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Executive Summary
Fossil fuels are currently the dominant energy carrier to meet the national energy need. Since reserves
of fossil fuels are limited, government has implemented policies, such as President Regulation No. 5,
2006 on National Energy Policy, to simulate the use of energy efficiently and rationally without
reducing needed energy to promote economic growth. In this case, energy efficiency is prioritized in
some sectors, specifically households and industry.
The CASINDO program aims to contribute to the formulation of these policies by creating a regional
energy efficiency master plan. The aim of this plan is to:
Contribute to current Vision 25/25 EE policy
Use a bottom-up approach to identify current barriers
Provide a quantitative base for policy input
Focus on EE measures that could provide savings in the short to medium term (max 10 yrs)
Focus on measures that could be implemented now - no unproven technologies or measures.
In the industry sector, especially in North Sumatera, energy efficiency is carried out by reducing the
use of diesel as a main fuel. In this study palm oil factories are analyzed because as a processing
industry, which is becoming a main player in the plantation sector in North Sumatera, it has large
potential to utilize its production waste.
From the analysis one palm oil factory with a capacity of 40 tones fresh fruit bunch (FFB)/hour using
liquid waste that is POME as energy of electricity generator and its planned investment is 54 billion,
then we can save 10 million liter diesel or it is equal to 85 billion rupiah in three years.
Besides the industrial sector, households are also the target of the analysis because it is one of the
largest energy consuming sectors in Indonesia reaching 11,4% from the used total energy in 2010.
This observation is focused for household in Medan City and some regions surroundings based on
different capacities; 450 vA (415 IDR/KWh), 900 vA (605 IDR/KWh) dan 1300 vA (790 IDR/KWh).
The way of efficiency for household is by replacing 1 used light bulb with 1 energy saver light bulb.
From this analysis, it is known that replacing the light bulb can save11,306 million (KWh) or it is
equal to 2,58 billion rupiah for 450 vA, then for 900 vA type is 3,73 million (KWh) or it is equal to
1,244 billion rupiah and for 1300 vA type is 15,614 million (KWh) or it is equal to 4,075 billion
rupiah.
Table 1 Financial and Energy Savings
No. Capacity
(Groups)
Energy Efficiency
[kWh]
Value
[Rp]
1 450 vA 11,306 Million 2,58 Billion
2 900 vA 3,73 Million 1,244 Billion
3 1300 vA 15,614 Million 4,075 Billion
In the households sector, there are some barriers to implement EE lighting bulb for the groups, for
group 450vA is financial barriers because most of the people in this group has a lowest saving
income. For other groups are lack of awareness of the advantages of energy efficiency.
For Palm oil mill implementation in industrial sector there are some barrier: large upfront investment
(up to 53 billion) and difficult access to finance (banks), lack of technical knowledge and awareness
and administrative and regulatory barriers related to policy consistency on offered electricity prices.
3
Implementing focused EE policy will affect the whole region and reduce the use of fossil energy,
reducing greenhouse gas emissions and environmental damage, reduce government subsidies on fossil
energy and reduce energy costs for users.
In household sectors, an Energy Efficiency bulb program can lead to savings between 12-27 GWh
after 5 years and no real financial barriers but mainly awareness issues recommend, such as labeling
program, increasing tax on regular light bulb and phase out program for regular light bulb.
For a biogas program on palm oil mills, it can save millions of liters of diesel a year and additional
electricity can be produced and supplied to PLN
CASINDO project is to aim on Energy Efficiency:
Contribute to current Vision 25/25 EE policy
Use a bottom-up approach to identify current barriers
Provide a quantitative base for policy input
Focus on EE measures that could provide savings in the short to medium term (max 10 yrs)
Focus on measures that could be implemented now - no unproven technologies or measures.
