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Regional Seminar on Commercialization of Biomass Technology
4-8 June 2001
Guangzhou, China

Ms. Indarti
Head of New Energy Utilization
Sub Directorate, Directorate General
of Electricity and Energy Utilization,
The views and opinions expressed in it are those of the author and do not necessarily
reflect those of the United Nations. The report has been issued without formal editing.

1. National Energy Policy
Indonesias energy resources consist of fossil energy and renewable energy. Fossil energy
i.e. oil, natural gas, and coal are extremely important and play a strategic role. These
resources are valuable for national development, functioning as energy resources and
industrial raw material as well as foreign exchange earner.
Oil reserves are not large, compared to the world’s oil reserves, Indonesia’s oil reserves
are small, being only about 0.6%.
The potential of natural gas are also not too much, compared to the world’s reserves,
Indonesia’s natural gas reserves only about 1.6%.
While the proven reserves of coal is only 5 billion tons. Compared to the world’s
reserves, Indonesia’s coal reserves are about 3.1%.
Energy resource which are considered as renewable energy are biomass, solar energy,
geothermal, hydro power, wind energy, and ocean energy. Indonesia has a fairly large
potential of biomass energy. The whole potential of biomass energy from the three
sectors of forestry, agriculture and estates, amounts to the equivalent of about 50,000
MW. The potential of solar energy is a relatively good, with a daily solar intensity of 4.8
kWh/m2. To make use of that solar energy potential, there is two technologies which
have been applied, namely solar thermal energy and solar photovoltaics. The total
Geothermal energy potential is around 20,000 MW, this amount is equal with 40% of
world’s geothermal energy resources. Hydro-power potential for electricity production is
estimated to be quite substantial, namely 75,000 MW. Meanwhile, the potential of wind
energy is in general small on account of the generally low wind speed of between 3 and 5
m/sec. But in certain areas, particularly in the eastern part of Indonesia the wind speed is
higher than 5m/sec. In general the potential of ocean energy is good, however in-depth
research into its potential has not been completed.
The increasing population and the sustained high growth of the economy demand inputs
of natural resources, both as fuel and in the form of raw materials, in large amounts. In
the mean time, fossil energy resources are finite, and efforts need to be undertaken to
optimize the utilization of energy resources.
To achieve this objective, the utilization of energy resources need to be shifted in the
stages from export of energy towards energy use in support of the industrialization
process such that sustainable development is attained. The most optimum energy
resources allocation needs to be achieved.
To support energy development in Indonesia there are five principal policies, namely :
• Energy diversification
Energy diversification is directed towards diversifying the utilization of energy, be it
renewable or non-renewable, in the framework of economic optimization of energy
supply and in order to decrease the rate of depletion of hydrocarbon resources so that
the maximum net benefit is obtained while sustainable development is implemented.
• Intensification of exploration for Energy Sources

Energy exploration activities are carried out through continuing surveys and
exploration for energy, either from domestic or foreign sources, with the aim of
increasing energy reserves, in particular oil and natural gas and coal. The search for
energy sources will be focused in areas that had not been surveyed, while those areas
with some indications will need efforts to update their reserve status to more
• Energy Conservation
The principle of conservation will be applied on all stages of utilization, beginning
with energy use at its source up to its end use to ensure the fulfillment of the future
generation's needs. The conservation effort will be applied on both the upstream and
the downstream sides. Upstream energy conservation will be implemented through
increasing the efficiency of energy source extraction, while downstream conservation
will be implemented through increasing efficiency of energy end use in all sectors.
• Energy Price
The average energy price in a planned and deliberate way will be adjusted such that it
would more and more follow the market mechanism but will take into account a
number of aspects, namely the optimization of energy utilization, increasing
economic competitiveness, protection of consumers, and the principle of equitable
• Environment
Energy development will be implemented in support of environmentally sound and
sustainable development. For this to be achieved, the environmental damage and the
degradation of the eco-system that accompanies energy development need to be
continually decreased by decreasing negative environmental impacts, either local, or
global, related to the production, transportation and end use of energy.
2. Renewable energy policy
Renewable energy policy is part of national energy policy particularly on energy
diversification policy. As the potential of renewable energy is relatively large, domestic
energy demand could in fact be met. However, their optimum use has not been achieved.
To date, the utilization of renewable energy are still small compared to national energy
demand, so that renewable energy development has to be supported to contribute
significantly to national energy supply mix.
Indonesia is an archipelago nation with a great variety of geographic conditions. Due to
such natural conditions some disparities have arisen among regions of Indonesia in terms
of modalities, infra-structure, human resources as well as in social-economic well-being.
These disparities mean that some regions are relatively modern, while some others are
still backward.
Therefore the economic development of those regions still relatively backward need to
pursued more vigorously, among others also through increasing efforts in energy supply.

