PRE FEASIBILITY STUDY

FOR
RENEWABLE ENERGY PROJECT
BIO MASS POWER PLANT 30 MW (2x15 MW)
AT PULAU LAUT, SOUTH ALIMANTAN PRO!INCE
EXECUTIVE SUMMARY.
PT. Aztec Resources (PTAR) is an IPP Developer that specializes in Renewable
Energy / reen Energy in con!unction with their cooperation with "uantu# $io
Energy %ro# &pain.
PTAR sees an opportunity to i#prove the energy #i' in &outh (ali#antan by
)eveloping an) pro#oting a $io #ass power plant together with Inhutani II a
&tate *wne) Enterprise belonging to the +inistry o% ,orestry an) +inistry o%
&tate *wn Enterprises.
The #utual bene-cial cooperation between PTAR an) Inhutani II in )eveloping a
$io#ass Power Plant will also i#prove the %orest utilization an) port%olio o% Pulau
.aut/ &outh (ali#antan ,orest/ especially in the %urther business plan/ the
cooperation will see0 the possibilities to pro)uce woo) pellet in the sa#e Plant.
The engineering )esign o% the plant will opti#ize the utilization o% all outputs
(eg.heat) so the plant can operate in a #ulti %unction #anner which is the
pro)ucing power an) woo) pellets econo#ically.
The %act an) the generous availability o% e'isting ,orestry Plantations at Pulau
.aut/ have contribute to )eci)e this as a 0ey area %or )eveloping the so calle)
$io +ass Power Plants. 1here its allowing the use o% available green energy/
contributing to the In)onesian Roa) +ap %or )eveloping Renewable Energies
within the Energy +i'/ an) contributing to the general green house gas
e#issions with a )ouble e2ect3 &ubstituting obsolete an) ine4cient )iesel
generation plants5 an) using 6*7 neutral bio #ass %uel instea) o% other types o%
%ossil %uel.
The Pro!ect will be )evelope) in an e'isting ti#ber plantation concession
(I8P99(:9TI) awar)e) to PT Inhutani II / that starte) operation/ i.e. Plantation
o% Acacia +angiu# as #ain species alrea)y run in its thir) cycles #eaning it has
been running pro)uctively %or al#ost 7; (twenty) years. This concession has an
e'tension o% <=/>7; 9a gross/ out o% which the net usable is <?/@A? 9a that
consists o% @</;=@ 9a per cycle
?
o% Acacia +angiu# / </=>7 9a per cycle o%
+eranti/ an) 7/<@B 9a per cycle o% Rubber.
1ith a very conservative calculation presente) in PT. Inhutani II long ter#
business plan/ the e'pecte) pro)uction o% Acacia +angiu# is </>>?/B7; +@ per
cycle
7
/ +eranti at A></<;; +@ per cycle
@
/ an) Rubber gives 7<@/B;; +@ per
cycle
<
plus a))itional resin pro)uction o% 7<7/@<; ton per cycle.
?
? pro)uctive cycle is B:> years ti#e %or har)woo) species li0e acacia sp.
7
Acacia #angiu# plantation is calculate) to have an output o% ?<; +@/9a
@
+eranti is 7;; +@/9a
<
Rubber is ?;; +@/9a
@
Analyzing the )i2erent #etho)s o% pro)ucing electricity %ro# $io +ass/ the #ost
suitable an) latest technology has been chosen/ in or)er to #a'i#ize the bio
#ass usage an) in general/ the pro)uctivity o% the %acilities/ always loo0ing %or
the best Cuality/price relationship.
As #entione) earlier/ the %oreseen installe) total capacity o% the plant is @; +1
net/ reCuiring <;;/;;; T#/year o% loose woo) chips an) other relate) waste)
associate) %orestry #aterial/ li0e branches/ stu#ps/ leaves an) bar0. The tree
usage is co#plete.
In this Pre ,easibility stu)y/ the pro!ect )eveloper #a)e so#e preli#inary
survey an) co#putation about the ,inancial Para#eters/ as %ollows
Tari2 with P.D =.@ 8&/01h
Pay $ac0 Perio) ?7 years
$rea0:even = years
R*E ?EF
ECuity Invest#ent 8&G 7?.> #illion
Pro!ect ,inance Debt 8&G E;.> #illion
These co#putations will be calculate) #ore )etaile) at the ,easibility stu)y to
ensure the %easibility an) pro-tability o% the pro!ect.


<
CONTENTS
I. Executive Summary.
II. Backgrou!
". Coutry Eergy Sector #re$et $ituatio a! Evirometa%
i$$ue$.
&. Su''%y (ema! Ba%ace i Sout) *a%imata a! #o+er
So%utio
,. Bio Ma$$ #o+er #%at a$ t)e u%timate $o%utio
-. Bee.t$ /or t)e regio
0. Bu$ie$$ #%a Summary O12ective.
A. TEC3NICA4.
III. Site (e$cri'tio
". Name o/ t)e Site
&. #%atatio Coce$$io
,. 4a! U$e a! geera% $ocio ecoomic 1ackgrou! o/ t)e area
-. 5eera% i/ra$tructure /aci%itie$
0. Syc)roi6atio +it) t)e %oca% 5ri!
IV. #re%imiary #%at (e$ig
". Bio Ma$$ /ue% $'eci.catio$ a! avai%a1i%ity.
&. #o+er #%at a! E%ectricity 5eeratio
,. A$) !i$'o$a% arragemet$.
-. Bioma$$ Su''%y
7ue% Avai%a1i%ity
Met)o! o/ $ourcig 1ioma$$.
#%atatio i$$ue$ a! tra$/er 'rice$.
0. Evirometa% a! Socia% Co$i!eratio$
B. 7INANCIA4S.
V. 7iacia% #arameter$ a$$um'tio$
C. OT3ERS.
VI. #ro2ect (eve%o'met #%a
(. 4E5A4.
VII. I$titutioa% coo'eratio
E
A''e!ix ". Su''ort 4etter$ /rom #T I)utai II a! Regioa%
Aut)oritie$
A''e!ix &. 4ega% I$$ue$
4IST O7 TAB4ES
4IST O7 7I5URES
B
II. Backgrou!
II." T)e #re$et $ituatio o/ I!oe$ia Eergy Sector a! it$
Evirometa% i$$ue$ .
6li#ate change is a global issue where the part o% the strategy to co#bat the
threat involves cutting carbon e#issions. The provision o% electricity %ro# clean/
renewable sources will play a vital role tac0ling the proble#.
*n the other han)/ as population e'pan)s an) )evelop/ in)ustrializing
econo#ies will reCuire a))itional an) )iverse energy sources. Energy %orecast
#o)els are increasingly shi%ting towar)s a )iverse energy #i' wherein
renewable have an) increasingly i#portant role to play.
*% course/ In)onesia is not an e'ception/ where each country has to )evelop
accor)ing to its own nee)s/ ob!ectives/ available resources an) socio:political
reality. In spite o% the tre#en)ous )evelop#ent o% In)onesia/ especially in the
last ?; years/ with partially %ortunate vast accountability %or raw #aterials an)
the ever i#proving political environ#ent/ In)onesia is still a )eveloping country
which %aces such i#portant challenges when it co#es to Electricity &upply
In)ustry3
.ac0 o% access by #any people to a2or)able electricity supply.
8n)er:invest#ent in electricity in%rastructure.
*ther sector ine4ciencies (-nancing/ in%rastructures/ etc)
Poor overnance.
8npre)ictable regulations.
8necono#ic electricity pricing an) a)verse environ#ental outco#es.
9ow to cope with high )e#an) growth/ both in)ustrial an) )o#estic.
In)onesia is a per%ect e'a#ple o% the above issues/ but also it has an a))e)
issue which is its vast an) heterogeneous territory with #ore than ?@/;;; islan)
an) 7/@ o% its territory being water5 as such the govern#ent has starte)/
especially )uring this )eca)e a series o% #easures inten)ing to ta0e the whole
energy sector o2 an) to a)eCuate it to the 1orl) Regulations establishe) to
counter attac0 the reen 9ouse as (9) e#issions an) to %ollow the roa)
#ap establishe) to cope with In)onesian contribution to the lobal Planet
6li#ate 6hange.