4
CONTENTS
EXECUTIVE SUMMARY 2
LIST OF FIGURES 5
LIST OF TABLES 5
1. Introduction 6
2. Methodology 8
Sector identification 8
Surveys 8
Analysis and energy efficiency measure identification 9
Financial analysis and policy scenarios 9
Conclusions and recommendations 9
3. Analysis 9
Sector identification 9
Household 10
Palm oil mill sector 10
Financial Analysis 12
Analysis of Energy Efficiency at POME 15
4. Conclusion 18
Household sector 18
Palm oil mill industry sectors 18
Recommendations 18
5
List of Figures
Figure 1. Development Of Primary Energy Demand And Supply Year 1990-2010
(Ebtke: Memr) 6
Figure 2. National Energy Policy (Eecchi-Program) 7
Figure 3. The Number And Share Of Electric Customers In Each Connection Range In Medan
And Its Close Surroundings 10
Figure 4. Total And Capacity Of Palm Oil Factory Production In Indonesia 11
Figure 5. Flow Of Pks Liquid Waste Processing 12
Figure 6. Process Scheme Of Biogas Generator 12
Figure 7. Npv Analysis For Lamp Changing Scenario 13
Figure 8. Potency Of Saving At Each Customer Group 13
Figure 9. Scenario Of Raising Cost The 415 Idr/Kwh Customer Group 14
Figure 10. Saving For 1 Light Bulb 15
Figure 11. Saving Potency For 1 Bulb With Some Scenarios 15
Figure 12. Npv Analysis For Palm Factory With Capacity 40 Ton Ffb/Hour 16
Figure 13. Saving Of Diesel Fuel 16
Figure 14. Npv Analysis At 5 And 10 Years Loan 17
Figure 15. Scenario Of 20%,40% And 80% Penetration 17
List of Tables
Table 1 Financial and Energy Savings 2 Table 2 Energy Saving Potential 8 Table 3 Category and total of household costumer 12 Table 4 Penetration scenario for each customer group 14
6
1. Introduction
With vast economic and population growth, Indonesia has the interest to manage and use energy as
effectively and as efficiently as possible. According to the World Bank, Indonesia's economic growth
increased from 5.7% in 2005 to 5.9% in 2010, and is projected to reach 6.2% in 2011. The population
of Indonesia now reaches 230 million people.
After China and India, Indonesia is the 3rd fastest growing economy and part of the world’s leading
industrial countries (G20). According to The World Bank, Indonesia is now the world’s 18th largest
economy at US$650 billion with a growth rate expected to reach 6.3% in 2011, potentially 7% by
2012 and 8% by 2014 - exceeding the growth rate of both China and India within 10 years. The Euro
monitor market research group expects that similar growth in per capita income will increase
Indonesia’s middle class families from 36% of the population this year to more than 58% by 2020.
Figure 1. Development Of Primary Energy Demand And Supply Year 1990-2010 (EBTKE: MEMR)
As we can see in figure 1 this economic growth is accompanied by an increase in energy demand. If
we assume that demand for electricity will grow on average 7% per year for the next 30 years, then
electricity consumption will significantly increase. For example, consumption in the household sector
will increase from 20 GWh in 2000 to around 450 GWh in 2030. The graph above shows that more
than 95% of the primary sources of energy still come from fossil fuels, which carry the following
negative effects:
Security of supply: although Indonesia has large fossil fuel resources it is still dependant on
certain fuel imports and therefore affected by volatile energy markets
Environmental issues: the combustion of fossil fuels emit greenhouse gases (GHGs) which
contribute negatively to climate change
Reduce government subsidies for fossil fuels: currently, the government subsidies for fossil
energy are Rp 98.96 trillion rupiah (2009). By reducing government subsidies for fossil fuels
more budget can be allocated to renewable energy and other EE & C efforts to reach future
targets.
Provide benefits for energy users: using energy efficiently has a direct impact on reducing the
cost incurred by energy users. Industrial goods and services become more competitive
internationally if the energy cost component can be reduced. In the household sector, energy
efficiency improvement can increase the average amount of disposable income for
households.
7
To reduce energy demand government needs to promote the efficient use of energy in the household,
industrial, commercial and transportation sector, by introducing policies and measures to stimulate
energy users to adopt efficient technologies and change their energy behavior. According to
Government Regulation No. 70/2009, energy efficiency and conservation is defined as a systematic,
planned and integrated effort in order to conserve domestic energy resources and increase efficiency
in its utilization. Energy efficiency and conservation covers all aspects of energy management, such
as:
Energy Supply
Energy Exploitation
Energy Utilization
Conservation of Energy Resources.