This should be more equitable, in order to decrease the economic disparity among the
regions and between urban and rural areas, thus enhancing the equitable distribution of
development and its benefits. The sustainable and economic supply of energy in support
of economic growth and the equitable distribution of development, needs to be
continually promoted.
In addition, to meet the demand for small scale energy, particularly in rural areas that are
remote and not easily accessible by conventional energy means, locally available energy
utilization needs to be promoted to enhance equitable distribution of development.
The development of renewable energy as local energy has to be integrated to the regional
development, it is developed particularly for income generating and finally can increase
social and economic welfare.
The price of oil is still subsidized, it cause the distortion of energy price system. The
subsidy will be reduced gradually, and it is expected that the price of renewable energy
can be competitive
To encourage Small Power Producers to develop renewable energy, government has
issued the decree on Small Power Purchase Tariff. This decree regulates the selling of
privately produced electricity to the State Electricity Company, with the following
• Electricity production from wind, solar energy, mini/microhydro
• Electricity production from agricultural, industrial and municipal wastes, geothermal
and co-generation systems from agricultural and industrial wastes
• Co-generation using natural gas, coal and oil.
• Electricity production from natural gas, coal and oil
The government has also issued ministerial decree regarding the pre-electrification
program. This program is aimed to fulfill the basic energy demand by supplying Solar
Home System (SHS) or microhydro in the village that has not been electrified. If the
demand increase and electricity grid come to the village, the equipment of SHS is
replaced to other location, while microhydro can be interconnected to the grid.
3. Institutions that involved in biomass development
Institutions involved in renewable energy including biomass among others government,
research institutions, universities, association, and NGOs.
Government such as Ministry of Energy and Mineral Resources, Ministry of Agriculture,
Ministry of Forestry; Institutions such as PTE-Technical Committee for Energy,
BAKOREN-National Energy Coordinating Board.
Research Institution such as BPPT-Agency for the Assessment and Application, LIPI-
Indonesian Institute of Science;

Universities such as Institute of Technology Bandung, Institute Agriculture of Bogor;
Association such as Association of Sugar Millers, Association of Palm Oil Millers,
Association of Plywood Industries;
NGO’s such as IRES-Indonesian Renewable Energy Society; YBUL-Yayasan Bina
Usaha Lingkungan, Yayasan IBK, etc.
NGO’s and CBO’s involvement in national energy policy and implementation regarding
the promotion of the program on reducing subsidy of oil and electricity, developing
renewable energy based on community development, propose to government concerning
energy policy, promoting renewable energy by dissemination information to rural
community (awareness), and assisting local/rural organization to improve their technical
and management capability
4. Biomass potential
The potential of biomass derived from wood and crop residues is shown in the table
below. The potential sources of fuelwood are rubber wood or palm tree wood from
plantations that are cleared or renewed, as well as logging residues, cuttings, trimmings
and sawdust from wood processing and plywood industries. The major crop residues to
be considered for power generation in Indonesia are palm oil residues, which are
generated throughout the year, and sugar processing residues as well as rice processing
(mill t/year)
Rubber wood
Logging residues
Sawn timber residues
Wood residues
Sugar residues
Bagasse:10, cane to:4, cane
leaves: 9.6
Rice residues
Husk:12, bran:2.5, stalk:2,
Coconut residues
Shell:0.4, husk:0.7
Palm oil residues
Empty bunches 3.4,
fibre:3.6, shell:1.2
5. Biomass Technology developed in Indonesia
The use of biomass energy is of long standing and is probably the oldest form of energy
whose role is large, especially in rural areas. It is estimated that 35% of total national
energy consumption in fact originates from biomass. Through direct burning and other
conversion technology such as pyrolisis and gasification, biomass may be converted into
heat, mechanical or electrical energy. The energy produced has been used for a variety of
purposes, among others for household (cooking and home industry), prime mover for rice

milling, for drying of agriculture products and wood industry, power generation in wood
and sugar industry.
Biomass cogeneration mostly installed in industries based biomass i.e. palm oil, wood
and sugar industries.
Existing co-generation plants are the 5.5 MW waste wood power plant at PT. Siak Raya
Timber in Pekanbaru, Sumatra, the 35 t/h at 35 bar installed at PT. Kurnia Musi Plywood
Industry in Palembang.
Most palm oil mills generate combined heat and power from fibres and shells, making the
operations energy self –efficient. However, the use of palm oil residues can still be
optimized in more energy efficient systems.
Sugar mills that have their own steam generation facilities are generally equipped with
old, low-pressure systems. Upgrading to highly efficient, high pressure systems with
higher capacities can be, commercially speaking, an interesting option.
It is estimated that palm oil and sugar production will be the sector where the demand for
biomass energy technology will increase considerably in the future. The palm oil industry
is one of the agro-based industries in Indonesia attracted by many domestic as well as
Small scale biomass gasification with the capacity around 15-176 kW for the time being
as demonstration projects, not fully commercially available. Technical improvements are
especially required in fuel feeding, gas cleaning, ash removal and overall automatic
control systems.
Bearing in mind that livestock population continually increases and the nation’s
population are large, the potential of biogas is quite substantial. However, only a very
small portion of this potential has been used, and even this has been limited to cooking
and lighting. The use of biogas from human wastes still at the stage of demonstration
projects. In addition to producing clean energy in the form of gas, biogas from human
waste could also overcome pollution of wells in dense human settlements, that is in large
Research and development of bio-fuel technology especially for transportation have been
implemented in Indonesia. The demonstration project and the assessment of economic
viability will be done in near future.
Efficient stoves
Efficient stove has been developed with modification of local/traditional stoves.
Training and socialization to small industries particularly craft industries done by
government and NGOs.

