UNDP Project Document

Microturbine Cogeneration Technology Application Project (MCTAP)

Government of Indonesia

And

United Nations Development Programme

Microturbine Cogeneration Technology Application Project (MCTAP) (PIMS# ___)

Brief Description Microturbine Cogeneration Technology (MCT) is the best alternative option for a growing captive power market as it produces less GHG than that of the standard reciprocating or internal combustion engines, which are currently used in facilities that require both power and thermal energy. It is particularly appropriate in areas, where gas resources are abundant or easy to get such as those serve by natural gas reticulation systems. MCT systems are easy to operate and maintain, and can also be operated using biogas and commercially available liquid fuels. Presently, there are multiple barriers hindering the development and application of alternative and clean energy technologies, in general, and MCT, in particular, in Indonesia. This project is designed to remove key market, policy, technical and financial barriers to MCT development and application in the country, particularly to reduce the initial cost of this technology which is considered still high for the country’s private sector. This project will introduce, promote, demonstrate and facilitate the marketing and application of MCT through six key components: (a) Technology Assessment and MCT Application Development; (b) Demonstrations & Market Development; (c) Technical Support for MCT Financing; (d) Policy & Institutional Support; (e) MCT Promotion Activities; and, (f) Technical Support for Local MCT Industry. From these 6 components, the following are the expected outcomes: (a) Enhanced knowledge of potential MCT applications; system benefits, availability and cost, as well as capacity and capability of local service providers for MCT systems; (b) Increased MCT applications in ICE sectors as well as market share of MCT, with resulting in GHG emission reduction, and reduction in MCT cost by about 25% average; c) Increased investments on MCT: banks/financing institutions providing loans for MCT projects; (d) Approval and implementation of policies supportive of MCT projects; e) Enhanced awareness of the benefits of MCT in order to increase the number of MCT users and planned MCT projects; and, f) Availability of locally made, and enhanced local manufacturing capability of MCT system components.

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Table of Contents

Section Page List of Acronyms 3 Section I: Elaboration of the Narrative 5 Part I: Situation Analysis 5 Part II: Strategy 18 Part III: Management Arrangements 37 Part IV: Monitoring and Evaluation Plan and Budget 39 Part V: Partnerships Strategy 40 Part VI: Legal Context 41 Section II: Strategic Results Framework and GEF Increment 42 Part I: Incremental Cost Analysis 43 Part II: Logical Framework Analysis (Project Planning Matrix) 56 Section III: Total Budget and Work Plan 60 Section IV: Additional Information 76 Part I: Additional Agreements 76 Part II: Stakeholder Involvement Plan 77 Part III: CO2 Emissions Reduction Estimates 80 Part IV: Monitoring and Evaluation Plan and Budget 85 Part V: Risk Analysis and Assumptions 88 Cover Page of Annual Work Plan and Signature Page 91 Annual Work Plan 92 Annexes Annex A: List of Demonstration Projects 97 Annex B: Project Team Terms of Reverences Annex C: Term of References of Key project Deliverables

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List of Acronyms

Acronym Meaning ADB Asian Development Bank APBN Anggaran Pendapatan Belanja Negara (National Development Budget) APR/PIR Annual Project Review/Project Implementation Review ASEAN Association of South East Asia Nation A&P RCU Asia-Pacific Regional Coordination Unit BBTE/B2TE Balai Besar Teknologi Energy (Energy Technology Center)

BPPT Badan Pengkajian dan Penerapan Teknologi – Agency for the Assessment and Application of Technology

CO2 Carbon dioxide CDM Clean Development Mechanism CCHP Combined Cooling and Heating Power System CHP Combined Heat and Power System DFO Domestic Fuel Obligation DG Distributed Generation DGEEU Directorate General for Electricity and Energy Utilization DJLPE Direktorat Jenderal Listrik dan Pemanfaatan Energy, DGEEU GDP : Gross Domestic Product ESCO Energy Service Company EC&EE Energy Conservation and Energy Efficiency ExA Executing Agency FI Financial Intermediary GEF Global Environment Facility GEF/SGP Global Environment Facility / Small Grant Programme GHG Greenhouse Gas GOI Government of Indonesia CHP Combined Heat Power GWe Gigawatt electricity, 1000 MWe GW, GWh Gigawatt, 1000 MW, gigawatt-hours HT High Temperature (Cogeneration) HPP Harga Pokok Penjualan – Cost of Electricity Supply IA Implementing Agency IC International Consultant ICE Industrial and Commercial Sector IDR Indonesian Rupiah IPC International Project Coordinator IPP Independent Power Producer ITB Institut Teknologi Bandung ( Bandung Institute of Technology) Jabotabek Jakarta Bogor Tangerang Bekasi Kep.Men State Minister Decision KUBE Kebijakan Umum Bidang Energi (General Guidelines on Energy Policy) KEN Kebijakan Energy Nasional (National Energy Policy kWh Kilowatt hour LFA Logical Framework Analysis

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Acronym Meaning LNG Liquid natural Gas LPG Liquid Petroleum Gas LT Low Temperature (Cogeneration) MCTAP Microturbine Cogeneration Technology Application Project MCT Microturbine Cogeneration Technology M&E Monitoring and Evaluation MEMR Ministry of Energy and Mineral Resources MOV Means of Verification MTI Ministry of Trade and Industry MW Megawatt, 1000 KW NAC National Advisory Council NEX National Execution NGO Non-Government Organization NPD National Project Director NPM National Project Manager NSS : National Strategy Study on the Clean Development Mechanism O&M Operation and Maintenance OP-7 : Operation 7 PDF-B Project Development Facility Block B PGN : Perusahaan Gas Negara PLFD Project Logical Framework Design PLN Perusahaan Listrik Negara (State-Owned Electric Company) PMO Project Management Office PPM Project Planning Matrix

PSKSK Pembangkit Skala Kecil Swasta dan Koperasi (Small Scale Generation by Private and Cooperative Enterprises)

PSK TERSEBAR Pembangkit Skala Kecil Tersebar (Small Distributed Generation)

QPR Quarterly Progress Report R&D Research and Development RE Renewable Energy SMOC/SME State Ministry of Cooperative, and Small and Medium Enterprises SME Small Medium Enterprise TA Technical Assistance TOR Terms of Reference TPR Tripartite Review TSCF Terra Standard Cubic Feet TWG Technical Working Group UNFCCC United Nations Framework Convention on Climate Change UNESCAP United Nations Economic and Social Commission for Asia and the Pacific UNDP United Nations Development Programme USAID United States Agency for International Development UU Undang-Undang (Law) YBUL Yayasan Bina Usaha Lingkungan (Foundation for Environmental Development)

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PART I: SITUATION ANALYSIS Context and Global Significance Indonesia is an archipelago consisting of about 17,000 islands, approximately 6,000 of which are inhabited. The five major islands (Sumatra, Java, Kalimantan, Sulawesi and Irian Jaya) and three smaller archipelagos (Maluku, West Nusatenggara and East Nusatenggara) serve as home to majority of the population. Indonesia is an agricultural nation, and has long been an exporter of raw materials, particularly tropical foodstuffs. Since 1990, industrial manufacturing has also become an integral part of the Indonesian economy, having been the largest contributor to the gross domestic product (GDP), followed by agriculture. As a consequence of the relatively high economic growth and rapid increase of population, energy consumption in Indonesia has been growing at a high rate. Even though Indonesia is endowed with abundant and various energy sources such as fossil energy as well as renewable energy, the areas that need such resources are not served because of the absence or inadequacy of distribution networks. Fossil fuels have been major energy resources in the power, industrial and transportation sectors of the country for decades. Considering their finite reserves, oil and gas, which at present dominate the country’s energy consumption mix, the GoI encourages the substitution/replacement of oil with other indigenous sources of energy. The GoI has initiated restructuring of energy prices by gradually eliminating subsidies and by promoting energy conservation programs. Since the oil and gas reserves are decreasing, it is imperative to identify and implement other measures to reduce dependency in these fossil-based energy resources. Thereby, it is expected that the utilization of other non-oil energy sources have to be accelerated. Indonesia Electricity Outlook In 2005, the installed capacity of the national electricity grid was 25.3 GW. This consisted of 21.9 GW installed capacity owned by PLN (state owned electricity company) and 3.4 GW by independent power producers (IPP), excluding captive power generation capacities. The total power generation that year was 127,670 GWh. Based on PLN statistics, the total captive power capacity in the country was 11.1 GW in 2005. That accounts for almost 44% of total national power generating capacity at that time. This shows how significant the captive power generation potential in the country. Captive power plants are common in some industries and in commercial buildings for generating electricity for own consumption. A total captive power capacity exceeding 40% of the total national installed power capacity simply reflects the prevailing poorly structured and insufficient electricity supply industry. Many areas in Indonesia especially outside Jawa and Bali experience frequent blackouts due to incapability of PLN to meet regional electricity demand. In order to slow down the electricity demand growth, PLN is imposing new higher tariff for new customers from the industrial and commercial sectors. The country’s industrial sector is the biggest consumer of electricity supplied by PLN. The sector accounted for 40% of the total sales of PLN in 2005, or approximately 42,448 GWh. Currently, with a growth rate of approximately 8% per annum, Indonesia needs substantial investments for the installation of new power generation capacity. This is illustrated graphically in Figure 1.

SECTION I: Elaboration of the Narrative

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While PLN is still reeling under financial problems, the IPPs found themselves in a situation where they can enhance their contribution in filling the gap in meeting the country’s electricity demand, with the building and operation of new power generation facilities. While the electricity prices in the country are still subsidized1, the potentials for energy savings in improved power generation technologies are high. The following are significant measures, which are expected to attract more investment in the country’s power sector: (1) Elimination of energy subsidies, which started since 2001; and, (2) Installation of LNG pipeline networks in Sumatra, Jawa and South Sulawesi. GGWWHH

Fig. 1: Electric Power Sales of PLN, year 1995 - 2005

The GOI indicates that in the national energy demand profile, electricity shows the fastest growth compared to other energy forms starting 2003. During the period 2000-2025, electricity grew by about 4.5 times and its share in the total energy demand grew 1.5 times. In 2005, PLN has at least 30,000 units of 50 kW to 1 MW diesel generating sets scattered all over the archipelago totaling around 500 MW. The GOI has started in 1999 to veer away from diesel-based generation particularly for new capacities and has prioritized the use of renewable energy wherever applicable and practical. That was the time when National Energy Vision 2020 was issued giving top priority to renewable energy (RE) resources in support of long-run energy development goals. However, there is a continuing trend in investing on diesel gensets even at today’s high oil prices. Diesel gensets have been widely used in Indonesia, especially in remote areas due to its availability, flexibility and ease to acquire and operate.

1 In the Java-Bali areas, which are mainly served by the PLN grid and where the MCT application potentials are high, the electricity tariff (2006) is on the average about 23.3% lower than the electricity generation cost.

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The main energy carriers used in Indonesia’s industrial sector are basically coal, natural gas and diesel oil. Purchased electricity from PLN also constituted a big portion of the energy sources for the sector. This is shown in Fig. 2 for the 2005 industrial energy consumption in Indonesia.

Fig. 2: National Industrial Energy Consumption Distribution of Indonesia, Year 2005

The energy-demand sectors that use the abovementioned energy carriers are among the major contributors to GHG emissions in the country, and are responsible for most of the increase in GHG emissions over the next two decades. A huge proportion of the captive power capacity in Indonesia is comprised of diesel power generation systems, which accounts for part of the CO2 emissions from the country’s power sector. Captive on grid-connected coal-fired power generations are also contributing high amounts of CO2 emissions. Table 1 presents the PLN Power Generation Performance in 2005 (Source: PLN Statistics).

Table 1: PLN Power Generation Performance (2005)

Power Plant Technology Type of Fuel Fuel

Consumption

Power Generation

(MWh)

Generation Cost

(US$/kWh)

CO2 Emission (million

tons)

CO2 Emission

Factor (kg/kWh)

Steam Thermal

Coal 16,579,922 33,962,475 0.045 38.710 1.140 Natural Gas 17,431 1,532,911 0.056 1.040 0.678 HSD 6,575 17,673 0.134 0.019 1.053 MFO 2,235,961 8,099,365 0.095 7.093 0.876

Gas-Fired Natural Gas 7,133 424,618 0.062 0.425 1.002 HSD 1,111,827 2,883,346 0.130 3.147 1.091

Combined Cycle

Natural Gas 156,877 18,528,247 0.038 9.358 0.505 HSD 3,655,089 14,580,986 0.089 10.345 0.709

Diesel HSD 1,368,597 4,929,961 0.118 3.873 0.786 MFO/IDO 10,221 40,501 0.101 0.029 0.728

Thousand BOE

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Power Plant Technology Type of Fuel Fuel

Consumption

Power Generation

(MWh)

Generation Cost

(US$/kWh)

CO2 Emission (million

tons)

CO2 Emission

Factor (kg/kWh)

Geothermal 3,005,510 0.067 0.601 0.200 Hydro 10,758,860 0.045 - - Total 98,764,453 0.061 75.640 Ave. 0.756 NOTE: The units of the fuel consumption are different for each fuel: tons for coal, million standard cubic feet (MMSCF) for natural gas and kiloliters for HSD, MFO, and IDO.

Cogeneration technologies and Microturbine Cogeneration Technology (MCT) in particular, offer a new perspective on clean, efficient and high quality of on-site power generation. Based on available statistical data on medium to large scale industries, the potential industrial sub-sectors for cogeneration implementation (e.g., pulp & paper, petrochemical, textile, food processing, etc.) consumed almost 29,000 GWh or approximately 30% of PLN-supplied electricity in 2005 while producing about 9,000 GWh as captive power (see Fig. 3).

Fig. 3: Installed Power Plant Capacity of Indonesia, Year 2005 From the data compiled by the Research and Development Center of Energy and Electricity Technology (Puslitbang Teknologi Energi dan Ketenagalistrikan), Ministry of Energy and Mineral Resources, there are 25 cogeneration plants in 2005 operating in the country with a total installed capacity of about 1,200 MW (excluding combined cycle plants of IPPs). About 834 MW has been operational before 2001. The pulp and paper industry, which accounted for 516 MW of cogeneration capacity in 2001, was the largest user of cogeneration, followed by the chemical industries (fertilizer, petrochemical and cement), which accounted for a total cogeneration capacity of 278 MW. The application of MCT depends on fuel gas availability. Fuel gas is typically supplied through gas pipelines and reticulation systems, as well as in gas tanks (pylons, bottles). The GoI has set up a plan to install gas piping system in Java, Sumatra and in some parts of Kalimantan that is going to be completed in 2019.

11.1;30%

3.1;8%

22.5;62%

PLN IPP Captive Power

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As illustrated in Fig. 4, it is planned that there will be undersea gas pipelines between Sumatra and Java and between South Kalimantan and Semarang. Besides, the GoI also plan to extend the gas distribution in many cities and towns in Java such as: Indramayu, Subang, Sumedang, Majalengka, Kuningan, Cirebon, Tegal, Pekalongan, Semarang, Ungaran, Kudus, Purwodadi, Rembang, Blora, Tuban, Bojonegoro, Lamongan, and Gresik. These cities are located in the north coastline of Java Island.

Total reserve (proven and possible) of natural gas in Indonesia as of 1 January 2006 was 187.09 TSCF. The New National Energy Policy (2006-2025) clearly indicates the encouragement for the industrial sector to increase the utilization of the country’s natural gas resource as a fuel or industrial raw material. With increasing oil prices and technological advances on natural gas utilization and transmission and the country’s new plan on natural gas transmission and distribution network expansions, the issue of ensuring natural gas reserves is now very important for Indonesia.

Fig. 4: LNG Main Transmission Line in Java

Natural gas in the country is processed into LNG and distributed to distant consumers, domestic and abroad. Natural gas for domestic use is distributed by PT. Perusahaan Gas Negara (PGN) through pipes to consumers as an energy source or as raw material in industrial chemical production. PGN’s distribution pipelines can be found in six major markets: Jakarta, Medan, Surabaya, Medan, Bogor, Cirebon, and Palembang, with a total pipeline length of 2,739 kms. GoI plans to increase the domestic use of natural gas. Presently, PGN is working to complete a 1,100 km natural gas transmission pipeline from the South Sumatra to West Java to supply the Banten/West Java distribution system and the development of a 686 km gas pipeline infrastructure from Duri-Dumai-Medan/Belawan, which is to provide natural gas supply from South Sumatra for the new Riau market and North Sumatra distribution network expansion. Subsequently, in the future PGN is also planning to build natural gas transmission pipelines from East Kalimantan to East Java, including the extension pipelines from East Java to Central Java and West Java, with a total pipeline length of 1,700 kms. The first phase of the distribution network extension (South Sumatra to West Java)

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requires US$ 424.40 million investment from the Japan Bank for International Cooperation (JBIC) and is expected to deliver gas about 250 MMSCFD. The second phase of the gas transmission project needs US$ 541.9 million investment from Eurobond and PGN funding sources and it will bring about 400 MMSCFD of gas from Central Sumatra to West Java after the completion of the project by the end of 2007 . With the increasing energy demand driven by national development activities, it is expected that natural gas will have a bigger energy contribution for domestic and industrial use in the future. In the area outside the transmission path of natural gas, there is no problem to develop and implement MCT projects because fuel gas is available. Microturbines can also be used stand alone as a distributed generation (DG) source. A distributed microturbine-based power unit can be connected directly to the customer or to a utility’s transmission and distribution system. Examples of technologies available for DG include gas turbine generators, internal combustion engine generators (e.g., gas, diesel), photovoltaic, wind turbines, fuel cells, and microturbines. DG refers to power-generation equipment that provides electric power at a site much closer to customers than a central generation station. Recently, biogas production from livestock manure management facilities has become a promising alternative for fueling DG technologies. These technologies, commonly referred to as anaerobic digesters, decompose manure in a controlled environment and recover the methane produced from the manure digestion. The recovered methane can fuel power generators to produce electricity, heat, and hot water. Digesters also reduce foul odor and can reduce the risk of ground- and surface-water pollution. Issues/Concerns In a nutshell, the major issues that have to be addressed are: Lack of comprehensive policy and suitable financing schemes to lessen high first cost which is

affecting private investor interest in the MCT projects; Lack of local MCT supporting industry capacities; Lack of confidence in MCT technology and information needs; and Insufficient demonstration of sustainable MCT application

The above issues are interrelated with identified policy, financial, institutional, technical, informational, and market development problems. For example, the policy barriers are related to the interaction between the national government and the local (municipal) implementation level. This highlights the importance of bringing national development planning and implementation at the local level, using appropriate policy instruments (guidelines and rules), where microturbine cogeneration can be optimally developed. Institutional Barriers • National energy policies are not translated to specific guidelines, rules and regulations with

particular focus on low GHG emitting technologies such as MCT applications in industrial and commercial sectors development activities - Several laws and regulations related to alternative energy technology in general (not specific to MCT development), have been issued by the GOI. With the implementation of local autonomy policy, the laws and regulations are not accompanied by operational guidelines. Local alternative energy technology policies, if they exist at all, are generally lacking in operational guidelines.

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• Low local government capacity in developing comprehensive local energy planning - The

opportunities and benefits of harnessing the available natural gas resources for productive applications are often overlooked in the local government’s energy planning. To make the systems sustainable, it is important that a comprehensive energy and electricity development and utilization plan at local level be firmed up and be the basis for strengthening coordination among the local government, private entrepreneurs and other institutions.

Technical Barriers The application of cogeneration technology has been identified as one of the cost-effective climate change mitigation measure in the Technology Needs Assessment (TNA) that Indonesia carried out during the top-up phase of its Climate Change Enabling Activity Project. The TNA was based on the mitigation measures that call for promoting public adoption of energy conservation & efficiency; and promoting clean and efficient energy use in the industrial and commercial sectors. MCT, which is a low temperature cogeneration system, is among the technologies that were cited as among those that should be promoted by the Government of Indonesia (GOI) in these sectors. Table 2 presents the various power generation technology options that have been identified in the TNA. For each option, the corresponding CO2 emission factors and typical fuels used are indicated.

Table 2: Estimated CO2 Emission Factor for Power Generation

Power Plant Technology Option Type of Fuel CO2 Emission Factor (kg/kWh) Combined Cycle PP Natural Gas 0.281

HSD 0.076 Geothermal PP 0.586 Hydro PP 0.786 Low Temperature Cogeneration Natural Gas 0.481 High Temperature Cogeneration Natural Gas 0.523 Biomass Steam PP Biomass 0.786 Solar Thermal Solar Heat 0.786 Solar Photovoltaic Solar Radiation 0.786 Wind Wind 0.786 Microhydro Hydro 0.786 NOTE: The baseline used is the diesel engine power plant with the generation cost for HSD at US$ 0.118 per kWh and emission factor of 0.786 kg CO2 per kWh.

Based on the consultations with stakeholders during the LFA workshop in May 2007, the following are the technical barriers identified in adopting the MCT in the Indonesian industrial and commercial enterprises sector: • Technical viability of MCT applications is unknown - There is insufficient information on, and

technical experience in, MCT applications in the country that can help convince potential users and supporters of this technology. The recent installations in offshore oil rigs of PERTAMINA have yet to generate enough information about the performance of the technology. The bulk of the information on the technical performance of MCT systems that are available is from the suppliers of the technology and these are on applications in the developed world.

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• Capacity of local equipment manufacturing industry to produce MCT components is unknown - There is no MCT market at the moment. Local equipment manufacturers may or may not be able to produced MCT system equipment/components. This is among the uncertainty that hinders the application and sale of MCT in the country.

• Lack of program and human capacity in R&D and local manufacturing of MCT components -

For the same reason as in the non-existent local MCT market, this contributes to the absence of the MCT market in the country. R&D activities for EC&EE technologies in the country are also very limited. These are mostly from government or foreign aid-assisted programs that most of the time, are not followed up when the programs end. Private sector R&D is mostly for consumable items and is also mainly sponsored by foreign-based parent companies of many manufacturing businesses in the country.

• Local service providers cannot provide quality installation, reliable products and basic

awareness for the clients - Local service providers (e.g., engineering and consulting firms) in general have specific capabilities limited to their respective areas of expertise. In some cases, good quality work still remains to be desired.

• Low level of competency of local technology service providers on MCT applications - While

local service providers (e.g., engineering and consulting firms) may know the concept and benefits of MCT, but since there are no experience yet, in-country, of MCT applications, there is definitely inadequate (most likely very minimal) know how in the installation, operation and servicing of such systems.

• No code of practice and technical guidelines for MCT installation, operation and maintenance –

MCT application projects will, at first, encounter several teething problems not only because it is new (although well known in the ICE sector). Even if the MCT equipment are properly designed and manufactured, the system may not be functioning optimally due to lack of guidelines and improper practice at the point of usage.

• There are no guarantees for the technical requirements necessary to ensure the safety and the

reliability of planned on-grid MCT systems - Being a new technology, to gain the confidence of the potential users, MCT system equipment will need to be covered by product warranties on technical performance and safe operation of installed systems and may have cost implications to provide them.

Information and Awareness Barriers MCT system cost is generally is 400% of diesel power generation technology. Because of this, MCT is not widely used in the country although it is known in the ICE sectors that it provides better environmental benefit and the overall operation cost is significantly cheaper, because these are more efficient and have longer lifetimes compared to typical DG and CHP applications. Although they are aware of the technology and its benefits, Indonesian industries are not ready to accept it unless they have seen a commercially viable and operating system on the ground. Practically, they don’t want to become guinea pigs for trying this “virtually known” but “realistically unknown” low GHG emitting energy technology.

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Specifically for MCT deployment, the main barrier is the lack of information on the cost-effectiveness of MCT applications in Indonesia. The application of the technology in the country is still perceived to be a technical risk. Although this technology implementation is expected to pay off by itself through savings gained from lower energy consumption, it is unlikely that this technology will be utilized seriously by any enterprise as there are no documented evidence to assure the market that the savings claimed by MCT manufacturers would be attainable under the climate conditions and the fuel prices in Indonesia. • Insufficient information and dissemination of policies and regulations - Limited information and

dissemination about cogeneration projects and confusing guidelines greatly affect local government in translating the general policies into local policies and implementing rules, hence hindering new business and community-driven initiatives in MCT projects.

• Lack of documentation and publication of existing cogeneration technology achievement - There

is lack of documented success stories of cogeneration projects in Indonesia and effective incorporation of lessons learned and best practices in planning cogeneration projects. While the successful experiences are shared mostly among cogeneration developers, potential investors or commercial funding agencies rarely know these. The levels of awareness of cogeneration not only in general public but also with engineering firms are low.

• Lack of up-to-date and transparent information on MCT - There are very limited comprehensive,

continuously collected and reliable sets of MCT related data that could be made readily available to interested parties. There is also absence of institution or local government agency, which is designated and have good capability to coordinate the conduct of MCT potential surveys for local sites as well as, eventually, nationwide for Indonesia.

