PT Perusahaan Listrik Negara vice president Rudiantara said that PLN was ready to buy the electricity generated from such power plant projects, as it was in line with the company's objective to boost the use of renewable energy.
"We've always been encouraging the use of such renewable energy. We're ready to deal with them on the purchase of their electricity," Rudiantara told The Jakarta Post over the weekend.
The first phase of the IFC program is targeting the waste from palm oil and rice milling to be used as fuel to generate power.
According to the IFC, by implementing these projects these industries are not only able to reduce their production costs by up to 30 percent, but also to help preserve the environment by substituting for the use of oil and diesel.
Rudiantara noted that the business deals would be under the electricity excess supply provisions, by which PLN can buy available excess power generated from these plants, under the independent power producer scheme.
"Our deals will be based on the prices they offer, while the nearness to our electricity grid will also be taken into consideration," he added.
Indonesia last year produced about 19 million tons of crude palm oil and about 60 million tons of rice. Amid the rising demand for electricity but slow growth of supply using mostly fuel oil, diesel fuel and coal, this huge amount of agricultural wastes has great potential for generating electricity and to help to re-green the environment.
Electricity analyst Fabby Tumiwa noted that based on a study conducted in 2006, when palm oil production reached 15 million tons, the biomass produced (of roughly the same amount) could be used to generate a total of 4.2 million megawatt hours of (MW) electricity.
"With such abundant palm oil wastes currently, I think we could produce electricity from such wastes up to about 5 percent of the total PLN's production capacity of 120 terawatt hours (TWH)," he said.
He said that there were about 371 palm oil mills in Indonesia with most of them operating in Sumatra. Also there are thousands of rice mills operating in the country, mostly in remote areas in Java and Sumatra. Palm oil factories often need between 3 to 10 MW electricity on average to support their production activities while rice mills are often smaller in Indonesia, and need smaller power units.
Palm oil, rice waste huge potential for generating electricity
17/04/2009 (The Jakarta Post) - It's the world's largest producer of crude palm oil and fourth largest producer of rice, Indonesia has huge potential for generating electricity from the tens of millions tons of waste from the two industries.
Speaking at a workshop on an energy efficiency program workshop organized recently by the International Finance Corporation, (IFC) a private arm of the World Bank, Lars Moller, a consultant with the IFC green energy project said Indonesia should seize the momentum and play a greater role in "green" energy development.
Moller said that by using simple but effective technology at relatively low cost, one ton of wastes of empty fruit bunches from palm oil mills or of rice husks from rice mills can generate 0.8 megawatts (MW) of electricity.
"No matter whether you use the empty fruit bunch or rice husks, every ton of these can generate roughly 0.8 megawatts (MW) of electricity. With millions of tons of such wastes available in Indonesia, imagine how huge is the country's potential," he said on the sidelines of the workshop.
Indonesia last year produced about 19 million tons of crude palm oil and about 60 million tons of rice. After being processed in oil palm mills, the oil palm fruit bunches will produce biomass waste roughly of equal amount of about 19 million tons of empty fruit bunches.
The total of 60 million tons of rice produced will result in roughly 20 percent of waste, or about 12 million tons of rice husks.
Amid the rising demand for electricity but slow growth of supply using mostly fuel oil, diesel fuel and coal, this huge amount of agricultural wastes has great potential for generating electricity and to help to re-green the environment.
According to Moller, who had conducted a study on the wastes in Indonesia, the cost of generating electricity by using biomass from such wastes is about 5 US cents per kilowatt hour (KWH).
In comparison, the state electricity company PT PLN currently sells electricity at an average of 6 US cent per KWH.
"Its cheaper and greener. Rather than using fuel oil, or coal, which are not clean and produce CO2 emission hazardous to the environment, it is better for companies, especially the medium and small scale ones, to generate electricity by using these wastes as the feedstocks to their own power plants," he said.
The IFC's Energy Efficiency Program Manager Tom Moyes said that IFC would help companies interested in the program by providing technical expertise and by arranging consortium with other banks to help with project financing.
"We target the small and medium scale companies in Indonesia. And I think it's good for businesses as they can cut their energy costs by up to 30 percent, and also good for the banking sector as the projects are bankable," he said.
Based on the IFC's data, there are about 42 million small and medium companies operating in Indonesia.
Almost all of the small and medium firms use either fuel oil or diesel fuel to generate their power plants or production machines, and they contribute significantly to the CO2 gas emissions.
Data collected by the International Energy Agency shows that from 1994 to 2004, CO2 emissions per capita from fossil fuel combustion grew faster in Indonesia than in China and India.
"This growth will increase substantially as energy intensity increases and fossil fuel emissions rise with GDP, unless mitigating actions are taken," said Brigit S. Helms, the advisory services head of IFC Indonesia.
To help the Indonesian industries in reducing the greenhouse gas emissions and producing green products, IFC had initiated the Indonesian Sustainable Energy Finance Project.
Under the project, IFC has commissioned the International Research Group of the Phillipines to conduct a study in the palm oil and rice milling industries to enable IFC to identify sustainable energy opportunities in the two industries.
The group is also tasked to design a sustainable energy financing project to be pursued in cooperation with commercial banks, industries, energy management companies, and IFC.
Brigit pointed out that by adopting the energy efficiency program, companies can produce greener products in a more efficient way.
She pointed out that by adopting the energy efficiency program, companies can produce greener products.
"In the future only greener products will become the winners in the international market."