To achieve a more energy efficient process or situation an initial investment must be made. This can
be in the form of more modern and efficient technology, improved regulation or training in the field
of improved energy management. For an energy user - be it in the household, industrial, transport,
commercial or public sector - the interest to invest in an energy efficiency measure is dependent on:
1. the size of the initial investment
2. the payback period of that investment
3. the total energy and cost savings.
Government can promote private investments in energy efficiency by introducing policies that can get
around the current barriers to investing in energy efficiency. The government of Indonesia has
recognized this in ‘Vision 25/25’ which outlines commitments to increase the use of renewable
energy to 25% and reduce energy demand by 33.85% compared to a business as usual scenario in
2025, as can be seen in figure 2.
Figure 2. National Energy Policy (EECCHI-Program)
The Government of Indonesia has promoted an energy efficiency program called Energy Efficiency
and Conservation Clearing House Indonesia (EECCHI) as an effort to reduce emissions, through
training, workshop, conference and energy seminar. EECCHI is a cooperation between the Ministry
of Energy and Mineral Resources (MEMR) and the Danish International Development Agency
(Danida). This program has been carried out since December 2009 until now. EECCHI program has
some activities such as: energy efficiency seminars, energy portal and blog competition, and training
for energy auditors. These current efforts are limited and the national approach does not take into
8
account regional differences. This technical working group aims to provide regional energy efficiency
policy recommendation for North Sumatra to contribute to national policy.
2. Methodology
To develop concrete regional energy efficiency policies a bottom up approach is used. To collect the
necessary data and to be able to prioritize the following steps were taken:
Identify the sectors with the highest energy usage in North Sumatera
Carried out surveys for the identified sectors.
Analyze collected data to established energy usage characteristic
Identify possible EE measures
Cost and potential analysis for EE measures
Identify barriers and create a policy scenarios
Conclusion and policy recommendations.
Sector identification
To identify the sectors that are the largest energy users data was used from PLN, and energy saving
potentials identified by MEMR (Table 2).
Table 2 Energy Saving Potential
Sector Potential
Energy Saving
Share of Energy
Consumption
Implementation
Target
(2010-
15)
Target
(2016-
20)
Target
(2021-
30)
Target
Total
Industrial 25% 49% 5% 7% 10% 22%
Commercial 25% 4% 5% 5% 5% 15%
Transportation 35% 30% 5% 10% 10% 25%
Household 30% 14% 5% 10% 10% 25%
Others 25% 3% 5% 5% 5% 15%
NATIONAL 29% 100% 5.1% 8.2% 9.7% 23%
From Table 2, shown that:
- industrial and household sectors are the largest energy consuming sectors in Indonesia
- Industry has the largest share but the smallest number of users
- Household and Commercial sector have many customers and are very fragmented.
Industrial and household sector were finally chosen due to the high energy usage and energy saving
potential.
Surveys
Surveys were carried out for households and industries in the Palm Oil sector in North Sumatera. For
households surveys was taken in Medan city and surrounding, and for palm oil mill in PTPN in North
Sumatera.
Consumption of electricity (watt) of light bulb used in the household will be identified in the survey.
Different group of electricity group such as : 450 VA, 900VA and 1300VA with average 20-30
houses were collected.
9
In Palm Oil (POM) sector surveys were carried out for 4 POM factories: PTPN 4 Mayang with
capacity 40 ton/hour, PTPN 4 Bah Jambi with capacity 60 ton/hour, PTPN 4 Dolok Hilir with
capacity 60 ton/hour and PTPN 3 Rambutan Tebing Tinggi , with capacity 35 ton/hour, collecting
data for palm oil mill factory was focused on the energy potential of the waste from the palm oil
process. There are energy potential solid waste and liquid waste (POME). From an energy efficiency
point of view, POME is the most useful potential energy waste and it can be used as to produce biogas
and run a generator.
Analysis and energy efficiency measure identification
The analysis of energy efficiency (EE) measure is based on energy usage, in term of Kwh (kilowatt
hour), and type of appliances. Easy access of the measure and a short payback period (PBP) for
investment were also measured.
In the household sectors, EE measures were identified by collecting data of energy usage of light
bulbs, for different groups of households with 450VA, 900VA and 1300VA connections. The 450VA
group has a largest numbers of customers but represents the lowest income group, An EE light bulb
program will be introduced for this group. With low investment and no necessary modifications to
implement EE light bulbs, the investment will have a short payback period.
