亚开行-印度尼西亚的可再生能源关税和激励措施：回顾和建议（英文）-2020.9-74页_2mb

Summary of Renewable Energy Tariffs and Incentives in Indonesia

Core Content

This report, prepared by PT. Castlerock and Economic Consulting Associates for the Indonesian Ministry of Finance, reviews the current renewable energy (RE) tariff and subsidy mechanisms in Indonesia and provides recommendations to improve the affordability and viability of RE projects. It emphasizes the need to close the price-cost gap between renewable and conventional power generation, while ensuring fiscal responsibility and efficient project implementation.

Main Points

1. Current Challenges in Renewable Energy Development

• Inadequate Planning and Grid Management: Poor system planning and grid management practices hinder the integration of renewable energy.
• Unbalanced Power Purchase Agreements (PPAs): Current PPAs are not well-structured, negatively impacting project bankability.
• Procurement and Contracting Issues: Counterproductive processes, such as build-own-operate-transfer (BOOT) requirements and change-of-ownership restrictions, create barriers for developers.
• Local Content and Foreign Investment Constraints: High local content requirements and limitations on foreign investment restrict the scalability and efficiency of RE projects.
• Price-Cost Gap: The main challenge is that renewable energy is often more expensive than conventional sources, especially coal, leading to a need for subsidies.

2. Subsidy Mechanism and Recommendations

• Subsidy Calculation: The subsidy should be based on the difference between the cost of renewable energy supply and the financial cost savings for PLN (State Electricity Company) from avoiding conventional generation.
• Cap on PPA Price: To ensure fiscal prudence, the PPA price should be capped at the economic value, which includes the economic avoided cost and social benefits (e.g., health, environmental, and energy security impacts).
• Legal and Governance Framework:
  • The legal basis should allow PLN to procure renewable energy to meet national targets.
  • Governance involves annual subsidy estimates prepared by PLN, reviewed by the Ministry of Energy and Mineral Resources (ESDM) and the Ministry of Finance (MOF), and approved by the House of Representatives (DPR).
  • A "true-up" mechanism is recommended at the end of the year to adjust for forecast vs. actual RE prices and volumes.

3. Implementation Strategy

• Annual Subsidy Proposals: PLN will propose annual subsidies based on expected RE additions and existing projects.
• Cost Estimation and Auctions:
  • For projects not procured through competitive tenders, a production cost model should be used.
  • Reverse auctions are recommended as the preferred method for setting PPA prices to ensure competitive pricing.
• Subsidy Payments:
  • Payments are made in arrears, with a final "true-up" based on actual generation output.
  • A margin is added to the subsidy to cover administrative and financial costs, but it should be significantly lower than the current 7% margin for tariff subsidies.

4. Focus on Geothermal

• Geothermal as a Key Resource: Geothermal represents 44% of Indonesia’s actual RE production in 2018 and 42% of PLN’s 2028 RE generation forecast.
• Current Regulation: Geothermal projects outside Java and Sumatera are capped at PLN's average production cost (BPP), which can be too low for smaller projects.
• Recommended Approach:
  • Allow PLN to negotiate prices freely for geothermal on Java and Sumatera.
  • Use a production cost model to estimate prices for geothermal projects outside these regions.
  • Adjust the subsidy framework to reflect the true economic value of geothermal.

Key Recommendations

• Adopt International Best Practices: Implement competitive procurement and risk mitigation strategies to reduce financial costs.
• Use Production Cost Models: Replace feed-in tariffs (FIT) with production cost models to better reflect project-specific cost drivers.
• Enhance Governance and Transparency: Ensure that the subsidy mechanism is transparent, with annual reviews and stakeholder input.
• Support Geothermal Development: Focus on reducing the price-cost gap for geothermal, which is a major source of RE in Indonesia.
• Cap Subsidies: Apply caps on total subsidies to ensure fiscal responsibility.
• Encourage Competitive Bidding: Use reverse auctions to ensure that the lowest-cost projects are prioritized.

Estimated Subsidy Payments

• RUPTL Scenario: For 3,786 MW of new geothermal capacity in 2028, the annual subsidy payment is estimated at Rp17.9 trillion.
• Adjusted Scenario: Excluding projects with uncertain prospects, the annual subsidy payment is estimated at Rp6.3 trillion for 1,546 MW of new capacity.
• Implications: These figures highlight the need for more realistic and targeted capacity planning, as well as the potential for significant cost reductions through competitive bidding.

Conclusion

The report underscores the importance of a well-structured subsidy mechanism to support the development of renewable energy in Indonesia. It calls for a shift from current practices to more efficient and competitive models, with a focus on geothermal as a key resource. The proposed mechanism aims to ensure that subsidies are both effective and fiscally responsible, enabling Indonesia to meet its RE targets while improving the overall affordability and reliability of electricity supply.