09. Proposed policy approaches and programme to deliver affordable and accessible sustainable energy options_1
Proposed Policy Approaches and Programmes to Deliver
Affordable and Accessible Sustainable Energy Options
G.M.Pillai
Project International Consultant, APCTT
&
Director General, WISE
Consultative Workshop on ‘Indonesia National Strategy to Increase Affordability of Sustainable
Energy Options and South-South Cooperation’
12-13 May 2014
Jakarta, Indonesia
Approach to Policy Recommendations
Identify necessary strategies to address
challenges associated with sustainable energy
options.
Suggest necessary policy actions to accomplish
these strategies.
Suggest general policies for affordable
sustainable energy options adopted worldwide
to suit Indonesian conditions.
Strategy I: Improved Coordination among Various
Government Ministries and Departments
Empowered
committee on
renewable energy
chaired and
coordinated by the
National Energy
Council
Sequential sign-off
on regulatory areas
by responsible
authorities
• The committee will comprise top level
representatives from three ministries
• The Ministry of Energy and Mineral Resources
• The Ministry of Forestry
• The Ministry of Agriculture
• Role of the empowered committee will be:
• Examination of laws of various ministries.
• Identification of conflicting clauses in various laws
of different ministries.
• Taking decisions to remove these conflicting
clauses.
• This will allow resolution of the disputes one by one
without much hassle.
Strategy II: Expedite License and Permit Procedures
Provide greater information dissemination about the
one-stop service (OSS) opened up by the Indonesia
Investment Coordinating Board.
Allow investors to clearly communicate problems they
face with the OSS so that necessary changes can be
made in the system.
Allow project proponents to provide constructive
feedback to the concerned authorities to identify the
gaps in the licensing and permit procedures.
Strategy II (Contd.): Increase the Education and Capacity of
Personnel Engaged in Management of the Licence and Permit
Procedure Efficiently
Training of personnel employed for
licensing
The
government should arrange for training of personnel
through workshops and training programmes to enhance
the capacity of the staff.
Private sector should be encouraged to pay for training
programmes and workshops.
The payment by the private sector may be
treated as profitable investment as this leads to
project approval rates.
Strategy III: Creating a Level Playing Field for
Renewable Energy Technologies
Incorporate the cost of
externalities of fossil-fuelbased energy in the cost of
conventional energy.
Educate people on adverse
effects of fossil fuel subsidies
using print and electronic
media.
Level playing
field for RE
Taper off fossil fuel subsidies
over the years by reducing the
gap between international
and domestic oil price.
Use instruments such as direct
cash transfer to protect poor
households from immediate
effects of price rise
Strategy IV : Encouraging Use of Solar Energy by the
Urban Population through Grid-interactive Mode
Implementation of net metering for encouraging urban electricity
consumers to install their own system, generate electricity for
their own consumption, and supply excess (generation over
consumption) electricity generated to the grid of the distribution
utility.
Actions for implementing net metering
Set aggregate generation capacity limits in order to protect the utility from
revenue loss and address concerns around grid stability.
Set an interconnection procedure with a well defined process of approval.
Classify customers into three categories – residential, commercial and industrial.
Set a distributed generation (DG) feed-in tariff (buy-back price) to ensure that
the producer of power receives a fixed price from PLN over a period of time
for selling excess power to PLN. Different prices may be adopted for different
categories of customers.
Strategy IV (Contd.): Encouraging Use of Solar
Energy by the Urban Population through Gridinteractive Mode
Consider the ownership of any potential carbon credits generated
from the installation of renewable energy technologies in designing
price determination rules for net metering.
Approve third party ownership of on-site RE generation. This will
benefit entities who cannot claim tax credits, and those who lack
initial investment capital.
Set specifications for electrical equipments, and allow consumers to
connect to the grid only if these specifications are followed.
Appoint qualified and competent entities who should be in charge of
installation, inspection and approval of grid connected systems
through standardized, transparent and efficient procedures.
The utility should be mandated to submit net metering data regularly
to the MEMR.