• Lack of information on the cost-effectiveness of MCT applications - Specifically for MCT

deployment, the main barrier is the lack of information on the cost-effectiveness of MCT applications in Indonesia. The application of the technology in the country is still perceived to be a technical risk. Although this technology implementation is expected to pay off by itself through savings gained from lower energy consumption, it is unlikely that this technology will be utilized seriously by any enterprise as there are no documented evidence to assure the market that the savings claimed by MCT manufacturers would be attainable under the climate conditions and the fuel prices in Indonesia.

Market Barriers Indonesia is a large country with many islands. As with other commodities, the geographic characteristics of the country this country will cause some difficulty to guarantee the after sales services that should offered during marketing promotion. It would be easy if the MCT is installed in Jakarta or Java Island where the MCT dealer will be sited, for example. But it is not easy if it is installed in Eastern Indonesia such as in Eastern Kalimantan. The market barriers are as follows: • No fully functional focal point for the provision of market development services for MCT - There

is no focal point for MCT development in the country that can assist the key players in exploring and taking advantage of opportunities in developing and implementing MCT projects. The existing Energy Conservation Clearing House (ECCH) at DGEEU and BPPT has to be reinforced to allow it to deliver other relevant services on top of what it has been doing under a specific

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project only. In conjunction with this is the lack of strategies for more effective information dissemination and training for recipients and for providers of services.

• Lack of skilled human resources for designing, implementing, and managing MCT projects -

Skilled human resources for developing new technologies in Indonesia are very limited. This is due to limited participation of the GOI and private sector on new technology development projects. Most of these projects are handled by engineers or technicians from abroad.

• Lack of effective technical human resources development program - There are only a few

existing training centers, mainly under DGEEU and BPPT that have specific program in alternative energy technology. Several NGOs like YBUL and Pelangi, which are sponsored by external donor institutions, provide training sessions for specific project requirements on an irregular basis. Despite initiatives in formal education leading to engineering degrees in energy conservation technology, still more regular training programs are needed to improve the quality and quantity of MCT engineers and technicians

• Lack of accessibility to information on MCT applications – Except for the MCT installations in

offshore oil rigs, there are no commercial MCT projects in Indonesia so far. In consequence, there is a dearth in information on local experience with the technology.

• Limited local industrial capacity to support MCT development - There are currently only a few

local industries that could support the MCT development. The capabilities these industries to do a MCT project are at best based on their track record in implementing cogeneration projects in Indonesia. Although the manufacturers related to the cogeneration technology are currently under utilized, the capacity is obviously inadequate to meet expected future demand, considering the large resource potential and market opportunity of MCT projects.

• Lack of MCT equipment product standards and standardization program - At present, there is no

system for accreditation, quality assurance and product certification for technology and performance. The absence of technical standard has led to the utilization of substandard (foreign and local) equipment, resulting in low efficiency and poor system reliability resulting to lack of confidence in the technology.

Institutional, Sectoral and Policy Context PLN is the main institution in implementing the electricity policy set up by DGEEU. Until recently, PLN centrally conducts the national electricity system planning, development and management. This state-owned utility company holds the monopoly for the national electricity business ranging from power generation, transmission and distribution, as well as power retailing. PLN’s installed generating capacity has grown from less than 800 MW in the mid 1970s to around 21.9 GW by end-2005, constituting about 60.2% of the national electric power generation capacity including captive power generation. PLN is currently unable to expand its power generating capacity due to financial difficulties. Its generating capacity includes several large Independent Power Producers (IPPs) that have been in operation since 1997. Captive power capacity that exists around the country adds up to 11.1 GW. In the past, PLN has announced 28 locations of critical systems that have started the rotation of power shutdown due to power shortage. The severe devaluation of the Indonesian Rupiah in the beginning of crisis in 1997 against the US Dollar left PLN with huge

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foreign debts and inability to meet the financial obligations to the IPPs. The purchase of fuel and spare parts at the world market in foreign exchange makes PLN even more entrenched in serious financial crisis in the past years. Economic outlook for Indonesia has started to see signs of recovery in the immediate term. The national utility has very limited resources to fully carry out its goal of improving the household electrification ratio from the present 55% to 90% in 2020. In this respect, the government needs to encourage more participation from relevant sectors and for communities to initiate community-based energy supply projects by themselves with basic government guidance. This becomes more imperative with the recent government mandate to accelerate development of indigenous energy. Stakeholders in Promoting Low GHG-Emitting Energy Technologies BPPT, through its BBTE (Balai Besar Teknologi Energi or Energy Technology Center) is committed to implement the MCTAP with the support and assistance from the GEF in order to realize the long-term smaller cogeneration technology market penetration in Indonesia. The BBTE is a BPPT subsidiary working in the field of energy technologies, especially in energy conversion and conservation. BBTE main task is to assist the government in the national economic development through research, assessment and application of energy technology BBTE will work closely with the Ministry of Energy and Mineral Resources (MEMR), the Ministry of Trade and Industry (MTI), particularly in the development of sound policy frameworks on gas utilization; electricity generation; technology application and commercialization. The state gas company’s (PGN) new gas distribution development project, which is funded by investment from international financial institutions will contribute to the establishment of policy frameworks to ensure sustainable access to affordable gas for microturbine users. In addition to that, the MEMR and MTI will play central roles in promotion activities and capacity building that would involve all stakeholders interested in the development of the microturbine market in Indonesia. The design and development of financing mechanisms (and a sustainable financing model) will involve a number of commercial banks such as Bank Buana International. The development and implementation of the demonstration schemes, market development and support to energy service companies (ESCOs) and MCT users, will heavily involve private companies, which initially include the main project proponents, namely SMIT (PT. Solusi Mitra Integrasi Teknologi) and GRK (PT. Gurmilang Rancang Kretama); and Capstone Inc. Other private companies have expressed interest in the project such as selected textile manufactures in Bandung, as well as the owners and management of several commercial buildings. During the PPG exercise, BBTE was supported by UNDP, and two private sector entities: SMIT and GRK. These 2 private companies were the original proponents of this proposed OP-7 project. BBTE, UNDP, SMIT and GRK ensure that the completion of the PDF-B activities would culminate in a comprehensive proposal for a GEF supported national MCT full project. Baseline Scenario It is anticipated that in the absence of the proposed GEF supported technology promotion project, highly polluting, non-environment friendly fossil fuel-fired energy systems would still be favored for power generation in the country. Rising from the financial crisis in the later part of the 90s, Indonesia has been one of the fastest growing countries in the ASEAN region with growing demand for

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electricity. To meet this demand, the GoI would continue to install new conventional power generation facilities. In addition, coal fired power plants and diesel power plants will still be the option for electricity generation, in view of the availability of fuel and the relatively lower cost for the technology involved. To mitigate the environmental pollution caused by the high level of coal and oil utilization in the country’s renewable energy development and the widespread practice of EC&EE have been encouraged by the GoI. Although there is high level of awareness of the economic and environmental benefits of MCT implementation, such technology will not be employed in the short to medium term because of its high cost. Indonesia with its growing captive power market, an insufficient power supply market, and availability of huge natural gas resources is definitely a promising market for cogeneration. Cogeneration has only been popular amongst the big industries, such as pulp & paper, petrochemical, textile and food processing, mainly because the past cogeneration technologies are usually only cost effective for bigger power and heating generation capacities. Recently, small-scale cogeneration has become popular in smaller industries. It is anticipated that the factors like, the availability of newer cogeneration technology, the development of natural gas infrastructure, and much more favorable regulations to support EC&EE projects are expected to contribute significantly towards promoting MCT for small-scale cogeneration in SMIs in Indonesia. Table 5 shows the summary of installed Cogeneration/CHP Projects in Indonesia since 1997.

Table 5: Summary of Installed Cogeneration/CHP Projects in Indonesia Since 1997

Industry Installed Cogeneration Capacity (MW)

Energy Generation (MWh)

Pulp and Paper 1,393 5,800 Petroleum Refineries 350 1,046Urea 203 831 Textile 202 719 Sugar 200 371 Wood 130 520 Oil Production 100 n.a. Chemical 127 475 Other 94 169 Total 2,798 9,930

Captive power generation units are often initially installed when the user could not get the electricity from the grid. When grid supply became available later, most owners of captive power plants switched to the grid. They keep their captive power generation units as back-up especially when PLN supply becomes unreliable. However, many continued to use captive power for production activities even with high outage records and costly operations. A study “Captive Power Supply in Indonesia: Historical Development, Present Status and Future Role” was conducted by Heinz Pape in 1998. Besides the results of a number of surveys done in some selected industries, the figures yielded in the study can be used as reference especially when we project the electricity generated by the captive plants in the future years. In 2025 about 111,795 GWh of electricity is forecast to be produced by captive based on the assumption that the growth rate of captive generation is 4.3%, which is the same as that in the World Bank study. That accounts for about 20% of total electricity generated by PLN and IPP together in the same year, which is estimated to be 578,743 GWh as can be seen in Fig. 6 below.

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Diesel engine gensets constitute bulk of the captive power plants in Indonesia. The World Bank study shows that about 42.2% of captive power generation is produced by plants using HSD (High-Speed Diesel Oil) as fuel. Another set of statistics published by the DGEEU in 2000 has different figures. The statistics indicate that the installed captive power capacity fueled by HSD amounted to 8,507 MW or 55.9% of total captive power capacity. By considering that and the portion of diesel engines which is likely to be less now, it is assumed (for a baseline scenario) that 40% of captive power generation is fueled by HSD, the rest by natural gas, coal, fuel oil and hydro, gas and hydro. Therefore, it is projected that the diesel captive plants will generate 48,474 GWh of electricity in 2025, almost two and a half times than the electricity generated in 2005 as seen in Fig. 6.

-

100,000

200,000

300,000

400,000

500,000

600,000

2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

PLN + IPP Captive Diesel Captive

GWh

Fig. 6: Generation of Captive, PLN and IPP Power Plants Without GEF support, MCT application will remain untapped mainly due to its relatively high cost and the general perception that the technology is ‘exotic’ and ‘unproven’. Without this proposed project, the country would have limited success in establishing a suitable environment for widespread adoption MCT application as a viable environment friendly energy system. A dominant power generation based on coal and diesel and the use of oil for industrial process heating will lead to a tremendous increase in GHG emissions, thus causing more serious problems for the local and global environment. The underlying factors such as forecast increase in energy demand and the huge of natural gas reserve in Indonesia point clearly towards the adoption of MCT as a viable alternative. Considering the synergies and benefits of MCT application, the technology will have an important impact and an environmental benefit to partially substitute the use of coal and oil for electricity generation and industrial process heating. The successful outcome of the proposed activities will make MCT commercially viable as alternative for electricity generation and industrial process heating/cooling. The desired increased market for MCT is expected to lower down the investment cost for MCT.

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PART II: STRATEGY Project Rationale and Policy Conformity MCT is a proven technology capable of providing a continuous source of high-quality power with low emissions and low maintenance. An energy system that makes use of MCT with heat recovery for providing thermal energy for space and process cooling can improve the overall efficiency of this energy system. The economic advantages of MCT are derived from an extremely reliable power supply from systems employing it. Energy savings from the application of the technology could be more than enough to pay for itself. The implementation of MCT in decentralized power generation can be cost-effective strategy for utilizing the marginal natural gas fields or flared gas in Indonesia. Such decentralized power generation systems can also be sources of jobs, employments, and enterprises creation; in areas surrounding or near these marginal natural gas fields. Based NSS report, the utilization of flared gas as a substitute energy source is the abatement option that offers the largest emission reduction potential at low positive cost in Indonesia. Flared gas are fuels that might otherwise be wasted, for instance, in an oil field when drilling takes place or when natural gas produced and burned from ex oil field or oil/natural gas field not being exploited because of non-commercial small deposits. To prevent an explosion, oil companies extract and burn off the gas at a wellhead in a process called "flaring”. MCT can tap fuel from the flaring pipe and generate energy from the gas which will still otherwise produce GHG while flaring. This option can be used as a common practice at offshore and outlying land-based oil rigs that lack access to power grids. MCT will be the sole power source for the facility or other sites near by oil and gas fields, which is situated out of reach of a power grid. The project strategy focuses on implementation of cost-reduction and capacity building activities, which include pilot installations of MCT to demonstrate various feasible applications. In parallel, information dissemination and promotion activities will be carried out. The various project components have been designed specifically to achieve the long-term cost reduction of MCT applications due to increasing MCT market. The activities are intended to build on the existing capacity in handling cogeneration technology already available in Indonesia to adopt MCT applications2. The combined effects of the MCTAP activities are expected to "jump-start" MCT applications and the MCT market in Indonesia. Alternative Scenario Under this proposed GEF-supported project, energy saving and GHG reduction in the industry and commercial sectors are expected in the short term, through the application of MCT as on-site combined power generation and heat recovery for heating/cooling in the country’s private sector power generation. The proposed project is expected to effectively reduce the cost of MCT and make

2 Through the National Energy Policy, the following courses of action will be promoted by the GoI to stimulate the private sector to implement MCT project to reduce the use of oil/coal for electricity generation and industrial process heating: (a) Support the development of small scale of natural gas transportation and natural gas storage technology; (b) Increase the use of natural gas as fuel or raw material in industry by accelerating the expansion of natural gas technology infrastructure; (c) Support research and development of natural gas conversion technology to substitute oil base technology; (d) Increase the number of deployment of cogeneration and fuel cell technology, because these technologies can reduce the cost of power generation and increase efficiency; and, (e) Encourage the industry to develop cogeneration technology for self generation of electricity, heating and cooling application and reduce the use of energy and energy cost.

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it a least cost alternative for energy applications in the industrial and commercial sectors in Indonesia. It will introduce and promote this new energy technology in the country through a set of strengthening local capabilities in designing and implementing MCT application projects, adopting supportive regulatory frameworks and facilitating investments in promising applications. The objective of cost reduction will be achieved by measures to influence or induce the demand for MCT. This GEF project will focus on industrial and commercial applications such as in textile, plastic, paper, ceramic, metal plating, brick manufacturing, hotel/residential apartments, hospitals and commercial buildings (including shopping malls and office buildings). These represent high potentials for MCT applications. These energy end-users currently use electricity (grid power or diesel-based captive power) for manufacturing processes and for air conditioning/refrigeration, or coal/oil for industrial process heating. The alternate scenario envisions deployment of MCT with one single input of energy (natural gas or LPG) in these end-users to generate electricity for on-site use and to use the MCT waste heat for industrial liquid/air process heating or to for liquid absorption air conditioning/refrigeration. The envisioned activities of the project are expected to result to MCT applications that will be economically competitive and affordable. Its fuel will be supported by the current and rapid development of new indigenous and cost-competitive gas distribution infrastructures from Sumatra and Kalimantan to Java. The MCT application will progress from the projected reduction cost of MCT system cost; expected growing MCT market demand and increasing economies of scale of MCT equipment manufacturing and engineering services. The project will involve piloting MCT deployment as a solution for an on-site electricity generation and heating/cooling in an industrial setting. The barriers in the deployment and operation of on-site small-scale MCT will be addressed and removed by demonstrating the first commercial pilot MCT application under the proposed project. The MCT application demonstration will also demonstrate both the environmental and economic gains from the deployment MCT-based small-scale co-generation. The demonstration will also showcase how a commercially viable MCT application will be designed, engineered, operated and maintained. It will also showcase the achievement of the reduction of CO2 emissions as compared to a similar conventional oil-fired power generation cum heating/cooling system. The demonstration will also facilitate the learning process required for widespread duplication of similar EC&EE implementation projects for commercial purposes in Indonesia, which will stimulate policy, technological and institutional changes that would promote EC&EE through deployment of MCT as an on-site small-scale cogeneration technology system for industries. The planned project will introduce and promote MCT technology through six key initiatives: 1. Assessment of MCT and related aspects of technology development 2. Demonstration of MCT application 3. Development of sustainable financial model to support MCT applications; 4. Development of supporting institutional and policy frameworks 5. Promotion and technical capacity building on MCT; and 6. Technical support for local energy and engineering service companies in the provision of MCT-

related services . The successful implementation of this project will increase awareness of the potential MCT users and the government, and will likely assist in reducing MCT project cost and removing the identified

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barriers. It is likely that MCT suppliers/distributors and the prospective users in the industrial and commercial sectors will be further encouraged to scale-up their capacity to develop and to adopt MCT technology. In effect, this will accelerate the cost reduction of MCT implementation and to build on the successful examples of emerging MCT market development and will continue translating future price reductions into greater long-term market penetration. The project proponents have identified so far some prospective MCT demonstration hosts. These host companies have current plans to install captive power generation capacity (replacement and/or additional) and upgrade/revamp their existing thermal systems. Thermal demand is mainly for process heating and is supplied by steam generated by boilers while the power requirements are provided mainly by diesel engines. These companies are intending to do cogeneration or combined heat and power (CHP) to save on energy and energy costs, and are willing to changeover to microturbine-based CHP if assistance will be provided for additional hardware that will be needed to facilitate MCT. Based on the Research and Development Center of Energy and Electricity Technology (RDCEET) report, a conservative projection can be set that, for the planned alternative scenario, the low thermal cogeneration (e.g. microturbine CHP) could potentially replace 5% of projected captive diesel power plant capacity of around 4,000 MW This corresponds to a total MCT capacity of 200 MW that can be targeted to be in place after five years or at the end of the MCTAP. The total combined capacity of the power projects of these potential host demonstration companies is 3.6 MW at a combined total investment cost of US$ 7.29M. This covers the cost for new/replacement gensets, reciprocating diesel engines and new/replacement steam boilers and waste heat recovery units. The plan is to improve/enhance their planned and budgeted projects by changing these to MCT applications and make these as demonstration projects under MCTAP. This means that their improved/enhanced projects, i.e., microturbine-based CHP, make up the GEF alternative that will be featured in Component 2 or MCT Demonstrations and Market Development of the MCTAP. Furthermore, the combined cost of these projects is the baseline cost for the full-scale demonstrations under Component 2. This is practically the co-financing for the demonstration activities in Component 2. Project Goal, Objective, Outcomes and Outputs/Activities The MCTAP goal, objective, outcomes, outputs and activities are described below. These are also stated in the Project Planning Matrix (PPM or Log Frame) as shown in Part II, Section II of this document. Project Goal - The overall goal of MCTAP is the reduction of the growth of GHG emissions from the MCT deployment in the industrial, commercial and energy (ICE) sectors in Indonesia. Project Objective - The overall project objective is the reduction of the long-term cost of MCT in order to accelerate the entry and increase the share of MCT in the Indonesian market. Project Outcome, Outputs and Activities The project is comprised of 6 components: Component 1: Technology Assessment and MCT Application Development Component 2: MCT Demonstration and Market Development

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Component 3: Technical Support to MCT Financing Component 4: MCT Policy and Institutional Support Component 5: MCT Promotion Activities Component 6: Technical Support for Local MCT Industry Component 1: Technology Assessment and MCT Application Development This component is in line with addressing the interest of the ICE sectors in the application of MCT, and for ensuring a wider level of acceptance and better understanding of the technology and its benefits, since this is an important key to the realization of the technology replications that are expected at the end of the MCTAP. The expected outcome from this component include: (1) Enhanced knowledge of potential MCT applications; (2) Improved knowledge of MCT system benefits, availability and cost; and, (3) Enhanced capacity and capability of local service providers for MCT systems. The main outputs of this component are the documented techno-economic feasibility assessments of local production of MCT components, and potential MCT application projects. To realize such outputs, the following activities will be carried out: Activity 1.1: Assessment of existing programs for EC&EE technologies which includes MCT - This activity will identify and document the status of existing installations and performance of cogeneration facilities and analyze areas of opportunity and limitations to guide the formulation of the country’s MCT policy and program. A database shall be developed and put in operation as repository of the information and experiences gathered through the conduct of surveys to identify and document the existing installed and planned cogeneration technology projects. GEF support is required for the conduct of the assessments, MCT policy formulation, and development of a pipeline of potential MCT application projects Activity 1.2: Gas supply and demand balance analysis – This activity will involve an assessment of the natural gas availability in Indonesia for local consumption in MCT systems. In support of the program, an economic feasibility study of gas development in a broader scale including the expansion of the gas pipeline networks to support fuel supply in addition to other fuel supply options for MCT will be conducted. GEF support is required for the conduct of the assessments and the economic feasibility study on natural gas development. Activity 1.3: Study on alternative fuels for MCT - This activity will involve the conduct of a study aimed at assessing the feasibility and applicability of other fuels (e.g., biogas, biodiesel) for operating MCT systems. GEF support is needed for the technical assistance to conduct the study. Activity 1.4: Comparative analysis of available microturbines and MCT systems in the world market – This activity will involve a detailed study of the technical specifications/features and performance and economic performance of the leading brands of microturbines and MCT systems. GEF support is needed for the technical assistance to conduct the study. Activity 1.5: Evaluation of the energy utilization and operating performance of existing cogeneration facilities - This activity is designed to evaluate the present energy utilization and operating performance of selected CHP facilities in the energy, commercial and industry sectors. This will provide useful inputs in the design of new MCT facilities or CHP retrofits in the potential sites, as well as identify potential improvements in the operation of existing CHP systems. GEF support is required for the technical assistance in the conduct of energy audits of existing cogeneration facilities in the country.

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Activity 1.6: Assessment of technical capacity of CHP facility engineers and operators and design of suitable skills upgrading program – In conjunction with the evaluation of existing CHP facilities, an assessment of the technical capacity of the facility engineers and operators will be done and a training program will be designed to upgrade their skills and allow them also to operate MCT systems safely and cost-effectively. GEF support is needed for the conduct of the assessment and for the technical assistance in the design of the skills upgrading program. Activity 1.7: Conduct of training program for CHP engineers and operators - This activity will involve training CHP operations personnel on the safe, cost-effective and environmentally sustainable operation of CHP systems, in general, and MCT systems, in particular. GEF support is needed for the design and conduct of the CHP training program. Component 2: MCT Demonstration and Market Development As a follow-through of the assessments and market possibilities, the outcomes and outputs of Component 1 will be used as inputs to the actual market development of MCT by identifying technology delivery and operational demonstration in selected sites and applications. There is a need to create an initial MCT market through MCT demonstration projects. The overall strategy is to establish a critical mass of demonstration projects that will provide detailed information of MCT operations, energy savings and environmental impacts to enterprises interested MCT systems from ICE sector. These will serve as actual examples for future MCT market references, and provide first hand experiences in the operation and possible improvements in the MCT application in Indonesia. The demonstrations are expected to generate maximum publicity for the technology and public awareness, thereby spurring replications, and ultimately leading to long-term cost reduction of the technology. The expected outcomes from this project component are: (1) Increased MCT applications in ICE sectors, with resulting and GHG emission reduction; (2) Significant reduction in MCT cost by about 25% average; and, (3) Increased market share of MCT. The main deliverables are: (1) Installed and operational MCT application demonstrations; (2) Documented results of the implemented demonstrations; and (3) Identified and designed replication MCT projects. The following are the activities that will be carried to help realize the expected outcomes. Activity 2.1: Technical and financial feasibility assessments of MCT applications in potential sectors in Indonesia - This will involve the evaluation of potential MCT application projects in order to select suitable projects that will be demonstrated under the MCTAP. The demonstration projects will be in the energy sector (power plant, offshore oil platform, coal mine); buildings sector (hotel) and industrial sector (starch manufacturing, chemicals). Any project which has undergone feasibility analyses will be reviewed to determine and verify project implementation requirements. If required, further feasibility assessments will be carried out by the demonstration hosts. This will involve carrying the existing studies for the demonstration projects forward to detailed technical design and engineering, cost calculation, design of ownership and management models, cost-benefit analysis, design of operation and maintenance concept, and assessment of financing aspects. GEF support is required for the technical assistance in conducting the feasibility assessments. Activity 2.2: Evaluation of the technical and financial requirements of MCT application in each sector – With the knowledge of the sectoral profiles, an assessment will be carried out to evaluate the overall technical and financial requirements of various industries in each sector for the deployment of

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EE technologies, in general, and MCT systems, in particular. GEF support is required for the technical assistance in conducting the assessments. Activity 2.3: Evaluation of logistical, safety, administrative, legal requirements for MCT projects - An evaluation of the implementation requirements (e.g., logistical, financial, manpower, technical, legal, etc.) for the demonstration schemes that will be carried out under this component of the MCTAP will also be carried out. GEF support is required for the technical assistance in conducting the evaluations. Activity 2.4: Identification and implementation of courses of actions for the removal of barriers to the successful implementation of MCT application demonstration projects – This is involves the evaluation of certain requirements maybe required to facilitate the smooth and effective implementation of the demonstration projects. Among these are: (1) Verification and confirmation of the magnitude and availability of MCT fuel resources in the sites; (2) Availability of materials needed and manpower at the site; (3) utility purchase agreements in case of sale of excess power and/or heat (steam); and, (4) Financing assistance mechanism for the financing of some of the demo projects. In addition, technical assistance will be provided in the setting up of administration, as well as operation and maintenance systems at the demonstration sites (designation of administrator, operators; establishing of guidelines and procedures, etc.). GEF support is required for the technical assistance in facilitating the requirements for the MCT demonstrations. Activity 2.5: Establishment of baseline data for the MCT demonstration project sites – This activity will involve the conduct of energy consumption and production surveys, and, where necessary, socio-economic conditions at the project sites and baseline performance data. Operating performance targets for each demonstration projects will also be established. This activity could be carried out in conjunction with the review/conduct of the feasibility analyses. GEF support is required for the technical assistance in conducting the baseline analyses of the demonstrations sites. Activity 2.6: Finalization of the design of MCT demonstration projects – This activity will involve the provision of technical assistance in the preparation of the MCT application project basic engineering design, comprehensive technical and economic feasibility evaluations, as well as in the detailed engineering designs. Demonstration of Pilot Project will be carried out by placing demonstration equipment owned by MCTA Project for certain duration of time in host entity’s facility. GEF support is required for the preparation of the engineering designs and comprehensive feasibility evaluations as well as a demonstration equipment. Activity 2.7: Assistance for the financing of MCT demonstration projects – The provision of assistance in the processing of applications for the financing of the operation and maintenance of each demonstration site will form bulk of the work under this activity. The host companies that maybe applying for financing for their demo MCT projects from banking/financial institutions will be assisted (if needed) in securing their financing. GEF assistance is needed for the required technical assistance. Activity 2.8: Installation and operation of each demonstration project - The main tasks under this activity for each demonstration project will be similar to that in full project implementations, starting from the conceptual design, to feasibility study, engineering design, installation, operation, monitoring and evaluation. Technical assistance will also be provided in the installation work. The list of MCT application demonstration projects is shown in Annex A. GEF support is required for the technical assistance in the implementation and operation of each demonstration project.