In industrial sectors, for Palm oil mill (POM) EE measure will be focus on the calculation of
investment of biogas plant to produce electricity by using liquid waste (POME) of the POM process.
Biogas plant has high investment and longer life time of the factory, there for it has longer pay back
period for this sector.
Financial analysis and policy scenarios
Financial analysis are carried out by calculating the NPV (Net present value) of the investment, to
determine the real cost and benefits, payback periods, and energy cost savings. From the financial
analysis the barriers will be identified and will be used to make policy scenarios.
Conclusions and recommendations
In house hold sectors, a light bulb replacement program can lead to savings for electricity and save the
costs of electricity production for PLN. In this sector, EE measures have low investments, therefore
subsidies are not necessary and policies can focus on promotion and information activities that
stimulate the replacement of light bulbs with EE bulb.
In the industrial sector for palm oil mill factories, implementation of new biogas plants will be
introduce. Biogas plants will use liquid waste (POME) for electric production that can be used by the
factory plant itself and can also be sold to PLN. Long term policies include education and knowledge
for energy efficiency for implementation should be introduced. Energy price should be adjusted and
subsidized for energy to minimized and then removing.
3. Analysis
Sector identification
The energy efficiency measures selected below are expected to be provide financial benefits in the
short term (maximum 5 years) to medium term (maximum 10 years). The industrial sector in North
Sumatera is dominated by the palm oil plantations and has large energy efficiency potential from
processing waste products. The household sector is the largest energy user group and simple efforts
are analyzed, for instance changing a regular lamp with energy efficient alternatives.
10
Household
The household sector consumes approximately 14% of the total energy in Indonesia. Based on this
fact, energy efficiency efforts in this sector are important, not only to reduce household energy
consumption, but also to make an impact on overall energy consumption.
Surveys were carried out in residences in Medan city and close surroundings. This was chosen to
include a variety of professions, such as farmers, civil servants and entrepreneurs, to account for
different levels of energy use and income levels. Different electricity groups such as : 450 VA,
900VA and 1300VA with average 20-30 houses were collected, shown in fig.3 In the household
sector it could be difficult to implement certain EE measures, because there are different barriers for
different consumer groups and choices are not always based on economic variables.
The analysis of energy efficiency (EE) measures for the household sector is based on energy usage
light bulbs in terms of Kwh (kilowatt hour).
Figure 3. The number and share of electric customers in each connection range in Medan and its
close surroundings
Palm oil mill sector
North Sumatera has the most palm oil plantations in Indonesia and is therefore a main priority in the
regional industrial sector. The main observations are related to the potential of palm oil industry waste
as an alternative energy source.
In a palm oil plantation, the final end product is crude palm oil (CPO), but during the processing of
CPO many bi-products are produced that can be used for various industrial processes. Besides palm
oil plantations owned by government (PTPN) in North Sumatera, there are also palm plantation
owned by private companies which always compete in producing better products. The palm oil sector
in Indonesia has developed rapidly with fast plantation growth support reaching more than 6.3 million
hectares which consist of about 60% exerted by large companies including the ones owned by
government (PMDN) and also private companies , and another 40% is exerted by civil plantation.
11
As well as the development of palm oil plantation growth processing industry has developed rapidly
too. It has been noted that until 2007, 965 companies with land area 3.753 millions of hectare are
owned by government plantation, private and foreign. However, civil plantation has reached 2,565
million hectare. It is an amazing development upon thinking about at the beginning, it is only 3.125
hectare (1979) which only represents 1,20 % of total palm plantation at that time. Total and capacity
of palm plantation production owned by government, private and foreign in Indonesia is shown at
Figure 4. If we take approximately of production each Palm Oil Factory in North Sumatera possessing
capacity 40 tons FFB/ hour each Palm Oil Factory.
Figure 4. Total and capacity of Palm Oil Factory production in Indonesia
A. Potency of palm liquid waste Palm oil mill Effluent (POME)
Through the use of anaerobic technology, liquid waste from palm oil factories can produce biogas,
which in turn can be used to produce electricity. Meanwhile, another bi-product empty fruit bunch of
palm can be processed becoming electricity through boiler system/steam turbine.
