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Bioenergy

Indonesian presidential hopefuls vow energy self-sufficiency through palm

18 February 2019

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Indonesia

JAKARTA: Indonesia’s two presidential candidates pledged on Sunday (Feb 17) to achieve energy self-sufficiency by boosting the use of bioenergy, particularly fuelled by palm oil, to cut costly oil imports by Southeast Asia’s biggest economy.

Indonesia, the world’s biggest palm oil producer, has been pushing for all diesel fuel used in the country to contain biodiesel to boost palm consumption, slash fuel imports, and narrow a yawning current account gap.

In a televised election debate, President Joko Widodo said if he won a second term the government planned to implement a B100 programme, referring to fuel made entirely from palm oil, after last year making it mandatory to use biodiesel containing 20 per cent bio-content (B20).

“We hope 30 per cent of total palm production will go to biofuel. The plan is clear, so we will not rely on imported oil,” Widodo said, adding that Indonesia’s crude palm oil production had reached 46 million tonnes a year.

Agreeing on the importance of bioenergy for self-sufficiency, his opponent Prabowo Subianto said if elected he would also “boost the use of palm oil, palm sugar, cassava and ethanol from sugar (cane)”.

The challenger did not elaborate on his bioenergy plan, but his campaign team has proposed using millions of hectares of degraded land to cultivate palm sugar to produce energy.

Widodo’s government has previously said it would offer incentives for developers of B100, which the net oil importer hopes can replace fuel imports within three years.

Indonesia’s state energy company PT Pertamina has signed an agreement with Italian oil company Eni to develop a refinery in Indonesia that would produce fuel completely derived from crude palm oil (CPO).

Oil imports have contributed to Indonesia’s widening current account deficit and the volatility of the rupiah currency. The government claimed that its biodiesel programme would save billions of dollars in diesel fuel imports.

Although retired general Prabowo agreed with Widodo on several points during the debate, he said Indonesia’s “land and water, and the resources within” must be controlled by the government.

“We are of the view that the government must be present in detail, thoroughly, firmly and actively to correct inequalities in wealth,” he said.

The challenger said the proportion of small farmers’ holdings in the country’s palm plantations should also be larger. Smallholders currently account for roughly 40 per cent of Indonesia’s 12 million hectares of palm oil plantations.

Both candidates expressed support for greater control of Indonesian natural resources.

President Widodo hightlighted Pertamina’s takeover of stewardship of major oil and gas blocks from foreign operators, and an agreement for a state company to purchase a 51 per cent stake in the giant Grasberg copper mine from Freeport McMoRan.

‘NOISE, SMOKE WAS FIREWORKS’

Earlier, Indonesian police said a suspected explosion outside the venue of the live presidential debate in the capital Jakarta was caused by fireworks.

Police officials said a loud noise was heard and thick grey smoke was seen immediately after in the area, where dozens of supporters of Widodo and Prabowo had gathered. There were no immediate reports of casualties or injuries.

“It was fireworks. We are still working on it,” national police spokesman Dedi Prasetyo told Reuters.

Unverified videos circulating on social media showed people running away from thick smoke in a parking lot and several police officers cordoning off an area near the hotel.

Indonesia is set to go to the polls on Apr 17.

Renewables

Singapore business school launches Southeast Asia’s first sustainability major

17 February 2019

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Singapore

A Singapore business school has launched Southeast Asia’s first major on sustainability.

The new course at Singapore Management University (SMU) aims to grow and promote the understanding of sustainability in Southeast Asia, a region with social and environmental issues ranging from deforestation and plastic pollution to overtourism and migrant labour.

The major takes three to four years to complete and will arm students with knowledge of sustainable practices and how to apply it in business.

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Many companies consider a sustainability strategy necessary to be competitive today and in the future.

Professor Gerard George, dean, SMU Lee Kong Chian School of Business

The curriculum will cover topics such as what businesses can do to reduce their negative impact on communities and the environment.

Modules include sustainable finance, social entrepreneurship, economic development in Asia, development, underdevelopment and poverty, and sustainability and marketing. Compulsory modules include sustainability management and governance.

One condition for the course is that is done concurrently with another chosen first major. The course will be available to SMU students from this year onwards.