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Activity 2.9: Monitoring and evaluation of the performance of each demonstration project – This activity will involve the monitoring and recording of the operation of the demonstration projects. The performance of the MCT demonstrations will be monitored and evaluated (in terms of energy savings generated, CO2 emissions avoided, IRR and cost effectiveness). Other MCT projects implemented outside of the MCTAP will also be monitored and where possible, evaluated. The findings and results of the evaluation of the demonstrations and other MCT applications outside of the project will be disseminated to the relevant stakeholders in the government and in the private sectors (particularly ICE). Each evaluation will also cover maintenance, management, administrative organization and operation of the demonstration project. An evaluation report for each demonstration site highlighting the operating and economic performances will be prepared. It is expected that this activity will be carried out regularly even after the completion of this project. GEF support is required for the conduct of and the documentation of the performance evaluation of each demonstration project. Activity 2.10: Evaluation and dissemination of the demonstration program results - This will activity will entail the conduct of an overall performance evaluation of the demonstration program, including the dissemination of program results and recommendations through a national workshop. The profiling of successful MCT application projects in Indonesia and in other countries will also be carried out and presented during the national workshop. GEF support is required for the technical assistance in conducting the evaluations and publication for dissemination of the evaluation results. Activity 2.11: Survey of MCT cost trends and impacts on MCT market - At the same time, regular surveys will be conducted to assess the impacts of the MCT development in the country. Such surveys will, among others, track the cost of MCT in the Indonesian market during the MCTAP implementation. Similar to the monitoring of the MCT demonstration and replication projects, such surveys will also be continued even after the project to track the performance of MCT projects as well as the trend of MCT cost, thereby establishing the technology’s cost effectiveness. GEF support is required for the technical assistance in conducting the survey and impact analysis. Component 3: Technical Support to MCT Financing This component is intended to remove the financing barriers to widespread MCT project development and implementation. It addresses the need to provide technical and financial assistance packages to companies and project proponents interested in applying MCT to meet entirely or partially their industrial energy needs. It will include technical assistance in facilitating the design, establishment and implementation of appropriate mechanisms for financing EC&EE projects, in general, and MCT application initiatives, in particular. Presently, the commercial lending/financing institutions have very limited support for technology development and application initiatives especially for what they perceive as unproven and new technologies such as the MCT. It is expected that this component will facilitate immediate and future financing for MCT installations as manifested by the following outcomes: (1) Investments on MCT; and, (2) Banks/financing institutions providing loans for MCT projects. This is important in ensuring the replication and sustainability of MCT, and ultimately leads to the reduction of the MCT cost. The main deliverables are: (1) Training and promotions for bank/financing institutions; and, (2) Designed financing schemes for MCT projects. The following are the activities that will be carried out to produce the component outputs and realize the expected outcomes

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Activity 3.1: Capacity building on MCT for the banking/financial sector - This will involve the conduct of training workshops on evaluating the financial viability of MCT projects. The workshops will also serve as campaigns addressed towards enhancing the banking/financial sector’s interest in providing financing to prospective MCT users. This will also involve securing support from banks and financing institutions in the financing scheme that the project will help develop. GEF support is required for conducting the training and promotional campaigns. Activity 3.2: Development of an action plan for MCT project financing - A study compiling details of all MCT demonstration sites, potential entrepreneurs, market conditions for EE technologies (MCT in particular) and possible financing modalities will be conducted. Based on the study, an action plan will be prepared outlining the essential steps and actions to be taken to facilitate the provision of financing of energy efficiency initiatives. GEF support is required for the technical assistance in conducting the study and preparing the action plan. Activity 3.3: Design of financing schemes for assisting potential: (1) MCT users in their MCT application projects; and, (2) local manufacturers in locally producing MCT products - This activity will involve a review of the performance of the existing industry credit schemes in Indonesia to determine the most appropriate baseline scheme (or a combination of schemes) for the envisioned MCT financing, as well as the latest international literature and experience on similar financial mechanisms for industrial facility improvements and/or industrial investments. It will also include the evaluation of the viability of financing MCT projects in the potential sectors, as well as the assessment of potential financing schemes. A report detailing the terms and conditions of each viable schemes will be prepared. Technical assistance will be provided in the design of appropriate financing schemes for such projects, based on government grants, loans from financial intermediaries, and ESCOs, including the identification and assessment of sources of finance, tariff structures and fiscal aspects. This activity will also involve the development of selection criteria for the financing schemes and the selection of eligible borrowers. This activity will also address the removal of financial barriers to enable industrial establishments and MCT project developers to access financial resources for the adoption and implementation of MCT. The results of this activity shall lead to the establishment of appropriate financing windows for MCT that will use the selected financial models. Initially, the schemes will be developed in partnership with commercial lending services provided through two local banks by a multilateral financing institution to support the growth of small and medium enterprises (SMEs)3 GEF support is required for the technical assistance in conducting the required background studies and reviews and in the design and development of the financing schemes. Activity 3.4: Promotion of MCT to local ‘ESCOs’ – This activity will entail promoting MCT projects as viable ventures for ESCOs operating in Indonesia, and perhaps later to foreign-based ESCOs. GEF support is required for conducting the promotional campaigns for ESCOs. Activity 3.5: Capacity building on project financing options - This will involve the conduct of a series of seminar-workshops for the commercial and industry sectors on potential financing options,

3 The IFC (through Bank Buana International Indonesia and Bank NISP) has developed commercial lending services for Indonesian SMEs. The financing schemes that will be developed under MCTAP will build on (by expanding the coverage to include financing for MCT applications) existing similar schemes and the project proponents will work with these 2 local banks during the PPG exercise.

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including a special course on CDM and ESCOs, for supporting their MCT application projects. Also covered under this activity is the provision of technical assistance to prospective MCT users in accessing and partnering with ESCOs (local and/or foreign) in their MCT application projects. GEF support is required for the technical assistance in conducting the training courses and in the marketing of prospective MCT application projects. Activity 3.6 Identifying fund sources and establishment of a financing plan for the nationwide MCT program.- A study will be conducted to provide recommendations towards reaching agreements on mobilizing local and international financial institutions and local industry resources through co-financing counterpart to the proposed GEF support and other sources to commercialize MCT technology application. Financing will be carried out by engaging key parties (e.g., foreign MCT equipment suppliers and local ESCO), businesses and end-users to implement MCT projects. GEF support is required for the technical assistance in conducting the study and for meetings aimed at mobilizing resources. Activity 3.7: MCT Business Development Matching and Strategic Partnership Establishment - This activity will involve mobilizing local and international financial institutions and local industry resources to commercialize MCT technology application. A designated MCT Market Services Group (MSG), possibly under BPPT, shall be organized in the first year of the project with the main function of identifying business opportunities through providing technical support to MCT financing. As a means of capacity building in this respect, the MSG will be involved in the business planning and financial advice to the MCT Demonstration Projects in order ensure that these demonstration projects will be implemented as planned according to the purposes of the demonstration activity. Working through existing public and private sector partners, the MSG will work directly with private companies and FIs, responding to their individual needs to structure investments, develop products, build their capacity to deliver MCT project financing, and market their MCT projects and financing products. Within the five year project, the MSG will be evaluated for its capacity to engage key parties (e.g., foreign MCT equipment suppliers and local ESCO), businesses and end-users to implement MCT application projects in the long run. GEF support is required for the operation of the MSG Component 4: MCT Policy and Institutional Support This component will involve activities that would facilitate the promulgation of and compliance to policies and regulations that encourage adoption of MCT systems in Indonesia. The main expected outcome from this project component is the approval and implementation of policies supportive of MCT projects. To realize this outcome, the following proposed activities will be carried out under this component: Activity 4.1: Conduct of a public survey on fuel price perception – This activity entails the conduct of a special survey of potential MCT users as to, among others, what they think as the reasonable or optimum price for typical fuels (e.g., LNG, LPG.) used in MCT applications. GEF support is needed for the conduct of the survey and evaluation of the survey results. Activity 4.2: Conduct of policy studies on MCT applications – This activity will involve the conduct of studies that will provide useful recommendations on policies regarding the application of EE technologies, in general, and MCT, in particular, including policies on MCT component pricing, importation, sales; and incentives for MCT suppliers and users. GEF support is needed for the conduct of the studies.

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Activity 4.3: Conduct of a study on MCT fuels and grid interconnection policy development - A related fuel supply and distribution policy for MCT should be based on sound policy on the national development of new gas distribution infrastructures that ensures sustainable access to affordable gas for effective microturbine technology application. Appropriate grid pricing for MCT electricity sales should be develop in order to encourage MCT projects. GEF support is needed for the conduct of the study. Activity 4.4: Formulation of policies, and associated implementing rules and regulations (IRRs) – Policy recommendations will be prepared, along with the IRRs and action plans for the enforcement of the policies and IRRs. This activity will also serve as part of the capacity building for the GoI in the design and preparation of environmentally sustainable policies, in general, and the same type of policies for the energy, commercial and industrial sectors, in particular. GEF support is needed for the technical assistance in the formulation of policies and the associated IRRs. Activity 4.5: Setting up and implementation of MCT policies – This activity will involve the lobbying of the government approval of favorable policy recommendations, the preparation and approval of policy implementing rules and regulations (IRRs), and the policy enforcement. GEF support is needed for the technical advice on the implementation and enforcement of the MCT policies. Activity 4.6: Conduct of technical workshop for promoting MCT and review of the existing national fiscal and financial framework for energy technology applications – This will involve information sharing about MCT and MCT applications, as well as soliciting inputs (comments & recommendations) from the stakeholders in the energy, commercial and industrial sectors regarding the necessary fiscal and financial policies/incentives in the application of MCT. GEF support is needed for the conduct of the workshop and evaluation/processing of the workshop findings and recommendations. Activity 4.7: Development of a new and broader fiscal incentives scheme for energy technology applications - Based on the inputs from the relevant sectors, this activity will involve the provision of technical assistance in the development of new and wide-ranging fiscal & financial policies for the application of energy technologies, in general, and MCT, in particular. This can be jointly done with the fiscal policy study and recommendations for the incentive program (energy efficiency and renewable energy) that is being planned by the Ministry of Energy and Mineral Resources in cooperation with the Ministry of Finance. This study will determine the set of time-bound incentives that will bring about the combined advantage to allow the MCT development to be competitive as it expands its market especially in the early stage of promotion considering its long term economic and environmental benefits. These incentives should cover the various aspects of the technology, i.e. project development, capital equipment, fuel supply, pricing for the heat and power produced, grid interconnection, etc. Incentives to bring about cost reduction by increasing the local content on the MCT demonstration and replication projects should be determined and adopted so that the up-front cost of MCT could be lessened and more favorable to the local industries. Incentives for appropriate pricing policy for electricity sold to the grid and for heat used for in-plant use can enhance profitability of MCT investments. GEF support is needed for the technical assistance in the design of the policies for fiscal incentives for energy technology applications. Activity 4.8: Facilitation of inter agency discussion on policies on MCT and setting up of fiscal incentives framework – This will involve the organizing, conduct and documentation of inter-agency discussion meetings on MCT and the setting up of new and broader policies such as the provision of

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incentives for the local manufacture of MCT components in order to improve the % local content in MCT systems marketed in Indonesia. GEF support is needed for the technical advice in the inter-agency discussions. Activity 4.9: Development and implementation of the implementing rules and regulations (IRR) on MCT Fiscal Incentives – This will involve the provision of technical assistance will be provided to develop and enforce the IRRs on MCT fiscal incentives scheme. A monitoring system will be developed and implemented to track the implementation and enforcement of the scheme. GEF support is needed for the development of the IRRs and for the design of the monitoring system for tracking the implementation and enforcement of the fiscal scheme. Activity 4.10: Implementation of policy support activities – This will involve conduct of campaigns targeting the relevant GoI agencies to encourage and lobby for the endorsement and/or approval of the proposed policy recommendations and IRRs. The draft policies and IRRs will be disseminated and presented to all stakeholders in workshops and seminars to also secure their support. GEF support is needed for the technical advice to the relevant GoI agencies, and for the conduct of the seminars & workshops. Activity 4.11: Preparation of procedures and requirements from various users of MCT - This will involve the development and dissemination of technical guidelines for project developers and implementers interested in venturing in the supply/distribution and application of MCT. The process of developing, getting feedback and disseminating the guidelines will involve seminars, workshops and training in areas that have big potential for MCT. It is important that a consultative approach with the possible players and promoters of the MCT program be done in order to establish collaboration among all the participants to provide strong support for market development of MCT. Considering that MCT will be a new program, this activity should include identification of local industrial capacity to support MCT development. GEF support is needed for the technical assistance in the preparation and dissemination of the technical guidelines and for the conduct of the seminars & workshops. Activity 4.12: Monitoring of MCT fuel prices – Regular monitoring of the prices of MCT fuels will be carried out under this activity. The economics of the MCT demonstration projects, as well as other replications of the MCT applications not covered by the demonstration schemes, will be evaluated to determine the fuel price impacts. GEF support is needed for the design and implementation of the MCT price monitoring system. Activity 4.13: Review of the MCT Policy – This activity will involve the review and evaluation of the MCT policy based on the results of the MCT application demonstrations. Revised policy and implementing guidelines will be formulated and recommended for issuance and enforcement. GEF support is needed for the review and upgrading (based on the results of the review) of the MCT policy. Activity 4.14: Capacity building for the relevant government agencies – This will involve the conduct of training and awareness-raising actions for relevant government agencies to secure their support in the establishment, implementation and enforcement of the proposed MCT policies (technical, financial, market). The main aim of this activity is to ensure that the sustainability and replication of the MCT demonstrations will happen. GEF support is needed for the conduct of training and awareness enhancement activities.

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Activity 4.15: Organizational development for an MCT Focal Unit - As a result of the policy, organizational and institutional study and evolving recommendations, the GOI will designate a group to act as Focal Agency, such as a unit at BPPT with relevant existing function, for MCT program management and implementation, operated and maintain the MCT databases, oversee the MCT communication plan and implement the monitoring and evaluation plan for the MCT program. GEF support is needed for the capacity building of the MCT Focal Unit. Activity 4.16: Establishment of independent association of MCT retailers and manufacturers – This activity will involve the establishment of an association of MCT retailers/manufacturers in the country that will help enforce MCT product/component standardization, develop business networks and other capacity building activities for its members. GEF support is needed for the technical advice in the formation of the association and development of its business plan. Component 5: MCT Promotion This component is intended to support the creation of the local MCT market. It will involve the design and implementation of an active promotional program for MCT that will bring about enhanced awareness of the public and other stakeholders on the efficient use of MCT for EC&EE practices in the ICE sector. This will also address the barrier of insufficient information and actual dissemination of policies, regulations and guidelines in the implementation of the nationwide MCT program. With the delivery of its main output -designed and implemented MCT promotional and advocacy program for the ICE sectors, the following outcomes are expected from this component: (1) Enhanced awareness of the benefits of MCT; (2) Increased number of MCT users; and, (3) A portfolio of planned MCT application projects. To realize these outcomes, the following proposed activities will be carried out: Activity 5.1: Preparation of an advocacy, marketing and communication plan for MCT development – This will involve a unified approach to promotion and advocacy that will improve awareness, understanding and decision-making to put up MCT projects. Information packages consistent with the communication plan based on the information and awareness needs assessment for various participants and users of MCT and the role of government in the implementation of the nationwide MCT program will be prepared. The dissemination of information on the MCT program, policies, regulations, application procedures and technical guidelines for project developers and implementers interested in venturing in the supply/distribution and application of MCT is part of this activity. GEF support is required for the design of the MCT advocacy, marketing and communication plan. Activity 5.2: Conduct of survey on MCT application relating to energy efficiency technologies in the ICE sectors in Indonesia – This will be carried out in Year 4 of the MCTAP implementation, when it is anticipated that several MCT application projects are already ongoing, under construction or planned. Profiles of these projects will be prepared, taking note of all technical design data, as well as operational and economic performance information. The information gathered will be stored (as a separate module) in the database of MCT system manufacturers, distributors and suppliers, and will be available for use by interested/prospective MCT system users. GEF support is required for the conduct of the survey and evaluation of the survey results. Activity 5.3: Development, operation and maintenance of a database of MCT system manufacturers, distributors and suppliers, products and specifications and prices – This will involve the conduct of a study to assess the capacity and performance of existing and potential MCT system manufacturers, distributors and suppliers all over the world, including the specifications and prices (overall and by

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component) of their respective MCT products. The information gathered will be stored in a database that will be developed, operated and maintained by BPPT. This database will be available for use by interested/prospective MCT system manufacturers and users. A website will be designed and used for promoting the MCT program and disseminate MCT-related and EC&EE technology information. The MCT Focal Unit in BPPT will oversee the MCT program in cooperation with all stakeholders and groups of MC users. Capacity building for the MCT Focal Unit staff will be implemented to enhance their skills in managing and maintaining the website and databases as tools to implement the MCT communication plan. Also, a set of promotional activities including the conduct of users’ trainings will be conducted to encourage target MCT clients in meeting their information needs directly. GEF support is required for the design of the database and web site, as well as in the conduct of the capacity building. Activity 5.4: Conduct of MCT road shows and exhibitions – This will involve the organization and conduct of road shows to promote MCT and MCT application, as well as participation in technology exhibitions in the country. This will be a joint effort of the GOI (i.e., BPPT) and the local MCT suppliers and MCT component manufacturers. Towards the end of the project, similar activities are planned for other ASEAN countries in collaboration with MCT suppliers (local and foreign). GEF assistance is required for production of materials and supporting the logistical requirements for the road shows and exhibitions. Activity 5.5: Conduct of seminar-workshops introducing MCT to local equipment retailers and manufacturers – In conjunction with the activity on the conduct of MCT road shows and exhibitions, a series of seminar-workshops will be conducted for local equipment retailers and manufacturers to promote the sale of MCT systems and products. GEF support is required for the conduct of the survey and evaluation of the survey results Activity 5.6: Provision of TA to manufacturers and retailers in the marketing of MCT – This activity is intended to support MCT retailers/manufacturers in their marketing of MCT systems in the country (e.g., development of business plans, networking, and promotion of business links). GEF support is required for the technical assistance in the marketing of MCT. Component 6: Technical Support for Local MCT Industry This project component will deal with activities that will facilitate the development of the local MCT industry through improved local vocational, technical; and managerial capacity to manage and sustain operations of MCT for EC&EE practices in the ICE sector. The project will use its resources to build capacities of the parties involved for the local manufacture and engineering services for MCT towards developing a standardization program for MCT manufacture and engineering services. It will focus on improving the capacity of the local engineering services and equipment manufacturing industry to develop and implement MCT projects as well as in producing MCT system components. Such capacity is indeed crucial in the reduction of the MCT cost. With the delivery of its main output - Documented results of the capacity building on local production of acceptable quality MCT system components, the following outcomes are expected: (1) Availability of locally made MCT components; and, (2) Enhanced local manufacturing capability of MCT system components. To realize these outcomes, the following activities will be carried out: Activity 6.1: Assessment of factors contributing to the general dependence of local energy consumers in imported equipment and recommendation of measures to effectively address such factors – A detailed study will be carried out to determine and analyze the reasons why energy consumers, in

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general, and, most commercial building owners and industries, in particular, prefer to utilize imported equipment instead of locally-made products. The study will validate the technical assistance and capacity building needs of local equipment manufacturers who may be able to produce some of the MCT system components. The technical assistance will include an assessment of the possibility to manufacture MCT components or increase the local content of MCT products and services in Indonesia. GEF support is required for the technical assistance in conducting the assessment. Activity 6.2: Evaluation of MCT system components that can be feasibly manufactured locally in Indonesia – Together with MCT experts and local equipment suppliers/distributors, an assessment of MCT system components will be made in order to determine which of these can be cost-effectively manufactured (at acceptable quality levels). GEF support is required for the TA in the evaluation. Activity 6.3: Evaluation of the capacity (human, technical, financial) of local equipment manufacturers to produce MCT components and/or systems – In line with the provision of technical assistance in improving manufacturing facilities, the existing capacity needs of pertinent local manufacturers will be assessed to determine what aspects of manufacturing of MCT system equipment have to be provided and/or enhanced. GEF support is required for the technical assistance in the evaluation and in the capacity needs assessment. Activity 6.4: Development of capacity & capability of local manufacturers to produce components of MCT – This will involve the conduct of training programs that will be designed based on the capacity needs assessment for other local manufacturers, as well as service providers (engineering consultants and repair & maintenance people) in the manufacturing of MCT system components, as well as in the application, repair and maintenance of MCT systems with locally made components. Technical assistance and transfer of knowledge in the areas of system design, installation, operation and maintenance will be provided to greatly improve the ‘learning by doing’ process. Seminars and workshops will be conducted to provide support to the local MCT development. GEF support is required for the technical assistance in the capacity needs assessment and in the design and provision of technical capacity building. Activity 6.5: Evaluation of financial, technical, logistical, legal requirements for the local manufacturing of MCT components – This will involve the study of the necessary requirements for the local manufacturing of MCT components, as well as providing assistance in the facilitation of the securing of some of these requirements. GEF support is required for the TA in the evaluation. Activity 6.6: Development of standards for MCT performance evaluation – With the guidance of MCT experts, as well as MCT system suppliers, this specific activity will involve the study, formulation, implementation and enforcement of codes/norms/standards for the performance of MCT systems. GEF support is required for the technical assistance in the development of standards for MCT performance evaluation. Activity 6.7: Development of standards for MCT installation, operation & maintenance – This will involve the development of codes/norms/standards that will be utilized by MCT service providers and MCT system users in the installation, operation and maintenance of MCT facilities, with the aim of ensuring optimum and cost-effective operating performance. GEF support is required for the TA in the development of standards for MCT installation, operation and maintenance. Activity 6.8: Capacity building for local manufacturers to comply with quality standards for MCT products – This will involve training and assisting local manufacturers for them to be able to

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conform with set quality standards/norms/codes for MCT. GEF support is required for the technical assistance in the capacity building for standards compliance. Activity 6.9: R&D on critical components of MCT systems that can be manufactured in Indonesia – Technical assistance will be provided to BPPT (in collaboration with selected local manufacturers) in conducting research and development activities for the local manufacture of critical MCT system components (e.g., electronic controls). GEF support is required for the technical assistance in the R&D on MCT components. Activity 6.10: R&D of production critical MCT components in Indonesia – As a follow-up to the R&D on critical MCT components, technical assistance will also be provided to BPPT (in collaboration with selected local manufacturers) in the local production of such components. GEF support is required for the technical assistance in the R&D on the production of MCT components. Activity 6.11: Promotion of research collaboration in engineering of MCT systems – Technical assistance will be provided to local engineering firms (including engineering consultants) in conducting research in the design and installation of MCT systems. GEF support is required for the technical advice on the areas of research on engineering of MCT systems. Activity 6.12: Evaluation of the capacity (technical, financial) of local service providers (e.g. engineering firms, consultants) in servicing, installing, maintaining MCT systems – This activity will involve the provision of technical assistance in improving the capacity of local service providers in design, installation, operation and maintenance of MCT systems and system equipment. Technical tools will be developed in order to assist them in the provision of such services to the local MCT market. GEF support is required for the technical assistance in the evaluation. Activity 6.13: Evaluation of the potential improvements/modifications of existing manufacturing processes, practices & facilities to allow for MCT component production – This will involve a detailed study on the present equipment manufacturing processes, practices and policies to determine how these can be improved/modified to allow for the local manufacture of MCT components. Local manufacturers that will be found suitable and capable for MCT components manufacturing will be identified. Selected manufacturers will be engaged in a discussion and agreement to proceed with the venture under the auspices of the MCTAP. GEF support is required for the technical assistance in the evaluation. Activity 6.14: Improvement of manufacturing process/practices and facilities to allow for MCT component manufacturing – This will involve providing specific technical assistance to selected local manufacturers that will venture in the local manufacturing of MCT system components. GEF support is required for the technical assistance in the improvement of manufacturing processes/practices for local MCT component manufacturing. Expected Outputs and Outcomes The following are the major outcomes of the 5-year MCTAP (by end-of-project) • Cumulative reduction of GHG emissions from the MCT deployment in the ICE sector in

Indonesia of 1.528 million tons CO2 (0.674 million tons CO2 in Year 5) • Cumulative energy savings in ICE sectors from the application of MCT of about 3.2 million BOE

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• Total installed capacity of MCT facilities of around 200 MW • Average % reduction in the cost of MCT of about 25% The following table summarizes the expected outputs and outcomes of each project component.

