.12 2033.12 2034.12 2035.12 2036.12
PJT Year 12.5 13.5 14.5 15.5 16.5 17.5 18.5
FCF (73,799) (47,413) (20,496) (19,008) (812,044) (646) 19,920
Current price
discount factor 0.28739 0.26011 0.23541 0.21307 0.19284 0.17453 0.15796
Discounted FCF (21,209) (12,333) (4,825) (4,050) (156,592) (113) 3,147
Financial Year 2037.12 2038.06 2039.06 2040.06 2041.06 2042.06 2043.06
PJT Year 19.5 20.5 21.5 22.5 23.5 24.5 25.5
FCF 40,755 124,108 986,556 997,042 1,007,528 1,018,005 1,028,459
Current price
discount factor 0.14296 0.12939 0.11711 0.10599 0.09593 0.08682 0.07858
Discounted FCF 5,826 16,058 115,532 105,675 96,648 88,382 80,813
Financial Year 2044.06 2045.06 2046.06 2047.06 2048.06 　 　
PJT Year 26.5 27.5 28.5 29.5 30 　 　
FCF 1,038,882 1,049,258 1,059,575 1,069,821 5,101,957 　 　
Current price 0.07112 0.06437 0.05825 0.05272 0.05016 　 　
discount factor
Discounted FCF 73,882 67,536 61,725 56,405 255,907 　 　

<Table 52> Discounted FCF

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4.4. Results of the economic feasibility study based on IRR method

❍ Minimum ROI of investment decision

- The minimum ROI for investment decisions in this investment is 10.49%

❍ Conditions for IRR calculation

- Discount rate at which net present value (NPV) becomes zero
- Discount rate that the total investment value is equal to the net investment
amount (3M USD)
(unit: USD)

Total investment Net investment

value amount (equity) Net present value Economy Review
3,364,875 (3,000,000) 0 Economically Feasible

<Table 53> IRR calculation condition

(unit: USD)

Financial Year 2018.06 2018.12 2019.12 2020.12 2021.12 2022.12

합계　
PJT Year 0 0.5 1.5 2.5 3.5 4.5
FCF 12,996,319 (2,100,000) 283,946 575,347 582,894 590,532 598,258
현가할인계수 1.00000 0.94279 0.83799 0.74485 0.66206 0.58847
Discounted FCF 0 (2,100,000) 267,701 482,137 434,168 390,965 352,055
Financial Year 2023.12 2024.12 2025.12 2026.12 2027.12 2028.12 2029.12
PJT Year 5.5 6.5 7.5 8.5 9.5 10.5 11.5
FCF 606,068 (198,224) (174,384) (962,173) (149,766) (124,985) (99,656)
현가할인계수 0.52306 0.46492 0.41324 0.36731 0.32648 0.29019 0.25794
Discounted FCF 317,009 (92,158) (72,063) (353,414) (48,896) (36,270) (25,705)
Financial Year 2030.12 2031.12 2032.12 2033.12 2034.12 2035.12 2036.12
PJT Year 12.5 13.5 14.5 15.5 16.5 17.5 18.5
FCF (73,799) (47,413) (20,496) (19,008) (812,044) (646) 19,920
현가할인계수 0.22927 0.20378 0.18113 0.16100 0.14310 0.12720 0.11306
Discounted FCF (16,920) (9,662) (3,712) (3,060) (116,206) (82) 2,252
Financial Year 2037.12 2038.06 2039.06 2040.06 2041.06 2042.06 2043.06
PJT Year 19.5 20.5 21.5 22.5 23.5 24.5 25.5
FCF 40,755 124,108 986,556 997,042 1,007,528 1,018,005 1,028,459
현가할인계수 0.10049 0.08932 0.07939 0.07057 0.06272 0.05575 0.04956
Discounted FCF 4,096 11,086 78,326 70,360 63,197 56,756 50,966
Financial Year 2044.06 2045.06 2046.06 2047.06 2048.06
PJT Year 25.5 26.5 27.5 28.5 29.5
FCF 1,038,882 1,049,258 1,059,575 1,069,821 5,101,957
현가할인계수 0.04956 0.04405 0.03915 0.03480 0.03093
Discounted FCF 51,482 46,217 41,484 37,229 157,811

<Table 54> Discount Rate by year for IRR calculation

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❍ IRR calculation result
- The discount rate IRR at which the net present value (NPV) becomes zero is
calculated as 12.51%.

❍ Economic Feasibility Review Conclusion

- The estimated internal rate of return of 12.51% exceeds the minimum rate of
return of 10.49%, which is proposed by the company.

Internal rate of return Yield Review Conclusion

12.51% 10.49% Economically Feasible

<Table 55> Result of economic feasibility (IRR)

4.5. Sensitivity Analysis

❍ The value of equity capital under the NPV law can be most sensitive to the
discount rate and the rate of change in land prices at the end of the estimated
period. In particular, since the value of land price sale includes the value of using
existing PV facilities, this value is reflected in the land price, which is reflected as
a key sensitivity factor.

❍ The results of the analysis of the value of equity and NPV sensitivity in the
investment based on the above two major variables are as follows.

[Value of equity in investments]

Annual Discount rate
average rate
of increase 8.49% 10.49% 12.49%
in land
3.00% 3,840,829 3,307,565 2,977,218
4.00% 3,939,965 3,364,875 3,010,676
5.00% 4,070,977 3,440,613 3,054,893

[NPV in investment]
Annual Discount rate
average rate
of increase 8.49% 10.49% 12.49%
in land
3.00% 840,829 307,565 (22,782)
4.00% 939,965 364,875 10,676
5.00% 1,070,977 440,613 54,893
<Table 56> Sensitivity of discount rate

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 Appendix

[Attachment 1. Statement of working expenses]

Statement of working expenses

Original
Item of Amount used Balance Percentage of Reasons for
intention
Particulars (thousand (thousand use
expenditure (thousand fluctuation
won) won) (% )
won)

Internal labor cost 28,000,000 28,000,000 - 100.0

Personnel
expenses
External labor cost - - - -

Base material,
48,000,000 45,593,493 2,406,507 95.0
facility/service cost

Material cost - - - -

Travelling expenses 64,475,000 40,940,699 23,534,301 63.5

Direct
expense Utility bill and
13,625,000 10,633,536 2,991,464 78.0
commission

technical intelligence
25,325,000 25,348,368 -23,368 100.1
activity cost

Project activity cost 575,000 572,540 2,460 99.6

Indirect
Indirect cost - - - -
expense

Total 180,000,000 151,088,636 28,911,364 83.9

※ You are permitted to indicate any changes in the amount used, compared to the original intention in
‘Reasons for fluctuation’ above clearly or in a separate form.

- 147 -
1. This Report is the final report of the New and Renewable Energy

Overseas Supporting Program, funded by the Ministry of Trade,

Industry & Energy.

2. For notification outside, it must be revealed that this project is the

result of the New and Renewable Energy Overseas Supporting

Program funded by the Ministry of Trade, Industry & Energy.