>
I!oe$ia E%ectri.catio Rate8
year &99:
,or e'a#ple/ as shown on the above table/ in (ali#antan the electri-cation rate
is only a E@F/ which is signi-cantly low an) certainly lower than the average in
the 6ountry.
This graphic above e#phasis even #ore that issue/ since speci-cally consi)ers
the &outh (ali#antan region is as one o% the %ocus o% Energy 6risis Area an) also
on both the eneration an) the Distribution. This %act an) the generous
availability o% e'isting ,orestry Plantations/ have contribute to )eci)e this as a
0ey area %or )eveloping the so calle) $io +ass Power Plants. 1here its allowing
the use o% available green energy/ contributing to the In)onesian Roa) +ap %or
)eveloping Renewable Energies within the Energy +i'/ an) contributing to the
general green house gas e#issions with a )ouble e2ect3 &ubstituting obsolete
an) ine4cient )iesel generation plants5 an) using 6*7 neutral bio #ass %uel
instea) o% other types o% %ossil %uel.
The In)onesian new Energy Policy is base) on %our (<) 0ey gui)elines3
Diversi-cation with special e#phasis on Renewable Energies.
Application o% a rational energy price.
=
Decentralization o% energy syste# with an increasing protagonist o% local
an) regional govern#ents.
Rural areas electri-cation with the goal o% having A;F co#plete) by 7;7;.
$ase) on the HElectrical eneral PlanI (R8(D) 7;;B:7;7B/ the %orecast %or the
electric al )e#an) in In)onesia be #ultiply by a %actor o% three (@). This is
eCuivalent to an average annual growth o% >F.
*n the other han)/ the e'pecte) In)onesia HEnergy +i'I towar)s 7;7E is3
Re)uce oil share %ro# EEF (7;;E) to 7;F in 7;7E. This is especially
evi)ent in &outh (ali#antan with a high )epen)ence on ol) %ashion )iesel
engines base) Power Plants.
Increasing use o% other energy sources in 7;7E.
o 6oal %ro# ?E.>F in 7;;E to @@F
o .iCue-e) 6oal to #ore than 7F.
o Datural as %ro# 7;F to @;F
o *ther Dew an) Renewable Energies to ?EF.
Re)uce Energy consu#ption intensity by ?F annually.
I#prove Energy in%rastructures con)itions.
Please chec0 in A''e!ix & about the relevant overn#ent an) o4cial
regulations establishe) in this sector.
At present/ a%ter the 6openhagen Protocol an) the ever increasing 1orl)
pressure on the environ#ent/ the cli#ate change an) the control over the 9/
along with the i##ense renewable resources that In)onesia posses/ there is an
increasing %elling/ both internally in the country an) outsi)e/ that Hit is not
enoughI/ an) that probably is the goal establishe) %or Renewable Energies on
the Roa) +ap with a ?EF %or year 7;7E/ was not as aggressive as it can be.
,ro# a strict econo#ical point o% view/ it is really worth it to review this since
the strategy o% a high substitution o% oil by gas an) coal/ an) the relatively low
A
incre#ent o% Renewable Energies/ ta0ing into consi)eration the i##ense
Cuantity o% the# an) their potential see#s #uch un%ocuse).
An alternative woul) be to )e)icate #ore o% those coal an) gas resources %or
the e'port #ar0et an) )evelop the sources o% Renewable Energies even %urther.
In this way an) a))e) value in the %or# o% carbon cre)its (6lean Developing
+echanis# or 6D+) has to be inclu)e) into the eCuation/ that with the price
increasing ten)ency %or all %ossil %uels/ the econo#ic a)vantage o% Renewable
Energies in general/ an) speci-cally the $io +ass beco#es sel% evi)ent. This
beco#es evi)ent in the ne't table. Dote that the $io +ass is the secon) largest
in ter#s o% potential but it is only utilize) in less than ?F o% that potential.
II.& Su''%y a! (ema! 1a%ace i Sout) *a%imata. T)e #o+er
So%utio
1e have seen alrea)y the opportunity that the area o2ers to )evelop this Pilot
Plant. .et us concentrate now on the speci-c area o2ere) to the pro!ect %or this
)evelop#ent. To chec0 speci-cally the case o% &outh (ali#antan/ which is the
case in our analysis/ let us re%er to the %ollowing Table II.7.?. 1e can appreciate
how the .oa) is at the present ti#e an) how is e'pecte) to evolve to the
%oreseeable %uture to 7;?=.
?;
Table II.2.1 Electrical Load in South Central Kalimantan
It is interesting to see the electri-cation ratio is growing %ro# EAF in 7;?; to
>;F in 7;?=. This pro!ection has to be a))e) to the %act that #ost o% the
e'isting power generation to)ay is base) on obsolete )iesel engines/ very
ine4cient an) ina)eCuate with the new energy policies.
The energy sales are esti#ate) to basically )ouble in the ne't = years/
especially on the resi)ential an) in)ustrial sectors. 9owever the power
contracte) increases only E;F in the sa#e perio) in)icating the increasing in
e4ciency generation an) )istribution. In general the perspective is to )evelop
the syste# in such a way that the pro)uction is always ahea) o% the
reCuire#ents an) no )e-cit is presente) in any given perio).
The ne't Table II.7.7/ presents the energy #i' capacity increase. The total
pro)uction )i2ers %ro# the previous table because this one inclu)es the East
(ali#antan province also since the Distribution &yste# has been )esigne) to
have all those regions interconnecte) as part o% the general (ali#antan
)evelop#ent plan. The i)ea is to try to have a general balance %or the whole
??
islan) an) cover so#e areas with lower resources or #ore )i4cult %or
generation with the over pro)uction on other areas.
Table II.2.2 Energy Mix Forecast in South and East Kalimantan
The interesting part is that we can see a lot o% pro!ects o% generating plants with
capacities between 7; an) <; +w on +,*/ as an) +ini hy)ro/ suggesting the
i#ple#entation o% localize) @; +w units in strategic regions where $io +ass
#ay be available an) #uch #ore econo#ically viable than other %or#s o%
generation either because its higher capital cost/ its higher %uel cost or %or
environ#ental reasons. The big units will still be on coal an) gas/ especially
because o% the availability in the region/ but in so#e cases li0e this one/ $io
?7
+ass is #ore econo#ically viable because o% the size an) the availability o% the
soli) %uel.
,inally an) to illustrate %urther the above #entione) co##ents/ the %ollowing
-gure presents the &outh (ali#antan interconnection syste# an) all the
potential pro!ects un)er )evelop#ent an) pro!ecte) %or the ne't = years.
It is interesting to notice that with the total )istribution )evelop#ent/ the pro!ect
area o% (otabaru/ o2ers an i#peccable situation in ter#s o% its interconnection
to the gri) having a substation very close an) the new lines interconnecting to
the total syste#. That per#its the Power Plant to be part o% the integrate)
(ali#antan &yste#.
&o/ in or)er to %ul-ll the electricity supply an) )e#an) balance in 7;?; an) to
7;?= at the &outh (ali#antan syste#/ there are a nu#ber o% power generation
plants progra##e). Dew power generation plants #ust utilize pri#er energy
that is available in (ali#antan Province/ li0e available $io +ass in the %or# o%
%orestry plantations5 this shoul) constitute a priority %or the region.
Also to strengthen the reliability o% the &outh an) 6entral (ali#antan syste#/
P.D will change their ol) ine4cient )iesel engines running in oil ($$+) into
power plants #ore ecologically an) operation e4cient. *il is subsi)ize) an)
very e'pensive with costs o% electricity o% 77 cents o% G per (wh. This shoul) be
)evelope) in parallel with the strengthen o% the trans#ission an) )istribution
networ0 to anticipate the growth o% electricity )e#an) in the syste#.
1e believe that 6lean $io +ass Technology will be one o% the 0ey %actors to
acco#plish the ob!ectives.
?@
II., Bio Ma$$ #o+er #%at a$ t)e u%timate $o%utio.
