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Generating Electricity with Biomass:

Experience from Bangka Belitung

Albert Maknawi Chief Operations Officer

KENCANA Agri

24 October 2011

Group Overview

Overview of Our Group’s Operation

Plantation

Processing

Products

Supporting Business

Operation Plantation Processing Products Supporting Business Fresh Fruit Bunches (FFB) Total Land bank 189,665 ha

Fresh Fruit Bunches (FFB)

Total Land bank

189,665 ha

Nucleus: 174,691 ha

Plasma: 14,974 ha

Total Planted Area

50,154 ha

Nucleus: 38,817 ha

Plasma: 11,337 ha

Palm Oil Mills
Palm Oil Mills
CPO
CPO

Total Production

Volume:

87,239 MT (FY2009)

94,154 MT (FY2010)

57,667 MT (1H2011)

Renewable Waste

(Empty Fruit Bunches,

Liquid Waste, Kernel

Shells, Fibre)

CPKO
CPKO

Total Production

Volume:

20,258 MT (FY2009)

16,513 MT (FY2010)

6,396 MT (1H2011)

Palm Kernel

Cake

Bulking Terminal
Bulking Terminal
• 6,396 MT (1H2011) Palm Kernel Cake Bulking Terminal Total capacity: 19,500 MT Logistics No of

Total capacity: 19,500 MT

Logistics
Logistics
Cake Bulking Terminal Total capacity: 19,500 MT Logistics No of Vessels :4 Total Capacity: 8,300 MT

No of Vessels :4

Total Capacity: 8,300 MT

No. of Mills: 3

Total Production Capacity: 165 MT/hour

Total Annual

Processing Capacity :

940,500 MT

Total Annual Processing Capacity : 940,500 MT Kernel Crushing Plants No. of Kernel Crushing Plants :
Total Annual Processing Capacity : 940,500 MT Kernel Crushing Plants No. of Kernel Crushing Plants :
Total Annual Processing Capacity : 940,500 MT Kernel Crushing Plants No. of Kernel Crushing Plants :
Total Annual Processing Capacity : 940,500 MT Kernel Crushing Plants No. of Kernel Crushing Plants :
Total Annual Processing Capacity : 940,500 MT Kernel Crushing Plants No. of Kernel Crushing Plants :
Kernel Crushing Plants No. of Kernel Crushing Plants : 2 Total Production Capacity: 435 MT/day
Kernel Crushing
Plants
No. of Kernel Crushing
Plants : 2
Total Production
Capacity: 435 MT/day
Total Annual
: 2 Total Production Capacity: 435 MT/day Total Annual Processing Capacity : 108,315 MT Biomass Power

Processing Capacity :

108,315 MT

435 MT/day Total Annual Processing Capacity : 108,315 MT Biomass Power Plant 1 s t Plant
Biomass Power Plant
Biomass Power Plant
Annual Processing Capacity : 108,315 MT Biomass Power Plant 1 s t Plant (2005) Location: Bangka

1 st Plant (2005) Location: Bangka

Capacity:

6.0 MW

2 nd Plant (2009)

Location: Belitung

Capacity: 7.5 MW

1 s t Plant (2005) Location: Bangka Capacity: 6.0 MW 2 n d Plant (2009) Location:
1 s t Plant (2005) Location: Bangka Capacity: 6.0 MW 2 n d Plant (2009) Location:

Where We Are … Estate Location

Where We Are … Estate Location 4
Why Biomass Power plant? 5

Why Biomass Power plant?

Why Biomass Power plant? 5

The Promise

The Promise Source: International Energy Agency (IEA) Energy Statistics 6

Source: International Energy Agency (IEA) Energy Statistics

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The Promise

Bangka-Belitung short of Electricity. Bangka Belitung was then identified as area of electricity crisis by Ministry of Energy and Mineral ResourcesThe Promise Free palm biomass and readily available Palm Kernel Shell Empty Fruit Bunch 100% diesel

Free palm biomass and readily availablecrisis by Ministry of Energy and Mineral Resources Palm Kernel Shell Empty Fruit Bunch 100% diesel

Mineral Resources Free palm biomass and readily available Palm Kernel Shell Empty Fruit Bunch 100% diesel

Palm Kernel Shell

Free palm biomass and readily available Palm Kernel Shell Empty Fruit Bunch 100% diesel power plant

Empty Fruit Bunch

100% diesel power plant means state electricity’s cost to generate 1 kWh > Rp. 2,000 generate 1 kWh > Rp. 2,000

Realization of zero wastediesel power plant means state electricity’s cost to generate 1 kWh > Rp. 2,000 Viable “Downstream”

