OECD-CEFIM Focus Group Discussion on the use of insurance products to de-risk clean-energy-projects

1. esdm.go.id| @kesdm Ministry of Energy and Mineral Resources|
Lowering Clean Energy Risk
Through Government
Regulation
Directorate General of New, Renewable Energy, and Energy Conservation
Ministry of Energy and Mineral Resources
Republic of Indonesia
Foto: Hasrullah Arifin/Lomba Foto KESDM 2019
Jakarta, 16 June 2021
FGD on Use of Insurance Products to De-risk Clean
Energy Projects
1
Chrisnawan Anditya
Director of Various New and Renewable Energy

2. esdm.go.id| @kesdm Ministry of Energy and Mineral Resources| 2
1 Energy Sector Commitments Towards Net Zero Emission 3
2 Government Programs for NRE Development 4
3 Investment Risks in Renewable Energy 5
4 Lowering Clean Energy Risk Through Government Regulation 6
5 Closing 12
OUTLINE

3. esdm.go.id| @kesdm Ministry of Energy and Mineral Resources|
ENERGY SECTOR COMMITMENTS TOWARDS NET ZERO EMISSION
Leaders Summit on Climate, 22 April 2021
UNFCCC - COP21, December 2015
National Commitments 2016-2030:
• The mandate of Law No. 16/2016 on Ratification of the
Paris Agreement: reducing GHG emissions by 29% (self-
effort) or 41% (with international assistance) by 2030
according to NDC;
• The energy sector reduces GHG by 314–398 million tons of
CO2 in 2030, through the development of renewable
energy, implementation of energy efficiency, energy
conservation, as well as the application of clean energy
technology.
National Commitments 2021-2050:
• Implement concrete actions on climate change through a
moratorium on forest and peat land conversion to reduce
forest fires by 82%;
• Encouraging green development through the development of
a Green Industrial Park covering an area of ​​12,500 hectares in
North Kalimantan;
• Unlock investment in the energy transition through the
development of biofuels, lithium battery industry, and
electric vehicles.
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4. esdm.go.id| @kesdm Ministry of Energy and Mineral Resources|
Source: National Grand Strategy for Energy Concept
esdm.go.id| @kesdm 4
1. Indonesian Government aims to add 38 GWof NRE
Installed Capacity by2035
2. Solar energy is prioritized due to its relativelylow cost
and short installationduration.
3. NRE AccelerationEfforts:
• Primary Final Energy Substitution, by utilizing the
existing technology; B30-B50, co-firing, RDF
utilization.
• Fossil Primary Energy Conversion, converting Diesel
PP or Coal Powered PP into NRE PP, biogas, and
pellet forcooking.
• Increasing NRE Capacity, to meet the new demand;
focus on the development of Solar PP
• Utilization of Non-Electric NRE /Non-Biofuel such
as briquettes and drying of biogas agricultural
products
• Implementation of the Presidential Regulation
regarding the price of NRE.
• The revised Ministerial Regulation regarding
Rooftop Solar PV.
10 10 11
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15
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24
27
30
32
35
37
39
41
43
45
48
2019 2021 2023 2025 2027 2029 2031 2033 2035
Total Capacity RE (GW)
NRE Target
23%
GOVERNMENT PROGRAMS FOR NRE DEVELOPMENT
4

5. esdm.go.id| @kesdm Ministry of Energy and Mineral Resources|
CHALLENGES
5
Social Social Social
Permit Engineering Engineering
Engineering Policy/Regulatory Policy/Regulatory
PPA/Contract Technology Technology
Policy/Regulatory Construction Labour
Procurement Process Labour Nature
Land Acquisition Nature Currency
Currency Hydrology
Grid Connection
Curtailment
Development Construction Operation
Which risks are acceptable to project developers, investors, lenders, utility company? And which are not
acceptable? What to do about it?
Source: Indonesia Renewable Energy Society, 2019
INVESTMENT RISKS IN RENEWABLE ENERGY