This Pilot Pro!ect will be a bio #ass powere) generator. It will use clean woo)
chip %ro# certi-e) sustainable %orestry operations to power the plant. 6lean
woo) chips are classi-e) as a renewable energy source by In)onesian an) in
general worl)wi)e legislations/ an) it is )erive) %ro# plant #atter.
In an operation calle) H&hort Rotation ,orestryI/ %ast growing species have been
plante) on )isuse) or #arginal lan)/ an) on a B year rotation/ ?>F o% the
plantation woul) be harveste) each year/ in a cycle. Re:growth replaces harvest
an) absorbs 6*7/ creating a carbon neutral %uel. *n the other han)/ en)uring
%orest cover provi)es a long ter# carbon store an) wil)li%e bene-ts/ contributing
also on a parallel e2ect in stopping the )e%orestation.
This ecological vision o% electricity generation contributes in stabilizing the
at#ospheric 6*7 levels by halting the one:way Jows o% 6oal an) *il out o% long
ter# carbon stores. In this way energy nee)s are #et by accelerating terrestrial
carbon cycling #a'i#izing photosynthesis an) capturing respiration.
The woo) chips are an e'cellent source o% energy an) in this speci-c case in
&outh (ali#antan/ with no signi-cant geother#al resources/ the nee) %or
substitution o% the ol) %ashion )iesel run engines/ the very li#ite) electrical gri)
an) the availability o% rea)y to go sustainable plantations/ loo0s li0e the best
alternative is the HIn 6oncession ,orestry $io +ass Power PlantI with a 6apacity
that balances3 ReCuire) De#an)5 e'perience an) in%rastructure in the region5
econo#y o% scale5 an) %orest plantation capacity.
In this case the repeatable Pilot Pro!ect Plant will have a Power eneration
capacity o% @; +w an) )epen)ing on the -nal %orestry yiel) there is the
possibility to pro)uce $io +ass soli) %uel in the way o% 1oo) Pellets/ %or e'port
or %or )o#estic consu#ption in cogeneration with coal. This will allow to3
signi-cantly increase the plantation Je'ibility5 i#prove the power plant
e4ciency by using the waste) energy on a pro)uction process5 an) contribute
with the cash Jow an) revenue generation.
&o su##arizing/ 1hy $io +ass3
It is a )iverse an) versatile %uel that can be converte) into electricity/ gas/
heat/ or liCui) %uels an) can either be use) solely or by co:-ring in power
stations.
$io#ass is a wi)ely available resource an) speci-cally in this case/ in the
%or# o% %orestry rea)y to go plantation. 1ith a clear econo#ical
a)vantage over other %or#s o% $io#ass or %ossil %uels.
?<
$io#ass is also re%erre) as a carbon neutral %uel lea)ing to a net 6*7
e#ission re)uction i% use) to substitute %ossil %uels. In this speci-c case it
is also #uch better than coal in ter#s o% sul%ur content an) ash content/
with its environ#ental an) econo#ical a))itional a)vantage that this
represent.
$io#ass appears to be the #ost i#portant o% the renewable in ter#s o%
technical an) econo#ical %easibility )uring the ne't %ew )eca)es. $io#ass
energy is viewe) to)ay as the %uture energy source %or )evelop#ent an)
in)ustry.
II.- Bee.t$ /or t)e regio.
The pro!ect activity will contribute to the sustainable )evelop#ent o% the &outh
(ali#antan area in the %ollowing ways3
Enhance regional econo#ic sustainability by re)ucing the countries an) in
particular/ the local )epen)ence in the )iesel base) power generation
which is ine4cient/ costly an) environ#entally not %rien)ly. Average age
o% e'isting pro)uction %acilities is about 7E to @; years.
Pro#ote the use o% renewable energy %or power generation which causes
an abate#ent o% 9 e#issions an) increasing the power supply security
in the region. This pro!ect is the per%ect can)i)ate %or 6D+ activity so to
increase the revenue.
Pro#ote the concept o% )istribute) generation which shall cause less
trans#ission an) )istribute) power ine4ciencies in the region.
I#prove stability an) also power Cuality o% electricity supply in local areas.
Enhance &outh (ali#antan econo#ic e4ciency through #ore e4cient use
o% energy %orest plantations.
Increase local e#ploy#ent )uring pro!ect construction phase an) )uring
operation phase/ both at the #ill site an) in the e'ploitation o% the %orest.
Increase inco#e an) liCui)ity to local econo#y through #any activities
()irect an) in)irect) such as transportation/ operating/ #aintenance/ etc.
It can be an e'port %uel region with its a))itional econo#ical bene-ts.
It can start a rational an) attractive base %or %oreign invest#ent in the
region.
II.; Bu$ie$$ #%a Summary.
In review o% raw #aterial supply/ reCuire) volu#es an) associate) costs/ capital
invest#ent an) potential selling prices via power purchase agree#ents with
P.D/ that this pro!ect is -nancially viable an) provi)e signi-cant bene-ts to
co##unity an) businesses in the area.
1ith an invest#ent o% 8&D GBB/;;;/;;; the power plant an) trans#ission line
will be %ully co##issione) an) provi)e a DET electricity supply o% ,9 M+ < &&-
mi%%io ki%o+att )our$ 'er year.
?E
The pro!ect paybac0 perio) is e'pecte) to be ?7 years with an IRR ?E.@F
,ro# co##ence#ent o% -nance being )rawn )own/ the power plant can be
co##issione) an) operational in appro'i#ately ?= #onths.
A. TEC3NICA4 SECTION
III. Site (e$cri'tio
III." #ro2ect Site 4ocatio...
This Pilot Pro!ect has been )eci)e) to be )evelope) in &outh (ali#antan/ in the
Province o% (ali#antan &elatan/ basically to #a0e sustainable use o% the original
plantations an) the substantial $io +ass available in the region5 being also in a
privilege situation with respect to a big living center/ $an!ar#asin/ it o2ere) the
per%ect alternative %or the ob!ective o% starting #a0ing another use in a
responsible an) sustainable #anner o% an available resource an) to contribute
greatly with the Roa) +ap establishe) in In)onesia %or an environ#entally
cleaner %uture %or 7;7E.
?B
The Pro!ect will be )evelope) in an e'isting ti#ber plantation concession
(I8P99(:9TI) awar)e) to PT Inhutani II / that starte) operation/ i.e. Plantation
o% Acacia +angiu# as #ain species alrea)y run in its thir) cycles #eaning it has
been running pro)uctively %or al#ost 7; (twenty) years. This concession has an
e'tension o% <=/>7; 9a gross/ out o% which the net usable is <?/@A? 9a that
consists o% @</;=@ 9a per cycle
E
o% Acacia +angiu# / </=>7 9a per cycle o%
+eranti/ an) 7/<@B 9a per cycle o% Rubber.
1ith a very conservative calculation presente) in PT. Inhutani II long ter#
business plan/ the e'pecte) pro)uction o% Acacia +angiu# is </>>?/B7; +@ per
cycle
B
/ +eranti at A></<;; +@ per cycle
>
/ an) Rubber gives 7<@/B;; +@ per
cycle
=
plus a))itional resin pro)uction o% 7<7/@<; ton per cycle.
III.& #%atatio Coce$$io....
E
? pro)uctive cycle is B:> years ti#e %or har)woo) species li0e acacia sp.
B
Acacia #angiu# plantation is calculate) to have an output o% ?<; +@/9a
>
+eranti is 7;; +@/9a
=
Rubber is ?;; +@/9a
?>
The
Plantation calle) PT. ID98TADI II (Pulau .aut 8nit) / is situate) in @K <?L ;I : @K
E=L ?EI &outh .atitu)e an) ??BK ;7L ;I : ??BK ?>L ;I East .ongitu)e within
Pulau .aut %orest group/ (otabaru Regent/ &outh (ali#antan Province as per the
#ap above an) it is about @;; (# %ro# $an!ar#asin with a relatively soun)
networ0 o% roa)s an) electrical trans#ission.