Table 6: Expected Outputs and Outcomes

Component Expected Outputs Expected Outcomes 1. Technology Assessment & MCT Application Development

• Documented Techno-economic feasibility assessments of local production of MCT components, and potential MCT application projects

• Enhanced knowledge of potential MCT applications;

• Improved knowledge of MCT system benefits, availability and cost

• Enhanced capacity and capability of local service providers for MCT systems

2. MCT Demonstration& Market Development

• Documented results of the implemented MCT application demos;

• Identified and designed other MCT application projects

• Increased MCT applications in ICE sectors, with resulting and GHG emission reduction;

• Significant reduction in MCT cost by about 25% average;

• Increased market share of MCT 3. Technical Support to MCT Financing

• Training and promotions for bank/financing institutions;

• Designed financing schemes for MCT projects.

• Investments on MCT; • Banks/financing institutions

providing loans for MCT projects

4. Policy & Institutional Support

• Proposed policy frameworks supportive of MCT application projects

• Approval and implementation of policies supportive of MCT projects

5. MCT Promotion • Designed and implemented MCT promotional and advocacy program for the ICE sectors

• Enhanced awareness of the benefits of MCT;

• Increased number of MCT users; • Planned MCT projects

6. Technical Support for Local MCT Industry

• Documented results of the capacity building on local production of acceptable quality MCT system components

• Availability of locally made MCT components;

• Enhanced local manufacturing capability of MCT system components

Project Indicators, Risks and Assumptions While MCT technology is already a proven cost effective technology in some developed countries, there are presently uncertainties about the costs, performance and benefits of the technology in Indonesia (and other ASEAN countries). The capacity development would include technical assistance and transfer of knowledge in the areas of system design, installation, operation and maintenance, thereby greatly improving the ‘learning by doing’ process. The local MCT industry players (ESCOs, engineering and engineering consulting firms, equipment manufacturers) are targeted under this major activity, particularly those who are interested and are capable of expanding their business to MCT applications.

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Normally initiatives for promoting new technologies in developing countries without accompanying holistic support programs would be perceived as high risk projects. In this case, the technology introduction in this proposed project will be accompanied by a large number of barrier removing activities which would substantially reduce any risk in the adaptation of MCT implementations. The proposed project will be carefully designed to facilitate close coordination and consultation of the relevant stakeholders in each of the proposed activities. Project activities will enhance local technical capacity to improve understanding and implementation of all aspects of MCT designs, financings, installations and operations; to build effective awareness programs targeted to optimize technology diffusion; to build the confidence of financing institutions to reduce risks of loans to finance MCT projects; and to develop policies and regulations to reduce the regulatory efforts of MCT project implementations, which therefore in combination are sufficiently capable to ensure the risks mitigation as the technology will already be accepted by the market and the project cost will be more affordable. The project has distinct innovation in terms of demonstrating to energy technology promoters and suppliers in the Indonesian private sector that cost-effectiveness and viability of a known but relatively new technology in the country (in fact in the ASEAN region). The proposed approach is definitely a new one in the marketing of new technology in the country. The evidence that the private sector is providing co-financing to the project is a manifestation of their support in developing the market for MCT. The innovative design of this project will contribute assisting Indonesia in efforts to address global environment issues by promoting an alternative environmentally sound energy technology solution to the industry and commercial sectors ;and to enhance socio-economic infrastructure and stabilize country economies, because the security supply of energy, especially electric energy, provided by MCT can be an important factor to strengthen the private sector businesses and to strengthen country socio-economic by improving job security/job creations for the workers. Expected Global, National and Local Benefits Global Benefits Microturbine systems (DG or CHP applications) produce less carbon dioxide (CO2), which as a GHG, contributes globally to climate change. Considering the electrification needs in Indonesia, the proliferation of more microturbine cogeneration facilities will reduce the negative environmental impact of oil -based power generation, and contribute to the reduction of CO2 emissions from power generation in the country. In order to satisfy the government’s target of total village electrification rate in 10 years and total household electrification in 20 years, very large contribution to supply this demand will usually be expected from electricity generated from diesel generators which could add to projected amounts of CO2 emissions in the long run if no significant alternative energy like environmental friendly energy is put in place. The experience and knowledge base that can be built from the MCTAP can be passed on to similarly situated counties in the area of microturbine cogeneration development and environmentally sound power supply for bonded industry communities.

National Benefits The innovative design of this project will contribute assisting Indonesia in efforts to address global environment issues by promoting an alternative environmentally sound energy technology solution to the industry and commercial sectors ;and to enhance socio-economic infrastructure and stabilize

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country economies, because the security supply of energy, especially electric energy, provided by MCT can be an important factor to strengthen the private sector businesses and to strengthen country socio-economic by improving job security/job creations for the workers. Country Ownership: Country Eligibility and Country Drivenness Sustainability The proposed project will achieve the objective set out in GEF Operational Program 7 to reduce green-house gas (GHG) emissions not only directly but also indirectly by inducing cost reductions in the MCT project implementation cost, which results in a higher penetration of this low GHG emitting technology in the energy markets. The MCT project implementation cost could be reduced due to the better market acceptance on MCT and the bigger its economics of scale. Recently, the capital costs of MCT are as follows: US$1,650/kW for electricity generation only; US$2,250/kW for CHP (combine heating and power system); and US$4,400/kW for CCHP (combine cooling, heating and power system). Once the market is established, improvement of MCT product services, promotion of local manufacturing as well as further R&D are very essential in reducing the long-term cost of MCT. It is expected that the successful of MCTAP would drive MCT investment cost reduction between 20-30% respectively. As in other GEF climate change projects, the ultimate goal of this project is the reduction of GHG emissions from anthropogenic sources. The project’s purpose is the demonstration of the cost-effectiveness of the technically viable MCT and the establishment of the enabling environment that would be conducive to its widespread application for on-site cogeneration in Indonesia. MCT will utilize cleaner alternative energy resources for electricity and heating/cooling generation. This also goes hand in hand in supporting economic development in Indonesia by providing affordable and cleaner alternative solutions to generate electricity and thermal energy, especially for small and medium enterprises (SME), which are the most targeted market for smaller cogeneration technology. The project would directly and indirectly achieve the OP-7 target outputs and strategic priorities by: 1. Reducing GHG emissions through the implementation of natural gas fired MCT to substitute the

use of oil/coal for electricity generations and industrial process heating; 2. Promoting environmental and economical benefit of MCT implementation. 3. Refining the policy framework and the institutional arrangements necessary for the widespread

adoption of MCT project implementation. 4. Increasing awareness among the general public, especially decision makers, consumers, and

other end-users on the potential role of MCT in substituting the use of coal and oil for electricity generation and industrial process heating.

5. Strengthening and supporting the private sector working in the energy sector to provide better quality of service and to develop models for providing MCT product services.

6. Developing viable financing options for MCT project implementations. 7. Disseminating experience and lessons learned to promote replication of MCT throughout GEF

eligible countries. Based on reports from a MCT manufacturer, at an average natural gas cost of US$6.85/MCF (in New York State, USA), heat recovery for hot water generation recovered from an MCT unit translates to a cost of about US$0.03/kWh. Factoring in this recovered heat, the resulting electric power generation cost using MCT is approximately US$0.07/kWh. Assuming the same operating conditions for an MCT application in Indonesia, with an average of natural gas cost of US$4.00/MCF, the result will be a net cost of electric generation of about US$0.041/kWh, which is much lower than the average

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local grid price of approximately $0.07/kWh (or even US$0.09/kWh during peak demand). Based on the above estimation, an MCT application project can be expected to payback through the energy costs savings in 2-3 years. The reduction of MCT installed cost will lead result to a shorted payback period. However, without the GEF support, it is unlikely that MCT will be utilized seriously by Indonesian enterprises as there are no documented evidence to assure the market that the savings claimed by MCT manufacturers would be attainable under the climate conditions and the fuel specifications in Indonesia. The proposed OP-7 project will, among others showcase the cost effectiveness of MCT. This would be among the initial steps towards the creation and enhancement of the MCT market in Indonesia. With the GEF support, efforts in the creation of the envisioned MCT market can be realized, which then subsequently contribute to the reduction of MCT’s first cost. The GEF support will, therefore, accelerate the dissemination in an orderly manner of the MCT in power markets in Indonesia and other part of the world, and will ultimately achieve a significant GHG reduction. The GEF financing for the proposed project will be partly utilized to cover the incremental cost of demonstrating this energy technology in industries and commercial buildings in Indonesia. Replicability The growing demand for electricity in the industry sector, and the inability of the PLN to provide reliable electricity supply (at least in some sections of the national grid) has led to industries generating their own electricity (i.e., captive power generation in Indonesia. Most of these captive power systems are DFO-fired units that typically are operating inefficiently. Further proliferation of these systems, and more importantly, the continued energy inefficient operation of such units will result in non-optimal energy utilization and higher GHG emissions. Cost reductions and higher quality of electricity generation are the features of MCT. The success of this project will have significant global and regional impacts. It can become a model for replication in the ASEAN region and elsewhere where MCT is not in use. The project intends to build and enhance awareness of this technology, which when adopted and applied can lead to significant reduction of GHG emissions in the country’s power sector, and in so doing, meet energy conservation goals and reduce costs. Natural gas and LPG distribution infrastructure are already in place in some locations of JABOTABEK (Jakarta, Bogor, Tanggerang and Bekasi) and the Province of Jawa Timur. Data on captive power capacity released by the DGEEU in 2000 show that the total diesel captive power capacity in Jakarta was 1,206.10 MW, 800.88 MW in Jawa Timur and 2,693.68 MW in Jawa Barat (where the city of Bogor, Tanggerang and Bekasi are located). The total diesel captive power capacity from these three provinces was 4,700.66 MW. If 10% of the total diesel captive power capacity in Jakarta, Jawa Barat and Jawa Timur can be reached by the supply of natural gas or LPG, the power generation in these locations can be replaced by MCT, with the potential nationwide electricity generation by MCT estimated at 470.06 MW. With the average MCT project cost of about US$2.000 per kW, the required investment for MCT in Indonesia, in replacing 10% of the total diesel-based power generation capacity, is US$800 millions. The proposed full project estimates a potential of 200 MW electricity generated by MCT systems in 3 years, with the estimated investment of US$ 400 million. With estimation 80% of the load and availability factor, the total avoided GHG emissions over 10 years (from the 200 MW installed MCT capacity) would be 4.4 Million tons of CO2, this will be up to around 3 GW by 2019 with total avoided GHG emissions of 66 Millions ton of CO2, as the technology cost will already be lower and more affordable. A successful implementation of the project is expected to result in improved market demand for MCT applications.

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PART III: MANAGEMENT ARRANGEMENTS

Implementation Arrangement BPPT is the designated Implementing Partner for the project. It will execute the project on behalf of the Government of Indonesia (GoI) under the National Execution (NEX) modality of the UNDP. UNDP which provides support to the project on behalf of the UNDP GEF takes the role of the Senior Supplier. While BAPPENAS represents the GoI and act as the Senior Beneficiary of the Project. The three parties make up the core members of the Project Board which main function is to strategically guide the course of the project towards achieving its objective. The Project Board will meet at least once in a quarter to review project progress and endorse proposed work plan and its budget. The Board also meets to resolve strategic issues faced by the project and to endorse the appointment of the project’s responsible parties, partners, and beneficiaries. In performing its task the Project Board may consult and coordinate with the project stakeholders to receive recommendations and reach sound decisions. To execute the project, BPPT will appoint a national project director (NPD) who will mainly be responsible for effective coordination among the stakeholders and achievement of project objectives as per the approved Project Document. The NPD is trusted with the responsibility to judiciously authorize the use of project fund and resources to effectively deliver project outputs. His/her accountability to the project is formally presented by timely submission of quarterly progress report, and dully signed financial reports, as well as the project’s combined delivery report at the end of each fiscal year. He/she also bares the duty to manage project risks and escalate critical issues to the Project Board. As required, BPPT may officially appoint Deputy NPDs to act on his/her behalf and take on a specific responsibility of the NPD. A professional project management office (PMO), which consists of technical experts and administrative personnel, will be recruited and appointed by the NPD. They will be responsible for the day to day implementation of the project activities. The PMO is headed by a National Project Manager (NPM) who has the overall responsibility to coordinate, implement and report the activities of the project. The accountability of the NPM and his team is referenced to demonstration of sound administrative and financial management of the project, as well as effective delivery of project activities. Accountabilities for project management are formally presented to the NPD by timely completion of FACE form and it supporting documents and statement of assets. Whilst on project activities accountabilities are formally presented by presentation of progress reports as required by UNDP and the GEF. The project manager is also obliged to follow up recommendations that arise from internal monitoring and evaluation and audit. The PMO personnel The PMO are recruited and appointed by the NPD. Prior to the implementation of the project, a Harmonized Advance Cash Transfer (HACT) assessment shall be carried out to determine the project management capacity of the Implementing Partner, and the modality of cash transfer to the project. Cash transfer is normally made to the project once every quarter in the amount stated in the corresponding quarterly work plan that has been proposed by the NPD. For this purpose the Implementing Partner is required to open a project bank account to receive the fund from UNDP. UNDP uses an integrated financial reporting format known as the FACE form for its financial reporting. The form allows the tracking of cash advances, expenditures, settlement of the

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expenditures by UNDP, and remaining balance. Certified FACE form is submitted to UNDP every quarter to settle project advances, and every time the project makes a request for payment to UNDP. AS part of the implementation arrangement the Implementing Partner will be required to prepare quarterly and annual work plans, budgets and progress reports as specified above and to submit to UNDP Indonesia. The Quarterly Progress Report (QPRs) would provide a brief summary of the status of input procurement and output delivery, explain variances from the work plan and present work plans for each successive quarter for review and endorsement. The QPRs will include financial statements and the work plan for the subsequent quarter. The PMO will also prepare and submit a combined annual project and project implementation review reports (APR/PIR) to UNDP. The APR/PIR report would provide a more in-depth summary of work-in-progress, measuring performance against both implementation and impact indicators. Any adjustments in project approach will be reported to the GEF who will evaluate and approve the adjustments recommended. A terminal report would be completed prior to the completion of the project detailing achievements and lessons learned. The PMO is required to hold an annual Project Board meeting, which invites the members of the stakeholders to report the progress of the project towards the targets. The APRs must be submitted to the participants at least two weeks before the TPR. The implementation arrangement for the MCTAP is shown diagrammatically below: Project Implementation Arrangement

Project Management Unit (PMU) • National Project Manager • Consultants • Admin and finance support

Project Board

Project Assurance (UNDP)

Partner

National Project Director

Partner

Partner

Senior Supplier (UNDP)

Senior Beneficiary

(BAPPENAS)

Project Executive

(BPPT)

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UNDP Country Office, together with the UNDP-GEF Regional Technical Advisor for Climate Change in the Asia-Pacific region will carry out the GEF oversight. Under the role of Project Assurance, UNDP will be responsible for monitoring and evaluation (M&E), including oversee project reviews, approving annual implementation work plans and budget revisions, monitoring progress, identifying problems, suggesting actions to improve project performance, facilitating timely delivery of project inputs, and provide linkages to the other sub-regional, Asia-Pacific regional and global initiatives. All M&E functions will be carried out in line with standard UNDP and UNDP-GEF procedures. UNDP will also provide country office support to the project and execute specific activities as agreed with the Implementing Partner. The total value of UNDP executed activities of the project is covered under a letter of agreement between the Implementing Partner and UNDP which is attached as an annex to the project document. Finally, at the conclusion of the project the National Project Director (NDP) has the overall responsibility to appropriately close the project both financially and operationally. In the former he or she is required to sign the final combined delivery report (CDR) of the project certifying the accountability of the use of project funds. In the latter he or she sees to that the National Project Manager (NPM) submits project terminal report, project review and terminal financial report and certifies the accomplishment of all project outputs as specified in the project work plan. Lastly, UNDP, through its assurance function will verify the soundness of the project closure and see to that all outstanding advance, payments and other obligations of the project are cleared and the ownership of project asset be transferred to the Agency for the Assessment and Application of Technology (BPPT) in line with UNDP rules and regulations. PART IV: MONITORING AND EVALUATION PLAN AND BUDGET The monitoring and evaluation will be undertaken in accordance with UNDP and GEF established procedures. Monitoring & evaluation (M&E) will continuously be carried out based on the success indicators and means of verification for each activity that will be carried out under this project. An M&E system will be developed and used to track the progress of the achievement of the set targets for the project’s success indicators, as well as any difficulties encountered and assistance that need to be provided to the local microturbine products manufacturers and distributors by the project to assist them in meeting the product quality standards. BPPT will also carry out monitoring & evaluation of all the demonstration sites. The evaluation reports will be disseminated nationwide. The Indicative Monitoring and Evaluation Plan and the corresponding plan and budget can be seen in Table 24 (Section IV.4). The PMO will carry out the M&E plan for the project. The Project Planning Matrix (PPM) in Table 11 states all the success indicators or objectively verifiable indicators for each project activity that will be carried out under this project. These indicators are parameters that have to be monitored by the PMO under this project. The annual growth in the capacity additions of microturbine in on-grid and off-grid and the corresponding GHG reduction, as well as the market share of microturbine electricity in the national power mix, in particular, provide a clear primary indication of the realization of the project's purpose. As such, these are parameters that have to be monitored and evaluated during the course of project implementation. Surveys will be conducted during the first quarter of the third year (mid-term) and the second quarter of the fifth year (final term) of the project to track the current status of the microturbine electricity market. The success indicators or objectively verifiable indicators for each objective and activity will be monitored and evaluated during the course of project implementation; the extent by which the GEF developmental goal is achieved will

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be evaluated from the monitored results. The annual target values for the indicators will be agreed upon during project document finalization. From GEF side the project will be subject to three mandatory independent evaluations. The first evaluation will be conducted during the third quarter of Year 2 followed by the second evaluation in the second quarter of Year 4 and the final evaluation at the completion of the project. UNDP will exercise its assurance functions through a series of activities which include spot checks for compliance to UNDP rules and regulation, programme monitoring, and annual audit which will be carried out by PBKP. UNDP may also exercise special audit as an extra measure to ensure compliance. Upon completion of each evaluation, the PMO organizes a meeting to discuss the results of the evaluation and to determine ways to implement suggestions by the evaluation. The project will coordinate with all the project partners and co-financing institutions, particularly those implementing parallel projects whose results feed in, or are integral components, of the MCTAP. The continuous monitoring and evaluation of the project sites, even after completion of the project period, will bring sustainability of the project with desired benefits in the long run. Direct support for the range of initiatives will be coming from all government agencies and private sector with relevant microturbine project interests. Funds will be used primarily to ensure an appropriate energy supply for local industries and to establish linkages between the microturbine cogeneration energy installation and the economic development activities associated with productive uses of microturbine cogeneration (MCT). The GEF support will take care of the support activities that will catalyze and sustain the progressive development of the microturbine resources and their productive applications. PART VI: Legal Context

LEGAL CONTEXT For CPAP countries: o If the country has not signed the SBAA, the following standard text is quoted: This document together with the CPAP signed by the Government and UNDP which is incorporated by reference constitute together a Project Document.

(a) The Revised Basic Agreement for Technical Assistance signed 29 October 1954 between the United Nations, the International Labour Organisation, the Food and Agriculture Organisation of the United Nations, the United Nations Educational, Scientific and Cultural Organisation, the International Civil Aviation Organisation, and the World Health Organisation and the Government of the Republic of Indonesia,

(b) The Standard Agreement on Operational Assistance signed 12 June 1969 between the

United Nations, the International Labour Organisation, the Food and Agriculture Organisation of the United Nations, the United Nations Educational, Scientific and

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Cultural Organisation, the International Civil Aviation Organisation, the World Health Organisation, the International Telecommunication Union, the World Meteorological Organisation, the International Atomic Energy Agency, the Universal Postal Union, the Inter-Governmental Maritime Consultative Organisation and the United Nations Industrial Development Organisation and the Government of the Republic of Indonesia,

(c) The Agreement signed 7 October 1960 between the United Nations Special Fund and the

Government of the Republic of Indonesia, and (d) all CPAP provisions

apply to this document. 

