A new ministerial decree is coming on 13th November 2009 (31/2009). I guess, this is a part of the government’s 100 days program especially from Department of Energy and Mineral Resources. The new ministerial decree is concerning the feed in tariff for renewable energy generators with capacity less than 10 MW or excess power. The new decree automatically cancels the infant ministerial decree number 5/2009 that was just released few months ago.
What’s the main characteristic of this new decree? It is the feed in price. For generators interconnected to medium voltage (I guess it is 20 kV), the averaged feed in price is 656 IDR/kWh for Java Bali area (factor = 1). For generators interconnected to low voltage (I guess it is 400 V), the averaged feed in price is 1004 IDR/kWh for Java Bali area (factor = 1). For islands other than Java Bali there are some multiplication factors (e.g. Sumatera and Sulawesi is 1.2; Kalimantan, Nusa Tenggara (East and West) is 1.3; and Papua is 1.5).
I guess the “staging” concept is still valid. This means in the first 5 or 7 years the developer can get higher feed in price (compared to the averaged price) and in the rest of the contract time, developer will get lower feed in price (compared to the averaged price).
It seems the procedure will be shortened since PLN is obliged to prepare a standardized contract form. This means there is no negotiation (also looking at the set price above). Implementation of projects will hopefully be faster unless PLN applies hard requirements for developers such as for example EBITDA 30% for the last 2 years (maybe PLN itself can not achieve this, although PLN’s move might be based on very rational reason such as preventing PPA holder from being brokers (selling PPA contracts) instead of being serious renewable energy generator developer).
Feed in price problem, that was, some weeks ago, still perceived as problem by some MHP developers is solved. This, according to association of mini hydro developers, is considered as a very good step and it expects a boom of MHP development in the next 3-5 years. The association predicts that the boom can reach 500 MW per year and that will make the industry facing a new problem. How to provide the hardware?
Currently MHP developers are mostly using Chinese or European hardware for their MHP schemes. Chinese products are very much having many varieties of quality. It corresponds with the price. European products usually have consistent quality standard, this means cost is very much fixed (i.e. quite high). There is also new Indonesian manufacturer that has just started into MHP hardware business (turbine) in MW scale. The next challenge to the government is to provide local manufacturers more capacities so that they can benefit from the MHP boom in the next 3-4 years. If local manufacturers can not move fast, all the benefits will go abroad and the overall goal of the new ministerial decree is missed.
The old decree (e.g. 1122/2002) set lower feed in price for interconnection at low voltage (0.6 times marginal cost of production at interconnection point). This new decree sets higher feed in price for interconnection at low voltage. Does this move is a strategy to encourage micro renewable energy generators? I guess this is to encourage such things. However the procedure should be very much shortened for the micro size since, I guess, it will be community based or very small private companies or cooperatives that might not have enough resources to pay the high transaction cost (relative) of interconnection process.
Anyway, although this was quite late (all energy minister should have done this years ago), but this decree is mostly welcomed by players in the sector. They have positive opinion on this and expecting that there will be a boom in the sector. Hydro power might lead the boom since the technology and also resources are already available and assessed so often.
Let's hope for positive development and prepare the necessary actions to tackle possible problems due to this decree.
I guess the “staging” concept is still valid. This means in the first 5 or 7 years the developer can get higher feed in price (compared to the averaged price) and in the rest of the contract time, developer will get lower feed in price (compared to the averaged price).
It seems the procedure will be shortened since PLN is obliged to prepare a standardized contract form. This means there is no negotiation (also looking at the set price above). Implementation of projects will hopefully be faster unless PLN applies hard requirements for developers such as for example EBITDA 30% for the last 2 years (maybe PLN itself can not achieve this, although PLN’s move might be based on very rational reason such as preventing PPA holder from being brokers (selling PPA contracts) instead of being serious renewable energy generator developer).
Feed in price problem, that was, some weeks ago, still perceived as problem by some MHP developers is solved. This, according to association of mini hydro developers, is considered as a very good step and it expects a boom of MHP development in the next 3-5 years. The association predicts that the boom can reach 500 MW per year and that will make the industry facing a new problem. How to provide the hardware?
Currently MHP developers are mostly using Chinese or European hardware for their MHP schemes. Chinese products are very much having many varieties of quality. It corresponds with the price. European products usually have consistent quality standard, this means cost is very much fixed (i.e. quite high). There is also new Indonesian manufacturer that has just started into MHP hardware business (turbine) in MW scale. The next challenge to the government is to provide local manufacturers more capacities so that they can benefit from the MHP boom in the next 3-4 years. If local manufacturers can not move fast, all the benefits will go abroad and the overall goal of the new ministerial decree is missed.
The old decree (e.g. 1122/2002) set lower feed in price for interconnection at low voltage (0.6 times marginal cost of production at interconnection point). This new decree sets higher feed in price for interconnection at low voltage. Does this move is a strategy to encourage micro renewable energy generators? I guess this is to encourage such things. However the procedure should be very much shortened for the micro size since, I guess, it will be community based or very small private companies or cooperatives that might not have enough resources to pay the high transaction cost (relative) of interconnection process.
Anyway, although this was quite late (all energy minister should have done this years ago), but this decree is mostly welcomed by players in the sector. They have positive opinion on this and expecting that there will be a boom in the sector. Hydro power might lead the boom since the technology and also resources are already available and assessed so often.
Let's hope for positive development and prepare the necessary actions to tackle possible problems due to this decree.
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