?=
PT. ID98TADI II is a &tate *wne) 6o#pany which its ?;;F shares belong to the
overn#ent o% In)onesia %or#e) initially on Dove#ber ?7/ ?A>E accor)ing to
(artini +ulya)i &9/ sworn Public Dotary un)er Dotary Act Do. >>. 6urrently the
co#pany is operating un)er the +inister o% ,orestry .icense nu#ber
&(.@;/+enhut:II/7;;B/ )ate) ,ebruary ?@/ 7;;B.
The speci-c location %or the Power Plant will be #ost li0ely close or within the
%orestry concession/ )ue to the relative soun) in%rastructures in the area.
9owever this will nee) a %urther analysis )uring the %easibility stu)y stage/
where all the %actors will be analyze) in )etail.
III., 4a! U$e a! 5eera% Socio Ecoomic 1ackgrou! o/ t)e area.
?A
.an) )escription is ABF )ry/ @F wet an) ?F peatlan)/ with its topography
consists o% AAF relatively Jat terrain (; : =K)/ an) the re#aining ?F is between
=K : ?EK. The lan) is situate) between ? M ?; #eters above sea level/ with its
soil characteristic consists o% co#bination yellow re) po)zollic/ latosol an)
alluvial. eologically the soil contents palaeogent an) alluviu# se)i#ents
stones.
De#ographically/ total population o% Pulau .aut regent is >@/7@;. 1here the
nu#bers o% pro)uctive age (?>:EE years ol)) are 7?/E>; #en an) ?A/>;7
wo#en. +a!ority o% Pulau .aut resi)ents are +osle# (A=.?F)/ 6hristians hol)
?.>F while others are at ;.7F. People o% Pulau .aut are 7;F %ar#ers/ 7EF
-sher#en/ @;F tra)ers/ an) 7EF are having #i'e) occupations.
There are 7@7 pri#ary schools/ E? !unior high school %acilities/ 7? high schools
an) even 7 higher learning institutions (colleges). *n the other han) throughout
the islan)/ you can -n) 7?@ #osCues/ 7A churches an) > other worship shrines.
III.- 5eera% i/ra$tructure$ /aci%itie$ .
+ain access o% Pulau .aut resi)ents is in)ee) by #o)e o% roa) transportation.
Travel )istance %ro# RegentLs capital o% (otabaru to site by roa) is about 7
hours. I% you wish to travel by air %ro# $an!ar#asin (capital o% &outh
(ali#antan) to Pulau .aut is about @; #inutes/ while access by roa) is aroun) =
hours to site. Total length o% roa)s outsi)e the concession in Pulau .aut %or
pro)uction as well as #ar0eting purposes is aroun) <; 0#. There is ? #ain
harbor in Pulau .aut where its )ra%t can acco##o)ate 7>; %eet size barge.
There is also ? airstrip built in Pulau .aut that can cater s#all aircra%ts an) or
helicopters.
,ive big rivers (&e#aras River/ &e0ara#bu River/ &ebanti River/ *0a:o0a River
an) .abunan +as River) are locate) within the concession that can be Cuite
use%ul as source o% water supply.
Pulau .aut area is having $ ("N ?<.; M @@.@F) type o% cli#ate/ where average
rain%all precipitation is aroun) 7/@A< ##/year. The highest rain%all precipitation
occurs in Oanuary (7=> ##)/ while the least rain%all happens in &epte#ber
(=E##)
7;
III.0
Syc)roi6atio +it) t)e %oca% 5ri!
7?
The Power Plant will have basically two ob!ective areas to serve. The local
reCuire#ents at the Pulau .aut internally in the islan) that are #erely about E
+w5 an) the rest will be connecte) via sub#arine cable to the nearest
substation in the ne't -gure/ na#e) as $atu .icin. This is an appro'i#ate
)istance o% ?; (# an) the invest#ent cost %or this interconnection will be
separate) %ro# the pro!ect an) inclu)e) into general Trans#ission an)
Distribution ?; year plan.
IV. #re%imiary #%at (e$ig.
IV." BIO MASS 7UE4 S#ECI7ICATIONS
5eera% a$'ect$ o/ +oo! a$ a /ue%
The characteristics a2ecting the properties o% woo) as a %uel are3 heat rate/
che#ical co#position/ #oisture content/ )ensity/ har)ness/ the a#ount o%
volatile #atters/ the a#ount o% soli) carbon/ ash content an) co#position/ the
#elting behavior o% ash/ the slugging behavior o% ash an) the a#ount o%
i#purities/ )ust an) %ungi spores.
1oo) %uel chips/ %or instance/ are o%ten #a)e o% various tree species with
various proportions o% woo)/ bar0/ %oliage/ branches/ bu)s/ an) even cones. This
causes variation in the %uel properties.
Appro'i#ately one hal% o% %resh/ !ust %allen tree is water. The other hal% consists
o% )ry #atter o% woo)/ appro'i#ately =EF o% which consists o% volatile #atters/
?</EF o% soli) carbon an) ;/EF o% ash. 1hen woo) is co#buste)/ its
co#ponents will change into stea# o% water (9
7
*)/ carbon )io'i)e (6*
7
)/
77
nitrogen o'i)es (D*
7
)/ sul%ur o'i)es (&*
7
) an) ash. 1oo) has practically no
sul%ur at all/ as its share in woo) is ;/;EF at the highest. The average che#ical
content o% woo) %uels is shown in Table IV.".
T"#$% I!&1' T(% ")%*"+% ,(%-.,"$ ,/01%01 /2 3//4 25%$6

4i$t a! Va%ue$ o/ =oo! 7ue% #arameter$
A su##ary o% typical woo) %uel characteristics is presente) in Ta1%e IV.&>
7ii$) +oo! /ue%$ +it) ty'ica% rage$ o/ variatio
4oggig
re$i!ue
c)i'$
=)o%e tree
c)i'$
4og C)i'$ Stum' C)i'$
So/t+oo!
Bark
Birc)
Bark
Moi$ture cotet8 +?@
A/re$) c)i'$B
09?;9 -0?00 -9?00 ,9?09 09?;0 -0?00
Net ca%ori.c va%ue i !ry
matter8 MCDkg
"E.0?&9 "E.0?&9 "E.0?&9 "E.0?&9 "E.0?&9 &"?&,
Net ca%ori.c va%ue a$
receive!8 MCDkg
;?F ;?F ;?"9 ;?"" ;?F :?""
Bu%k !e$ity a$ receive!8
kgD%oo$e m,
&09?-99 &09?,09 &09?,09 &99?,99 &09?,09 ,99?-99
Eergy !e$ity8 M=)Dm,
o/ 1u%k vo%ume
9.:?9.F 9.:?9.F 9.:?9.F 9.E?".9 9.0?9.: 9.;?9.E
A$) cotet i !ry matter8
+?@
"?, "?& 9.0?& "?, "?, "?,
3y!roge cotet i !ry
matter A3B8 +?@
;?;.& 0.-?; 0.-?; 0.-?; 0.:?0.F ;.&?;.E
Su%')ur cotet i !ry
matter ASB8 +?@
G9.90 G9.90 G9.90 G9.90 G9.90 G9.90
Nitroge cotet i !ry 9.,?9.0 9.,?9.0 9.,?9.0 9.,?9.0 9.,?9.0 9.0?9.E
7@
matter ANB8 +?@
Moisture Content
The #oisture content o% woo) signi-cantly inJuences the net calori-c heating
value since vaporizing water reCuires energy. The #oisture content o% %resh
woo) %uel varies %ro# E; to B; percent o% the weight o% the total #ass. In
general/ the #oisture content o% woo) %uels varies usually %ro# 7; to BE percent
an) is inJuence)/ a#ong other things/ by the cli#atic con)itions/ the ti#e o%
year/ tree species/ the part o% ste# in Cuestion an) by storage phase.
The e2ect o% #oisture content on the heating value o% woo) is clearly )e-ne) in
7igure IV.".
7igure IV."> The eect o! moisture content on the heating "alue o! #ood $%&h'%g(

It is thus obvious that the acCuisition o% energy per #
@
o% woo) %uel increases as
the )ry #atter content per #
@
increases an) the #oisture content )ecreases.
