Kerangka Dialog/Kelembagaan Indonesia – Korea ... To ensure the availability of
equity as much as US$ 22.5b is a real challenge .... Jawa, Madura & Bali:.
Renewable Energy Investment, Opportunity and Risks - Indonesia Montty Girianna The National Development Planning Agency, BAPPENAS September 2013
Geothermal Potential Distribution and Installed Capacity
Location
Resources (MWe) Speculative
Reserve (MWe)
Hypothetic
Probable
Possible
Installed Capacity (MWe)
Proven
Sumatera
4,925
2,076
5,983
15
380
122
Java
1,935
1,946
3,415
885
1,815
1,134
410
359
973
-
30
5
1,000
127
992
150
78
60
545
43
341
-
-
-
Kalimantan
45
-
-
-
-
-
Papua
70
-
-
-
-
-
8,935
4,551
11,704
1,050
2,303
Bali-Nusa Tenggara Sulawesi Maluku
Total 265 Locations Total Resource/installed Capacity
28,543
1,341
2
Kerangka Dialog/Kelembagaan Indonesia – KoreaPower Typical Capital Cost per MW for 200MW Geothermal (sebagai rujukan) Plant (US$) success ratio Land acquisition/local cost Survey cost AMDAL/licensing Exploration wells Well testing for exploration purposes FEED Feasibility study Production wells Injection Well Steam Above Ground System (SAGS) Sub Total Capital Cost Steam Price escalation and contingency Total cost steam Power plant Auxilliary electricity cost Sub Total Power Plant Price escalation and contingency Total Cost Power Plant Total Capital Cost (Steam and Electricity) Cost per MW
Replacement cost price/unit
number
62%
5,600,000 100,000
19 12
80% 80%
5,600,000 5,600,000
60 22
1,500,000 300,000
200 3
10%
1 MW 1km 10%
Replacement cost based on success ratio 350,000 750,000 322,222 108,864,000 1,200,000 1,200,000 350,000 336,000,000 119,616,000 59,002,308 627,654,530 62,765,453 690,419,983 300,000,000 900,000 300,900,000 30,090,000 330,990,000 1,021,409,983 5,107,049.91 3
Kerangka Dialog/Kelembagaan Indonesia – Korea The Size of Geothermal Power Generation Industry (sebagai rujukan )
Potential Reserve 4.984 MW (US$ 25b)
In Production (7 fields ) Installed Capacity 1.231 MW
Existing 19 fields (Brownfields) – 10.869 MW
Not in Production (12 fields )
35 new fields
Not in Production (35 fields)
Potential Reserve 5.885 MW (US$ 29.5b)
Potential Reserve 4.139 MW (US$ 21b)
Investment needs (15.000 MW) is about US$ 75b. With the assumption of 30% equity, we need to tap from the world capital market about US$ 52b. To ensure the availability of equity as much as US$ 22.5b is a real challenge 4
Investment barriers in scaling up geothermal development (identified earlier) • Inadequate policy frameworks – Underestimated environmental benefits of geothermal energy and insufficient economic incentives for investment
• Lack of planning/management capabilities to efficiently conduct transactions of geothermal projects – Inconsistency between blueprint and power expansion plan – Little experience in sructuring investment transactions to be ‘bankable’
• Weak technical capability to support geothermal long-term growth – From resource identification to operation of geothermal power – Low domestic participation in all parts of the value chain of geothermal development – high project costs 5
Where Bottlenecks Occur • Local governments lack of resources (technical and financial) – unable to develop sufficient data for tender – Appoint business entity to undertake preliminary survey (Government Regulation 59/2007), i.e., nominated developer – Project award effectively occurs at this point if ‘right to mactch’ granted
• Local governments lack capacity – To develop data and/or select appropriate parties to conduct the preliminary survey and tender process
• Tender Process non-standar, underminded by ‘right to match’ – No competitive tension – no incentive for nominated developer to submit competitive proposal –> Unlikely to attract competing bids
6
Where Bottlenecks Occur •
No standardized Power Purchase Agreement (PPA)
– Lead to protracted negotiations with the winning bidders •
Pricing mechanism – Current Regulation provides ‘highest bencemark price’ but does not solve
•
Cost of capital and access to long-term debt finance – Higher cost of capital – especially equity; High capital costs means need to raise 22.5 times as much finance per MW of installed capacity – Likely need to raise foreign currency financing
•
Energy subsidies, conterparty credit risk & government support – Energy subsidies undermine creditworthiness of PLN – IPP require confidence in creditworthiness of PPA counterparty – Subsidy has significant drew on government resources 7
Kerangka Dialog/Kelembagaan Indonesia – Korea (sebagai rujukan)
Geothermal Industry Structure
8
Incentives for Geothermal Power Development Initiatives/incentif
Objectives
Actors
Standardized Power Purchase Agreement
Facilitate the Power Purchase Agreement (PPA), with "standardized" and transparent template
MEMR PLN
Guarantee for Offtaker Performance
Provide Guarantee for PLN Performance – government guarantees that Geothermal IPP will get paid as long as it produces electricity
MOF
Tender Rules
Improvements to the tender rules for field development, in order to get world-class developers to compete for the development of the geothermal
MEMR
Local Government Capacity
Increased capacity of local government in tendering and completing the EIA and forest protection (protection and conservation)
MEMR MOHA
Resource Risk Mitigation
Formulate mitigation instruments to reduce resource risk by providing facilities upstream /resource confirmation for the preliminary survey activities - private sector financed Geothermal Resource Risk Fund
MEMR MOF
Financing Support to Local Government
Financing for Local Governments to invest in exploration drilling to reduce the Geothermal Resource Risk - Enhance the existing geological data in a pre-selected area, before being offered for tendering of those WKP
MEMR MOF
Long-term Finance
Provide long term finance facilities, together with local Indonesian Banks, such as Infrastructure Finance Facility, and/or bi-/multilateral donors
MOF
Feed-In Tariff
Obligation is imposed to the regional or national electric grid utilities, for a set price, to buy electricity produced by the geothermal projects.