Strategy V: Encouraging Private Participation in
Promotion of Solar Home Applications in Rural
Areas
Clearly
declare grid
expansion plan
and identify
regions for
SHS.
Provide
subsidy to
reduce upfront
costs of SHS.
Ensure product
quality
standards for
increasing
reliability.
Private
participation
in promotion
of SHS
Prepare a
phase-wise
target for
deploying SHS
in identified
regions.
Establish a
cost-sharing
mechanism
among
stakeholders
in a PPP
model.
Strategy VI: Encourage Community Participation in
Promoting Off-grid Technologies
Awareness building about community-based projects
• Educate stakeholders about the benefits of such projects and their
sustainability.
• Disseminate awareness among private and community stakeholders .
Facilitating private participation
• Provide information to the private sector about the regions suitable for these
projects, and possible impacts of these projects.
• Green financing option should be tapped to provide finance to the private
sector.
Provision of subsidy
• Provide subsidy to reduce capital cost of the project.
• Taper off the amount of subsidy over time to increase self-sufficiency of these
projects.
Strategy VI (Contd.): Encourage Community
Participation in Promoting Off-grid Technologies
Community Cooperative
Joint Venture
Private entity
Knowledge
dissemination and
capacity building
NGO
Different stakeholders and their interaction in
community-based model
Strategy VI (Contd.): Encourage Community
Participation in Promoting Off-grid Technologies
The management model
Private entity
Community
cooperative
NGO
• Enters into a joint venture with the
community cooperative.
• Responsible for installation,
operation and maintenance of the
project.
• Responsible for loan repayment
• Enters into a joint venture with the
private entity
• Responsible for tariff collection
which includes O&M cost,
replacement cost, and return for
private entity and cooperative.
• Responsible for knowledge
dissemination among end users.
• Facilitating the capacity building of
cooperative members in managerial
works
•The joint venture receives loans from bank, and subsidy from government.
•The joint venture will be responsible for loan repayment.
•A core committee will be formed to manage funds for the project. The committee will comprise equal number of members
from private entity and cooperative sector.
Strategy VII: Promote Use of Biofuels especially in SmallScale Isolated Electricity Production and in Transport
Preparation of a land management plan
• There should be a land management plan to maintain balance between food
production and fuel crop production.
• An independent and accessible store of web-based information on land-use
pattern, land availability, land rights, and biodiversity for universal access
should be created.
Increase coordination among departments and institutions
• Coordination among various government departments should be increased.
This will help in building up a harmonized policy for biofuel development
and use.
• Coordination among various biofuel research organizations should be
increased to prepare a consolidated biofuel research agenda.
Promoting role of local administration
• Local administration should be entrusted with the responsibility of providing
information on appropriate feed stocks and technologies.
Strategy VII (Contd.): Promote Use of Biofuels especially in
Small-Scale Isolated Electricity Production and in Transport
Provide adequate infrastructure
• Build up adequate infrastructure, and improve the existing infrastructure of
potential areas of biofuel feedstock supply.
Programme to meet demand for energy
• Promote social programme through mass campaigning, grants, and subsidies
for large-scale dissemination of biofuels for electricity and transport sector.
Training for capacity building of government institutions
• Provide training for capacity building of government institutions on remote
sensing techniques and GIS, collation of existing methodologies and tool-kits
on policy making, techniques for developing a data repository for key country
databases on biofuels, and providing long-term secure storage of these data.
Strategy VIII: Ensure Sustainable Use of Biomass
Resources
Zoning of biomass projects
A
specific radius should be defined around each biomass
project based on availability of biomass.
Permission for new projects should not be given within the
specified radius.
Laws to restrict biomass export
The
government should bring in stringent laws to restrict
export of biomass.
There should be a strict enforcement mechanism to
implement the laws to restrict biomass export.
Strategy IX: Development of Domestic
Manufacturing Sector
Financial
incentives
Certification
and testing
programme
Tax incentives
Domestic
Manufacturing
R,D&D
programme
Local content
requirement
Need for Scientific Resource Assessment
Need
for GIS-based maps at the country or regional
level.
Higher resolution data covering narrower geographic
zones is necessary for precise decision-making.