The )ry #atter content o% the chip #easure varies consi)erably. This is
inJuence) by the basic )ensity an) the soli) volu#e content o% chips. $asic
)ensity (0g/#
@
) in)icates the relationship o% )ry #ass to soli) volu#e #easure/
or how #uch )ry woo) weighs per a soli) #easure o% woo).
I% a plant has been )esigne) to use #oist %uels/ no technical proble#s will occur
but high #oisture content will i#pact the overall %easibility o% the energy
pro)uction3
the #ore water %uel contains :P lower heating value :P %uel e4ciency is
lower
the #ore water %uel contains :P bigger boiler volu#e nee)e) :P #ore
e'pensive boiler
7<
Transportation o% water is not %easible ,urther/ #ost auto#ation syste#s
cannot react to rapi) variations in #oisture content resulting in
inco#plete co#bustion/ which increases e#issions.
)article Si*e +istribution
The particle size an) #oisture content o% )irect woo) %uels or %orest %uels are
o%ten very heterogeneous. The particle size varies %ro# saw)ust:li0e nee)le an)
bar0 #aterial to stic0s o% woo) an) branch pieces. The size o% the woo)
particles is inJuence) both by the original raw #aterial being chippe) an) by
the chipper types. The #ore stern woo) the raw #aterial contains/ the #ore
even the particle size )istribution will be. The con)ition o% chipper 0nives as well
as the aperture size o% the screen in the chipper also inJuences the particle size.
6hips pro)uce) with crushers have typically coarser particles co#pare) to the
chips pro)uce) with chippers.
There is a large variety o% )i2erent chippers available. 1oo) chip users always
)e-ne the size an) Cuality. 8sually size is )e-ne) so that AE F o% chips #ust %all
un)er )ia#eter o% @; ##/ <E ## or B; ##. +a'i#u# #oisture content (w:F)
allowe) is usually )e-ne) %or chips to be un)er <;F/ E;F B;F or BEF.

It is the %uel supplierLs responsibility to )eliver the size an) Cuality o% chips that
he has signe) a )elivery contract %or.
+ensity
The soli) volu#e content o% chips in)icates the relationship between the #asses
o% so:calle) bul0 #easure an) soli) #easure/ that is/ how #any soli) #@ one
bul0 #@ will yiel). The soli) volu#e content o% chips is inJuence) #ostly by the
technical speci-cations o% the chipper/ such as particle size )istribution/ blowing
power an) loa)ing #etho). The )rying ti#e o% chips an) the co#pacting that
occurs )uring long:)istance transport/ however/ have no )ecisive e2ect on the
soli) volu#e content value. &oli) volu#e content (the portion o% soli) #easure)
is nee)e) %or converting bul0 #easure into soli) #easure. The bul0 )ensity o%
the woo)y bio#asses is in the range o% 7;;: @E; 0g/loose #
@
.
The )ensity an) ability to control it will a2ect %uel han)ling syste#s (e.g.
conveyor )esigne)).
,sh Content and )ro-erties

The %uel contains various i#purities in the %or# o% inco#bustible co#ponent
parts ash. Ash itsel% is un)esirable/ since it reCuires puri%ying o% the Jue gas %or
particles with a subseCuent ash an) slag )isposal as the result. The ash
containe) in woo) co#es pri#arily %ro# soil an) san) absorbe) in the bar0. A
#inor proportion also co#es %ro# salts absorbe) )uring the perio) o% growth o%
7E
the tree.
The ash also contains heavy #etals/ causing an un)esirable environ#ental
e2ect/ but the content o% heavy #etals is nor#ally lower than in other soli)
%uels.
A special characteristic o% ash is its heat conservation property. ,or woo) stoves/
the ash layer at the botto# o% the stove %or#s a heating sur%ace/ trans%erring
heat to the -nal burnout o% the char. ,or heating syste#s using a grate/ the ash
content is i#portant in or)er to protect the grate against heat %ro# the Ja#es.
1oo) also contains salts that are o% i#portance to the co#bustion process. It is
pri#arily potassiu# (() an) partly so)iu# (Da)/ base) salts resulting in stic0y
ash/ which #ay cause )eposits in the boiler unit. The Da an) ( content in woo)
are nor#ally so low that it will not cause proble#s with tra)itional heating
technologies.
Typical #ineral %ractions in woo) chips e'presse) as percentage o% the )ry
#atter (D+) o% the woo) is shown in Table IQ.@. 6o#pare) to straw/ the (
content in woo) chips is appro'. ?; ti#es lower.
% of DM
Potassium (K) 0.1
Sodium (Na) 0.015
Phosphorus (P) 0.02
Calcium (Ca) 0.2
Ma!"sium (M) 0.0#
T"#$% I!&3' T78.,"$ -.0%*"$ 250,1./06 2/* W//4 M"1%*."$&
,ro# a practical point o% view an) ta0ing into consi)eration3
&i#ilar re%erences on bio#ass power plants/
The electricity )e#an) in the area/ an) the character o% energy
substitution that this pro!ect has/
The ReCuire) Je'ibility because o% the non:e'act nature o% $io +ass.
The #anaging ability o% the ,orest concession in size/
The learning curve ele#ent inherent to a Pilot Pro!ect/
The conclusion is that this Pilot Plant shoul) be able to )eliver @; +we net to the
gri) in substitution %or the eCuivalent size o% currently )iesel generation
syste#s/ %or the .i%e 6ycle o% the plant (@; years).
9owever/ the %orest yiel) esti#ate is very conservative an) the bio#ass
availability is very sensible to it. &o we can thin0 in another scenario #ore
opti#istic in which the %orest yiel) #ay be 7;; T#/9a. In this case the Power
plant can be <;F bigger/ but really it is not the best size when consi)ering all
the rest o% the %actors #entione) above. &o it is easy to co#e into the i)ea o%
7B
using that e'cess o% bio#ass to pro)uce si#ple soli) %uel in the %or# o% 1oo)
Pellets with currently in high )e#an) in the worl) an) with costs o% selling that
!usti%y the invest#ent easily.
,urther#ore/ the Power Plant can be )evelope) in #o)ules o% ?B to ?> +we/ so
a%ter the -rst 7 years o% operation/ the pro)uction capacity can be increase) by
si#ply a))ing #ore #o)ules an) then giving a tre#en)ous growth Je'ibility to
cope with the ever increasing )e#an) an) the nee) to 0eeping in substituting
the )iesel power generation.
8n)er this scenario the Pro!ect Proposal woul) be3
A @; +w net 1oo) $io +ass Power Plant R.. an)
A ?;;.;;; T#/year o% 1oo) Pellets o% in)ustrial Cuality %or e'port.
IV.& #O=ER #4ANT AN( E4ECTRICITY 5ENERATION.
Analyzing the )i2erent #etho)s o% pro)ucing electricity %ro# $io +ass/ the #ost
suitable an) latest technology has been chosen/ in or)er to #a'i#ize the bio
#ass usage an) in general/ the pro)uctivity o% the %acilities/ always loo0ing %or
the best Cuality/price relationship.
As #entione) earlier/ the %oreseen installe) total capacity o% the plant is @; +w
net/ reCuiring <;;/;;; T#/year o% loose woo) chips an) other relate) waste)
associate) %orestry #aterial/ li0e branches/ stu#ps/ leaves an) bar0. The tree
usage is co#plete.
The %uel storage capacity will be )esign to han)le > )ays o% continuous
operation. *n the other han) the syste# is provi)e) with )evices %or #atter
re#oval assuring that way the strict environ#ental regulations to be %ollowe).
7>
,or this size o% $io +ass Power Plant the #ost econo#ical an) e4cient boiler
syste#s are either3 Qibrating rate water coole)5 or $ubbling ,lui)ize) $e).
Di2erent suppliers o2er each one or both o% the# so the -nal syste# will be
chosen base) on the best e4ciency/econo#ic )elivery. The plant will co#prise
o% either boiler that will generate stea# %ro# woo)y bio#ass at a te#perature
appro'. o% EB; S6 an) a pressure o% =7 bars. The hot co#bustion gas will Jow
vertically )own through the boiler/ raising stea# which is subseCuently passe)
on the stea# turbine on a stan)ar) Ran0ing type o% ther#o)yna#ically stea#
cycle. The turbine is connecte) to a power generator which in turn rotates an)
generates the reCuire) electricity.