Additionally, this document together with the CPAP signed by the Government and UNDP which is incorporated by reference constitute together the instrument envisaged in the Supplemental Provisions to the Project Document, attached hereto as Annex B. Consistent with the above Supplemental Provisions, the responsibility for the safety and security of the implementing partner and its personnel and property, and of UNDP’s property in the implementing partner’s custody, rests with the implementing partner. The implementing partner shall: a) put in place an appropriate security plan and maintain the security plan, taking into account the security situation in the country where the project is being carried; b) assume all risks and liabilities related to the implementing partner’s security, and the full implementation of the security plan. UNDP reserves the right to verify whether such a plan is in place, and to suggest modifications to the plan when necessary. Failure to maintain and implement an appropriate security plan as required hereunder shall be deemed a breach of this agreement. The implementing partner agrees to undertake all reasonable efforts to ensure that none of the UNDP funds received pursuant to the Project Document are used to provide support to individuals or entities associated with terrorism and that the recipients of any amounts provided by UNDP hereunder do not appear on the list maintained by the Security Council Committee established pursuant to resolution 1267 (1999). The list can be accessed via http://www.un.org/Docs/sc/committees/1267/1267ListEng.htm. This provision must be included in all sub-contracts or sub-agreements entered into under this Project Document. ”

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PART I: Incremental Cost Analysis Broad Development Goals Rising from the financial crisis in the later part of the last decade, Indonesia has been one of the fastest growing countries in the ASEAN region with growing demand for electricity. To meet this demand, the GoI would continue to install new conventional power generation facilities. In addition, coal fired power plants and diesel power plants will still be the option for electricity generation, in view of the availability of fuel and the relatively lower cost for the technology involved. The energy-demand sectors are among the major contributors to GHG emissions in the country, and are responsible for most of the increase in GHG emissions over the next two decades. A huge proportion of the captive power capacity in Indonesia is comprised of diesel power generation systems, which account for part of the CO2 emissions from the country’s power sector. Captive on grid-connected coal fired power generations are also contributing high amounts of CO2 emissions. Global Environmental Objective The proposed project will achieve the objective set out in GEF Operational Program 7 to reduce green-house gas (GHG) emissions not only directly but also indirectly by inducing cost reductions in the MCT project implementation cost, which results in a higher penetration of this low GHG emitting technology in the energy markets. Baseline Activities Indonesia has been one of the fastest growing countries in the ASEAN region with growing demand for electricity. To meet this demand, the GoI would continue to install new conventional power generation facilities. In addition, coal fired power plants and diesel power plants will still be the option for electricity generation, in view of the availability of fuel and the relatively lower cost for the technology involved. To mitigate the environmental pollution caused by the high level of coal and oil utilization in the country’s renewable energy development and the widespread practice of EC&EE have been encouraged by the GoI. Although there is high level of awareness of the economic and environmental benefits of MCT implementation, such technology is not expected to be employed in the short to medium term because of its high cost. Indonesia with its growing captive power market, an insufficient power supply market, and availability of huge natural gas resources is definitely a promising market for cogeneration. Cogeneration has only been popular amongst the big industries, such as pulp & paper, petrochemical, textile and food processing, mainly because the past cogeneration technologies are usually only cost effective for bigger power and heating generation capacities. Recently, small-scale cogeneration has become popular in smaller industries. GEF Alternative This GEF project will focus on industrial and commercial applications such as in textile, plastic, paper, ceramic, metal plating, brick manufacturing, hotel/residential apartments, hospitals and

SECTION II: STRATEGIC RESULTS FRAMEWORK AND GEF INCREMENT

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commercial buildings (including shopping malls and office buildings). These represent high potentials for MCT applications. These energy end-users currently use electricity (grid power or diesel-based captive power) for manufacturing processes and for air conditioning/refrigeration, or coal/oil for industrial process heating. The alternate scenario envisions deployment of MCT with one single input of energy (natural gas or LPG) in these end-users to generate electricity for on-site use and to use the MCT waste heat for industrial liquid/air process heating or to for liquid absorption air conditioning/refrigeration. The proposed MCTAP activities are expected to result to MCT applications that will be economically competitive and affordable. Its fuel will be supported by the current and rapid development of new indigenous and cost-competitive gas distribution infrastructures from Sumatra and Kalimantan to Java. The MCT application will progress from the projected reduction cost of MCT system cost; expected growing MCT market demand and increasing economies of scale of MCT equipment manufacturing and engineering services. Project Outcomes The MCTAP will result to the following outcomes by end of its 5-year implementation period: • Cumulative reduction of GHG emissions from the MCT deployment in the ICE sector in

Indonesia of about 1.528 million tons CO2; • Cumulative energy savings in ICE sectors from the application of MCT of about 3.2 million

BOE; • Total installed capacity of MCT facilities of around 200 MW; and, • Average % reduction in the cost of MCT of about 25%. Project Components Component 1: Technology Assessment and MCT Application Development This component is in line with addressing the interest of the ICE sectors in the application of MCT, and for ensuring a wider level of acceptance and better understanding of the technology and its benefits, since this is an important key to the realization of the technology replications that are expected at the end of the MCTAP. Among the major activities are the provision of technical assistance in the: (1) conduct of more detailed techno-economic feasibility evaluations of potential demo projects identified during the PPG exercise; (2) design of the MCT application demonstration projects including the conceptual design, engineering design, installation, operation, monitoring and evaluation plans for both demonstration and replication projects; and, (3) development of technical guidelines for project developers and implementers interested in venturing in the supply/distribution and application of MCT. Component 2: MCT Demonstration& Market Development This component will facilitate the creation of an initial MCT market through MCT demonstration projects. The major activities in this component include: (1) MCT Demonstrations; (2) Technical assistance for MCT System Demos; (3) M&E of MCT Demos & other MCT projects; (4) Survey of MCT cost trends and impacts on MCT market; and, (5) Dissemination of information on results of MCT application projects. This will involve the installation of a combined total capacity of 3.6 MW

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MCT systems in selected demo companies. These will serve as actual examples for future MCT market references, and provide first hand experiences in the operation and possible improvements in the MCT application in Indonesia. Through these demonstrations, it is anticipated that the initial users would be able to better appreciate MCT, and with a wider understanding of its benefits, the market growth is accelerated and enhanced, leading to the long-term cost reduction of the technology. By end of the project, the expected installed MCT capacity in Indonesia is 200 MW. The MCT application demonstrations will be carried out in the following companies: The installation cost of the MCT demos will be financed using funds from the host companies and the incremental cost provided by the GEF. These demonstrations will basically optimize the planned power generation and process heating projects (baseline) of the host companies by upgrading them to MCT applications (alternative). The alternative MCT installations are expected to optimize the utilization of both the electricity generated and the waste heat used for process heating and where possible also for cooling/refrigeration applications

The performance of the demonstrations will be monitored and evaluated (in terms of energy savings generated, CO2 emissions avoided, IRR and cost effectiveness). Other MCT projects implemented outside of the MCTAP will also be monitored and where possible, evaluated. The findings and results of the evaluation of the demonstrations and other MCT applications outside of the project will be disseminated to the relevant stakeholders in the government and in the private sectors (particularly ICE). The demonstrations are expected to generate maximum publicity for the technology and public awareness, thereby spurring replications, and ultimately leading to long-term cost reduction of the technology. At the same time, regular surveys will be conducted to assess the impacts of the MCT development in the country. Such surveys will, among others, track the cost of MCT in the Indonesian market during the MCTAP implementation. Similar to the monitoring of the MCT demonstration and replication projects, such surveys will also be continued even after the project to track the performance of MCT projects as well as the trend of MCT cost, thereby establishing the technology’s cost effectiveness. Component 3: Technical Support to MCT Financing This component will address the removal of financial barriers to enable industrial establishments and MCT project developers to access financial resources for the adoption and implementation of MCT. It will include a complementary technical assistance program for enhancing MCT investment capacity by developing a pipeline of finance-ready MCT application projects and building the commercial capacities of MCT businesses and participating financial institutions (FIs). Activities for mobilizing local and international financial institutions and local industry resources to commercialize MCT technology application financing will be carried out by engaging key parties (e.g., foreign MCT equipment suppliers and local ESCO), businesses and end-users to implement MCT projects. Working through existing public and private sector partners, the Project will work directly with private companies and FI, responding to their individual needs to structure investments, develop products, build their capacity to deliver MCT project financing, and market their MCT projects and financing products. Initially, the schemes will be developed in partnership with commercial lending services provided through 2 local banks by a multilateral financing institution to support the growth of small and medium enterprises (SMEs). Presently, the commercial lending/financing institutions are not supporting technology development and application initiatives in Indonesia. It is expected that this component will facilitate immediate and future financing for MCT installations. This is

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important in ensuring the replication and sustainability of MCT, and ultimately leads to the reduction of the technology cost. Component 4: Policy and Institutional Support This component will address the need to come up with policy frameworks that will support initiatives such as MCT applications. It will include, among others, the following activities: (1) a study to identify the available tax benefits for energy efficiency projects such as MCT applications with further improvement for better market environment; (2) fiscal policy study and recommendations for the incentive program (energy efficiency and renewable energy) being planned by Indonesia’s Ministry of Energy and Mineral Resources in cooperation with the Ministry of Finance; and, (3) capacity building to the relevant government agencies to come up and support the establishment, implementation and enforcement of such policies (technical, financial, market). The last one is to ensure that the replication of the MCT demonstrations will happen. Component 5: MCT Promotion This project component will enhance the level of awareness on the benefits and features of the MCT technology both as a dedicated promotional campaign and as part of the GoI’s EC&EE campaign program. It would focus in generating awareness and better understanding on MCT technology and applications through MCT road shows and exhibitions, and information dissemination activities. The level of awareness for the public in general and especially policy makers will be raised to the point that they understand the MCT technology, aware of its true benefits and ecological significance, understand the purpose and appreciate the function of the technology. It is expected, as a result of the advocacy campaigns that will be carried out under this component, that policy makers would further appreciate the possibilities for the MCT market, and are able to introduce suitable support policy and regulatory initiatives. Public awareness raising materials will be prepared and seminars conducted to increase the awareness of the decision makers on the low GHG emitting energy technologies. It is envisioned that the interventions that will be carried out under this project component will facilitate the increased demand for MCT and the reduction of its current unit cost.

Component 6: Technical Support for Local MCT Industry - This project component would focus on improving the capacity of the local engineering services and equipment manufacturing industry to develop and implement MCT projects as well as in producing MCT system components. Such capacity is indeed crucial in the reduction of the MCT cost. The 2 major activities are focused on: (a) Capacity Development of Local MCT Industry – technical assistance and transfer of knowledge in the areas of system design, installation, operation and maintenance, thereby greatly improving the ‘learning by doing’ process; and, (b) Study on Local Capacity Development to Increase Local Content of MCT Systems –technical assistance and capacity building for local equipment manufacturers who may be able to produce some of the MCT system components. An assessment of the possibility to manufacture MCT components or increase the local content of MCT products and services in Indonesia will be carried out.

It is envisioned that the planned interventions will all lead to a significant reduction of the MCT cost by an average of 25% and the desired environment for a sustainable MCT market in the country. With the cost of MCT reduced as facilitated by this project, the widespread utilization of MCT systems, which is expected to result in an overall 200 MW installed capacity by end of project, will result in a cumulative GHG emission reduction of about 1.528 million tons CO2.

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Incremental Cost Matrix and Project Indicative Budget The complete costing of the project which shows co-financing in addition to basic commitment is seen in Table 7.

Table 7: Summary Cost of Each Project Component (US$)

Project Component Baseline Incremental Total Cost 1.Technology Assessment & MCT Application Development 192,800 250,700 443,500

2.MCT Demonstration& Market Development 12,909,800 1,060,500 13,970,3003.Technical Support to MCT Financing 176,100 274,100 450,2004.Policy & Institutional Support 461,400 263,000 724,4005.MCT Promotion 662,800 348,000 1,010,8006.Technical Support for Local MCT Industry 428,100 275,000 703,1007.Learning Evaluation and Adaptive Management 502,000 116,000 618,0008.Learning Evaluation and Adaptive Management 425,000 425,000Total 15,333,000 3,012,300 18,345,300

Table 8: Project Cost Sharing Matrix (US$)

PROJECT COMPONENTS UNDP GEF National Gov’t

Private Sector Total

1. Technology Assessment & MCT Application Development

250,700 224,700 0 475,400

2. MCT Demonstration& Market Development

1,060,500 0 12,592,000 13,652,500

3. Technical Support to MCT Financing

274,100 205,200 0 479,300

4. Policy & Institutional Support 263,000 537,700 0 800,7005. MCT Promotion 348,000 772,500 0 1,120,5006. Technical Support for Local MCT Industry

275,000 498,900 0 773,900

7. Learning Evaluation and Adaptive Management

116,000 502,000 0 618,000

8.Learning Evaluation and Adaptive Management 425,000 425,000

TOTAL 425,000 2,587,300 2,741,000 12,592,000 18,345,300

Table 9: Summary of Project Co-Financing

Contributor Classification Type Amount (US$) Status

BPPT (BBTE) Gov’t Agency Cash 2,241,000 Confirmed DGEEU Gov’t Agency Cash 500,000 Confirmed PT Surya Spektrum Inti, Jakarta Private Sector Cash 3,200,000 Confirmed PT Trans Malindo Energi, Private Sector Cash 1,600,000 Confirmed

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Contributor Classification Type Amount (US$) Status

SMP Budi Bhakti, Depok Private Sector Cash 640,000 Confirmed Bengkel “26 Mobil “, Medan Private Sector Cash 160,000 Confirmed Bengkel Karya Prima, Medan Private Sector Cash 160,000 Confirmed Vulkanisir Gunung Mas, Madiun Private Sector Cash 48,000 Confirmed PT Harmoni Inti Pratama, Jakarta Private Sector Cash 3,200,000 Confirmed PT Pelita Cakrawala, Batam Private Sector Cash 800,000 Confirmed PT Kreasindo Restu Utama, Jakarta Private Sector Cash 640,000 Confirmed PT Bali Niaga Prima, Bali Private Sector Cash 480,000 Confirmed PT Mega Citra Perkasa, Pekanbaru Private Sector Cash 320,000 Confirmed PT Ajanni Tekindo, Pekanbaru Private Sector Cash 320,000 Confirmed PT Parindo Karya Prima, Pekanbaru Private Sector Cash 320,000 Confirmed Classic Emporium, Jakarta Private Sector Cash 160,000 Confirmed Capella Body Center, Medan Private Sector Cash 160,000 Confirmed CV Trans, Medan Private Sector Cash 96,000 Confirmed Karoseri Gunung Mas, Madiun Private Sector Cash 96,000 Confirmed Krakatau’s Automobile Body Repair, Medan Private Sector Cash 96,000 Confirmed

Asia Insurance Private Sector Cash 96,000 Confirmed Total 15,333,000

The GOI contribution comes mainly from the planned and budgeted activities of the BPPT to pursue its mandate of assessing, evaluation and promoting the implementation of feasible and applicable technologies in Indonesia. Part of this is from the budget of the DGEEU for its cogeneration promotion and energy policy and institutional work. The BPPT’s assistance will cover baseline activities for the assessment of the various options for MCT applications and identifying the various requirements to facilitate MCT projects in the ICE sectors of the country. Its activities in technology development and technology market development will also be tapped to assist in the promotion of the MCT market that the project will initiate and facilitate. The co-financing from BPPT will also be used for providing technical support in accessing local financing for potential MCT users. The BPPT’s technology promotion activities will also support the promotional activities for MCT under the project. The project’s intermediate objective of providing technical support for the local MCT industry will be supplemented by BPPT’s activities in supporting the improvement of the local manufacturing industry. Lastly, the GOI support to the project, through the BPPT, will be in the management of the project activities. The project management expenses that will be covered by the co-financing are mainly for the personnel and meetings costs of the Project Board and PMO, as well as the office rental and travel costs of the PMO. The co-financing share to the project management cost is US$ 460,000, which at 10% is at par as that of the GEF share. Bulk of the co-financing (US$ 12,592,000) comes from the private sector, and this is mainly the investment cost for the MCT application projects that they are financing, which are included in MCTAP as demonstration projects.

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Table 10: Incremental Cost Matrix and Project Indicative Budget

COMPONENT No. 1 Baseline Alternative IncrementalBusiness-as-Usual Scenario: Proposed Situation: Additional Features:

Technology Assessment and MCT Application Development Outcome: Thorough understanding and appreciation of technology options and their environmental impacts of MCT systems by ICE sector, government and other stakeholders

Although the industrial and commercial sectors in the country recognizes the energy saving and environmental benefits of utilizing MCT, the high first cost of the technology is clearly preventing them from employing MCT. No educational material or

publication addressing MCT’s performance capability to build the understanding and interest of public and government in MCT.

Activities designed to address the technical barriers that hinder the widespread applications of MCT to build the understanding and appreciation of technology options, the technology’s economic benefit and their environmental impacts by government and other stakeholders.

Study of existing MCT system manufacturers, distributors and suppliers all over the world, including the specifications and prices (overall and by component) of their respective MCT products. Assessment of overall technical and financial

requirements of various industries in each sector for the deployment of EE technologies, in general, and MCT systems, in particular. Evaluation of the potential of MCT application

projects in order to select suitable projects that will be demonstrated under the MCTAP. Study on ongoing and planned MCT application

projects all over the world. Survey to determine ongoing and planned MCT

application projects. Identification of other potential end-use sectors in

industry and commerce where MCT can be applied.

Domestic Benefits

Domestic Benefit: Increased awareness on

EC&EE technologies, but not on MCT.

Domestic Benefit: Enhanced understanding and positive

perception of MCT at many levels of society. Increased confidence in the viability

and benefits of MCT applications. Improved competency level of the

domestic ESCO on MCT project.

Domestic Benefit: Enhanced understanding and positive perception

of MCT at many levels of society. Increased confidence in the viability and benefits

of MCT applications. Improved competency level of the domestic ESCO

on MCT project.

Global Benefits

Global Benefit: No potential for or limited energy savings and GHG reductions resulting from marginal improvements in MCT investments

Global Benefit: Greater potential for GHG reductions resulting from MCT investments are realized nationwide

Global Benefit: Greater potential for GHG reductions resulting from MCT investments are realized nationwide

COST 192,800 443,500 250,700

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COMPONENT No. 2 Baseline Alternative Incremental Business-as-Usual Scenario: Proposed Situation: Additional Features:

Component 2: MCT Demonstrations & Market Development Outcome: Establishment of a critical mass of demonstration projects that will provide detailed information of MCT operations, energy savings and environmental impacts to enterprises interested MCT systems from ICE sectors

Industry has interests on EC&EE technologies but not on MCT, because there are no documented evidence to assure the market that the savings claimed by MCT manufacturers would be attainable under the climate conditions and the fuel specifications in Indonesia.

Activities designed to provide the needed technical assistance for MCT project developers and implementers. Demonstration of MCT applications

enhances understanding about the viability of the technology and its benefits.

Feasibility analyses of selected demonstration sites; specific activities to ensure effective demonstration project implementations; Baseline study for the demonstration projects;

design, installation, operation, monitoring and evaluation of the demonstration projects. Evaluation of certain requirements for smooth and

effective implementation of the demonstration projects Setting up of administration, as well as operation

and maintenance systems at the demonstration sites Preparation of the MCT application project basic

engineering design, comprehensive technical and economic feasibility evaluations, as well as in the detailed engineering designs. Study, formulation, implementation and

enforcement of codes/norms/standards for the performance of MCT systems.

Domestic Benefits

Domestic Benefit: None enterprises are confident

to implement an MCT investment project. None banks or investors are

confident to finance MCT projects, because there is no documented evidence on MCT economic benefit.

Domestic Benefit: MCT standards development and

implementation; and MCT showcases and demonstration projects are implemented A wider level of acceptance and better

understanding on the technology and its benefits Enhanced confidence of banks/FIs to

finance MCT project and reduce MCT project’s financial risk profile Increased numbers of enterprises

interested to implement MCT projects. Increased numbers of replication

MCT project implementations.

Domestic Benefit: MCT standards development and implementation;

and MCT showcases and demonstration projects are implemented on targeted premises. A wider level of acceptance and better

understanding on the technology and its benefits, An enhanced confidence of banks/FIs to finance

MCT project and reduce MCT project’s financial risk profile, which could lead to the reduction of MCT implementation cost. Increased numbers of enterprises interested to

implement MCT projects. Increased numbers of replication MCT project

implementations.

Global Benefits Global Benefit: Global Benefit: Global Benefit:

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Few or no MCT investments carried out resulting in no energy savings and GHG reductions

Energy efficiency and GHG reductions resulting from MCT projects are realized from demonstration projects, as well as the potential for replication

Energy efficiency and GHG reductions resulting from MCT projects are realized from demonstration projects, as well as the potential for replication

COST 12,909,800 13,970,300 1,060,500

Component #3 Baseline Alternative IncrementalBusiness-as-Usual Scenario: Proposed Situation: Additional Features:

Component 3: Technical Support for MCT Financing Outcome: Availability of financial and institutional support to encourage enterprises from ICE sector to adopt energy efficient MCT systems

Limited ability of banking and financial institutions address EC&EE loan risks and benefits; Inadequate banking and financial institutional capacity to assess EC&EE financing mechanisms; and No linkages with other financing schemes that provide EC&EE sector development.

Activities primarily designed to address MCT project developer’s lack of access to finance for supporting MCT applications and energy efficiency initiatives. The expected outcome from this

component is the availability of financial and institutional support to encourage ESCO and potential users of MCT’s adoption.

Review of the performance of the existing industry credit schemes in Indonesia Evaluation of the viability of financing MCT

projects in the potential sectors, as well as the assessment of potential financing schemes. Design of appropriate financing schemes for such

projects, based on government grants, loans from financial intermediaries, and ESCOs, including the identification and assessment of sources of finance, tariff structures and fiscal aspects. Series of seminar-workshops for the commercial

and industry sectors on potential financing options, including a special course on CDM and ESCOs, for supporting their MCT application projects. Accessing and partnering with ESCOs (local

and/or foreign) in their MCT application projects.

Domestic Benefits

Domestic Benefit: Few if any MCT projects

financed

Domestic Benefit: An enhanced confidence of the

banks/FIs to finance MCT projects. Provided MCT financing options

would significantly reduce the up-front investment cost of MCT projects. Increased replication of MCT projects financed through commercial loans

Domestic Benefit: An enhanced confidence of the banks/FIs to

finance MCT projects. Provided MCT financing options would

significantly reduce the up-front investment cost of MCT projects. Increased replication of MCT projects financed

through commercial loans

Global Benefits

Global Benefit: Increased energy consumption and no GHG emission reductions from ICE sector

Global Benefit: Enhanced energy savings and GHG emission reductions resulting from increased financing availability from commercial banks/FIs and other

Global Benefit: Enhanced energy savings and GHG emission reductions resulting from increased financing availability from commercial banks/FIs and other funding sources.

51

funding sources. COST 176,100 450,200 274,100

Component #4 Baseline Alternative IncrementalBusiness-as-Usual Scenario: Proposed Situation: Additional Features:

Component-4 Policy & Institutional Support Outcome: Promulgation of and compliance to regulations that encourage adoption of MCT systems

No efforts within GoI to promote need for favorable regulatory regime to encourage cogeneration implementation in the ICE sector; No new policies drafted by GoI to encourage cogeneration implementation in the ICE sector; No emission standards for power/thermal generation systems; and, No meaningful dialogue between ICE and GoI on improving the environmental performance of the power/thermal generation systems.

Activities designed to address the policy and regulation related barriers that affect the widespread application of MCT in the ICE sector. The expected outcome of the activities that will be carried out is the promulgation of, and compliance to, favorable policies and regulations that encourage adoption of MCT and energy efficient power/thermal generation practices and methodologies.

Review and evaluation of the MCT policy based on the results of the MCT demonstrations. Formulation of revised policy and implementing

guidelines for issuance and enforcement. Lobbying of the government approval of favorable

policy recommendations, preparation and approval of policy IRRs, and the policy enforcement Lobbying for the endorsement and/or approval of

the proposed policy recommendations and IRRs. Dissemination of draft policies and IRRs to all

stakeholders Preparation of policy recommendations, along

with the IRRs, and action plans for the enforcement of the policies and IRRs. Development of new and wide-ranging fiscal &

financial policies for the application of energy technologies, in general, and MCT, in particular. Development and enforcement of the IRRs on

MCT Fiscal & Financial Framework. Development and use of a monitoring system track

the implementation and enforcement of the framework. Information sharing about MCT and MCT

applications, as well as soliciting inputs (comments & recommendations) from the stakeholders in the energy, commercial and industrial sectors regarding the necessary fiscal and financial policies/incentives in the application of MCT.

Domestic Benefits

Domestic Benefit: No significant changes of

energy utilization in the ICE sector due to stagnancy of

Domestic Benefit: Policy development accelerated to

encourage proliferation of EE&EC in the power/thermal generation systems.

Domestic Benefit: Policy development accelerated to encourage

proliferation of EE&EC in the power/thermal generation systems.

52

policy development for ICE sector to implement MCT and cogeneration in general ICE sector will continue to utilize energy for power/thermal generation with little effort to curtail environmental impacts.

ICE sector will be encouraged to become a cleaner and more energy efficient industry through favorable regulatory regime

ICE sector will be encouraged to become a cleaner and more energy efficient industry through favorable regulatory regime

Global Benefits

Global Benefit: Limited energy efficiency for power/thermal generation in the ICE sector

Global Benefit: Higher GHG emission reductions resulting from enhanced policy and institutional support to the implementation of cogeneration systems, particularly MCT systems in the ICE sector.

Global Benefit: Higher GHG emission reductions resulting from enhanced policy and institutional support to the implementation of cogeneration systems, particularly MCT systems in the ICE sector.

COST 461,400 724,400 263,000

Component #5 Baseline Alternative IncrementalBusiness-as-Usual Scenario Proposed Situation: Additional Features:

Component 5: MCT Promotion Outcome: Enhanced awareness of the public and other stakeholders on the efficient use of MCT for EC&EE practices in ICE sector

Limited public and stakeholder awareness of MCT and EE&EC practices in ICE sector; ICE sector do not have credible knowledge of MCT and their benefits; and, Fragmented efforts to disseminate information of MCT for EC&EE projects.

Activities addressing the barriers related to low awareness of government, public, and ICE sector of technical alternatives to energy efficient power/thermal generation methodologies and practices, as well as the lack of access to information on MCT and EC&EE in ICE sector. An enhanced level of awareness and

better understanding on MCT technology and applications; and its environmental and economical benefits.

Organization and conduct of road shows to promote MCT and MCT application, as well as participation in technology exhibitions in the country. Planning of similar activities for other ASEAN

countries in collaboration with MCT suppliers (local and foreign). Conduct of a series of seminar-workshops for

local equipment retailers and manufacturers to promote the sale of MCT systems and products, in conjunction with the activity on the conduct of MCT road shows and exhibitions. Supporting MCT retailers/manufacturers in their

marketing of MCT systems in the country (e.g., development of business plans, networking, and the promotion of business links). Establishment of an association of MCT

retailers/manufacturers in the country that will help

53

enforce MCT product/component standardization Development of business networks and other

capacity building activities for its members.

Domestic Benefits

Domestic Benefit: Dispersed and fragmented information dissemination that is not effective in enhancing awareness of MCT and EC&EE practices amongst stakeholders and the general public

Domestic Benefit: Credible MCT information generates

more interest in MCT with organizations and stakeholders Positive public awareness of MCT

operations and the output quality from MCT operations and EC&EE practices

Domestic Benefit: Credible MCT information generates more interest

in MCT with organizations and stakeholders Positive public awareness of MCT operations and

the output quality from MCT operations and EC&EE practices

Global Benefits

Global Benefit: Poor public awareness of energy savings and GHG reductions of MCT operations

Global Benefit: Enhanced awareness of public and stakeholders, especially ICE sector, of EC&EE and GHG emission reductions from MCT operations

Global Benefit: Enhanced awareness of public and stakeholders, especially ICE sector, of EC&EE and GHG emission reductions from MCT operations

COST 662,800 1,010,800 348,000

Component #6 Baseline Alternative IncrementalBusiness-as-Usual Scenario Proposed Situation: Additional Features:

Component 6: Technical Support for Local MCT Industry Outcome: Improved local vocational, technical; and managerial capacity to manage and sustain operations of MCT for EC&EE practices in the ICE sectors.