Initiatives for resource assessment with DANIDA for
wind power projects and ESMAP for all other projects
may be helpful as initial level resource assessment.
Resource maps and data should be made publicly
available through creation of RE portals.
Promotion of Off-grid Energy Systems
Off-grid system
development and
demonstration
programme
Target setting and
identification of
regions
Development of
supply chain for offgrid systems
DGNREEC will set
phase-wise targets
Introduce delivery
models of distribution
like renting, leasing and
BOOT
MEMR shall carry out
R&D programme,
development,
demonstration, and
commercial application
of off-grid technologies
DGNREEC will identify
regions suitable for
these technologies and
build up a database on
suitable regions
Create enterprise
development
programme to develop
entrepreneurs delivering
RE applications and
services locally.
R&D should cover
innovative micro
generation technologies
Program for Solar Deployment Promotion
Solar photovoltaic
system for rural home
lighting
Solar thermal
application for
cooking and industrial
heating/drying
Solar thermal system
for water heating
Government shall
encourage private
participation to promote
solar PV
DGNREEC shall initiate a
programme for solar
cooking/improved stove
DGNREEC shall initiate a
nation-wide programme
on solar water heating
Solar PV programme will
be implemented through
appointment of ESCOs
DGNREEC shall initiate a
time-bound programme for
utilization of CSP for
industrial applications
DGNREEC shall formulate
a time-bound programme
to amend building laws,
bye-laws or rules and
regulations to facilitate the
programme
Financial and Fiscal Incentives
Existing
incentives
Financial
and fiscal
incentives
Income tax reduction
Accelerated
depreciation
Tax reduction on dividends
for foreign investors
Exemptions on import
duty
VAT exemption
Production tax
credit
Proposed
incentives
Property tax incentives
Personal income tax
incentives
Sales tax incentives
Pollution tax
exemptions
Note: Proposed incentives are options available to decide on the right mix of incentives. Quantitative Study has to be conducted to
determine the right mix of incentives.
Creation of Fund to Finance RE/Market for RE
Eco-taxes
Carbon- tax
on fossil fuels
Tax on
carbon
emitters
Traffic
congestion
fees
Domestic
public
financing
Creation of a
specialized
financial
institution within
the government
to leverage
private capital
International
funding
Sources such as
clean
development
mechanism (CDM)
and joint
implementation
fund under
UFCCC, world
bank and
bilateral
development
assistance.
Capacity
building in
banking and
financial
sector
Public benefit
funds raised
through systems
benefit charges
Government
purchase of RE
technologies
through long term
contracts, preapproved
agreements and
volume purchases
Revolving fund
Human Resource Capacity Development
Need to revise curricula of educational and training institutions
Revision should be done at all levels of education as given below:
General RE courses at school level
Technician-level programme for skilled workers (9 months to 1 year)
Diploma-level programme for supervisory staff (1 to 2 years)
Engineering and graduate courses
Post-graduate courses
Doctoral-level courses
Management institutions for Masters in Energy Management (with emphasis on RE)
Training institutes in the govt and non-govt sector for on-the-job training, offering
certificate courses up to 3 months and providing training of trainers
Laboratory infrastructure should be created.
Awareness about green jobs should be created to attract talents in this
sector.
Promote Formal Regional Business Incubators
Development of entrepreneurs in sustainable energy
business
Instruments to promote business incubators
Tax benefits
Low-cost loans
Promoting public-private partnership
Facilitating private sector in technology tie-up
Facilitating technology transfer with foreign firms
Ensure Product Standards
Formulate regulations on product standards
and requirements for manufacturers and
installers.
Ensure strict enforcement of these
regulations.
Support and promote testing and
certification of renewable energy
equipments.