Viable “Downstream” project100% diesel power plant means state electricity’s cost to generate 1 kWh > Rp. 2,000 Realization

Renewable Quest

Renewable Quest 8
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Biomass Powerplants

Biomass Powerplants Listrindo Kencana, Tempilang – BANGKA Installed Capacity: 6MW Commisioned in 2008 Feedstock: Empty

Listrindo Kencana, Tempilang BANGKA

Biomass Powerplants Listrindo Kencana, Tempilang – BANGKA Installed Capacity: 6MW Commisioned in 2008 Feedstock: Empty
Biomass Powerplants Listrindo Kencana, Tempilang – BANGKA Installed Capacity: 6MW Commisioned in 2008 Feedstock: Empty

Installed Capacity: 6MWBiomass Powerplants Listrindo Kencana, Tempilang – BANGKA Commisioned in 2008 Feedstock: Empty Fruit Bunch (EFB) and

Commisioned in 2008Kencana, Tempilang – BANGKA Installed Capacity: 6MW Feedstock: Empty Fruit Bunch (EFB) and Palm Kernel Shell

Feedstock: Empty Fruit Bunch (EFB) and– BANGKA Installed Capacity: 6MW Commisioned in 2008 Palm Kernel Shell (PKS) Technology: Traveling grate biomass

Palm Kernel Shell (PKS)

Technology: Traveling grate biomass fired boiler supplying 35 tph steam @ 38 bar 450C to 6MW condensing turbineEmpty Fruit Bunch (EFB) and Palm Kernel Shell (PKS) Registered as CDM project by UNFCCC on

Registered as CDM project by UNFCCC on 8 December 200835 tph steam @ 38 bar 450C to 6MW condensing turbine Envisioned as 2 x 6

Envisioned as 2 x 6 MW power plant built in 2 phasesRegistered as CDM project by UNFCCC on 8 December 2008 First project in Indonesia to receive

First project in Indonesia to receive2008 Envisioned as 2 x 6 MW power plant built in 2 phases biomass PPA and

biomass PPA and first to provide electricity from biomass to national grid

Bangka grid: 80MW Diesel poweredto receive biomass PPA and first to provide electricity from biomass to national grid Electricity rate:

Electricity rate: Rp. 766 / kWhto receive biomass PPA and first to provide electricity from biomass to national grid Bangka grid:

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Biomass Powerplants

Biomass Powerplants Belitung Energy, Mempaya – BELITUNG Installed capacity: 7.5 MW Feedstock: Empty Fruit Bunch (EFB)

Belitung Energy, Mempaya BELITUNG

Biomass Powerplants Belitung Energy, Mempaya – BELITUNG Installed capacity: 7.5 MW Feedstock: Empty Fruit Bunch (EFB)
Biomass Powerplants Belitung Energy, Mempaya – BELITUNG Installed capacity: 7.5 MW Feedstock: Empty Fruit Bunch (EFB)

Installed capacity: 7.5 MWBiomass Powerplants Belitung Energy, Mempaya – BELITUNG Feedstock: Empty Fruit Bunch (EFB) and Palm Kernel Shell

Feedstock: Empty Fruit Bunch (EFB) and Palm Kernel ShellEnergy, Mempaya – BELITUNG Installed capacity: 7.5 MW Technology: Vibrating grate biomass fired boiler supplying

Technology: Vibrating grate biomass fired boiler supplying 45 tph steam @ 38 bar 415C to 7.5MW fully condensing turbineMW Feedstock: Empty Fruit Bunch (EFB) and Palm Kernel Shell Registered as CDM project by UNFCCC

Registered as CDM project by UNFCCC on 16 December 201045 tph steam @ 38 bar 415C to 7.5MW fully condensing turbine Envisioned as 2 x

Envisioned as 2 x 7.5 MW powerRegistered as CDM project by UNFCCC on 16 December 2010 plant built in 2 phases The

plant built in 2 phases

The first project to provide electricity from renewable sources to the Belitung electricity grid2010 Envisioned as 2 x 7.5 MW power plant built in 2 phases Belitung grid: 59MW

Belitung grid: 59MW Diesel poweredproject to provide electricity from renewable sources to the Belitung electricity grid Electricity rate: Rp.787/ kWh

Electricity rate: Rp.787/ kWhto provide electricity from renewable sources to the Belitung electricity grid Belitung grid: 59MW Diesel powered

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Lessons learnt

Lessons learnt 11
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External

Perusahaan Listrik Negara: :