MEMR MOF
Geothermal Fund Identification
Exploration
Presently, tender for WKP effectively occure here, as tender for preliminary survey
Development & Financing
Financing provision (Geothermal Fund) of better data enables tender to be conducted here
Bottleneck/Gap: Projects (WKP) tendered too early – at preliminary survey stage, before sufficient data is available for bidders to make realistic assessment of project potential/profitability
80%
Solution: Geothermal Fund provides finance/assistance to pay costs of preliminary survey and limited exploration
60% 40% 20%
Operation
Power plant construction
Injection drilling
Production drilling
Financial close
Intial production drilling
Feasibility
Delineation drilling
Exploration drilling
Geophysics
Reconnaisance
0% Desktop
Probability of Failure (Risks)
100%
Operation
Geothermal Fund •
Geothermal Fund Establishment – In 2011 the GOI has provided budgeted for establishment of a Revolving Fund (Fund), dedicated for geothermal development.
•
The purpose of the fund – to enhance the existing geological data in a pre-selected area, before being offered for tendering of those WKP. – the enhanced data would make the geothermal risk more defined when the WKP is offered for tender.
•
Use of fund – to finance the geothermal exploration activities up to initial drilling exploration well(s) and it is expected the fund will be sustainable for future project development. – the fund will be made available to geothermal projects using the Public Private Partnership (PPP) scheme.
Proposed Feed-in Rates for Geothermal Power Sumatera: 10 - 11,5 US$ cents/kWh
North, Mid Sulawesi & Gorontalo: 13 - 14,5 US$ cents/kWh
(High/Medium Voltage)
Maluku & Papua: 17- 18,5 US$ cents/kWh
Jawa, Madura & Bali: 11 - 12,5 US$ cents/kWh
West & East Nusa Tenggara: 15 - 16,5 US$ cents/kWh
South, West, Sout East Sulawesi: 11 - 13,5 US$ cents/kWh
The proposed prices are set depending upon the region where the field is located. Unlike the existing feed-intariff for other renewable surces, such as hydro, biomass, and landfill gas, the tariffs are given in U.S. dollars.
The tariff is a fixed price as opposed to a previously set as benchmark prices or ceiling prices, so it is true feedin tariffs – guaranteed price paid for energy by state electricity company – as known internationally.
Feed-in Tariff – Tendered Price versus Capacity on 19 New Fields of Geothermal (Green) Fileds in the Process of PPA with tPLN (Source: KESDM, July 2012) 20
(US$) Cents per kWh
18,18 17,95
Maluku FIT
15 13,17
Java FIT 9,65
10
9,09
9,50
9,47
8,58 8,09 8,39
6,63 6,29
7,55
9,50 9,40 8,86 8,10
Sumatra FIT
250
300
6,90
5,62
5
0 0
50
100
150
200
Power Plant Capacity (MW) Sumatera
Jawa
NTT dan Maluku
PLN has to pay above tendered prices. The difference or gap will be reimbursed via government (Electricity Subsidy). However, MOF requires geothermal price must reflect the true potential reserve of fields, thus need exploration.
New Thought – Proposed price regimes taking into account a classification (Not Location) of geothermal 20
(US$) Cents per kWh
18,18 17,95
15
Moderate Temperature Reservoir (150-180 oC)
13,17
9,65
10
9,09
9,50
9,47
8,58 8,09 8,39
6,63 6,29
9,50 9,40 8,86
8,10
7,55
6,90
5,62
5
High Temperature Reservoir (>220 oC)
0 0
50
100
150
200
250
Power Plant Capacity (MW) Sumatera
Jawa
NTT dan Maluku
Fileds with moderate temperature reservior (binary plants) have higher price relative to those with high temperature reservior (flash plants)
300
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