Possibilities of South-South Cooperation: Rural
Energy Development Programme of Nepal
Indonesia
Nepal
Promotion
through REDP
•Government
participation
•Capacity
development
•Local
government
engagement
•Community
mobilization
Potential
applications
Technologies
Micro hydro technology
Solar home systems
Improved cook stoves
Biogas
Possibility of S-S
cooperation
•Knowledge
sharing
•On-site
training
programme
for policy
makers, local
authorities,
and
communities
Affordable and Accessible Sustainable Energy Options
G.M.Pillai
Project International Consultant, APCTT
&
Director General, WISE
Consultative Workshop on ‘Indonesia National Strategy to Increase Affordability of Sustainable
Energy Options and South-South Cooperation’
12-13 May 2014
Jakarta, Indonesia
Approach to Policy Recommendations
Identify necessary strategies to address
challenges associated with sustainable energy
options.
Suggest necessary policy actions to accomplish
these strategies.
Suggest general policies for affordable
sustainable energy options adopted worldwide
to suit Indonesian conditions.
Strategy I: Improved Coordination among Various
Government Ministries and Departments
Empowered
committee on
renewable energy
chaired and
coordinated by the
National Energy
Council
Sequential sign-off
on regulatory areas
by responsible
authorities
• The committee will comprise top level
representatives from three ministries
• The Ministry of Energy and Mineral Resources
• The Ministry of Forestry
• The Ministry of Agriculture
• Role of the empowered committee will be:
• Examination of laws of various ministries.
• Identification of conflicting clauses in various laws
of different ministries.
• Taking decisions to remove these conflicting
clauses.
• This will allow resolution of the disputes one by one
without much hassle.
Strategy II: Expedite License and Permit Procedures
Provide greater information dissemination about the
one-stop service (OSS) opened up by the Indonesia
Investment Coordinating Board.
Allow investors to clearly communicate problems they
face with the OSS so that necessary changes can be
made in the system.
Allow project proponents to provide constructive
feedback to the concerned authorities to identify the
gaps in the licensing and permit procedures.
Strategy II (Contd.): Increase the Education and Capacity of
Personnel Engaged in Management of the Licence and Permit
Procedure Efficiently
Training of personnel employed for
licensing
The
government should arrange for training of personnel
through workshops and training programmes to enhance
the capacity of the staff.
Private sector should be encouraged to pay for training
programmes and workshops.
The payment by the private sector may be
treated as profitable investment as this leads to
project approval rates.
Strategy III: Creating a Level Playing Field for
Renewable Energy Technologies
Incorporate the cost of
externalities of fossil-fuelbased energy in the cost of
conventional energy.
Educate people on adverse
effects of fossil fuel subsidies
using print and electronic
media.
Level playing
field for RE
Taper off fossil fuel subsidies
over the years by reducing the
gap between international
and domestic oil price.
Use instruments such as direct
cash transfer to protect poor
households from immediate
effects of price rise
Strategy IV : Encouraging Use of Solar Energy by the
Urban Population through Grid-interactive Mode
Implementation of net metering for encouraging urban electricity
consumers to install their own system, generate electricity for
their own consumption, and supply excess (generation over
consumption) electricity generated to the grid of the distribution
utility.
Actions for implementing net metering
Set aggregate generation capacity limits in order to protect the utility from
revenue loss and address concerns around grid stability.
Set an interconnection procedure with a well defined process of approval.
Classify customers into three categories – residential, commercial and industrial.
Set a distributed generation (DG) feed-in tariff (buy-back price) to ensure that
the producer of power receives a fixed price from PLN over a period of time
for selling excess power to PLN. Different prices may be adopted for different
categories of customers.
Strategy IV (Contd.): Encouraging Use of Solar
Energy by the Urban Population through Gridinteractive Mode
Consider the ownership of any potential carbon credits generated
from the installation of renewable energy technologies in designing
price determination rules for net metering.
Approve third party ownership of on-site RE generation. This will
benefit entities who cannot claim tax credits, and those who lack
initial investment capital.
Set specifications for electrical equipments, and allow consumers to
connect to the grid only if these specifications are followed.
Appoint qualified and competent entities who should be in charge of
installation, inspection and approval of grid connected systems
through standardized, transparent and efficient procedures.
The utility should be mandated to submit net metering data regularly
to the MEMR.
Strategy V: Encouraging Private Participation in
Promotion of Solar Home Applications in Rural
Areas
Clearly
declare grid
expansion plan
and identify
regions for
SHS.