For Palm Oil Factory with capacity 30 ton FFB/hour, in a year it can be processed 150 thousands
FFB. The percentage of liquid waste in each ton is 0,63 m3, then in a year it can produce liquid waste
about 97.500 m3/year. Next, if it is processed to be electricity, it will produce 1 Mega Watt (MW).
However, for each ton of FFB, it consists of 0,22 m3 empty bunch fruit of palm, which can be used to
generate electricity about 2,5 MW. Thus, from liquid and solid wastes (empty bunch fruit of palm )
Palm Oil Factory owns capacity 30 FFB/hour, it can produce 3,5 MW electricity .
B. Processing of liquid waste from Palm Factory to gas
The fresh waste water is filled into the storage tanks S1 and S2, where the water cools down to
ambient temperature, and the oil float are skimmed manually. The feeding pump P1 sucks water from
the storage tank S2 and feed it into the bottom of the digester D1. The water passes the fixed bed to
the top (up flow), where the effluent flows out. A part of the effluent is pumped by the circulation
pump P2 back to the feeding system to dilute the influent, to lift the pH and to optimize the
distribution of substrate inside the digester. The surplus of the effluent flows into the top of digester
D2 to keep this digester active. The water passes the fixed bed in down flow mode and is discharged
finally.
12
Figure 5. Flow of PKS liquid waste processing
The produced biogas (at ambient temperature 26-28oC) is collected and is measured by gas counters.
Figure 6. Process Scheme of Biogas Generator
Financial Analysis
A. Analysis of Energy Efficiency on Lighting Lamp
Based on the collected data on total PLN connected household customers for each kWh energy cost
category is shown in Table 2.
Table 3 Category and total of household costumer
Electricity group category Amount of connections in category
415 IDR/KWh (450VA) 157032
605 IDR/KWh (900VA) 103827
790 IDR/KWh (1300VA) 31676
13
Figure 7 shows the financial analysis of replacing regular bulbs with a energy efficient alternative by
calculating the net present value (NPV) of the investment. This shows that only Rp. 605,-/kWh and
Rp. 790,-/kWh groups can pay back the investment within one year.
This is a problem because the Rp. 415,-/kWh group has the largest potential (Figure 8), but has the
longest payback period and the lowest total savings. Other household customer groups do not have
financial barriers, and the survey shows that these groups already largely use EE lighting.
Figure 7. NPV Analysis for lamp changing scenario
Figure 8. Potency of saving at each customer group
From the financial analysis it is only the Rp. 415,-/kWh customer group that needs policy measures to
overcome the following barriers:
Long payback periods
Low final cost savings
Policy measures that could get around these barriers are:
Increasing electric prices
14
Increasing the awareness for the benefits of EE light bulbs.
Below policy scenarios are introduced for the Rp. 415,-/kWh customer group, where electricity prices
are raised by 20% and 35 % (Figure 9). Although the outcome of the policy scenarios show better
PBP and higher savings, it should be considered that this consumer group has the lowest income and
will be relatively more affected by raising electric costs.
Figure 9. Scenario of Raising cost the 415 IDR/kWh customer group
Factors which affect penetration level is total of household which have used save energy lamps.
Besides, income group issue and awareness are also guided the users to buy the regular lamp, since its
price is cheaper. By considering those factors, so it is recommended a scenario as shown at Table 3.
Table 4 Penetration scenario for each customer group
Group Normal (no EE policy) Optimistic (EE policy)
415 IDR/KWh (450VA) 20% 50%
605 IDR/KWh (900VA) 10% 20%
790 IDR/KWh (1300VA) 5% 10%
Analysis result of saving potency to change a regular lamp with a save energy lamp at household and
subsidize saving generated for PLN during 5 years can be seen at Figure 10.
15
Figure 10. Saving for 1 light bulb
Meanwhile for changing 1 light bulb at a household to some scenarios are different after 5 years as
shown at Figure 11.
Figure 11. Saving potency for 1 bulb with some scenarios
Analysis of Energy Efficiency at POME
From palm factory data at whole North Sumatera, we obtain:
There are many kinds of palm factory, according to capacity there are 30, 40, 45, 60 and 80 tons
FFB/hour.
