Utilization of Biomass Fuel as Fuel Mixture in Steam Power Plants

To accelerate the achievement of renewable energy targets in the national energy, reducing greenhouse gas emissions, and encouraging economic development through the role of the community in the provision of biomass as fuel in a Steam Power Plant (in Indonesian in short, a “PLTU”), the Minister of Energy and Mineral Resources (“MEMR”) issued Regulation No. 12 of 2023 dated November 27, 2023 on the Utilization of Biomass Fuel as Fuel Mixture in Steam Power Plants (“Regulation 12/2023”).

We set out below the key provisions of Regulation 12/2023.

Key Definitions

The key definitions provided under Regulation 12/2023 are as follows:

  1. Biomass Fuel (Bahan Bakar Biomassa or “B3m”) is defined as solid fuel in whole or in part which most of it originates from organic materials with certain standards and quality.
  2. Mixture of B3m (hereinafter referred to as Cofiring Biomass) is defined as a combustion activity in a PLTU between coal and one or more different B3m at the same time with a certain ratio to replace certain amount of coal with taking into account the quality of the fuel as needed.
  3. A PLTU is defined as a power plant that utilizes coal as its fuel.

Utilization of Biomass in PLTUs

Article 2(1) of Regulation 12/2023 provides that the utilization of B3m in a PLTU is divided into 2 (two) categories, as follows:

Regulation 12/2023 provides that B3m for a PLTU shall fulfill the standards and quality in accordance with the Indonesian National Standard (Standar Nasional Indonesia or “SNI”).

In the event the SNI is not yet available and/or not in accordance with the required standards and quality, the MEMR, through the Director General of New, Renewable Energy and Energy Conservation (the “Director General”), may determine the B3m standards and quality for a PLTU by considering the following:

  1. the technology development;
  2. a manufacturer’s capabilities ;
  3. the capabilities and needs of consumers;
  4. specific conditions at each PLTU; and
  5. the Application of Health, Safety and Environment (HSE) Measures.

Implementation of Cofiring Biomass

The utilization of B3m for a PLTU shall be carried out through Cofiring Biomass carried out by the Cofiring Biomass users, as follows:

  1. a holder of a business license to supply electricity for integrated public interest (Izin Usaha Penyediaan Tenaga Listrik untuk Kepentingan Umum or an “IUPTLU”);
  2. a holder of a business license to supply electricity for public interest in the electricity sector; and/or
  3. a holder of a business license to supply electricity for its own interest (Izin usaha Penyediaan Tenaga Listrik untuk Kepentingan Sendiri or an “IUPTLS”).

collectively referred to as the “Users.”

The implementation of Cofiring Biomass by a IUPTLU holder shall be carried out in accordance with the Business Plan for Electricity Provision (Rencana Usaha Penyediaan Tenaga Listrik or “RUPTL”).

Further, an IUPTLU and an IUPTLS holders shall convey the plan to implement the Cofiring Biomass in accordance with the RUPTL to the MEMR at the latest in October before the following year. Thereafter, the Director General shall evaluate the details of the plan on the implementation of the Cofiring Biomass.

In the implementation of Cofiring Biomass, the Users shall provide the B3m. The provision of B3m is carried out by way of procurement of goods or services determined by the Users and implemented under the B3m supply agreement with the provider.

B3m Price Determination

The Users conduct the procurement of B3m through the purchase of B3m from a provider based on (i) the highest benchmark price (harga patokan tertinggi); or (ii) agreed price (harga kesepakatan).

The highest benchmark price is applicable (i) for the purchase of B3m by PT PLN (Persero) as the IUPTLU holder; and (ii) for the holder of a business license to supply electricity that collaborates with PT PLN (Persero).

Further, the highest benchmark price is calculated with the coal price formula multiplied by the price coefficient value B3m (k) times the factor calorific value correction (fc), with the highest benchmark price is FOB B3m price, and the coal price as the basis for the calculation is an average FOB coal price.

Reporting Obligation

The Users are required to convey a written report to the MEMR through the Director General with a copy to the Director General of Electricity and Director General of Minerals and Coal every 3 (three) months, containing the following:

  1. the PLTU Data which implements Cofiring Biomass;
  2. the type, volume, and calorific value of B3m, and B3m price including its percentage against coal;
  3. the total electricity production produced from the Cofiring Biomass; and
  4. the total greenhouse gas emissions reduction value.

 

AKSET

Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Radiansyah Suryomahendro Yamin (ryamin@aksetlaw.com), and M. Raehan A. Fadila (mfadila@aksetlaw.com) for further information.

 

Disclaimer:

The foregoing material is the property of AKSET and may not be used by any other party without prior written consent.  The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance.  Specific legal advice should be sought by interested parties to address their particular circumstances.

Any links contained in this document are for informational purposes and are available and relevant at time this publication is made.  We provide no liability whatsoever in respect of any information or content in such links.