According to professor Gerard George, dean of SMU Lee Kong Chian School of Business, “Increasingly, businesses have embraced sustainability as part of their strategic goals. Many companies consider a sustainability strategy necessary to be competitive today and in the future.”

The course is backed by Southeast Asia’s largest bank, DBS, which plans to commit more than $1 million in funding to sustainability research, scholarships and fellowships.

The bank’s Singapore country head, Shee Tse Koon, said sponsoring the course aligned with DBS’ legacy as the country’s development bank.

“Our hope is that this partnership will cultivate a thriving pool of talent and businesses that will help us [Singapore] become a world-class centre of sustainable development excellence,” he said.

The announcement comes in a busy period for DBS’ sustainability activity. Last year, the bank launched the Recycle More, Waste Less campaign in a bid to reduce the use of plastics in Singapore, and awarded CapitaLand a $300 million sustainability-linked loan to promote sustainable practices.

DBS is the only Asia bank to commit to using only renewable energy to power its operations and was the first to launch a climate policy. But the bank continues to face criticism from environmental groups for funding coal-fired power stations in the region.

Electricity/Power Grid ,
Energy Economy

Investing in Southeast Asia’s electricity

17 February 2019

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ASEAN

Southeast Asia is a growing region with countries here averaging growth rates of 5.1 percent. This situation has rightly prompted a rise in energy demand within the region. Between 2000 and 2016, economic growth in the region spurred a 70 percent increase in primary energy demand. To that end, governments in Southeast Asia have implemented a host of policies to ensure energy demand is met.

On a regional scale, the ASEAN Power Grid (APG) slated to span the length and breadth of the 10-member states of the Association of Southeast Asian Nations (ASEAN) was initiated in the late 1990s. Essentially, the grid represents a forward-thinking vision to enhance cross border electricity trade in the region which would help undergird rising electricity demand.

The expansion of the regional electricity grid cannot be undertaken without foreign investment, thus presenting a lucrative win-win opportunity for foreign investors. Numbers by the International Energy Agency (IEA) indicate that the region would require US$1.2 trillion in investments between now and 2040 in order to modernise and expand its electricity grids.

Prominent investors in the electricity sector include China, Japan, European nations, the United States (US) as well as several multilateral banks and financial institutions.

For China, the clear motive for their investment is to further entrench their economic and political relationships with countries in the region – some of which border its southern regions. Since 2003, China has invested US$66 billion in power generation in Southeast Asia, representative of 48 percent of its total investment globally in that regard.

Japan on the other hand, has been actively investing upwards of US$1.5 billion in hydro, solar and wind projects in the region since 2009. Its neighbour, South Korea has also shown interest with the Export-Import Bank of Korea investing US$150 million in renewables in Southeast Asia between 2009 and 2016. Seoul’s New Southern Policy, initiated in 2017 promises to further increase energy cooperation with its counterparts in Southeast Asia.

Outside of Asia, the US’ Overseas Private Investment Corporation has invested over US$400 million between 2009 and 2016. Moreover, the US Agency for International Development is set to pump in US$750 million to bolster the renewable energy capacities of ASEAN member states.

In Europe, investment interests come mainly from Germany. Germany’s development organisation, the Gesellschaft für Internationale Zusammenarbeit (GIZ), has been actively partnering with the ASEAN Centre for Energy via the ASEAN-Germany Energy Programme (AGEP). The GIZ has assisted and funded a host of activities aimed at improving regional and technical cooperation between Germany and ASEAN states.
Source: International Renewable Energy Agency

Multilateral banks like the World Bank and the Asian Development Bank (ADB) have played a crucial role in facilitating renewables deployment in the region. Both financial institutions have invested over US$2 billion and US$1 billion, respectively in Southeast Asia’s renewable energy sector since 2009.

Going green

Most investments from China, Japan and South Korea focus on non-renewables like coal, notwithstanding an increased urgency in investing in renewables, especially in hydropower and solar.

In Indonesia, these three countries have participated in 18 coal projects between 2010 and 2017. In financing such projects, they needn’t look too far off, as Singapore’s top three banks – DBS Bank, Oversea-Chinese Banking Corporation (OCBC), and United Overseas Bank (UOB) – provided necessary funding for 21 coal projects from 2012 to 2018. Over half these projects were coal-fired power plants in Vietnam and Indonesia.