No growth in EC&EE service businesses; Limited availability of local capabilities for MCT equipment manufacturers/fabricators and importers, and evaluation of energy efficiency of MCT; ICE sector, energy consultants, technical institutes and universities, and technology suppliers lack suitably skilled human resources and have weak technical support capacity available to them; Few training courses conducted by training organizations, with a lack of comprehensive approach and standardized training materials.

Evaluation of the capacity (technical, financial) of local service providers (e.g. engineering firms, consultants) in servicing, installing, maintaining MCT systems Assessment of technical capacity of

CHP facility engineers and operators and design of suitable skills upgrading program Conduct of training program for CHP

engineers and operators Promotion of research collaboration in

engineering of MCT systems Evaluation of the potential

improvements/modifications of existing manufacturing processes, practices & facilities to allow for MCT component production

Improving the capacity of local service providers in design, installation, operation and maintenance of MCT systems and system equipment. Development of technical tools in order to assist

local service providers in the provision of such services to the local MCT market. Assessment of the technical capacity of the facility

engineers and operators Design of a training program for upgrading their

skills and allow them also to operate MCT systems safely and cost-effectively. Training CHP operations personnel on the safe,

cost-effective and environmentally sustainable operation of CHP systems, in general, and MCT systems, in particular. Technical assistance to local engineering firms

(including engineering consultants) to conduct research in the design and installation of MCT

54

Provision of TA in the improvement of manufacturing process/practices and facilities to allow for MCT component manufacturing Evaluation of the capacity (human,

technical, financial) of local equipment manufacturers to produce MCT components and/or systems Development of capacity & capability

of local manufacturers to produce components of MCT Evaluation of financial, technical,

logistical, legal requirements for the local manufacturing of MCT components R&D on critical components of MCT

systems that can be manufactured in Indonesia R&D of production critical MCT

components in Indonesia

systems. Conduct of a detailed study on the present

equipment manufacturing processes, practices and policies to determine how these can be improved/modified to allow for the local manufacture of MCT components. Specific technical assistance to selected local

manufacturers that will venture in the local manufacturing of MCT system components Assessment of the existing capacity needs of

pertinent local manufacturers to determine what aspects of manufacturing of MCT system equipment have to be provided and/or enhanced. Conduct of training programs that will be designed

based on the capacity needs assessment for other local manufacturers, as well as service providers in the manufacturing of MCT system components, as well as in the application, repair and maintenance of MCT systems with locally made components. Conduct of a study on the necessary requirements

for the local manufacturing of MCT components, as well as providing assistance in the facilitation of the securing of some of these requirements. Technical assistance to BPPT (in collaboration

with selected local manufacturers) to conduct research and development activities for the local manufacture of critical MCT system components Technical assistance to BPPT (in collaboration

with selected local manufacturers) in the local production of such components.

Domestic Benefits

Domestic Benefit: Continued limitations and low

quality vocational skills of local engineers and consultants on MCT systems Limited or no capacity of

Domestic Benefit: Trained work force with the skill and

discipline to operate an MCT operation Trained technical work pool to

support the design, construction, commissioning and

Domestic Benefit: Trained work force with the skill and discipline to

operate an MCT operation Trained technical work pool to support the design,

construction, commissioning and operation of an MCT operation, and to conduct

55

technical work force to install and support MCT operations Limited capacity of

entrepreneurs and business personnel to manage MCT operations.

operation of an MCT operation, and to conduct energy audits Trained business personnel and

entrepreneurs to manage MCT operations. An enhanced capability of local

manufacturer to manufacture MCT’s components, which can reduce MCT project cost.

energy audits Trained business personnel and entrepreneurs to

manage MCT operations. An enhanced capability of local manufacturer to

manufacture MCT’s components, which can reduce MCT project cost.

Global Benefits

Global Benefit: A limited capacity of local

personnel to realize energy savings and GHG emission reductions in ICE sector from their power/thermal generation systems. A limited capacity of local

manufacturer to contribute GHG emission reductions.

Global Benefit: An improved capacity of local

personnel to increase energy savings and GHG emission reductions resulting from improved MCT designs, management and operations An improved capacity of local

manufacturer to contribute GHG emission reductions due to the MCT improved market, resulting from the cost reduction of MCT systems.

Global Benefit: An improved capacity of local personnel to

increase energy savings and GHG emission reductions resulting from improved MCT designs, management and operations An improved capacity of local manufacturer to

contribute GHG emission reductions due to the MCT improved market, resulting from the cost reduction of MCT systems.

COST 428,100 703,100 275,000 Project Management 502,000 618,000 116,000 TOTAL COST 15,333,000 17,920,300 2,587,300

56

PART II: Logical Framework Analysis (Project Planning Matrix)

Table 11: Project Planning Matrix (PPM) of MCTAP

Project Strategy Success Indicators Baseline Year 0

Year 5 Target (or on the Year as indicated to be

completed)

Means of Gauging Success Assumptions

GOAL: Reduction of the growth of GHG emissions from the MCT deployment in the ICE sectors in Indonesia.

• GHG emissions reduced by MCT, million tons of CO2

• 0 • 1.528 (cumulative)

• Documentation of energy savings and GHG emissions reduction from MCT pilot projects

• MCTAP Program reports

• Planned project M&E activities are fully supported and implemented

• GoI is supportive of the application of EC&EE and MCT in the ICE sector to reduce air pollution and GHG emissions

PURPOSE: Removal of barriers and project cost reduction that inhibit the adoption of MCT implementation in the ICE sectors

• Cumulative energy savings from ICE sector, million BOE

• 0 • 3.20

• Documentation of energy savings and GHG emissions reduction from pilot projects

• MCTAP Program reports

• Survey of MCT users from ICE sector indicating type of application, project cost and installed capacity

• Planned project M&E activities are fully supported and implemented

• Government policies encouraging EC&EE are strictly enforced

• Reliable data on energy savings and emission reductions of MCT on each applications are available

• MCT installed, MW • 0 • 200MW • Average % reduction of

MCT cost • No data • 20% from Year 1

OUTCOMES Component 1: Technology Assessment and MCT Application Development Thorough understanding and appreciation of technology options and their environmental impacts of MCT systems by ICE sector,

• Number of MCT applications identified and assessed for techno-economic and market feasibility

• 0 • 10 • Documentation of energy savings and GHG emissions reduction from demonstration projects

• Reports and feed back from MCT implementers.

• Registry of enterprises • Documentation of

• ICE sector are willing and interested in participating and cooperating in the design, development and implementation of the MCTAP program

• Relevant information are made available

• Total capacity of installed MCT planned to be developed and implemented in ICE sector

• 0 • 200 MW

57

Project Strategy Success Indicators Baseline Year 0

Year 5 Target (or on the Year as indicated to be

completed)

Means of Gauging Success Assumptions

government and other stakeholders

EC&EE projects influenced by the pilot demonstrations under MCTAP

Component 2: MCT Demonstrations & Market Development Establishment of a critical mass of demonstration projects that will provide detailed information of MCT operations, energy savings and environmental impacts to enterprises interested MCT systems from ICE sectors

• Total capacity of MCT demonstration projects implemented and operational

• 0 • 8 MW • Documentation of demonstration project operations (including reports on plant visits)

• MCTAP Project M&E reports

• Demonstration projects are fully financially supported by their host companies

• Host demo sites allow visitors to visit and/or study the demo project

• Demonstration of a pilot project by locating a demonstration equipment owned by MCTA Project for a certain duration of time.

• Total capacity of MW of installed MCT by enterprises

• 0 • 200 MW

• Number of comprehensive technical and economic feasibility evaluation of different engineering designs and applications of MCT demonstrations to meet market requirements

• 0 • 10

• Improvement in the overall specific energy consumption in the ICE sector

• No data • 5% based on Year 1 data

Component 3: Technical Support for MCT Financing Availability of financial and institutional support to encourage enterprises from ICE sector to adopt energy efficient MCT systems

• Number of banks/financial institutions offering loan/credit facilities for EC&EE projects MCT projects by end of project

• 0 • 12 • Survey of bank/finance institutions offering loan/credit facilities for MCT projects

• Documentation of “Standard Financing Agreements”

• MCTAP Project M&E reports

• Relevant information about MCT economical and environmental performance from local MCT users are made available, including data on annual energy cost saving

• Full cooperation of survey respondents is ensured.

• Total capacity of EC&EE and MCT projects assisted through bank financing

• 0 • 200

• Total capacity of project financing agreed by MCT implementers and the bank/financial institutions

• 0 • 200

Component-4 Policy & Institutional Support Promulgation of and compliance to

• Number of new policies and regulations favorable to EC&EE initiatives in the ICE sector, together with

• 0

• 1

• Documentation of the policies and implementing rules and regulations for EC&EE

• Implementing rules and regulations are enforced

• Continued GoI support for

58

Project Strategy Success Indicators Baseline Year 0

Year 5 Target (or on the Year as indicated to be

completed)

Means of Gauging Success Assumptions

regulations that encourage adoption of MCT systems

policy support program implementation, developed, completed and implemented

initiatives in the ICE sector

• Documentation of strategies and regulations on the efficient use of MCT

• MCTAP Project M&E reports

favorable regulatory regime throughout the project life

• Strategies and regulations on

minimizing air pollution from ICE activities are developed and implemented

• None • Completed by Year 3

• Percentage of ICE sector which is compliant to set emission standards for MCT operations

• 0 • 5% by Year 3

• M&E for policy implementation and installation of MCT systems adopted and operationalized in designated agency

• None • Completed by Year1

Component 5: MCT Promotion Activities Enhanced awareness of the public and other stakeholders on the efficient use of MCT for EC&EE practices in ICE sectors

• MCT Information Center operational

• None

• Completed by Year 1

• Documentation of the approved EC&EE awareness-raising program

• ICE sector awareness surveys

• Feedback communications from clients of Information Center

• Documentation of the policies and IRRs for EC&EE initiatives in the ICE sector

• Documentation of strategies and regulations on the efficient use of MCT

• Relevant stakeholders and target groups are interested in participating and cooperating in the design, development and implementation of program

• Fully functioning database and information exchange services program operated by BPPT

• None • Completed by Year 1

• Percentage of ICE sector satisfied clients served by the MCT Information Centre

• 0 • 5% each year starting Year 2

• MCT energy performance rating scheme completed and implemented

• None • Completed by mid Year 2

Component 6: • Total capacity of MCT • 0 • 200 MW • Documentation of • Relevant personnel are

59

Project Strategy Success Indicators Baseline Year 0

Year 5 Target (or on the Year as indicated to be

completed)

Means of Gauging Success Assumptions

Technical Support for Local MCT Industry Improved local vocational, technical; and managerial capacity to manage and sustain operations of MCT for EC&EE practices in the ICE sectors.

installed EC&EE projects influenced by the pilot demonstrations under the MCTAP

• MCTAP Project M&E reports

• Documentation of certified MCT by MCT principals or the relevant certifying body.

• Registry of businesses providing technical services to MCT

• Documentation of project proposals prepared and submitted by the MCT component makers to GoI, investors, international donors, etc.

interested and willing to participate in the training and in applying the knowledge/know-how they learn

• GoI, private sector investors, and international donors are willing to provide financial support for MCT component manufacturers.

• ICE sectors are willing to adopt new business methods to adopt cleaner and energy efficient technologies

• Number of certified MCT developers in each year

• 0 • 8

• Minimum number of trained local equipment manufacturers producing equipment and/or components for the MCT

• 0 • 2

• Minimum number of trained local engineering firms registered and profitably engaged in the MCT support industry providing technical services

• 0 • 2

• A set of manufacturing standards for MCT system and components adopted by industry

• None • Completed by Year 3

60

SECTION III: Total Budget and Work Plan

Award ID: 00049011 Award Title: PIMS 3471 Indonesia: Microturbine Cogeneration Technology Application Project

Business Unit : IDN10 Project ID: 00059512 Project Title: PIMS 3471 Indonesia: Microturbine Cogeneration Technology Application Project (MCTAP) Implementing Partner : Agency for Assestment & Application of Technology (BPPT) (Executing Agency)

Table 12: MCTAP Budget

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

Component 1: Technical Assessment & MCT Application Development Activity 1.1: Assessment of existing programs for EC&EE technologies which includes MCT

62000 71200 International

Consultant 5,000 0 0 0 0 5,000

62000 71300 National

Consultant 10,000 0 0 0 0 10,000

62000 71600 Travel 500 0 0 0 0 500 62000 74500 Documentation 500 0 0 0 0 500

Sub-total Activity 1 16,000 0 0 0 0 16,000 Activity 1.2: Gas supply and demand balance analysis

62000 71200 International

Consultant 5,000 0 0 5,000 0 10,000

62000 71300 National

Consultant 15,000 0 0 10,000 0 25,000

62000 71600 Travel 1,000 0 0 1,000 0 2,000 62000 74500 Documentation 500 0 0 300 0 800

Sub-total Activity 2 21,500 0 0 16,300 0 37,800 Activity 1.3: Study on alternative fuels for MCT

62000 71200 International

Consultant 5,000 0 0 0 0 5,000

62000 71300 National

Consultant 20,000 0 0 0 0 20,000

61

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

62000 71600 Travel 500 0 0 0 0 500 62000 74500 Documentation 500 0 0 0 0 500

Sub-total Activity 3 26,000 0 0 0 0 26,000 Activity 1.4: Comparative analysis of available microturbines and MCT systems in the world market

62000 71200 International

Consultant 10,000 0 0 0 0 10,000

62000 71300 National

Consultant 10,000 0 0 0 0 10,000

62000 71600 Travel 500 0 0 0 0 500 62000 74500 Documentation 500 0 0 0 0 500

Sub-total Activity 4 21,000 0 0 0 0 21,000 Activity 1.5: Evaluation of the energy utilization and operating performance of existing cogeneration facilities

62000 71200 International

Consultant 5,000 7,500 0 0 0 12,500

62000 71300 National

Consultant 20,000 0 0 0 0 20,000

62000 72200 Travel 1,200 1,200 0 0 0 2,400

62000 74100 Professional services 10,000 10,000 0 0 0 20,000

62000 74500 Documentation 500 500 0 0 0 1,000 Sub-total Activity 5 36,700 19,200 0 0 0 55,900 Activity 1.6: Assessment of technical capacity of CHP facility engineers and operators and design of suitable skills upgrading program

62000 71200 International

Consultant 0 0 7,500 0 15,000 22,500

62000 71300 National

Consultant 0 0 1,200 1,200 1,200 3,600

62000 71600 Travel 0 0 500 500 500 1,500 62000 74500 Documentation 0 0 300 300 300 900

Sub-total Activity 6 0 0 9,500 2,000 17,000 28,500 Activity 1.7: Conduct of training program for CHP engineers and operators

62000 72200 Travel 0 1,200 1,200 1,200 1,200 4,800

62000 71300 National Consultant 0 1,200 0 0 0 1,200

62000 74500 Audio Visual &

printing doc 0 300 300 300 300 1,200

62

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

62000 74100 Professional

services 0 5,000 5,000 5,000 5,000 20,000

62000 74100 Workshop

Expenses 0 5,000 5,000 5,000 5,000 20,000

62000 74500 Workshop

Miscellaneous 0 1,000 1,000 1,000 1,000 4,000

Sub-total Activity 7 0 13,700 12,500 12,500 12,500 51,200 Sub Total Component 1 121,200 32,900 22,000 30,800 29,500 236,400 Component 2: MCT Demonstration & Market Development Activity 2.1: Technical and financial feasibility assessments of MCT applications in potential sectors in Indonesia

62000 71200 International

Consultant 5,000 5,000 0 0 0 10,000

62000 71300 National

Consultant 10,000 5,000 0 0 0 15,000

62000 71600 Travel 500 500 0 0 0 1,000 62000 74200 Documentation 500 500 0 0 0 1,000

Sub-total Activity 1 16,000 11,000 0 0 0 27,000 Activity 2.2: Evaluation of the technical and financial requirements of MCT application in each sector

62000 71200 International

Consultant 0 10,000 0 0 0 10,000

62000 71300 National

Consultant 0 4,000 5,000 0 0 9,000

62000 71600 Travel 0 500 500 0 0 1,000 62000 74200 Documentation 0 500 300 0 0 800

Sub-total Activity 2 0 15,000 5,800 0 0 20,800 Activity 2.3: Evaluation of logistical, safety, administrative, legal requirements for MCT projects

62000 71300 National

Consultant 5,000 2,500 0 0 0 7,500

62000 71600 Travel 250 250 0 0 0 500 62000 74200 Documentation 250 250 0 0 0 500 62000 74500 Misc. 0 0 0 0 0 0

Sub-total Activity 3 5,500 3,000 0 0 0 8,500 Activity 2.4: Identification 62000 71200 Int'l Consultant 0 0 0 0 0 0

63

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

and implementation of courses of actions for the removal of barriers to the successful implementation of MCT application demonstration projects

62000 71300 National

Consultant 0 0 5,000 2,500 2,500 10,000

62000 71600 Travel 0 0 0 0 0 0

62000 74200 Documentation 0 0 1,000 300 1,000 2,300

Sub-total Activity 4 0 0 6,000 2,800 3,500 12,300Activity 2.5: Establishment of baseline data for the MCT demonstration project sites

62000 71200 Int’l Consultant 0 5,000 2,500 0 7,500

62000 71300 National Consultant 0 2,500 5,000 2,500 2,500 12,500

62000 71600 Travel 0 500 500 250 250 1,500 62000 74200 Documentation 0 500 1,000 1,000 1,000 3,500

Sub-total Activity 5 0 8,500 9,000 3,750 3,750 25,000 Activity 2.6: Finalization of the design of MCT demonstration projects

62000 71200 Int’l Consultant 0 10,000 2,500 0 0 12,500

62000 71300 National Consultant 7,500 5,000 0 0 0 12,500

62000 71600 Travel 500 500 0 0 0 1,000 62000 72200 Equipment 212,000 612,500 0 0 0 824,500 62000 74200 Documentation 0 500 500 0 0 1,000

Sub-total Activity 6 220,000 628,500 3,000 0 0 851,500 Activity 2.7: Assistance for the financing of MCT demonstration projects

62000 71300 National

Consultant 0 0 5,000 2,500 2,500 10,000

62000 71600 Travel 0 0 0 0 0 0 62000 74200 Documentation 0 0 1000 1000 1000 3,000

Sub-total Activity 7 0 0 6,000 3,500 3,500 13,000 Activity 2.8: Installation and operation of each demonstration project

62000 71200 Int’l Consultant 2,500 5,000 2,500 0 0 10,000

62000 71300 National consultant 5,000 5,000 5,000 2,500 2,500 20,000

62000 71600 Travel 0 500 500 250 250 1,500 62000 74200 Documentation 0 500 300 1,000 1,000 2,800

Sub-total Activity 8 7,500 11,000 8,300 3,750 3,750 34,300

64

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

Activity 2.9: Monitoring and evaluation of the performance of each demonstration project

62000 71300 National consultant 0 0 5,000 0 0 5,000

62000 74100 Professional

services 0 0 5,000 5,000 7,500 17,500

62000 74200 Documentation 0 0 300 1,000 1,000 2,300 Sub-total Activity 9 0 0 10,300 6,000 8,500 24,800 Activity 2.10: Evaluation and dissemination of the demonstration program results

62000 71300 National consultant 0 0 0 5,000 2,500 7,500

62000 71600 Travel 0 0 0 250 250 500

62000 74100 Workshop Expenses 0 0 0 2,500 2,500 5,000

62000 74200 Documentation 0 0 0 1,000 1,000 2,000 Sub-total Activity 10 0 0 0 8,750 6,250 15,000 Activity 2.11: Survey of MCT cost trends and impacts on MCT market

62000 71300 National consultant 0 0 5,000 0 2,500 7,500

62000 71600 Travel 0 0 0 0 0 0

62000 74100 Professional services 0 0 10,000 0 10,000 20,000

62000 74200 Documentation 0 0 300 0 600 900 Sub-total Activity 11 0 0 15,300 0 13,100 28,400 Sub Total Component 2 249,000 677,000 63,700 28,550 42,350 1,060,600 Component 3: Technical Support for MCT Financing Activity 3.1: Capacity building on MCT for the banking/financial sector

62000 71200 International

Consultant 0 5,000 0 0 0 5,000

62000 71300 Natl. Cons. 0 10,000 0 5,000 0 15,000 62000 71600 Travel 0 0 0 0 0 0

62000 74100 Training expenses 0 10,000 0 10,000 0 20,000

62000 74200 Documentation 0 500 0 1,000 0 1,500 Sub-total Activity 1 0 25,500 0 16,000 0 41,500

65

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

Activity 3.2: Development of an action plan for MCT project financing

62000 71300 National consultant 0 10,000 0 0 0 10,000

62000 74200 Documentation 0 500 0 1,000 0 1,500 62000 74500 Misc. 0 500 0 500 0 1,000

Sub-total Activity 2 0 11,000 0 1,500 0 12,500 Activity 3.3: Design of financing schemes for assisting potential: (1) MCT users in their MCT application projects; and, (2) local manufacturers in locally producing MCT products

62000 71200 International

Consultant 0 5,000 0 0 0 5,000

62000 71300 National

Consultant 0 10,000 0 5,000 0 15,000

62000 74200 Documentation 0 500 0 1,000 0 1,500

Sub-total Activity 3 0 15,500 0 6,000 0 21,500 Activity 3.4: Promotion of MCT to local ‘ESCOs’

62000 71300 National

Consultant 0 10,000 0 0 0 10,000

62000 71600 Travel 0 1,000 500 1,000 500 3,000

62000 74500 Seminars/Meetings 0 1,000 1,000 1,000 1,000 4,000

62000 72400 Communication

and audio visual 0 300 300 300 300 1,200

62000 74200 Documentation 0 500 1,000 1,000 1,000 3,500 Sub-total Activity 4 0 12,800 2,800 3,300 2,800 21,700 Activity 3.5: Capacity building on project financing options

62000 71200 International

Consultant 0 5,000 0 0 0 5,000

62000 71300 Natl. Cons. 5,000 0 5,000 0 10,000 62000 71600 Travel 0 0 0 0 0 0

62000 74100 Training expenses 0 15,000 15,000 10,000 0 40,000

62000 74200 Documentation 0 500 0 1,000 0 1,500 Sub-total Activity 5 0 25,500 15,000 16,000 0 56,500

66

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

Activity 3.6 Identifying fund sources and establishment of a financing plan for the nationwide MCT program

62000 71200 International

Consultant 0 5,000 0 0 0 5,000

62000 71300 Natl. Cons. 0 5,000 0 5,000 0 10,000 62000 71600 Travel 0 1,250 0 1,250 0 2,500 62000 74200 Documentation 0 1,000 0 1,000 0 2,000

Sub-total Activity 6 0 12,250 0 7,250 0 19,500 Activity 3.7: MCT Business Development Matching and Strategic Partnership Establishment

62000 71200 International

Consultant 0 0 5,000 0 0 5,000

62000 71300 Natl. Cons. 0 0 5,000 5,000 5,000 15,000 62000 71600 Travel 0 0 1,500 1,000 1,000 3,500

62000 72400 Communication and audio visual 0 0 300 300 300 900

62000 74100 Business

Conventions 0 0 25,000 25,000 0 50,000

62000 74200 Documentation 0 1,000 1,000 1,000 3,000 Sub-total Activity 7 0 0 37,800 32,300 7,300 77,400 Sub Total Component 3 0 102,550 55,600 82,350 10,100 250,600 Component 4: Policy & Institutional Support Activity 4.1: Public survey on fuel price perception.

62000 71300 National

Consultant 0 2,500 0 0 2,500 5,000

62000 71600 Travel 0 250 0 0 250 500

62000 74100 Professional services 0 7,500 0 0 0 7,500

62000 74200 Documentation 0 1,000 0 0 0 1,000 Sub-total Activity 1 0 11,250 0 0 2,750 14,000 Activity 4.2: Conduct of policy studies on MCT Applications

62000 71200 International

Consultant 0 2,500 0 0 2,500 5,000

62000 71300 Natl. Cons. 0 5,000 0 0 5,000 10,000 62000 71600 Travel 0 0 0 0 0 0 62000 74200 Documentation 0 1,000 0 0 0 1,000

Sub-total Activity 2 0 8,500 0 0 7,500 16,000

67

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

Activity 4.3: MCT Fuel and Grid interconnection Policy Development.