The -nal selection o% power plant )esign will be )eter#ine) by3
E4ciency
6ost o% output ratio
Reliability
*T+ 6osts
Environ#ental 6ontrols
6APEU
The Power Plant ECuip#ent is typically )ivi)e) in two categories/ HcoreI
eCuip#ent an) HperipheralI (au'iliary an) ancillary) eCuip#ent3
6*RE. Re%ers to the #ain syste#s reCuire) %or #ain conversion processes
%ro# %uel to electricity or heat.
o ,uel 9an)ling an) preparation syste#
o $oiler
o 9eat Recovery stea# generators
o Pri#e +overs. &tea# Turbines
o enerator.
A8UI.IARV.
o 9eat E'changers
o &tea# ECuip#ent
o Trans%or#ers
o 6ontrol an) +onitoring &yste#
o 6o#bustion ECuip#ent
o E#ission 6ontrol3 6o#bustion +easures an) ,lue as Treat#ent
o 1ater Treat#ent
o *thers.
IV., AS3 (IS#OSA4 .
The total a#ount o% ash pro)uce) by the plant with this 0in) o% raw #aterial %uel
an) assu#ing a #a'i#u# content o% @F %or Acacia is about <;;; T# per year.
A concept is currently being )evelope) that will also inclu)e recirculation o% a
certain %raction o% the ash bac0 into the %orest as an organic %ertilizer/ in or)er to
7=
close the nutrient cycle at least partially. ,or this size o% $io +ass Plant an) the
relatively low ash content o% the woo) %uel co#pare) let us say with coal/ it
shoul) be relatively easy to han)le the Ash resi)ual in a econo#ical way.
IV.- BIO MASS SU##4Y H..
Fuel ,"ailability . As an initial conservative approach it has been consi)ere) a
yiel) o% ?<; #W/9a o% ,orestry $io +ass/ it has been esti#ating a total woo)
availability o% <.= #illion #W soli) over bar0 on @</;;; 9a/ in a B year plantation
cycle. This #eans that we will have appro'i#ately aroun) >AE/;;; #W soli) over
bar0 per year. This is a very i#portant -gure %or basic %orestry planning an)
#anage#ent an) %or )eveloping the basic engineering %or the %acilities to be
installe).
Theoretically this volu#e is enough bio#ass %or a EE +w plant/ but when other
ele#ents were ta0en into account/ the -nal )ecision has been to install initially
@; +w Plant. This will reCuire roughly about ?7B/;;; T# per year o% oven )ry
%uel which is eCuivalent to 7A;/;;; #W o% green woo) chips with a #oisture
content o% <EF in average.
Method o! sourcing bio mass. The operation can be seen in the %ollowing
-gure 5
7A
1hile in general one o% the costing an) co#plicate) activities o% bio #ass power
generation is the logistics involve) with the so bul0y %uel #aterial/ in this case
this issue has been #ini#ize) to the best since the power plant will be built
within the %orestry concession.
)lantation Issues and trans!er -rices. &ince the pro!ect sponsor an) the
raw #aterial supplier is the sa#e co#pany/ Inhutani II (A &tate *wn Enterprise)/
it shoul) be relatively easy to on the one han) assure the availability o% the
reCuire) raw #aterial on a ti#ely %ashion/ an) on the other to establish a
trans%er price that #a0es the pro!ect very viable. The cycles are basically in B
years %ro# planting to harvesting/ so nor#ally the %orest is #anage) by )ivi)ing
the concession in B parts #ore or less si#ilar an) go one by one cloc0 wise.
&ince this %orestry is alrea)y #ature/ the -rst year will be harvesting starting the
planting only on the secon) year/ on the previous harveste) lot.
Appropriate use o% %orestry #anage#ent tools inclu)ing thinning/ pruning/
prescribe) burning as well as ta0ing no action in currently healthy stan)s helps
prevent catastrophic wil)-res an) helps create an) #aintain resilient
watershe)s/ which in turn support co##unities/ wil)li%e an) recreational
opportunities an) enhance overall %orest aesthetics. &ynergistically/ these
environ#ental e2ects create socioecono#ics issues %or co##unities/ ranging
%ro# water availability/ to sustaine) ti#ber pro)uction/ through non ti#ber
%orest pro)ucts creation.
9owever the %orestry #anage#ent is in)epen)ent %ro# the power plant
operation so the Power plant will receive the logs at the log yar) at a speci-c
price all inclu)e). The initial conversation with the %orestry co#pany in)icates
prices o% about @; 8&G/#W )elivere) on the woo) yar) at the power plant. Then
there are so#e other associate) costs %or internal transportation an) han)ling/
@;
plus the woo) chipping an) treating be%ore going into the boiler %or incineration
an) co#bustion.
IV.0 ENVIRONMENTA4 AN( SOCIA4 CONSI(ERATIONS H
The propose power generation co#bination )oes not lea) to any a))itional
a)verse i#pact on the environ#ent.
6onsi)ering the air 'o%%utio8 the stea# boiler is eCuippe) with )ust
precipitating eCuip#ent/ ensuring Jue gas an) )usts concentration in
co#pliance with environ#ental regulation o% In)onesia. The air pollution i#pact
will be negligible. It is so#eti#es use%ul to co#pare potential bio #ass
e#issions with coal e#issions because both are soli) %uels using si#ilar
conversion technologies to pro)uce power. &o burning bio #ass to generate
power typically pro)uces less &*X e#issions than coal because it contains less
sul%ur typically5 the relation is li0e ? to @. Also bio #ass contains less nitrogen
resulting in a signi-cantly lower e#ission o% D*'.
As %or the +ater nee)e) %or the syste# is use) only %or cooling there%ore/ the
)ischarge) water )oes not cause environ#ental pollution. *nly s#all
wastewater will be )ischarge %ro# boiler an) it is treate) in the water treat#ent
plant. &o the i#pact is not signi-cant.
The oi$e is controlle) to reCuire) li#its/ by selecting the correct rotating
eCuip#ent that copes with the speci-cations i#pose) to the suppliers.
1ithout a )etaile) socio econo#ic analysis/ however %ew in)ications can be
given right away. ,or instance/ it is e'pecte) that the construction o% the plant
will provi)e wor0 %or a signi-cant a#ount o% people over a perio) o% B to ?;
#onths/ while plant operations will create per#anent !obs %or <; to E; people.
A))itional to this all the %orest operation/ %or planters/ harvesters/ )rivers/ lab
wor0ers/ etc will provi)e a positive labor i#pact in the region an) certainly
prosperity in the %or# o% a))itional in)irect wor0s surroun)ing the Power Plant
operation an) #aintenance.
In ter#s o% substitution an) greenhouse gas #itigation the e2ect o% choosing
this 0in) o% woo) %uel plant is also very interesting. Particularly/ the %uel
reCuire#ents o% an a)eCuate heat an) power pro)uction in a %ossil %uele)
ther#al power plant woul) either reCuire E;/;;; Tons o% har) coal/ @;/;;; Tons
o% heavy oil or 7E/;;; Tons o% natural gas per annu# to pro)uce the sa#e
a#ount o% energy. &o the operation o% our plant will allow %or saving a signi-cant
a#ount o% %ossil %uel. +oreover bioenergy use) is consi)ere) carbon )io'i)e
neutral because the a#ount o% carbon absorbe) in the stan)ing bio#ass )uring
%orest growth is eCuivalent to what is being release) to the at#osphere when
burning the sa#e a#ount o% woo). In ter#s o% greenhouse gas e#ission saving
%ro# operating this particular plant/ the re)uction o% annual 6*X is about
??;/;;; Tons/annu# when co#paring to coal generation. This allows %or
@?
applying %or 6lean Developing +echanis# an) #a0e goo) use o% the 6arbon
6re)its that this plant will have.
This last issue has not been inclu)e) into the -nancial eCuations at this stage
since the price %or the 6arbon 6re)its is not clear in In)onesia yet.