Implementing renewable energy initiatives is easier said than done. ASEAN aims to secure 23 percent of its primary energy mix from renewable resources by 2025. Based on policies that are currently being practiced and that are in consideration for the future, the region’s renewable energy share in its primary mix is slated to reach only 17 percent by 2025, leaving a six percent gap between target and actual rate of adoption.

Nevertheless, the dwindling costs of renewable energy have further strengthened the business case for turning to renewables. According to the International Renewable Energy Agency (IRENA), the cost for solar photovoltaics (PV) fell 45 percent – the most among other renewable power sources – between 2012 and 2016 from US$3,915/kilowatt (kW) to US$2,134/kilowatt (kW). Onshore wind experienced a similar cost reduction between 2013 and 2016 from US$2,627 to US$2,342.

The nexus of economic growth and energy demand will be a continuous dilemma for lawmakers and investors alike. With lucrative foreign investments knocking on the doors of countries in the region, governments must be put to task in ensuring investments within their respective borders are reflective of this shared green future.

This article was first published by The ASEAN Post on 20 September 2018 and has been updated to reflect the latest data.

Electricity/Power Grid ,
Energy Economy

Camarines Sur power cooperative gets P624 million DBP loan

16 February 2019

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Philippines

MANILA, Philippines — State-run Development Bank of the Philippines (DBP) has extended loans amounting to P624 million to an electric cooperative from Camarines Sur to help improve its services to 82,000 households in the province.

In a statement, DBP President and chief executive officer Cecilia Borromeo said the bank has signed a P624-million loan agreement with the Camarines Sur III Electric Cooperative (CASURECO III) to finance the cooperatives’ initiatives to improve power distribution and reduce systems losses in its area of service.

The loan, she said, will also be used to train CASURECO’s personnel.

With the approval of the loan, Borromeo said CASURECO III is now the third electric cooperative supported by the DBP in Camarines Sur and Camarines Norte. Majority of the water districts in the Bicol Region are also funded by the DBP.

CASURECO III serves Iriga City and the towns of Nabua, Bato, Buhi, Balatan, Bula, and Baao, with a combined population of around 412,450. It has accomplished 100 percent electrification of all 229 barangays in its areas of coverage.

Incorporated in 1975, the electric cooperative was upgraded by the National Electrification Administration to Category C in 2016 and Category B the following year because of its compliance with key performance standards.

CASURECO III maintains deposits with DBP lriga, and has availed of other DBP services, such as payroll servicing, deposit pick-up, and salary loan program for its employees.

DBP has also installed an automated teller machine at the CASURECO III office to facilitate the delivery of electronic banking services to its officers, employees and customers.

DBP is the eighth largest bank in the country, with total assets amounting to P632.93 billion as of end-September 2018.

The bank reported a net income of P4.49 billion in the first nine months of the year, reflecting a 13-percent improvement compared to P3.98 billion in the same period last year.

Electricity/Power Grid

Vietnam inaugurates $1.27 billion thermal power plant

16 February 2019

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Vietnam

The 600 MW Thai Binh 1 Thermal Power Plant officially opened Thursday in the northern province of Thai Binh.

It is expected to generate 3.6-3.9 billion kWh of electricity a year, said Duong Quang Thanh, chairman of Vietnam Electricity (EVN), the country’s sole electricity distributor.

Construction of the plant commenced in 2014, with a total investment VND26.5 trillion ($1.27 billion). Of this, EVN, the project investor, contributed 15 percent, and the remaining 85 percent came from an ODA loan from the Japan International Cooperation Agency (JICA).

The plant is one of two thermal power projects in Thai Binh Province. Construction of the second, which has a capacity of 1,200 MW, is expected to be completed in 2020.

Vietnam relies largely on hydropower and thermal power plants for its electricity needs. However, its hydropower potential is almost fully exploited and its oil and gas reserves are running low. Thermal energy is expected to account for over 48 percent of the country’s power production in 2019.

While it is one of Asia’s fastest-growing economies, Vietnam been struggling to develop its energy industry.

World Bank country director for Vietnam, Ousmane Dione, said at a recent forum that Vietnam will need to raise up $150 billion by 2030 to develop its energy sector.

Dione added that electricity demand in the country will grow by about 8 percent a year for the next decade.