62000 71200 International

Consultant 0 2,500 0 0 0 2,500

62000 71300 Natl. Cons. 0 5,000 5,000 62000 71600 Travel 0 0 0 0 0 0 62000 74200 Documentation 1,000 1,000

Sub-total Activity 3 0 8,500 0 0 0 8,500 Activity 4.4: Formulation of Policies and Associated implementing rules and regulation

62000 71200 International

Consultant 0 2,500 0 0 0 2,500

62000 71300 Natl. Cons. 0 5,000 5,000 62000 71600 Travel 0 0 0 0 0 62000 74200 Documentation 1,000 1,000

Sub-total Activity 4 0 8,500 0 0 0 8,500 Activity 4.5: Setting Up and Implementation of MCT Policies

62000 71300 National

Consultant 0 5,000 0 0 0 5,000

62000 71600 Travel 0 0 0 0 0 0 62000 74200 Documentation 0 1,000 0 0 0 1,000 62000 74500 Policy Promotion 0 1,000 1,000 1,000 1,000 4,000

Sub-total Activity 5 0 7,000 1,000 1,000 1,000 10,000 Activity 4.6: Conduct of technical workshop for promoting MCT and review of the existing national fiscal and financial framework for energy technology applications

62000 71200 International

Consultant 0 5,000 0 0 0 5,000

62000 71300 Natl. Cons. 0 5,000 0 5,000 0 10,000 62000 71600 Travel 0 0 0 0 0 0

62000 74100 Workshop expenses 0 10,000 0 10,000 0 20,000

62000 74200 Documentation 0 1,000 0 1,000 0 2,000 Sub-total Activity 6 0 21,000 0 16,000 0 37,000 Activity 4.7: Development of a new and broader fiscal incentives scheme for energy technology applications

62000 71300 National

Consultant 0 5,000 0 0 0 5,000

62000 71600 Travel 0 0 0 0 0 0 62000 74200 Documentation 0 1,000 0 0 0 1,000 62000 74500 Policy Promotion 0 1,000 1,000 1,000 1,000 4,000

68

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

Sub-total Activity 7 0 7,000 1,000 1,000 1,000 10,000 Activity 4.8: Facilitation of inter agency discussion on policies on MCT and setting up of fiscal incentives framework

62000 71300 National

Consultant 0 5,000 0 2,500 0 7,500

62000 74500 Meetings 0 250 150 250 150 800 62000 74200 Documentation 0 200 0 1,000 0 1,200

Sub-total Activity 8 0 5,450 150 3,750 150 9,500 Activity 4.9: Development and implementation of the implementing rules and regulations (IRR) on MCT Fiscal Incentives

62000 71300 National

Consultant 0 10,000 0 0 0 10,000

62000 71600 Travel 0 0 0 0 0 0 62000 74200 Documentation 0 1,000 0 0 0 1,000 62000 74500 Meetings 0 250 150 150 150 700

Sub-total Activity 9 0 11,250 150 150 150 11,700 Activity 4.10: Implementation of policy support activities

62000 71300 National

Consultant 0 5,000 0 2,500 0 7,500

62000 71600 Travel 0 0 0 0 0 0

62000 74100 Workshop expenses 0 10,000 0 10,000 0 20,000

62000 74200 Documentation 0 200 0 1,000 0 1,200 Sub-total Activity 10 0 15,200 0 13,500 0 28,700 Activity 4.11: Preparation of procedures and requirements from various users of MCT

62000 71300 National

Consultant 0 5,000 0 2,500 0 7,500

62000 71600 Travel 0 0 0 0 0 0

62000 74100 Workshop expenses 0 10,000 0 10,000 0 20,000

62000 74200 Documentation 0 200 0 1,000 0 1,200 Sub-total Activity 11 0 15,200 0 13,500 0 28,700 Activity 4.12 : Monitoring of MCT fuel Prices

62000 71300 National consultant 0 0 5,000 0 2,500 7,500

62000 71600 Travel 0 0 0 0 0 0

62000 74100 Professional services 0 0 7,500 0 7,500 15,000

69

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

62000 74200 Documentation 0 1,000 1,000 2,000 Sub-total Activity 12 0 0 13,500 0 11,000 24,500 Activity 4.13: Review of the MCT Policy

62000 71300 National

Consultant 0 0 5,000 0 2,500 7,500

62000 71600 Travel 0 0 0 0 0 62000 74200 Documentation 1,000 0 1,000 2,000

Sub-total Activity 13 0 0 6,000 0 3,500 9,500 Activity 4.14: Capacity building for the relevant government agencies

62000 71200 International

Consultant 0 5,000 0 0 0 5,000

62000 71300 Natl. Cons. 0 5,000 0 2,500 0 7,500 62000 71600 Travel 0 0 0 0 0 0

62000 74100 Training expenses 0 10,000 0 10,000 0 20,000

62000 74200 Documentation 0 200 0 1,000 0 1,200 Sub-total Activity 14 0 20,200 0 13,500 0 33,700 Activity 4.15: Organizational development for an MCT Focal Unit

62000 71300 National

Consultant 0 3,900 0 0 0 3,900

62000 71600 Travel 0 0 0 0 0 0

62000 74100 Training expenses 0 10,000 0 10,000 0 20,000

62000 74200 Documentation 0 200 0 1,000 0 1,200 Sub-total Activity 15 0 14,100 0 11,000 0 25,100 Activity 4.16: Establishment of independent association of MCT retailers and manufacturers

62000 71300 National

Consultant 0 0 2,500 0 0 2,500

62000 71600 Travel 0 0 0 0 0 0 62000 74200 Documentation 0 0 1,000 0 0 1,000

Sub-total Activity 16 0 0 3,500 0 0 3,500 Sub Total Component 4 0 153,150 25,300 73,400 27,050 278,900 Component 5 : MCT Promotion Activities Activity 5.1: Preparation of an advocacy, marketing and

62000 71200 International

Consultant 10,000 0 0 0 0 10,000

70

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

communication plan for MCT development

62000 71300 Natl. Cons. 2,500 2,500 3,800 0 0 8,800 62000 71600 Travel 0 0 0 0 0 0

62000 74100 Promotional materials 0 10,000 10,000 0 0 20,000

62000 74200 Documentation 2,500 200 1,000 0 0 3,700

62000 74100 Professional services 0 0 7,500 0 0 7,500

Sub-total Activity 1 15,000 12,700 22,300 0 0 50,000 Activity 5.2: Conduct of survey on MCT application relating to energy efficiency technologies in the ICE sectors in Indonesia

62000 71300 National

Consultant 10,000 0 5,000 0 0 15,000

62000 71600 Travel 0 0 0 0 0 0

62000 74100 Professional services 5,000 0 5,000 0 0 10,000

62000 74200 Documentation 1,000 0 1,000 0 0 2,000 62000 74500 Misc. 0 0 0 0 0 0

Sub-total Activity 2 16,000 0 11,000 0 0 27,000Activity 5.3: Development, operation and maintenance of a database of MCT system manufacturers, distributors and suppliers, products and specifications and prices

62000 71300 National

Consultant 10,000 0 2,500 0 0 12,500

62000 71600 Travel 1,000 0 1,000 0 0 2,000 62000 74100 Database Design 10,000 0 0 0 0 10,000 62000 74200 Documentation 500 0 1,000 1,000 0 2,500

62000 74500 Database Training 5,000 0 0 0 0 5,000

Sub-total Activity 3 26,500 0 4,500 1,000 0 32,000 Activity 5.4: Conduct of MCT road shows and exhibitions

62000 71200 International

Consultant 0 5,000 0 0 0 5,000

62000 71300 Natl. Cons. 0 10,000 2,500 2,500 2,500 17,500 62000 71600 Travel 0 10,000 10,000 10,000 0 30,000

62000 74100 Promotional materials 0 15,000 15,000 15,000 0 45,000

71

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

62000 74100 Exhibition

Expenses 35,000 0 0 0 25,000 60,000

62000 74200 Documentation 0 200 1,000 1,000 0 2,200

62000 74100 Professional services 0 5,000 5,000 5,000 0 15,000

Sub-total Activity 4 35,000 45,200 33,500 33,500 27,500 174,700 Activity 5.5: Conduct of seminar-workshops introducing MCT to local equipment retailers and manufacturers

62000 71200 International

Consultant 0 5,000 0 0 0 5,000

62000 71300 Natl. Cons. 0 10,000 0 2,500 0 12,500 62000 71600 Travel 0 0 0 0 0 0

62000 74500 Workshop Expenses 0 15,000 0 15,000 0 30,000

62000 74200 Documentation 0 300 0 1,000 0 1,300 Sub-total Activity 5 0 30,300 0 18,500 0 48,800 Activity 5.6: Provision of TA to manufacturers and retailers in the marketing of MCT

62000 71200 International

Consultant 0 5,000 0 0 0 5,000

62000 71300 Natl. Cons. 0 9,700 5,000 2,500 0 17,200 62000 71600 Travel 0 1,000 1,000 1,000 0 3,000 62000 74200 Documentation 0 300 1,000 0 1,300

Sub-total Activity 6 0 16,000 6,000 4,500 0 26,500 Sub Total Component 5 92,500 104,200 77,300 57,500 27,500 359,000 Component 6 : Technical Support For Local MCT Industry Activity 6.1: Assessment of factors contributing to the general dependence of local energy consumers in imported equipment and recommendation of measures to effectively address such factors

62000 71200 International

Consultant 0 0 0 5,000 0 5,000

62000 71300 Natl. Cons. 0 0 0 2,500 0 2,500 62000 71600 Travel 0 0 0 0 0 0

62000 74200 Documentation 0 0 0 1,000 0 1,000

Sub-total Activity 1 0 0 0 8,500 0 8,500

72

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

Activity 6.2: Evaluation of MCT system components that can be feasibly manufactured locally in Indonesia

62000 71200 International

Consultant 0 0 0 5,000 0 5,000

62000 71300 Natl. Cons. 0 0 0 2,500 2,500 5,000 62000 71600 Travel 0 0 0 0 0 0 62000 74200 Documentation 0 0 0 1,000 0 1,000

Sub-total Activity 2 0 0 0 8,500 2,500 11,000 Activity 6.3: Evaluation of the capacity (human, technical, financial) of local equipment manufacturers to produce MCT components and/or systems

62000 71200 International

Consultant 0 0 0 2,500 0 2,500

62000 71300 Natl. Cons. 0 0 0 2,500 2,500 5,000 62000 71600 Travel 0 0 0 0 0 0 62000 74200 Documentation 0 0 0 1,000 1,000 2,000

Sub-total Activity 3 0 0 0 6,000 3,500 9,500 Activity 6.4: Development of capacity & capability of local manufacturers to produce components of MCT

62000 71200 International

Consultant 0 0 0 2,500 0 2,500

62000 71300 Natl. Cons. 0 0 0 5,000 0 5,000

62000 71600 Training expenses 0 0 0 10,000 0 10,000

62000 74200 Documentation 0 0 0 1,000 0 1,000 62000 74500 Miscellaneous 0 0 0 500 0 500

Sub-total Activity 4 0 0 0 19,000 0 19,000 Activity 6.5: Evaluation of financial, technical, logistical, legal requirements for the local manufacturing of MCT components

62000 71200 International

Consultant 0 0 2,500 2,500 0 5,000

62000 71300 Natl. Cons. 0 0 5,000 2,500 0 7,500 62000 71600 Travel 0 0 0 0 0 0 62000 74200 Documentation 0 0 1,000 1,000 0 2,000

Sub-total Activity 5 0 0 8,500 6,000 0 14,500 Activity 6.6: Development of standards for MCT performance evaluation

62000 71200 International

Consultant 0 0 5,000 0 0 5,000

62000 71300 Natl. Cons. 0 0 5,000 0 2,500 7,500 62000 71600 Travel 0 0 0 0 0 0 62000 74200 Documentation 0 0 1,000 0 1,000 2,000

73

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

62000 74500 Promotional

materials 0 0 500 0 0 500

Sub-total Activity 6 0 0 11,500 0 3,500 15,000 Activity 6.7: Development of standards for MCT installation, operation & maintenance

62000 71200 International

Consultant 0 0 5,000 0 0 5,000

62000 71300 Natl. Cons. 0 0 5,000 0 2,500 7,500 62000 71600 Travel 0 0 0 0 0 0 62000 74200 Documentation 0 0 1,000 0 1,000 2,000 62000 74500 Miscellaneous 0 0 500 0 0 500

Sub-total Activity 7 0 0 11,500 0 3,500 15,000 Activity 6.8: Capacity building for local manufacturers to comply with quality standards for MCT products

62000 71200 International

Consultant 0 0 5,000 0 0 5,000

62000 71300 Natl. Cons. 0 0 5,000 2,500 0 7,500 62000 71600 Travel 0 0 0 3,200 0 3,200

62000 74100 Training expenses 0 0 0 10,000 5,000 15,000

62000 74200 Documentation 0 0 1,000 1,000 0 2,000 Sub-total Activity 8 0 0 11,000 16,700 5,000 32,700 Activity 6.9: R&D on critical components of MCT systems that can be manufactured in Indonesia

62000 71200 International

Consultant 0 0 0 5,000 0 5,000

62000 71300 Natl. Cons. 0 0 0 2,500 0 2,500

62000 73,400 Rental and maintenance of other equipment

0 0 0 15,000 0 15,000

62000 74200 Documentation 0 0 0 1,000 0 1,000 Sub-total Activity 9 0 0 0 23,500 0 23,500 Activity 6.10: R&D of production critical MCT components in Indonesia

62000 71200 International

Consultant 0 0 0 5,000 0 5,000

62000 71300 Natl. Cons. 0 0 0 2,500 0 2,500

74

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

62000 73400

Rental and maintenance of other equipment

0 0 0 15,000 0 15,000

62000 74200 Documentation 0 0 0 1,000 0 1,000 Sub-total Activity 10 0 0 0 23,500 0 23,500 Activity 6.11: Promotion of research collaboration in engineering of MCT systems

62000 71200 International

Consultant 0 0 2,500 0 0 2,500

62000 71300 Natl. Cons. 0 5,000 2,500 0 7,500 62000 71600 Travel 0 0 1,000 0 0 1,000 62000 74200 Documentation 1,000 1,000 0 2,000

Sub-total Activity 11 0 0 9,500 3,500 0 13,000 Activity 6.12: Evaluation of the capacity (technical, financial) of local service providers (e.g. engineering firms, consultants) in servicing, installing, maintaining MCT systems

62000 71200 International

Consultant 0 0 2,500 2,500 0 5,000

62000 71300 Natl. Cons. 0 5,000 2,500 0 7,500 62000 71600 Travel 0 0 0 0 0 0

62000 74200 Documentation 0 0 1,000 1,000 0 2,000

Sub-total Activity 12 0 0 8,500 6,000 0 14,500 Activity 6.13: Evaluation of the potential improvements/modifications of existing manufacturing processes, practices & facilities to allow for MCT component production

62000 71200 International

Consultant 0 0 5,000 5,000 0 10,000

62000 71300 Natl. Cons. 0 0 5,000 2,500 0 7,500 62000 71600 Travel 0 0 0 0 0 0

62000 74200 Documentation 0 0 1,000 1,000 0 2,000

Sub-total Activity 13 0 0 11,000 8,500 0 19,500 Activity 6.14: Improvement of manufacturing process/practices and facilities to allow for MCT component manufacturing

62000 71200 International

Consultant 0 0 0 5,000 0 5,000

62000 71300 Natl. Cons. 0 0 0 3,800 5,300 9,100 62000 71600 Travel 0 0 0 1,000 500 1,500 62000 74200 Documentation 0 0 0 1,000 0 1,000

Sub-total Activity 14 0 0 0 10,800 5,800 16,600

75

Project Outcomes/Atlas Activity Agency

Source of

Funds

ERP/ Atlas

Budget Code

ERP/Atlas Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Totals

SUB TOTAL Component 6 0 0 71,500 140,500 23,800 235,800

Project Management

62000 71200 Project Adviser –

International 10,000 5,000 0 0 0 15,000

62000 71300 Project Manager –

National 25,000 25,000 25,000 25,000 25,000 75,000

62000 71600 Travel 1,000 1,000 1,000 1,000 1,000 5,000

6200 72400 Comm. & Audio equip. 2,500 0 0 0 0 2,500

6200 72500 Supplies 1,000 1,000 500 500 500 3,500 6200 74500 Misc. expenses 500 500 500 500 500 2,500 6200 71400 Assistant 2,500 2,500 2,500 2,500 2,500 12,500

Sub Total PMO 42,500 35,000 29,500 29,500 29,500 116,000 Grand Total 505,200 1,104,800 344,900 442,600 189,800 2,587,300

76

PART I: Other Agreements (See attached)

A. GEF Operational Focal Point Letter of Endorsements B. Co-Financing Letters

SECTION IV: ADDITIONAL INFORMATION

77

PART II: Stakeholder Involvement Plan The following lists the stakeholder groups and their involvement in the proposed MCTAP.

Table 13: Role of Stakeholders

Institution Official Mandate Role in MCTAP Government Agency for Assessment and Application of Technology (BPPT)

Assessment and application of new technology; Technology research and development, demonstration, testing, etc.; Project development in the pilot and pre-commercial phase, including microturbine technology; and Assessment of the application of new and renewable energy technologies and their viability in the Indonesian context.

Implementing Partner of MCTAP; Secretariat to Project Board; Co-financing institution

Ministry for Environment Management of natural resources and environment to support reaching of sustainable development, builds coordination and partnership of the stakeholders in management and exploiting of natural resources and environment efficiently, fair and having continuation, realizes prevention of damage and contamination control of natural resources and environment for the agenda of conservation of neighborhood function of life

Member of the Project Board; Participate in policy and institutional capacity development activities of the project.

Directorate General of Electricity and Energy Utilization (DGEEU)

Rural electrification; Policy formulation on electricity and energy utilization; Implementation of the policy on electricity and energy utilization based on the existing laws and regulations; Development of standards, norm, technical guidance and procedures on electricity and energy utilization; Technical advice and evaluation; and Regular administration business of the institution.

Chair of the Project Board; Participate in policy and institutional capacity development activities of the project. Co-financing institution.

BAPPENAS (National Planning Development Agency).

Preparation of the national development plan; Overseeing energy development for national scale, including energy conservation through its Bureau for Electricity, Energy Development and Mining; Allocation plan for government resources; and Determination of partnerships by government in different projects including. Energy conservation, renewable energy,

Member of the Project Board; Participate in policy and institutional capacity development activities of the project.

78

Institution Official Mandate Role in MCTAP special rural electrification and other projects

BP Migas A Government owned agency for supervising and controlling the operation of Production Sharing Contract of Oil and Gas Contractors in order to guarantee the effectiveness and efficiency business activities, strive for the availability of oil and gas to meet domestic demand, while to support a conducive climate environment investment for oil and gas upstream business activities.

Member of the Project Board; Participate in policy, institutional and technical capacity development activities of the project.

State Ministry of Cooperatives and Small and Medium Enterprises (SMOC&SME)

Responsible for enhancing the role of cooperatives in rural electrification, and in some cases initiator of electrification projects.

Member of the Project Board; Participate in the market development activities of the project. Potential financer of follow-up projects.

Ministry of Finance

Budgeting and finance of all government projects including all energy related projects planned by the Government agencies

Member of the Project Board

Center for Research and Development of Energy Technology and Electricity

Research and development on energy and electricity technology; Research services related to energy and electricity laboratory, consultancy on energy and electricity and application, including energy R&D

Member of the Project Board; Participate in the technology and market development activities of the project. Co-financing institution

International Organizations UNDP-Indonesia

Provision of TA grants for GOI’s various energy and environmental projects, including energy conservation projects, as capacity building program for different initiatives

GEF Implementing Agency; Member of the Project Board; Co-financing institution for the PPG Exercise that designed and developed the MCTAP.

International Fund Corporation / The World Bank

Provision of loans for various energy projects, including energy conservation projects, as lending and capacity building program for different initiatives

Participate in the financial assistance activities of the project.

NGOs/CBOs Energy Efficiency Society Forum (FKMHE)

A non-governmental institution, providing public education and advocacy, independent research and dissemination of energy efficiency activity

Participate in the policy capacity building and market development activities of the project.

Indonesian Renewable Energy Society (METI)

A NGO working on renewable energy development, especially in increasing the quantity and quality of human resources and renewable energy industry.

Participate in the technology and market development activities of the project.

PELANGI An independent research institute for studies and advocacy on strategic issues on natural resources and

Participate in the policy capacity building and market development activities of the project.

79

Institution Official Mandate Role in MCTAP environment while pursuing socio-economic well-being that is equitable and democratic.

Private Sector PT. PGN National gas supply system as the

government corporation which is now the PT. PGN (Persero) retaining the task of distribution

Member of the Project Board; Participate in the policy, institutional and technical capacity development activities of the project.

PT. Pertamina National oil and gas mining system as the government corporation which is now the PT. Pertamina (Persero)

Member of the Project Board; Participate in the technical capacity development activities of the project.

PT. Perusahaan Listrik Negara (PLN)

National Power Utility Company Member of the Project Board; Participate in the technical capacity development activities of the project.

PT Surya Spektrum Inti, Jakarta General Contractor and Genset Rental Company

Host Demonstration Company

PT Bali Niaga Prima, Bali Mechanical, AC and Electrical Planning Company

Host Demonstration Company

PT Pelita Cakrawala, Batam General Contractor, Transportation and Trading Company

Host Demonstration Company

Vulkanisir Gunung Mas, Madiun Tire vulcanizing company Host Demonstration Company Karoseri Gunung Mas, Madiun Automobile Body Assembly, Paint

and Repair Works Company Host Demonstration Company

PT Kreasindo Restu Utama, Jakarta

Contractor in Electrical and Mechanical Engineering

Host Demonstration Company

Capella Body Center, Medan Maintenance and Repair Works Company

Host Demonstration Company

Krakatau’s Automobile Body Repair, Medan

Paint and Repair Works Company Host Demonstration Company

Classic Emporium, Jakarta Automobile Parts and Accessories Company

Host Demonstration Company

PT Trans Malindo Energi, Jakarta General Contractor and Genset Rental Company

Host Demonstration Company

PT Surya Spektrum Inti, Jakarta Retail (Malls) Host Demonstration Company SMP Budi Bhakti, Depok Private Junior High School Host Demonstration Company Inti Energi Abadi, Jakarta General Contractor and Genset Rental

Company Host Demonstration Company

PT Bumi Citra Permai, Jakarta Industrial Estate Company Host Demonstration Company Bengkel “26 Mobil “, Medan Paint and Repair Works Company Host Demonstration Company CV Trans, Medan Paint and Repair Works Company Host Demonstration Company Bengkel Karya Prima, Medan Paint and Repair Works Company Host Demonstration Company PT Ajanni Tekindo, Pekanbaru Heavy Equipment Industry Host Demonstration Company PT Mega Citra Perkasa, Pekanbaru

Agro Business and Building Developer Company

Host Demonstration Company

PT Parindo Karya Prima, Pekanbaru

Real Estates Developer Company Host Demonstration Company

Asia Insurance Insurance Company Host Demonstration Company

80

PART III: CO2 Emissions Reduction Estimates Summary The ultimate goal of the project is to reduce GHG emission from fossil-based power generation in Indonesia. This objective will be achieved by reducing the long-term cost of MCT, adoption of supportive regulatory frameworks, and removing its barrier to the sustainable and widespread applications of MCT within Indonesian market. Direct CO2 Emissions Reductions The MCTAP includes the implementation of demonstrations involving the installation of new MCT system with capacity of about 3.6 MW in Indonesia. Some assumptions will be taken in estimating the CO2 emissions reduction during and after the MCTAP implementation. The CO2 released from micro-turbine cogeneration is only 0.305 kg/kWh, which is much lower than the average power sector emission factor in Indonesia (0.756 kg/kWh). Off-grid MCT systems that will be installed will directly displace diesel fuel oil (HSD) used in diesel power generation. In this regard, about 0.481 kg/kWh CO2 emissions can be avoided since the CO2 emission factor of diesel power plants in Indonesia is about 0.786 kg/kWh. For on-grid MCT systems, the estimated CO2 emission avoidance is based on the aggregated power generation mix, which in the case of Indonesia is at 0.451 kg CO2/kWh As mentioned earlier the potential market for micro-turbine cogeneration until the end MCTAP is set to be 5% of power generation by captive diesel plants or about 301 MW. It is envisioned that the planned interventions will all lead to a significant reduction of the MCT cost by an average of 25% and the desired environment for a sustainable MCT market in the country. With the cost of MCT reduced as facilitated by this project, the widespread utilization of MCT systems, which is expected to result in an overall 200 MW installed capacity by end of project, will result in a GHG emission reduction of about 1.528 million tons CO2. Using 90% load factor and 90% availability factor (combined ≈ 0.8), the annual power capacity (MW) was be able to be computed, as well as the associated CO2 emission reduction. For the 5-year MCTAP, the target MCT capacity installed by end-of-project (EOP) is 200 MW. Using 90% load factor and 90% availability factor (combined ≈ 0.8), the annual power generation (MWh) were computed, as well as the associated CO2 emission reduction at 0.481 tons/MWh. The first MCT installations under MCTAP will be on stream by 2009, i.e., 2009 (50 MW); 2010 (100 MW); 2011 (150 MW) and, 2012 (200 MW), the total power generation will be about 3,504 GWh. The corresponding CO2 emission reduction is 1.528 million tons. Based on the estimated installed capacity each year during the project life, the annual CO2 emissions reduction is shown in Table 14.