$. 7INANCIA4 S
V. 7iacia% Eva%uatio
V." Itro!uctio to 7iacia% Eva%uatio
The -nancial evaluation in this chapter appraises the pro-t o% the invest#ent
through a set o% the -nancial analyses. It is to assess the )egree to which the
Pro!ect will generate revenues su4cient to #eet its -nancial obligations/ to
assess the incentives %or investors/ an) to ensure output %orecasts consistent
with -nancial charges.
The evaluation in)icator or e4ciency o% invest#ent is #easure) in the %ollowing
sections by using Det Present Qalues (DPQ) an) -nancial internal rates o% return
(,IRR). The ,IRR is the rate o% )iscount which eCuates the present values o% the
cost an) bene-t strea#s over 7E years o% the operation perio). There are two
0in)s o% ,IRRs %ocuse) in this report5 i) the Pro!ect IRR/ which is an ,IRR be%ore
the -nancial charges or any #oney trans%ers/ an) ii) Return on ECuity (R*E)/
which represents another ,IRR %ro# the investorLs point o% view.
V.& A$$um'tio$ i 7iacia% Eva%uatio
(?) Evaluation Perio)
The -nancial evaluation in this chapter assu#es 7< #onths o% the construction
an) 7E years o% the co##ercial operation therea%ter.
(7) 6urrency
The )ollar o% the 8nite) &tate o% A#erica (8& Dollar) is use) in the -nancial
evaluation. The e'change rate between In)onesian Rupiah an) 8&D is Rp.
A/;;;/8&D.
(@) 6apital E'pen)iture (6APEU) an) *perational E'pen)iture (*PEU)
The total capital e'pen)iture (6APEU) is su##e) as given in the %ollowing table.
9ere/ the har)ware covers not only the power plant to generate the electricity
but the power trans#ission %acilities to trans#it the electricity to the e'isting
power networ0. The -nancial charges/ which are )etaile) in the %ollowing
sections/ are the cost reCuire) %or %or#ulating the pro!ect -nance an) necessary
insurance pre#iu# to be incurre) be%ore the co##ercial operation. The initial
wor0ing capital (I16) is #onetary reserve %or the Pro!ect 6o#pany one year
be%ore the co##issioning.
@7
Descriptions A#ount Dotes
9ar)ware 6ost
8&GB?.;
#ill
Power Plant
8&G<E.;
#ill
@; +1 o% the bio#ass power plant
Trans#ission .ines
8&G?B.;
#ill
<? 0# long ?E; 0Q trans#ission line an)
substation
,inancing 6harges an)
Insurance
8&GB.< #ill
Interest an) insurance cost )uring construction
Initial 1or0ing 6apital (I16) 8&GE.; #ill
6APEU (total capital
e'pen)iture)
8&G>7.<
#ill
As )iscusse) earlier/ the operational e'pen)iture (*PEU) is assu#e) to be
8&G>.E #illion in the -rst year o% the co##ercial operation.
(<) ,inancing 6harges
It is assu#e) that the eCuity invest#ent is 8&G 7?.> #illion or @;F to 6APEU
an) the re#aining 8&GE;.> #illion is the pro!ect -nance )ebt. *ne o% the #ost
li0ely -nancing sche#es is a syn)icate pro!ect -nance with an e'port cre)it
agency. The e'pecte) -nancing con)itions are tabulate) below.
4oa Co!itio$ A$$ume! /or #rivate Bu$ie$$ Mo!e%
&ource
Interest
Rate
(p.a)
,ront:
en) %ee
6o##it#
ent %ee
(p.a)
race
perio)
Repay
perio)
.oan
share
A#oun
ts (G+)
$an0
A
E.;;F ?.;;F ;.>EF
;
years
?7
years
B;F @;.@A
$an0
$
B.;;F 7.;;F ?.;;F
;
years
= years <;F 7;.7B
Total E.<;F ?.<;F ;.=EF
;
years
?7
years
?;;F E;.BB
Dotes ?. The %ront:en) %ee will be charge) only at the ti#e o% loan agree#ent. The
co##it#ent %ee is charge) against unuse) loan a#ount an) will
)ecrease gra)ually an) en) at null when the loan a#ount is %ully
)isburse).
7. .oan a#ount inclu)es 8&GE #illion o% the initial wor0ing capital (I16)
@. Interest rates are constant an) )o not change )uring construction an)
)uring repay#ent perio).
<. race perio) inclu)es @ years o% construction plus reengineering an)
per#its an) license perio).
E. $an0 A3 E6A (e'port cre)it agency)/ $an0 $3 co##ercial ban0(s)
(E) Insurances
Insurances are assu#e) to insure all o% the eCuity invest#ent/ the )ebts an)
interests %ro# H$an0 $I in the above table/ %or which the Pro!ect 6o#pany is
liable. The insurance pre#iu# assu#e) is 7.; F p.a. o% the respective
invest#ent an) liabilities. Do insurance is assu#e)/ however/ %or the )ebt %ro#
H$an0 AI.
@@
(B) Electricity &ales
All o% salable electricity is assu#e) to be sol) to P.D/ the electricity o2:ta0er/ on
the basis o% a 7E years long electricity sales contract or the Power Purchase
Agree#ent (PPA). This -nancial evaluation assu#es =.@8&Y/01h o% the basic
electricity tari2/ which is a unit electricity price o% the -rst year o% the
co##ercial operation with no consi)eration o% price escalation. The basic
electricity tari2 has been chosen as the balance) price #a0ing the Pro!ect
attractive enough not only %or the investor but the o2:ta0er. The basic electricity
tari2 =.@8&Y/01h is aroun) Rp. >E;/01h/ which is ==F to the regulate) price
A

%or the s#all an) #e)iu# scale renewable energy power plant in (ali#antan.
In this -nancial evaluation/ all o% pay#ent %ro# P.D to the Pro!ect 6o#pany is
assu#e) to be in 8& Dollar.
(>) Price Escalation an) Electricity Tari2 Increase
In this -nancial evaluation/ 7F p.a. o% the price escalation is assu#e) to the
cost ite#s/ o% which price escalation see#s not to be co#pensate) by the o2:
ta0er un)er the electricity sales contract.
(=) Discount Rate
?;F p.a. o% the )iscount rate is assu#e) in this -nancial evaluation.
(A) Depreciation an) A#ortization
It is assu#e) that all o% the har)ware (tangible assets) is )epreciate) an)
counte) as the accounting e'penses. The applie) #etho) is the straight line %or
7E years o% )epreciation with zero resi)ual values.
(?;) Ta'es
The %ollowing ta' con)itions are assu#e) %or the pro!ect i#ple#entation an)
operation.
QAT will be %ully pai) by the Pro!ect 6o#pany.
7EF o% pro-t ta' to the Pro!ect 6o#pany %or the operation years
without any ta' holi)ays.
V., 7iacia% Eva%uatio$
The Pro!ect IRR/ which is an ,IRR be%ore the -nancial charges or any #oney
trans%ers/ is analyze) to be ?;.@F a%ter 7E years o% the co##ercial operation.
The present worth o% the net bene-t %ro# the Pro!ect is obtaine) to be 8&G?.E
#illion/ assu#ing ?;F p.a. o% the )iscount rate an) 7= years o% the total
evaluation years. The -nancial strea# is given in the %ollowing table.
A
The +inisterial Decree Do. @?/7;;A sets %orth Rp. =E7.=/01h o% the electricity tari2 %or
power plants which use renewable energy in s#all an) #e)iu# scale in (ali#antan. Re%er to
Regulation o% +inister o% Energy an) +ineral Resources Du#ber @? o% 7;;A on Power Purchase
Price by PT P.D (Persero) %ro# Electric Power Plant which uses renewable energy in s#all an)
#e)iu# scale or e'ec power.