Provide
subsidy to
reduce upfront
costs of SHS.
Ensure product
quality
standards for
increasing
reliability.
Private
participation
in promotion
of SHS
Prepare a
phase-wise
target for
deploying SHS
in identified
regions.
Establish a
cost-sharing
mechanism
among
stakeholders
in a PPP
model.
Strategy VI: Encourage Community Participation in
Promoting Off-grid Technologies
Awareness building about community-based projects
• Educate stakeholders about the benefits of such projects and their
sustainability.
• Disseminate awareness among private and community stakeholders .
Facilitating private participation
• Provide information to the private sector about the regions suitable for these
projects, and possible impacts of these projects.
• Green financing option should be tapped to provide finance to the private
sector.
Provision of subsidy
• Provide subsidy to reduce capital cost of the project.
• Taper off the amount of subsidy over time to increase self-sufficiency of these
projects.
Strategy VI (Contd.): Encourage Community
Participation in Promoting Off-grid Technologies
Community Cooperative
Joint Venture
Private entity
Knowledge
dissemination and
capacity building
NGO
Different stakeholders and their interaction in
community-based model
Strategy VI (Contd.): Encourage Community
Participation in Promoting Off-grid Technologies
The management model
Private entity
Community
cooperative
NGO
• Enters into a joint venture with the
community cooperative.
• Responsible for installation,
operation and maintenance of the
project.
• Responsible for loan repayment
• Enters into a joint venture with the
private entity
• Responsible for tariff collection
which includes O&M cost,
replacement cost, and return for
private entity and cooperative.
• Responsible for knowledge
dissemination among end users.
• Facilitating the capacity building of
cooperative members in managerial
works
•The joint venture receives loans from bank, and subsidy from government.
•The joint venture will be responsible for loan repayment.
•A core committee will be formed to manage funds for the project. The committee will comprise equal number of members
from private entity and cooperative sector.
Strategy VII: Promote Use of Biofuels especially in SmallScale Isolated Electricity Production and in Transport
Preparation of a land management plan
• There should be a land management plan to maintain balance between food
production and fuel crop production.
• An independent and accessible store of web-based information on land-use
pattern, land availability, land rights, and biodiversity for universal access
should be created.
Increase coordination among departments and institutions
• Coordination among various government departments should be increased.
This will help in building up a harmonized policy for biofuel development
and use.
• Coordination among various biofuel research organizations should be
increased to prepare a consolidated biofuel research agenda.
Promoting role of local administration
• Local administration should be entrusted with the responsibility of providing
information on appropriate feed stocks and technologies.
Strategy VII (Contd.): Promote Use of Biofuels especially in
Small-Scale Isolated Electricity Production and in Transport
Provide adequate infrastructure
• Build up adequate infrastructure, and improve the existing infrastructure of
potential areas of biofuel feedstock supply.
Programme to meet demand for energy
• Promote social programme through mass campaigning, grants, and subsidies
for large-scale dissemination of biofuels for electricity and transport sector.
Training for capacity building of government institutions
• Provide training for capacity building of government institutions on remote
sensing techniques and GIS, collation of existing methodologies and tool-kits
on policy making, techniques for developing a data repository for key country
databases on biofuels, and providing long-term secure storage of these data.
Strategy VIII: Ensure Sustainable Use of Biomass
Resources
Zoning of biomass projects
A
specific radius should be defined around each biomass
project based on availability of biomass.
Permission for new projects should not be given within the
specified radius.
Laws to restrict biomass export
The
government should bring in stringent laws to restrict
export of biomass.
There should be a strict enforcement mechanism to
implement the laws to restrict biomass export.
Strategy IX: Development of Domestic
Manufacturing Sector
Financial
incentives
Certification
and testing
programme
Tax incentives
Domestic
Manufacturing
R,D&D
programme
Local content
requirement
Need for Scientific Resource Assessment
Need
for GIS-based maps at the country or regional
level.
Higher resolution data covering narrower geographic
zones is necessary for precise decision-making.
Initiatives for resource assessment with DANIDA for
wind power projects and ESMAP for all other projects
may be helpful as initial level resource assessment.