6. Programs on Biomass Energy Development:
Programs of biomass development are directed to the activities related in technology,
awareness, policy and financing.
• Increasing Research and Development activities
• Identification and mapping of biomass potential
• Dissemination on technology of efficient stove
• Dissemination of biomass technologies
• Training and socialization of biomass technology
• Demonstration projects of bio-fuel
• To encourage private/local industries to increase local content
• Strengthening international cooperation particularly on the investment of biomass
• Preparing regulation focusing on the incentive
• Standardization
7. Awareness raising programs
Information dissemination by publication of brochures/leaflet, directory of renewable
energy projects and directory of companies involve in renewable energy development.
Conduct training, seminars, workshops to exchange of information, and information
dissemination; demonstration projects with involving the people in the planning,
implementation and evaluation of renewable energy projects, and preparing guideline of
renewable energy project preparation.
8. Barriers
There are some barriers in developing biomass development, among others:
• Oil subsidy
• High investment cost
• Lack of financial institutions (Bank) interested in biomass development
• Lack of coordination among related institutions
• The efficiency and reliability of existing technology is still low
• Difficulties of community acceptance regarding biogas from animal dung, manure
• Low capability of rural institution
9. Opportunities for commercialization of biomass technology
Some issues regarding the opportunity of biomass development for commercialization:
• Cogeneration have been commercial
• Most of high potential of biomas in palm oil, sugar and wood industries not yet
• Most of existing biomass cogeneration are old and low efficiency. It should be
replaced by the new and efficient cogeneration equipment

• Biomass cogen can meet electricity demand in industries base biomass, and the
excess of electricity can be sold
• Replacing diesel oil in industries based biomass
• There are around 50 sugarmills and 100 palm oil mills available
10. The market of biomass technologies is attractive because of:
Indonesia represents an attractive market for biomass technology mainly because of the
following reason:
• Low cost of biomass residue combined with high electricity demand
• Geographically, it is difficult and expensive to develop centralized electricity system
• Fuel supply to remote areas is often not possible due to weather condition
• Biomass residues create a waste disposal problem
11. Foreign investment
Foreign investment is welcome and considered as method of importing modern
technology allowing the transfer skills, creating new job, developing local entrepreneurial
The Capital Investment Coordinating Board is a key role in promoting foreign investment
and approving project application
• Foreign capital investment may be established as:
- Joint venture between a foreign company and capital owned by Indonesian
citizens and/or a foreign or domestic statutory body or individual
- Direct investment, where the capital owned by foreign citizens and/or a foreign or
domestic statutory body or individual.
12. Biomass Utilization
Biomass consumption is around 35% of national energy consumption
Installed capacity of cogeneration is around 302 MW particularly in palm oil industries,
sugarmills and sawmill industries.
Around 70 units of gasification with the capacity between 10-200 kW have been installed
for electrification and drying.
Hundreds units of biogas from animal dung and human waste
Thousands units of efficient stoves have been made for cooking in household, small
industries such as brick and tile, crafts, etc.
13. Biomass projects
Many projects related to biomass utilization have been implemented and still continue in
the future. Some of them are dissemination of efficient stove through training and
demonstration project by regional office of Ministry of Energy and Mineral Rsources,
and financed by national budget
Demonstration projects of gasification in some locations done by Indonesian Institute of
Sciences, financed by international donor agency.

Gasification project done by Indonesia Power with the capacity around 18 kW, financed
by company
Feasibility study of biomass cogeneration in East Kalimantan with the capacity of 15-30
MW, financed by international donor agency
14. Manufacture
There are many manufacture involving in the biomass technology production, such as PT.
Boma Bisma Indra, design and manufacture of gasifier systems using wood and rice
husk, capacity between 15-176 kW
PT IMSF, design and manufacture of gasifier systems
PT. Spektra Matrika Indah, biogas design and construction, using animal manure and
human waste, capacity 30-50 m3