Energy Economy

Indonesia’s Pertamina Cuts Jet Fuel Price in Relief for Airlines

16 February 2019

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Indonesia

Indonesia’s stock exchange plans to cut the minimum trading price for shares and shrink the lot size in its drive to attract more retail investors and boost volumes.

The bourse will revise the decade-old requirement for stocks to maintain a floor price of 50 rupiah and lower the minimum order size from 100, Laksono Widodo, director of trading and membership at PT Bursa Efek Indonesia, said in an interview.

The Jakarta Composite Index has rebounded from 2018’s selloff to trade near its all-time high reached last February, as foreigners have turned bullish on Indonesian equities after being net sellers in the past two years. That’s as volume and turnover have climbed since the settlement period for stocks was cut to two days from three in November. The bourse is eager to maintain the momentum, Widodo said.

“It’s all about the development of the retail market and deepening of financial markets,” he said. “We need to revise various rules on trading, and hopefully it all can come in the second half of the year.”

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Trading volume and turnover on the rise since the rule tweak in November

Source: Bloomberg

Click to read about Indonesian exchange plans to lure trading

Twenty six of the 637 stocks in the benchmark Jakarta Composite Index stopped trading after their prices fell to 50 rupiah each. Revising the floor price will allow these shares to change hands again at prices that will reflect their fundamentals, he said.

Reducing the lot size will bring high-value shares like PT Gudang Garam with the reach of retail investors. A single transaction in the stock under the existing norms cost 8.3 million rupiah ($590). That’s more than twice the minimum monthly wage in Jakarta.

Also on the cards is easing of rules for companies planning first-time share sales after a record number of IPOs last year, Widodo said.

Volumes on Indonesia’s $523 billion stock market have climbed 23 percent on average in the months after the settlement cycle was pruned in November from the mean 12 months prior, data compiled by Bloomberg show. Daily turnover jumped at least 17 percent in the period and has stayed above the exchange’s 9 trillion rupiah target.

“The exchange has provided a good boost to the market,” said Taye Shim, head of equities capital market at PT Mirae Asset Sekuritas Indonesia, said. “We expect a further increase in retail participation if the reduction in minimum transaction price and lot size were to materialize.”

Bioenergy

Ministry’s B20 plan to end surplus issue

16 February 2019

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Thailand

Energy Minister Siri Jirapongphan attends an exhibition at Egat’s head office in Bang Kruai, Nonthaburi.

The Energy Ministry has set a new goal to make biodiesel B20 available nationwide to tackle the persistent surplus of crude palm oil.

B20 is a blend of 80% diesel and 20% methyl ester content from crude palm oil. The current formulation is 7% crude palm oil for biodiesel B7.

In 2019, crude palm oil output is expected to reach 2.5 million tonnes, but 2 million is the normal annual output. The 500,000-tonne surplus will need to be absorbed by other sectors.

Energy Minister Siri Jirapongphan said policymakers will set long-term measures to mitigate the surplus output that takes place every year.

“The widespread use of B20 should be started in the next couple of years and motorists can refill B20 at every petrol station,” Mr Siri said. “Diesel-powered pickups should be B20-compatible in the coming years.”

Last year was the first time the ministry announced commercial sale of B20, but viability was limited to diesel-powered buses and trucks.

B20 has been available for fleet operators of trucks and buses as well as boats.

Two companies, PTT Plc and Bangchak Corporation Plc, have agreed to distribute B20 at their petrol stations.

Other traders such as Susco Plc and PTG Energy Plc are expected to follow with B20 distribution in the next few months.

The first year of commercial sales will be voluntary for buses and trucks, while pickups should be able to refill using B20 in the near future.

Mr Siri said the ministry will team up with several oil traders and vehicle assemblers to create field tests for B20 in pickups, which is the next step.

“Once B20 can be distributed nationwide, demand for crude palm oil will rise by another 600,000 tonnes per year and the surplus will be depleted,” he said.

Mr Siri said purified biodiesel or B100 is part of the longer term plan.

Another measure to absorb the surplus is to use crude palm oil for power generation, set at 160,000 tonnes.

With this volume, the surplus in stock will decline from 360,000 tonnes to 200,000 tonnes, the normal monthly level.

Mr Siri said this measure will not impact the power tariff.