Resource maps and data should be made publicly
available through creation of RE portals.
Promotion of Off-grid Energy Systems
Off-grid system
development and
demonstration
programme
Target setting and
identification of
regions
Development of
supply chain for offgrid systems
DGNREEC will set
phase-wise targets
Introduce delivery
models of distribution
like renting, leasing and
BOOT
MEMR shall carry out
R&D programme,
development,
demonstration, and
commercial application
of off-grid technologies
DGNREEC will identify
regions suitable for
these technologies and
build up a database on
suitable regions
Create enterprise
development
programme to develop
entrepreneurs delivering
RE applications and
services locally.
R&D should cover
innovative micro
generation technologies
Program for Solar Deployment Promotion
Solar photovoltaic
system for rural home
lighting
Solar thermal
application for
cooking and industrial
heating/drying
Solar thermal system
for water heating
Government shall
encourage private
participation to promote
solar PV
DGNREEC shall initiate a
programme for solar
cooking/improved stove
DGNREEC shall initiate a
nation-wide programme
on solar water heating
Solar PV programme will
be implemented through
appointment of ESCOs
DGNREEC shall initiate a
time-bound programme for
utilization of CSP for
industrial applications
DGNREEC shall formulate
a time-bound programme
to amend building laws,
bye-laws or rules and
regulations to facilitate the
programme
Financial and Fiscal Incentives
Existing
incentives
Financial
and fiscal
incentives
Income tax reduction
Accelerated
depreciation
Tax reduction on dividends
for foreign investors
Exemptions on import
duty
VAT exemption
Production tax
credit
Proposed
incentives
Property tax incentives
Personal income tax
incentives
Sales tax incentives
Pollution tax
exemptions
Note: Proposed incentives are options available to decide on the right mix of incentives. Quantitative Study has to be conducted to
determine the right mix of incentives.
Creation of Fund to Finance RE/Market for RE
Eco-taxes
Carbon- tax
on fossil fuels
Tax on
carbon
emitters
Traffic
congestion
fees
Domestic
public
financing
Creation of a
specialized
financial
institution within
the government
to leverage
private capital
International
funding
Sources such as
clean
development
mechanism (CDM)
and joint
implementation
fund under
UFCCC, world
bank and
bilateral
development
assistance.
Capacity
building in
banking and
financial
sector
Public benefit
funds raised
through systems
benefit charges
Government
purchase of RE
technologies
through long term
contracts, preapproved
agreements and
volume purchases
Revolving fund
Human Resource Capacity Development
Need to revise curricula of educational and training institutions
Revision should be done at all levels of education as given below:
General RE courses at school level
Technician-level programme for skilled workers (9 months to 1 year)
Diploma-level programme for supervisory staff (1 to 2 years)
Engineering and graduate courses
Post-graduate courses
Doctoral-level courses
Management institutions for Masters in Energy Management (with emphasis on RE)
Training institutes in the govt and non-govt sector for on-the-job training, offering
certificate courses up to 3 months and providing training of trainers
Laboratory infrastructure should be created.
Awareness about green jobs should be created to attract talents in this
sector.
Promote Formal Regional Business Incubators
Development of entrepreneurs in sustainable energy
business
Instruments to promote business incubators
Tax benefits
Low-cost loans
Promoting public-private partnership
Facilitating private sector in technology tie-up
Facilitating technology transfer with foreign firms
Ensure Product Standards
Formulate regulations on product standards
and requirements for manufacturers and
installers.
Ensure strict enforcement of these
regulations.
Support and promote testing and
certification of renewable energy
equipments.
Possibilities of South-South Cooperation: Rural
Energy Development Programme of Nepal
Indonesia
Nepal
Promotion
through REDP
•Government
participation
•Capacity
development
•Local
government
engagement
•Community
mobilization
Potential
applications
Technologies
Micro hydro technology
Solar home systems
Improved cook stoves
Biogas
Possibility of S-S
cooperation
•Knowledge
sharing
•On-site
training
programme
for policy
makers, local
authorities,
and
communities