6. esdm.go.id| @kesdm Ministry of Energy and Mineral Resources|
CHALLENGES
6
DE-RISK CLEAN ENERGY PROJECTS: REPOSITIONING OF AUTHORITY
Minister of EMR
• Carried out by State Enterprises (PLN);
• Business Entities which have cross provinces business
areas;
• Business entities which sell electricity to electricity business
license holder issued by Minister.
• Electricity Business Area Holder which provide integrated
electricity supply.
Governor
• Business entities which have business area in a single
province;
• Business entities which sell electricity to electricity business
license holder issued by Governor.
• Electricity Business Area Holders which do not include
electricity generation business
Authority of Minister of EMR / Governor after issuing IUPTL:
AUTHORITY OF ISSUING THE ELECTRICITY SUPPLY BUSINESS LICENSE FOR PUBLIC (IUPTL)
Minister of EMR
• Stipulation of Electricity Tariff;
• Stipulation of Electricity Sale Price Agreement and Grid Lease for
business entity which its license was issued by Minister;
• Ratification of Electricity Business Plan for business entity which
its license was issued by Minister;
• Supervision and Monitoring;
• Administrative Sanctions Arrangement.
Governor
• Stipulation of Electricity Sale Price Agreement and Grid Lease for
business entity which its license was issued by Governor;
• Ratification of Electricity Business Plan for business entity which its
license was issued by Governor;
• Supervision and Monitoring;
• Administrative Sanctions Arrangement.
Based on Government Reg. No. 5/2021 and Government Reg. No 25/2021

7. esdm.go.id| @kesdm Ministry of Energy and Mineral Resources|
CHALLENGES
7
DE-RISK CLEAN ENERGY PROJECTS: EASY OF PERMITS
ESBL(IUPTL) is an Electricity Supply Business
License for Public Interest
Shall have:
1. Business ID / NIB (Nomor Induk Berusaha);
2. Beneficial Ownership (Daftar Penerima Manfaat);
ESBL (IUPTL) Requirements :
1. Feasibility study of electricity supply business, with
documents that contains (in Indonesian
Language/Bahasa) :
a. Financial Feasibility Study;
b. Operational Feasibility Study;
c. Grid Interconnection Study;
d. Installation location;
e. One Line Diagram;
f. Type and capacity of business;
g. Construction Schedule; and
h. Operation Schedule, which prepared by Certified
Business Entity; and
2. Electricity Sale and Purchase Agreement between
applicant and prospective electricity buyer (ESPA/PJBL
with its amendments) according to Electricity Sale
Price Criteria or has obtained Electricity Sale Price
Approval from Minister of EMR or Governor, based on
the authority.
Business entity submit licensing
request in OSS
(oss.go.id)
DG Electricity MEMR
Carried out verification of technical
requirements
(Business Licensing Commintment)
COMPLETE
& VALID
?
APPLICANT
NO
YES
ESDM Licensing App
(perizinan.esdm.go.id)
ESBL/IUPTL
Issued
(oss.go.id)
5
Working
Days
BID (Business ID) / NIB
(Nomor Induk Berusaha)
ESBL/IUPTL
(not activated)
Rejected
ESBL/IUPTL
Efektif
Commitment Fulfilled Letter
(perizinan.esdm.go.id)
Commitment
Fulfilled
The Electricity Supply Business
License for Public (IUPTL)
Before After
Requirements 9/10 2
Period (days) 30 5
Based on Government Reg. No. 23/2014 jo. Government Reg.
No. 14/2012; Government Reg. No. 24/2018; Government Reg.
No. 5/2021; and Government Reg. No 25/2021

8. esdm.go.id| @kesdm Ministry of Energy and Mineral Resources|
CHALLENGES
8
DE-RISK CLEAN ENERGY PROJECTS: ON-LINE PERMIT PROCESS
Request
(Licensing)
Business
Entities
OSS
KESDM
Application
(Evaluation)
perizinan.esdm.go.id
Rejected
NIB (Business ID) and
Licensing Output (not activated)
Approved/Rejected
Integration
Business License
(Activated)
Commitments
fulfilled
Approval
Request Tracking
Based on Government Reg. No. 23/2014 jo. Government
Reg. No. 14/2012; Government Reg. No. 24/2018;
Government Reg. No. 5/2021; and Government Reg. No
25/2021

