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PLN to buy electricity from biogas and biomasss power plants at higher price

JAKARTA (Rambu Energy) – The Energy and Mineral Resources Ministry has issued a Ministerial Decree that requires the state electricity company PT PLN to purchase electricity from biomass and biogas power plants at higher tariff.

The ruling (Permen No. 27, 2014) is an amendment of previous ministerial decree no 4, 2012, which provides incentives to private sector to develop biomass and biogas power plants.

Since the issuance of the ministerial decree (No 4, 2012), private sector investment in biomass and biogas on grid is still low. One of the reasons was due to depreciation of rupiah against US dollar, which raises investment cost to build the plants.

In addition, the electricity purchase scheme is not attractive to investors as PLN purchase electricity from biogas and biomass power plants through excess power scheme. Hence, purchasing the electricity from these power plants is not considered priority.

Biogas, sometimes is called swamp gas, landfill gas, or digester gas, provides a clean, easily controlled source of renewable energy from organic waste materials.

The amended ruling principally encourages the utilization of biomass and biogas potential as a move to increase the utilization of non-fossil fuel, in particular in remote areas.

The Energy Ministry estimates that the biomass potentials in Indonesia are estimated to reach 32,654 megawatts (MW). So far, 1,716.5 MW of biogas and biomass energy had been developed.

The development of bioenergy (on grid) as of end 2013 has reached 90.5 MW, and 1,626 MW is still not connected with PLN’s power grid (off-grid). The government sees huge potential to develop biomass utilizing waste of agriculture products, palm oil, pulp and paper, cassava, and others.

The government has set basic price for Feed-in-Tariff (FiT) for biomass power plant (PLTBm) is Rp1,150/kWh if it is connected to medium-voltage grid or Rp1,500/kWh if it is connected with low-voltage grid of PLN.

The basic tariff for Feed-in-Tariff for biogas power plant (PLTBg) is Rp1,050/kWh if it is connected to medium-voltage grid of PLN and Rp1,400/kWh if it is connected with low-voltage grid of PLN.

Among companies that had developed biomass is PT Austindo Nusantara Jaya Tbk (ANJ). The company operates its biogas business through its subsidiary PT Austindo Aufwind New Energy. Biogas is produced from organic material and can be used as fuel in gen-sets. AANE is already operating its first plant at our Belitung Island Plantation and is processing waste water from its palm oil mill. The facility is operating to avoid the green house gas emissions as a CDM project registered at UNFCCC.

AANE and PT PLN (Persero) of Bangka Belitung have signed a long term power purchase agreement. The 1.2 MW plant is the first independent power producer (IPP) in Indonesia to operate a biogas plant for commercial power generation.

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