@<
7iacia% Stream /or #ro2ect IRR
Ta0ing the -nancial charges into account/ the pro!ect cash Jow has been
si#ulate) with enough )egree to which the Pro!ect woul) generate revenues
su4cient to #eet its -nancial obligations an) reasonable )ivi)en) to the
investors. The pro!ectLs cash Jow over 7E years o% the co##ercial operation is
tabulate) as %ollows3
@E
#ro2ectI$ Ca$) 7%o+
The return on eCuity (R*E) has been co#pute) to be over ?EF with 8&G?7.<
#illion o% the net present worth o% the return to the investor %ro# the Pro!ect.
Retur o EJuity AROEB
@B
V.- Se$itivity Aa%y$i$
The sensitivity analysis has been a))e) to the above -nancial analysis to
e'a#ine i% the Pro!ectLs pro-tability can be sustaine) un)er un%oreseen
con)itions. The e'a#ination cases are5 6ase ? %or ?;F capital e'pen)iture up/
6ase 7 %or ?;F bene-t less/ an) 6ase @ %or the co#bine) case o% 6ases ? an) 7.
The sensitivity analysis evaluates that the Pro!ect woul) have enough
sustainability even with such un%oreseen con)itions/ as co#pare) in the
%ollowing table.
F.0"0,."$ I04.,"1/*6 /2 B"6% C"6% "04 S%06.1.).17 A0"$76.6
8nit3 8&G #illion
6ases 6ase ; 6ase ? 6ase 7 6ase @
Descriptions $ase 6ase ?;F 6ost 8p
?;F $ene-t
.ess
6ase ?Z7
Pro!ect
IRR
IRR ?;.@F A.BF =.7F >.EF
DPQ ?.E :7.? :=.; :??.E
R*E
IRR ?E.@F ?@.>F ??.@F ?;.;F
DPQ A.@ B.@ :;.7 :@.7
The -nancial results obtaine) using the assu#ptions above #entione) on the
costs calculation are3
Tari2 with P.D =.@ 8&/01h
Pay $ac0 Perio) ?7 years
$rea0:even = years
R*E ?EF
ECuity Invest#ent 8&G 7?.> #illion
Pro!ect ,inance Debt 8&G E;.> #illion
This si#ply corroborates the %act that $io +ass Power Plants #ay o2er
tre#en)ous opportunities that even econo#ically is not only viable but in %act
very pro-table. ,in)ing this in what can be consi)ere) basically an in%rastructure
pro!ect is very appealing an) certainly very #otivating to pursue it an) push it
over/ having also the a))e) value o% all the socio econo#ical an) environ#ental
bene-t.
C. OT3ERS.?
VI. #ROCECT (EVE4O#MENT #4AN H.
In or)er to opti#ize the ti#ing %or the pro!ect i#ple#entation/ it is being
)eci)e) to apply a %ast trac0 approach when co#e to sche)uling. This #eans
that a consecutive activity #ay start be%ore -nishing the previous one an) run
in parallel %or as #uch ti#e as possible.
@>
7ii$) 1y
Presentation o% Pre ,easibility &tu)y :::::::::::::::::::::::::::::: +ilestone
&tarting Point
Pre I#ple#entation ,inancing ::::::::::::::::::::::::::::::::::::::: +onth 7
,easibility &tu)y ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
+onth E
Environ#ental I#pact Assess#ent ::::::::::::::::::::::::::::::::::
+onth B
Per#its an) .icenses :::::::::::::::::::::::::::::::::::::::::::::::::::::
+onth B
,inancial Pac0age ::::::::::::::::::::::::::::::::::::::::::::::::::::::
+onth =
Ten)ering o% ECuip#ent &upply ::::::::::::::::::::::::::::::::::::::
+onth =
,inancial 6lose ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
+onth =
Detaile) Technical Design ::::::::::::::::::::::::::::::::::::::::::::::
+onth ?7
ECuip#ent Delivery ::::::::::::::::::::::::::::::::::::::::::::::::::::::::
+onth ?=
6ivil 1or0s an) 6onstruction :::::::::::::::::::::::::::::::::::::::::::
+onth ?>
Erection an) ,inal 6onstruction :::::::::::::::::::::::::::::::::::::::
+onth 7?
6o##issioning/ &tart 8p an) Test Run ::::::::::::::::::::::::::::::
+onth 77
6o##ercial *peration :::::::::::::::::::::::::::::::::::::::::::::::::::
+onth 7<
(. 4E5A4.?
VII. I$titutioa% coo'eratio.
@=
This pro!ect is being )evelope) by PT. Aztec Resources/ a co#pany establishe)
in In)onesia by In)onesian Renewable energy/ In)epen)ent Power Pro)ucers
an) ,orestry e'perts an) in cooperation with a &panish 6o#pany calle)
"uantu# $io Energy/ which are e'pert in Renewable Energy. PT Aztec Resources
has also )evelope) a partnership with Inhutani II/ a &*E belonging to the
+inistry o% ,orestry. This is the co#pany that coor)inates the concession given
%or the %orestay plantation an) is in %act the one that han)les an) #anages that
plantation.
As such they are the provi)ers o% the raw #aterial or soli) bio #ass %uel/ so
being an intereste) party5 it is obvious to believe that they will #a0e sure about
the availability o% that raw #aterial/ one o% the #ost critical issues when
)eveloping power plants an) specially/ $io +ass power plants.
The initial conversations with the +inistry o% ,orestry an) with Inhutani II
speci-cally/ are very pro#ising an) everything in)icates that everyone is in line
with this proposal.
Attache) in Appen)i' ?/ there is the copy o% the initial letters %ro# Inhutani II
e'pressing their support %or this pro!ect an) their will to go %or the ne't step o%
,easibility &tu)y an) alocation o% -nancial resources.
PT. Aztec Resources is also in a process o% establishing cooperation with other
pro!ect sponsor %ro# Oapan/ &pain an) other European co#panies.
@A
A''e!ix "
Su''ortig %etter$ /rom I)utai II
<;
A''e!ix &.
4ega% I$$ue$.
Regulations %or electricity supply
Mii$teria% regu%atio No 9"D&99;o #roce!ure /or E%ectric #o+er
#urc)a$e /or #u1%ic Co$um'tio
Mii$teria% Regu%atio No &D&99;o Me!ium Sca%e Ree+a1%e Eergie$
Ba$e! #o+er #%at$
P(8( or P.D #ay purchase electricity %ro# PI8(8/IPP by Ten)er or by Direct
Appoint#ent (;?/7;;B)[
,or Renewable Energy base) Power Plants can be by Direct Appoint#ent
(;?/7;;B an) ;7/7;;B)3Private Power Plants +ini#u# 6apacity o% ? +1 up to
?; +1
Intereste) Parties #ay sub#it proposal (a)#inistrative an) technical) to P.D
with copies to Directorate eneral/ overnor or +ayor o% the Area (;7/7;;B5
??77/7;;7).
,or Renewable Energy base) Power Plants (as per ;7/7;;B)/ Intereste) Parties
can be 3 Ooint Qentures/ Privates/ $8+D/ In)ivi)ual.
Perpes B>/7;;E %or structure o% regulations pertaining to Private Public
Partnerships (PPPs)
Privates or Qentures intereste) #ust obtaine) .icense %or Electrical $usiness %or
Public 6onsu#ption (-'e) I8(8)(;?/7;;B).
[,or +e)iu# &cale Ter# o% 6ontract3 8p to 7; years (;7/7;;B).
6onstruction can only be starte) a%ter the license (-'e) I8(8) is obtaine)
(;7/7;;B).
[In carrying out the Pro!ect/ Developers shall use / utilize )o#estic pro)uct/
services(;7/7;;B).
[Power Plants can be operate) a%ter obtaining 6o##issioning 6erti-cate %ro#
authority )eci)e) by overn#ent(;7/7;;B).
4a+$ o/ I!oe$ia
The laws o% In)onesia inclu)e5
.aws (8n)ang:8n)ang)5
overn#ent Regulations(Peraturan Pemerintah \PP])5
Presi)ential Regulations (Peraturan Presiden \Perpres])5
<?
Presi)ential Instructions (Instruksi Presiden \Inpres])5
Presi)ential Decrees (Keputusan Presiden \(eppres])5
+inisterial Decrees (Surat Keputusan Menteri \(ep#en])5
Regional an) .ocal Regulations/ an) other rules an) regulations.
<7