There are 87 palm factory in total in North Sumatra. The total capacity is 3010 tons FFB/hour
or it is about 35 tons FFB/hour approximately.
Palm factory with 40 tons FFB/hour is generally found.
NPV analysis result shows that time period of investment payback (PBP) is 62 months and after
operating for 240 months will give profit about 14,5 quintillion (Figure 12)
16
Figure 12. NPV analysis for Palm factory with capacity 40 ton FFB/hour
The diesel fuel saved by using a biogas generator, amounts to 10 million liters after 3 years for 1 palm
factory.
Figure 13. Saving of diesel fuel
The barriers to implement this measure are:
a. Large upfront investment
b. Technical knowledge
c. Awareness
d. Access to finance
e. Administrative barrier
f. Policy consistency or transparency
To ensure access to finance, the financial sector must be involved. This can be stimulated by the
following steps:
a. Training and showing the financial sector that investments in energy efficiency measures are
a profitable prospect by showing NPV analysis including PBP and BEP from investment.
b. Showing proof of factory’s finance report to ensure the finance department about factory
productivity.
c. Providing collateral as a guarantee, such as ownership of area, factory and other valuable
treasures.
17
d. Asking support from the government to guarantee the loan, since it is part of the government
energy program.
By creating a cost scheme from the financial sector to investment with interest at an IR of 12% for 10
years provides a return on the investment after 5 months. A loan of 5 years however, requires 77
months to return the investment but provides 2 billion rupiah higher profits after 20 years.
Figure 14. NPV Analysis at 5 and 10 years loan
Human resource capacity and technical knowledge can be given by some ways, such as :
Government should present the opportunities of biogas technology. to all palm oil mill
owners and companies
Training for the workers/staff but also management in the mill on building digester, generator
links, CH4 piping, etc.
Purchase energy generated by palm factory.
The regional scenarios can affect the penetration rate. For 20%,40% and 80% penetration scenarios
are shown at Figure 15. It can be seen that only by 40% penetration obtained saving after 5 years is
about 20 million litters. Effect of complete policy system also can be seen, including bank and clear
and consistence policy to factory which sells energy to PLN, then it will give saving as 35 million
liters of diesel after 5 years, and 140 million liter after 20 years for 80% penetration rate.
Figure 15. Scenario of 20%,40% and 80% penetration
18
Recommendation
From the data we can see that investor can make profit even with a loan. To stimulate it, we
recommend that we should have 70-80% maximum government security.
4. Conclusion
Based on done analysis identifies that there is a very large prospect for Energy Efficiency in North
Sumatera for household and Palm oil mill Industry sectors.
Household sector
To limit the effects of higher energy prices, campaign programs regarding the financial benefits of EE
bulbs should be introduced before prices get increased. This allows household customers to reduce
the financial effects of higher energy prices due to their lower consumption.
Recommendations
a) From the data we can say that improving the energy efficiency of lighting in households can
lead to large savings for both households and PLN.
b) The largest potential lies in the 450 VA group, and at the same time we can also see that the
current energy price in this group leads to the largest barriers for EE bulbs.
c) To go around these barriers a policy option of increased price was introduced to realize
shorter PBP for the 450 VA group. In addition to this, a more focus and optimal program of
awareness for saving energy can be expanded small district (RT/RW) by giving brochures or
posters containing advantage of using save energy bulb, then shows some electric bills before
increasing electric price to sensitive customer group. Other electric prices do not need to be
raised, but a more general awareness must be intensive through media mass advertisement
(TV, Radio, Newspaper, etc).
d) At national level, we can do some things, for instance: holding labeling program, increasing
tax on regular lamps, and stopping selling regular lamps program.
Palm oil mill industry sectors
Conclusions
Introducing a biogas program for palm oil factories can save million litres of diesel every
year.
The electricity produced can be sold to PLN and fed to the regional grid, further increasing
the return of the investment.
Recommendations
a) To overcome high upfront investment of biogas generator, we should have 70-80% maximum
government security on loans. These loans are still provided by private financial institutions
but due to the guarantee low interest rates can be used.
b) Programs will not succeed without improving awareness and technical capacity for all who
have interest.
c) Contract of selling electric to PLN must be transparent and long-time term to make sure that
investors find the prospect attractive by reducing risk.