“This amount for power generation should soon push up the price of fresh palm to a range of 3.1-3.25 baht per kilogramme from 2 baht now,” he said.

In related news, the state-run Electricity Generating Authority of Thailand (Egat) signed purchase contracts yesterday with 22 crude palm oil millers for a combined 83,000 tonnes at a price of 18 baht per kg. Egat plans to purchase another 22,000 tonnes in the second contract and 55,000 tonnes in the third. The agency has allocated a budget to purchase crude palm oil of 2.88 billion baht.

Renewables

Senate examines scope and exclusivity of Solar Philippines mini-grid franchise

15 February 2019

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Philippines

The Senate committee examining a house bill granting a PV mini-grid franchise to renewable energy firm Solar Philippinnes has been debating the reach of the franchise as well as its exclusivity, with the discussion to reconvene in May after the general election.

The bill has gone through three hearings already, having passed through the lower house, and stakeholders were asked to submit position papers on the latest version last week.

The controversial HB 8179 relates to an offshoot of Leandro Leviste’s firm Solar Philippines known as Solar Para Sa Bayan (SPSB) or ‘Solar For The Country’, which focuses on combinations of solar PV, energy storage and diesel generation in both un-electrified areas as well as regions already receiving electricity. Indeed this plan to reach beyond areas lacking in electricity access is one of the several issues that have the rest of the industry up in arms, particularly as the original scope of the franchise was across the Philippines.

Theresa Capellan, president of the Philippine Solar and Storage Energy Alliance (PSSEA), told PV Tech that the solar industry, which is largely opposed to the franchise, has managed to get two important provisions added to the Bill, among other minor changes. The first was that the Electricity Regulatory Commission (ERC) must oversee and review any tariff determination put forward by SPSB and the second was to have the scope of the franchise confined to ‘unserved’ and ‘underserved’ areas. This would mean that SPSB’s projects could not be connected to the main grid under the franchise, despite Leviste’s long-term vision for the mini-grids to not just handle unserved areas but also start to creep into supplying towns and even cities.

The Senate has been scrutinising two more aspects of the Bill.

One issue relates to there being no definition of unserved or underserved in Electric Power Industry Reform Act (EPIRA). The final draft of the Bill has yet to be tabled, but Capellan said the language used by the Senate defined ‘unserved’ as an area that has no electricity and no distribution lines, while the definition of ‘underserved’ – areas that are receiving electricity but not necessarily for 24 hours a day and with regular brownouts – needs to be consistent with the contents of the EPIRA.

Questions have been raised about how SPSB entering underserved areas would impact the existing contractual obligations of the incumbent franchise holders, said Capellan. These include uncertainty over whether the originally contracted capacities – a coal-fired power plant for example – would become stranded assets. On the other hand, if SPSB enters unserved areas, there are fewer complications, although there are still issues that need clarification.

Capellan added: “That is why the inclination of the Senate is to limit to the unserved [areas], because if you go into the underserved then all of these issues will have to be clarified and threshed out. There will be a lot of questions that need to be resolved, but in the unserved [areas] it’s pretty straightforward. You don’t disrupt any existing contracts.”

The second aspect being examined is the definition of ‘non-exclusive’. Critics of the House Bill have consistently argued that it would offer one private PV firm a monopoly that would merely replace the monopoly of the rural electric cooperatives with another one. Meanwhile, SPSB chief Leviste has always hit back by highlighting the fact that the franchise is explicitly non-exclusive.

This should mean that any parties can enter the franchise area that SPSB is operating in, but there will be a competitive selection process.

Capellan said the general position of the industry is that the bill should not be passed because it effectively amends the regulatory regime under the EPIRA. Furthermore, wherever one wants to do business in energy the Philippines, there is always an existing franchise, so granting SPSB a franchise raises more questions about whether the original franchises would be automatically revoked, for example. There are also questions about whether the franchise will cover not just power generation, but also transmission lines.

The bill passed through the lower house in December, but is now being deliberated by the Senate and a technical working group, which raised many of these more specific concerns.

Local news outlets have reported Leviste as saying that SPSB is open to “compromise” on the bill, as long as the overall undertaking can be continued.

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The 600 MW Thai Binh 1 Thermal Power Plant officially opened Thursday in the northern province of Thai Binh.

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