9. esdm.go.id| @kesdm Ministry of Energy and Mineral Resources|
CHALLENGES
9
DE-RISK CLEAN ENERGY PROJECTS: PPA GUIDANCE
1. PJBL : Period
2. Rights and obligations : seller - buyer
3. Guarantee
4. Commissioning & COD
5. Fuel supply
6. Transactions
7. Generation Performance Penalties
8. PJBL : Termination
9. Transfer of rights
10.Price adjustment requirements
11.Dispute resolution
12.force majeur
PRINCIPLE OF ARRANGEMENTS:
1. The longest period of ESPA/PJBL is 30 years, with considering
generation type and starting date from COD.
2. Build, Own, Operate, Transfer (BOOT) is used as cooperation
pattern in ESPA/PJBL.
1. Comissioning terms shall refer to MEMR Regulation No 5/2014
jo MEMR Regulation No 10/2016 concerning on Electricity
Accreditation and Certification Procedure.
2. Electricity operation shall refer to MEMR Regulation concerning
on Grid Code.
3. If there is COD acceleration by PLN’s request → vendor have
right to obtain incentives
4. If there is late COD → PLN have right to give penalty
1. PLN shall purchase electricity matched with Availability Factor
(AF) or Capacity Factor (CF) with price as stated in purchase
agreement.
2. IPP shall provide electricity energy as stated in the contract
(deliver or pay).
3. In the condition that PLN can not absorb electricity as stated in
the contract and this condition is caused by PLN’s fault, then
PLN shall pay the penalty to the seller (take or pay).
ESPA (PJBL) :
COMISSIONING & COD:
TRANSAKSI:
Based on MEMR Reg No. 10/2017 jo MEMR
Reg. No. 10/2018

10. esdm.go.id| @kesdm Ministry of Energy and Mineral Resources|
CHALLENGES
10
DE-RISK CLEAN ENERGY PROJECTS: PRICE AND MECHANISM *)
*) Draft Presidential Regulation on NRE
PRICE
FiT staging 2 no excalation phase, location factor is valid for
Staging 1:
▪ Hydro PP (including Hydro PP reservoir) for capacity up to 5 MW
▪ Solar PV and Wind PP for capacity up to 5 MW
▪ Biomass PP and Biogas PP for capacity up to 5 MW
▪ Solar PV and Wind PP expansion for capacity up to 5 MW
▪ Biomass PP and Biogas PP expansion for capacity up to 5 MW
Ceiling price (HPT) staging 2 no excalation phase, location factor is
valid for staging 1:
▪ Geothermal PP for all capacity
▪ Hydro Power Plant (including Hydro Power Plant reservoir) for
capacity>5 MW
▪ PV and Wind PP >5 MW
▪ Biomass PP and Biogas PP for capacity >5 MW
▪ PV and Wind PP expansion >5 MW
▪ Biomass PP and Biogas PP expansion >5 MW
▪ excess power Geothermal, Hydro, Biomass, Biogas PP all
capacity.
Agreement Price:
▪ Hydro Power Plant Peaker for all capacity
▪ Waste PP,Biofuel PP, Sea Energy PP for all capacity
MECHANISM OF PURCHASING ELECTRIC POWER
Direct Appointment:
▪ Hydro PP for all capacity;
▪ Solar PV and Wind PP for capacity up to 5 MW
▪ Biomass PP and Biogas PP for capacity up to 5 MW
▪ Expansion of hydro PP, geothermal, Solar PV, wind PP, Biomass PP,
Biogas for all capacity.
▪ Excess power of dari hydro PP, geothermal, Biomass PP, Biogas for
all capacity.
Direct Appointment : assignment for Hydro PP reservoir &
Geothermal
Direct selection: Solar PV, Wind PP, Biomass PP and Biogas PP for
capacity up to 5 MW
BOOT mechanisme: B to B.
Period of contract: 30 years for hydro PP, geothermal, Solar PV, wind
PP; 20 years for PLTBg and 25 years for Bimass PP.
Transaction using Rupiah.
The agreement price requires the approval from the MEMR
The provision of electricity purchase price is evaluated 3 years at the
most.
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11. esdm.go.id| @kesdm Ministry of Energy and Mineral Resources|
CHALLENGES
11
DE-RISK CLEAN ENERGY PROJECTS: GOVERNMENT SUPPORT *)
Ministry of EMR: Formulating NRE PP
development plan and determining the
NRE quota
01
Ministry of Finance:
▪ Providing fiscal and non-fiscal incentives
▪ Giving compensation to PT PLN if the
electricity purchase price regulated in
the Presidential Regulation > BPP PT
PLN
02
Ministry of SOE: Determining the NRE
utilization target in PT PLN’s performance
indicator and assigning SOE to develop
NRE industry
03
Ministry of Agrarian Affairs and Spatial
Planning/National Land Agency:
Providing ease of licensing and prioritizing
NRE utilization in national spatial planning
04
Ministry of Environment and Forestry:
Providing ease of licensing for land
utilization in forest areas and cost
deduction in NRE development
05
Ministry of Industry:
▪ Supporting Business Entities to prioritize domestic
products utilization through creating of supply
capability
▪ Determining import quotas for NRE PP components,
▪ Executing Verification of Domestic Component Level
for NRE PP components
▪ Formulating roadmap for electricity supporting
industry development
06
Ministry of Public Works and Housing :
Providing ease of licensing and cost deduction
in NRE development
07
Ministry of Home Affairs: Formulating policy
to support the development of NRE PP in the
scope of regional government
08
Regional Government: Providing ease of
licensing, incentives (deduction of land and
building tax), and collateral of land availability
for NRE PP development
09
The Head of BKPM: Ensuring the ease of
licensing issuance in NRE development both in
central and regional areas
10
Coordinating Minister of Maritime and
Investment: Coordinating the formulation of
policy and the implementation of Government
supports
11
*) Draft Presidential Regulation on NRE