Lengthy Power Purchase Agreement; Powerplant had to be built while PPA process is on-goingExternal Perusahaan Listrik Negara : Fixed electricity price, variable feedstock cost Grid reliability Troubleshooting and

Fixed electricity price, variable feedstock costPowerplant had to be built while PPA process is on-going Grid reliability Troubleshooting and coordination with

Grid reliabilityis on-going Fixed electricity price, variable feedstock cost Troubleshooting and coordination with PLN operators

Troubleshooting and coordination with PLN operatorselectricity price, variable feedstock cost Grid reliability Licenses: Lack of understanding by local authority for PPA

Licenses:Troubleshooting and coordination with PLN operators Lack of understanding by local authority for PPA process and

Lack of understanding by local authority for PPA process and other required licensesand coordination with PLN operators Licenses: Overlapping and contradicting regulations between Ministry,

Overlapping and contradicting regulations between Ministry, Government and PLNlocal authority for PPA process and other required licenses Local Community and Villagers: Socialization how the

Local Community and Villagers:and contradicting regulations between Ministry, Government and PLN Socialization how the cooperative with PLN work 12

Socialization how the cooperative with PLN worklicenses Overlapping and contradicting regulations between Ministry, Government and PLN Local Community and Villagers: 12

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Feedstock, Feedstock, Feedstock

Cyclical supply of Palm Kernel Shell and Empty FruitFeedstock, Feedstock, Feedstock Bunch Inconsistent fuel quality Increasing competition from overseas Palm Kernel Shell

Bunch

Inconsistent fuel qualityCyclical supply of Palm Kernel Shell and Empty Fruit Bunch Increasing competition from overseas Palm Kernel

Increasing competition from overseas Palm Kernel Shell buyersKernel Shell and Empty Fruit Bunch Inconsistent fuel quality EFB and PKS composition strategy for different

EFB and PKS composition strategy for different time of the daycompetition from overseas Palm Kernel Shell buyers Fuel preparation means high parasitic consumption Higher

Fuel preparation means high parasitic consumptionand PKS composition strategy for different time of the day Higher maintenance compared to coal powerplant

Higher maintenance compared to coal powerplantof the day Fuel preparation means high parasitic consumption Continuous tweaking of equipment and setting means

Continuous tweaking of equipment and setting means automation remains limitedtime of the day Fuel preparation means high parasitic consumption Higher maintenance compared to coal powerplant

Financing

Financial institution lack of understanding in renewableFinancing sector Not many interested Less appetite for small projects Self Financing , refinancing later Strict

sector

Not many interestedinstitution lack of understanding in renewable sector Less appetite for small projects Self Financing ,

Less appetite for small projectsof understanding in renewable sector Not many interested Self Financing , refinancing later Strict financial

Self Financing , refinancing latersector Not many interested Less appetite for small projects Strict financial covenants Demand for Long Term

Strict financial covenantssector Not many interested Less appetite for small projects Self Financing , refinancing later Demand for

Demand for Long Term PPANot many interested Less appetite for small projects Self Financing , refinancing later Strict financial covenants

Challenges and Possibilities 15

Challenges and Possibilities

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Possibilities

Better rates through a dedicated biomass pricing scheme from PLN and Ministry of Energy and Mineral ResourcesPossibilities Securing biomass supply through provincial domestic obligation Domestic biomass pricing scheme so variable

Securing biomass supply through provincial domestic obligationscheme from PLN and Ministry of Energy and Mineral Resources Domestic biomass pricing scheme so variable

Domestic biomass pricing scheme so variable electricity price can be a realitybiomass supply through provincial domestic obligation More understanding of fuel characteristics for higher

More understanding of fuel characteristics for higher efficiency power plant.scheme so variable electricity price can be a reality Integration of Palm Oil Mill steam requirement

Integration of Palm Oil Mill steam requirement and Powerplant electricity requirement through a single Cogen Plant: Savings in fuel, lower operation cost and higher production of electricityof fuel characteristics for higher efficiency power plant. Biogas plant from effluent pond to generate more

Biogas plant from effluent pond to generate more electricityrequirement through a single Cogen Plant: Savings in fuel, lower operation cost and higher production of

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“Present technology is real, Biomass are abundant, prices

and policies are set. Lets work together for a brighter and

cleaner Indonesia!”

Thank You

Albert Maknawi

Chief Operations Officer

KENCANA Agri amaknawi@kencanaagri.com

Thank You Albert Maknawi Chief Operations Officer KENCANA Agri amaknawi@kencanaagri.com 18
Thank You Albert Maknawi Chief Operations Officer KENCANA Agri amaknawi@kencanaagri.com 18