12. esdm.go.id| @kesdm Ministry of Energy and Mineral Resources|
CHALLENGES
12
CLOSING
Indonesia has committed to achieve the 23% new and renewable
energy target by 2025 as mandated by the national energy policy
as well as Paris Agreement.
1
NRE development is one of efforts to achieve renewable energy
target as well as reducing emission target.
2
Improved regulations is part of creating a conducive investment
climate as well as lowering risk of NRE development
3

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REGULATION FRAMEWORK
1. Peraturan Menteri ESDM Nomor 28 Tahun 2012 jo. Peraturan Menteri ESDM Nomor 07 Tahun 2016 tentang Tata Cara Permohonan
Wilayah Usaha Penyediaan Tenaga Listrik Untuk Kepentingan Umum;
2. Peraturan Menteri ESDM Nomor 35 Tahun 2013 jo. Peraturan Menteri ESDM Nomor 12 Tahun 2016 tentang Tata Cara Perizinan Usaha
Ketenagalistrikan;
3. Peraturan Menteri ESDM Nomor 31 Tahun 2015 tentang Penyediaan Tenaga Listrik dalam Kawasan Terbatas;
4. Peraturan Menteri ESDM Nomor 39 Tahun 2018 tentang Pelayanan Perizinan Berusaha Terintegrasi Secara Elektronik Bidang
Ketenagalistrikan.
5. Peraturan Menteri ESDM Nomor 12 Tahun 2019 tentang Kapasitas Pembangkit Tenaga Listrik Untuk Kepentingan Sendiri Yang Dilaksanakan
Berdasarkan Izin Operasi;
UNDANG-UNDANG
PERATURAN PEMERINTAH
PERATURAN MENTERI
1. Undang - Undang Nomor 30 Tahun 2009 tentang Ketenagalistrikan;
2. Undang – Undang Nomor 11 Tahun 2020 tentang Cipta Kerja.
1. Peraturan Pemerintah Nomor 42 Tahun 2012 tentang Jual Beli Listrik Lintas Negara
2. Peraturan Pemerintah Nomor 23 Tahun 2014 tentang Perubahan atas Peraturan Pemerintah Nomor 14 Tahun 2012 Kegiatan Usaha
Penyediaan Tenaga Listrik
3. Peraturan Pemerintah Nomor 24 Tahun 2018 tentang Pelayanan Perizinan Berusaha Terintegrasi Secara Elektronik
4. Peraturan Pemerintah Nomor 5 Tahun 2021 tentang Penyelenggaraan Perizinan Berusaha Berbasis Risiko
5. Peraturan Pemerintah Nomor 25 Tahun 2021 tentang Penyelenggaraan Bidang Energi dan Sumber Daya Mineral