Table 14: MCT Power Generation and Corresponding CO2 Emissions Reduction

Year Installed Capacity, MW

Power Generation, GWh

CO2 Emissions Reduction, tons

2008 - - - 2009 50 350.4 152,774 2010 100 700.8 305,549 2011 150 1,051.2 458,323 2012 200 1,401.6 611,098

81

The growing captive power generation market in Indonesia is definitely a promising market for cogeneration. Recently, small-scale cogeneration has become popular in small and medium industries. As one of low temperature cogeneration technologies, microturbine cogenerations are quite potential to replace captive diesel plants and boilers in those industries. About 40% of captive power generation is currently generated by HSD and the rest by others like natural gas, coal, fuel oil, and hydro. Based on the World Bank study, we assume that the captive generation will grow about 4.3% per year. Therefore, the baseline energy consumption will increase from 132.24 million BOE in 2008 to 156.50 million BOE in 2012. By using natural gas as fuel and its high efficiencies, implementation of microturbine cogenerations during the MCTAP will be able to bring about energy savings in the country. It is expected by the MCTAP that the savings would reach 1.24 million BOE at the end of the project (see Table 15).

Table 15: Direct Energy Savings during Project Implementation

Year Baseline energy

consumption (million BOE/yr)

GEF energy consumption

(million BOE/yr)

Project energy savings

(million BOE/yr)

Percent energy savings

(%)

Cumulative Project energy savings (million

BOE/yr) 2008 132.24 132.24 - - - 2009 137.93 137.60 0.33 0.24 0.33 2010 143.86 143.18 0.68 0.47 1.01 2011 150.05 149.10 0.95 0.63 1.96 2012 156.50 155.26 1.24 0.79 3.20

* BOE: Barrel Oil Equivalent As mentioned earlier, some CO2 emission reduction can be mitigated through the displacement of about 5% of captive diesel power generation with the use of microturbine cogeneration during the MCTAP. Table 16 shows the baseline and alternative CO2 emissions and also cumulative CO2 emission reduction resulted from the project.

Table 16: Direct CO2 Emissions Reductions during Project Implementation

Year

Baseline CO2 emissions (million tons/yr)

Alternative CO2 emissions

(million tons/yr)

GEF CO2 reduction (million tons/yr)

% CO2 Reduction

Cumul. CO2 Reduction

(million tons)

2008 46.16 46.16 - - - 2009 48.14 47.97 0.153 0.37 0.153 2010 50.21 49.84 0.305 0.74 0.458 2011 52.37 51.86 0.458 0.99 0.916 2012 54.63 53.95 0.611 1.23 1.528

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Direct Post-Project CO2 Emissions Reductions The MCTAP is expected to bring about the enabling environments that are expected to induce investments for new MCT systems so that the share of MCT could reach 10% of captive diesel market five years after the end of the project. That will bring the total installed microturbine cogeneration system capacity in Indonesia about 494 MW by the end of 2017. During the same period, the estimated power generation of the installed MCT systems would reach 3,461 GWh. This translates to a total CO2 emissions avoidance (from displacement of some captive power) of about 1.664 million tons and energy savings of 3.06 million BOE. The total cumulative CO2 emissions reduction and energy savings 5 years after the end of MCTAP implementation are 6.194 million tons and 11.37 million BOE respectively (see Table 17 and 18). By considering that, the Direct Post-Project CO2 Emissions Reduction of the MCTAP is 6.194 million tons (2013-2017). Table 17: MCT Power Generation and Corresponding CO2 Emissions Reduction after Project

Implementation

Year Installed Capacity, MW

Power Generation, GWh

CO2 Emissions Reduction, millions tons

2013 250 1,755 0.8442014 305 2,135 1.027 2015 363 2,545 1.224 2016 426 2,987 1.436 2017 494 3,461 1.664

Table 18: Direct Energy Savings after Project Implementation

Year

Baseline energy

consumption (MMBOE/yr)

GEF energy consumption (MMBOE/yr)

Project energy savings

(MMBOE/yr)

Energy savings

(%)

Cumulative Project energy savings (MMBOE/yr)

2013 163.23 161.68 1.55 0.95 1.552014 170.25 168.36 1.89 1.11 3.43 2015 177.57 175.32 2.25 1.27 5.68 2016 185.20 182.57 2.64 1.42 8.322017 193.17 190.11 3.06 1.58 11.37

BOE: Barrel Oil Equivalent

Table 19: Direct CO2 Emissions Reductions after Project Implementation

Year Baseline CO2

emissions (MM tons/yr)

Alternative CO2 emissions (MM tons/yr)

GEF CO2 reduction (MM

tons/yr)

% CO2 Reduction

Cumul. CO2 Reduction (MM tons)

2013 56.97 56.13 0.844 1.48 0.844 2014 59.42 58.40 1.027 1.73 1.870 2015 61.98 60.76 1.224 1.97 3.094 2016 64.64 63.21 1.436 2.22 4.530 2017 67.42 65.76 1.664 2.47 6.194

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Indirect CO2 Reductions MCTAP creates the enabling environment that will facilitate the widespread application of microturbine cogeneration technology in Indonesia. The primary targets of the project are the industrial and commercial sectors that are in need of both electricity and thermal energy services. Capacity development activities that will be conducted under the project are expected to influence the relevant stakeholder entities in the promotion, support, design and installation, financing, operation and maintenance of commercially viable MCT system projects. The project will also involve interventions that will bring about the necessary institutional, regulatory and financial policies and mechanisms that would enhance the promotion of the applicable and feasible MCT delivery models, and encourage the target groups in taking on the MCT technology. The operation of a realistic technical potential for more MCT systems in the country that are influenced and induced by the enabling environment established, and demonstrations shown, under the MCTAP will bring about the cumulative CO2 emission avoidance of about 15.652 million tons (2013-2022). Considering the significant barrier removal work and reduced investment cost that will be done under MCTAP, it is deemed that the GEF influence in achieving the abovementioned CO2 emission reductions during the influence period, which in this case is 10 years after MCTAP (i.e., 2013-2022), is considered quite high, relative to that during the project period (i.e., 2008-2012). In that regard, most of the indirect CO2 reduction can be attributed partly to the interventions that will carried out during the MCTAP such as the establishment and enforcement of microturbine cogeneration policies and financing mechanisms, market enhancement, and the successful demonstration programs. In this case, the GEF Causality Factor (CF) can be taken as Level 3 (“substantial but modest”), i.e., 60%. In this regard, 60% of the estimated additional 11.739 million tons of CO2 emissions reduction can be considered as the MCTAP’s Indirect CO2 reduction. Therefore, the Indirect CO2 emission reduction = 11.739 * 0.6 = 7.043 million tons (CF = 0.6).

Table 20: Indirect CO2 Emissions Avoidance (million tons): 2013 – 2022 (Baseline & Additional)

Year Total CO2 Emissions Annual Cumulative

2013 0.633 0.633 2014 0.770 1.403 2015 0.918 2.321 2016 1.077 3.398 2017 1.248 4.646 2018 1.302 5.947 2019 1.358 7.305 2020 1.416 8.721 2021 1.477 10.198 2022 1.540 11.739

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Total CO2 Emissions Reduction

Table 21: Total CO2 Emissions Reduction Attributed to Project

Particulars Quantity (M tons) Remarks

Direct CO2 1.528 From total 200 MW installed MCT capacity during MCTAP Direct Post-Project CO2

6.194 From replication projects of about 494 MW capacity (during 5 years after MCTAP)

Indirect CO2 7.043 GEF Causality Factor = 0.6 Total 14.765

Total CO2 reduction = Direct CO2 + Direct post-project CO2 + [Indirect CO2 * GEF Causality

Factor] Total CO2 Reduction = 14.765 million tons

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Part IV: Monitoring & Evaluation Plan and Budget The proposed project is comprised of six major components consisting of complementary activities designed to achieve the project objectives. For the outputs and activities in each component of the project, Table 22 shows the indicative targets at the end of the project in Year 5 and the periods after the project.

Table 22: Annual Targets for Project Outcomes

Component/Indicator Baseline Annual Targets Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

GOAL: Reduction of the growth of GHG emissions from the MCT deployment in the ICE sector in Indonesia. Cumulative GHG emissions reduced by MCT, million tons of CO2

0 0.153 0.458 0.916 1.528

OBJECTIVE: MCT cost reduction and removal of barriers to MCT applications in the ICE sector Cumulative energy savings from ICE sector, million BOE

0

0.32 0.96 1.92 3.20

MCT installed, MW 0 50 100 150 200 Average % reduction of MCT cost No data 10% from

Y1 level 15% from Y1 level

20% from Y1 level

25% from Y1 level

Component 1: Technology Assessment and MCT Application Development Outcome 1: Enhanced knowledge of potential MCT applications, benefits, availability and cost to improve capability of local MCT providers Number of MCT applications identified and assessed for techno-economic and market feasibility

0 10

Total capacity of installed MCT planned to be developed and implemented in ICE sector

0 200 MW

Component 2: MCT Demonstrations & Market Development Outcome 2: Increased MCT applications and market share Total capacity of MCT demonstration projects implemented and operational

0

8 MW

Total capacity of MW of installed MCT by enterprises

0 200 MW

Number of comprehensive technical and economic feasibility evaluation of different engineering designs and applications of MCT demonstrations to meet market requirements

0 10

Improvement in the overall specific energy consumption in the ICE sector

No data 5% based on Year 1

data Component 3: Technical Support for MCT Financing Outcome 2: Increased MCT applications and market share Number of banks/financial institutions offering loan/credit facilities for EC&EE projects MCT projects by end of project

0

12

Total capacity of EC&EE and MCT projects assisted through bank financing

0 200

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Component/Indicator Baseline Annual Targets Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Total capacity of project financing agreed by MCT implementers and the bank/financial institutions

0 200

Component-4 Policy & Institutional Support Outcome 4: Approval and implementation of policies and institutional arrangements supportive of MCT projectsNumber of new policies and regulations favorable to EC&EE initiatives in the ICE sector, together with policy support program implementation, developed, completed and implemented

0

1

Strategies and regulations on minimizing air pollution from ICE activities are developed and implemented

None Completed

Percentage of ICE sector which is compliant to set emission standards for MCT operations

0 5%

M&E for policy implementation and installation of MCT systems adopted and operationalized in designated agency

None Completed

Component 5: MCT Promotion Activities Outcome 5: Enhanced awareness of the benefits of MCT and increased number of MCT users and planned MCT projectsMCT Information Center operational None Completed Fully functioning database and information exchange services program operated by BPPT

None Completed

Percentage of ICE sector satisfied with service of MCT Information Centre

0 5% 5% 5% 5%

MCT energy performance rating scheme completed and implemented

None Completed mid Year 2

Component 6: Technical Support for Local MCT Industry Outcome 6 : Availability of locally made and reasonably-priced MCT component Total capacity of MCT installed 0 200 MW Number of certified MCT developers in the each year starting Year 5.

0 8

Minimum number of trained local equipment manufacturers producing MCT equipment and/or components

0 2

Minimum number of trained local engineering firms registered and profitably engaged in the MCT support industry

0 2

A set of manufacturing standards for MCT system and components adopted by industry

None Completed

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Monitoring Plan

Table 23: Project Monitoring Indicators

Success Indicators Targets (EOP)

Means of Verification Sampling

Frequency Location Cumulative GHG emissions reduced by MCT, million tons of CO2

• 1.528 • Documentation of energy savings and GHG emissions reduction from MCT pilot projects

• MCTAP Program reports

Semi-Annually Demonstration Project Sites; BPPT, DGEEU, PLN, Statistics Office

• Cumulative energy savings from ICE sector, million BOE

• 3.20

• Documentation of energy savings and GHG emissions reduction from pilot projects

• MCTAP Program reports • Survey of MCT users from

ICE sector indicating type of application, project cost and installed capacity

Semi-Annually Demonstration Project Sites; BPPT, DGEEU, PLN, Statistics Office

• MCT installed, MW • 200MW Annually BPPT, DGEEU, PLN • Average % reduction of MCT

cost • 25% from

Year 1 Quarterly MCT Suppliers/Distributors

Monitoring & Evaluation Budget

Table 24: Project M&E Plan and Budget

Type of M&E Activity Responsible Parties Budget US$

Excluding project team Staff time

Time frame

Inception Workshop (IW) Project Manager (BPPT) UNDP Indonesia &

UNDP/GEF RCU Included in PMO budget Within first 2 months of

project start up

Inception Report (IR) Project Team (BPPT) UNDP Indonesia &

UNDP/GEF RCU Included in PMO budget

Draft IR available before IW Final IR available immediately following IW

Measurement of Means of Verification

Project Manager (BPPT) Project team members Included in PMO budget Start, mid and end of project

Measurement of Means of Verification for Project Progress and Performance (measured on an annual basis)

Oversight by UNDP-GEF RCU Technical Advisor and PM

Measurements by regional field officers and local IAs

Included in PMO budget, and the demonstration activities

Annually prior to APR/PIR and to the definition of annual work plans

APR and PIR Project Team (BPPT) UNDP Indonesia &

UNDP-GEF RCU Included in PMO budget Annually

TPR and TPR report

GOI Counterparts UNDP Indonesia &

UNDP-GEF RCU Project team (BPPT)

Included in PMO budget Every year, upon receipt of APR

PAC/Tripartite Review Meetings

Project Manager (BPPT) UNDP Indonesia Included in PMO budget After IW and subsequently

at least once a year

Periodic status reports Project team (BPPT) Included in PMO budget To be determined by Project team and UNDP Indonesia

88

Type of M&E Activity Responsible Parties Budget US$

Excluding project team Staff time

Time frame

Technical reports Project team (BPPT) Hired consultants as

needed

Included in Component budget

To be determined by Project Team and UNDP Indonesia

Mid-term External Evaluation

Project team (BPPT) UNDP- Indonesia &

UNDP-GEF RCU External Consultants (i.e.

evaluation team)

$20,000 At the mid-point of project implementation.

Final External Evaluation

Project team (BPPT) UNDP Indonesia &

UNDP-GEF RCU External Consultants

$20,000 At the end of project implementation

Terminal Report Project team (BPPT) UNDP Indonesia External Consultant

Included in PMO budget At least one month before the end of the project

Lessons learned Project team (BPPT) UNDP Indonesia &

UNDP-GEF RCU Included in PMO budget Annually

Audit UNDP Indonesia Project team (BPPT) Included in PMO budget Annually

Visits to field sites (UNDP staff travel costs to be charged to IA fees)

UNDP Indonesia UNDP-GEF RCU (as

appropriate) GOI/PAC representatives

US$ 8,000 Annually

TOTAL INDICATIVE COST (Excluding project team staff time and UNDP staff and travel expenses) US$ 48,000

Part IV: Project Risks and Assumptions While all efforts are made to ensure the effective design and implementation of the project activities, there are some risks that have to be addressed to ensure success of the project. The principal risks, which can potentially hinder the successful project implementation and/or reduce project effectiveness, relate to: (a) the sustainability of the support by key stakeholders as defined in the section on Partnership Strategy ; (b) lack of, or fading, interest of the private sector (particularly those who volunteer to host demo projects); (c) ineffective project coordination; (d) failure of MCT technology to perform as claimed by manufacturers resulting to customer dissatisfaction; (e) failure of the gas companies to provide with sufficient and sustainable gas supply and, (f) and unwillingness of consumers to buy MCT products due to high initial cost may lead to failure of the project to induce widespread use of MCT equipment. To address these risks, the project has to establish effective means to monitor and to the extent possible mitigate these risks. Mitigation measures include a strong emphasis on hands-on project management and participation of key national partners, mobilizing private sector participation and a continuous dialogue between the UNDP-GEF, implementing Partner, and relevant line ministries. The different risks that were identified during the project formulation exercise and the recommended mitigation measures are the following:

89

Table 22: Summary of Risk Mitigation measures for the BRESL Project

Risk Level of Risk Mitigating Actions

Insufficient or fading support from the key partners – Unanticipated shift of national renewable energy program priorities leading to reduced technical and budgetary support to MCTAP in general, and specifically insufficient manpower and infrastructure in the agencies with specific mandate relevant to the MCT commercialization leading to slow execution and poor enforcement of regulatory mechanisms; and, Uncertainties to the approval of the recommendation made by MCTAP.

Moderate • During the project LPAC and inception meetings, government commitments to the project will be clearly established and confirmed, including the commitment to provide adequate project staff

• Use of champions both in the government and private sectors to ensure implementation of key activities of MCTAP, particularly the demo projects.

• The project, through successful demonstration of the MCT applicability and economy of scale, will strongly encourage key partners to continue their support and to include MCT development in their programme plan and implementation.

Ineffective participation and coordination The capacity of some of the responsible parties, partners and stakeholders to effectively coordinate in support, and to implement the project activities maybe low. At times, limited available human resource is fully absorbed by the institutions’ internal responsibilities and work and thereby diverting attention from the project activities.

Low to Moderate

• Appointing dedicated project focal point and consultants paid by the project as necessary to ensure efficiency of implementing project activities.

• Introduce capacity building exercises through trainings and workshop on specific topics of project management and implementation.

• Maintain regular communication with the senior official of each respective institutions through the of project board meetings as well as other forums.

Failure for demonstrating the MCT applicability and economy of scale – The technology is new and therefore it has never been tested in Indonesia before.

Low to moderate

• It is new to Indonesia but it has been successfully demonstrated in some other Asian countries. The success example could be use as comparisons or the case of Indonesia.

• BPPT as the Implementing Partner of the Project will see to that the technology is rigorously assessed to demonstrate it applicability under varying scenarios of market conditions and natural gas pricing.

Unsustainable natural gas supply - Natural gas pricing and distribution scheme may differ from the original scenario as defined during the project development stage. This could potentially be driven by policy change in the State’s Gas Company (PGN).

Moderate to Low

• The design of the project has considered the risk and special attention is paid to PGN’s national gas distribution expansion plan. Ensuring that MCT application will not be hampered by shortage of gas supply.

• Close coordination wit PGN will ensure any movement of natural as base price. Assuming that oil price will follow similar trend, it will pose less risk to the project.

High initial investment of the technology - Failure of MCT products to

Moderate • Consumer education activities focus on use and application of wide range of MCT equipments.

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Risk Level of Risk Mitigating Actions

reach affordable price in the Indonesian consumers, despite of the successful demonstration of the technology and return of investment over the long run.

• Sonsumer promotion of after sales service and warranty by manufactures.

• Development of local service centers

� OVERALL Moderate

Formatted: Bullets and Numbering

91

Narrative This project will introduce, promote, demonstrate and facilitate the marketing and application of MCT. through six key components: (a) Technology Assessment and MCT Application Development; (b) Demonstrations & Market Development; (c) Technical Support for MCT Financing; (d) Policy & Institutional Support; (e) MCT Promotion Activities; and, (f) Technical Support for Local MCT Industry. From these 6 components, the following are the expected outcomes: (a) Enhanced knowledge of potential MCT applications; system benefits, availability and cost, as well as capacity and capability of local service providers for MCT systems; (b) Increased MCT applications in ICE sectors as well as market share of MCT, with resulting in GHG emission reduction, and reduction in MCT cost by about 25% average; c) Increased investments on MCT: banks/financing institutions providing loans for MCT projects; (d) Approval and implementation of policies supportive of MCT; e) Enhanced awareness of the benefits of MCT in order to increase the number of MCT users and planned MCT projects; and, f) Availability of locally made, and enhanced local manufacturing capability of the components.

Annual Work Plan (Cover Page)

Country: Indonesia

UNDAF Outcome(s): By 2010, improve life chances and livelihood opportunities through enhanced Government commitment, institutional support, and empowered community engagement in the achievement of the MDGs.

Expected CP Outcome(s): By 2010, improved environmental living conditions and sustainable energy

Expected CP Output(s): Policy, regulatory, economic, market, technological and information barriers to renewable energy and energy efficiency measures are removed.

Implementing partner: The Agency for the Assessment and Application of Technology (BPPT) Other Partners:

Agreed by (Implementing Partner): __________________________________________ Agreed by (UNDG Agency):_________________________________________________

Programme Period: 2008-2013 Programme Component: Climate Change Intervention Title: Microturbine

Cogeneration Technology Application Project

Budget Code: Duration: 5 Years

Estimated annualized budget: USD 400,000 Allocated resources: • Government (co-financing) USD 2,741,000 • Regular (UNDP cost sharing) USD 425,000 • Other (private co-financing) USD12,592,000

o GEF USD 2,587,300 o Donor _ o Donor _

Unfunded budget: _

92

Annexes

93

Annex A List of Demonstration Projects

Demonstration Project Host Company Type of Business Capacity Investment

Cost, US$ Description MW(e) MW(th) MCT Power Generation - Air Conditioning Project

PT Surya Spektrum Inti, Jakarta

General Contractor & Genset Rental Company 2.00 3.69 3,200,000

MCT system will generate part of the power requirements of the company. Waste heat recovered is used to operate a liquid absorption refrigeration (LAR) system for producing chilled water for air conditioning.

MCT Power Generation - Air Conditioning Project

PT Trans Malindo Energi,

General Contractor & Genset Rental Company 1.00 1.85 1,600,000

MCT system will generate part of the power requirements of the company. Waste heat recovered is used to operate a LAR system for producing chilled water for air conditioning.

MCT Power Generation - Air Conditioning Project

SMP Budi Bhakti, Depok

Private Junior High School

0.40 0.74 640,000

MCT system will generate part of the power requirements of the high school premises. Waste heat recovered is used to operate a LAR system for producing chilled water for air conditioning.

MCT Power Generation - Low Pressure Steam Generation Project

Bengkel “26 Mobil “, Medan

Automobile Body Assembly, Paint and Repair Works 0.10 0.18 160,000

MCT system will generate part of the power requirements of the metal treatment process. Recovered waste heat is used for producing low pressure steam for steam drying and washing.

MCT Power Generation - Hot Water System Project

Bengkel Karya Prima, Medan

Automobile Body Assembly, Paint and Repair Works 0.06 0.11 160,000

MCT system will generate part of the power requirements of the metal treatment process. Recovered waste heat is used for producing process hot water and cleaning.

MCT Power Generation - Hot Water System Project

Vulkanisir Gunung Mas, Madiun

Tire Vulcanizing

0.03 0.06 48,000 MCT system will generate part of the power requirements of the tire vulcanizing process. Recovered waste heat is used for producing hot water for tire curing.

3.6 6.6 5,808,000

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Demonstration Project Host Company Type of Business Capacity Investment

Cost, US$ Description MW(e) MW(th) MCT Power Generation - Air Conditioning Project

PT Harmoni Inti Pratama, Jakarta

2.00 3.69 3,200,000

MCT system will generate part of the power requirements of the company office building. Waste heat recovered is used to operate a LAR system for producing chilled water for air conditioning.

MCT Power Generation - Air Conditioning Project

PT Pelita Cakrawala, Batam

General Contractor, Transportation and Trading 0.50 0.92 800,000

MCT system will generate part of the power requirements of the company. Waste heat recovered is used to operate a LAR system for producing chilled water for air conditioning.

MCT Power Generation - Air Conditioning Project

PT Kreasindo Restu Utama, Jakarta

Electrical & Mechanical Engineering Contractor

0.40 0.74 640,000

MCT system will generate part of the power requirements of the company. Waste heat recovered is used to operate a LAR system for producing chilled water for air conditioning.

MCT Power Generation - Air Conditioning Project

PT Bali Niaga Prima, Bali

Air Conditioning, Electrical & Mechanical Engineering

0.30 0.55 480,000

MCT system will generate part of the power requirements of the company. Waste heat recovered is used to operate a LAR system for producing chilled water for air conditioning.

MCT Power Generation - Air Conditioning Project

PT Mega Citra Perkasa, Pekanbaru

Agro Business and Building Developer

0.20 0.37 320,000

MCT system will generate part of the power requirements of the company's office building. Waste heat recovered is used to operate a LAR system for producing chilled water for air conditioning.

MCT Power Generation - Air Conditioning Project

PT Ajanni Tekindo, Pekanbaru

Heavy Equipment Industry

0.20 0.37 320,000

MCT system will generate part of the power requirements of the company. Waste heat recovered is used to operate a LAR system for producing chilled water for air conditioning.

MCT Power Generation - Air Conditioning Project

PT Parindo Karya Prima, Pekanbaru

Real Estate Development

0.20 0.37 320,000

MCT system will generate part of the power requirements of the company. Waste heat recovered is used to operate a LAR system for producing chilled water for air conditioning.

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Demonstration Project Host Company Type of Business Capacity Investment

Cost, US$ Description MW(e) MW(th) MCT Power Generation - Air Conditioning Project

Classic Emporium, Jakarta

Automobile Parts & Accessories Dealer

0.10 0.18 160,000

MCT system will generate part of the power requirements of the company's office building. Waste heat recovered is used to operate a LAR system for producing chilled water for air conditioning.

MCT Power Generation - Hot Water System Project

Capella Body Center, Medan

Transport Vehicle Maintenance & Repair 0.06 0.11 160,000

MCT system will generate part of the power requirements of the metal treatment process. Recovered waste heat is used for producing process hot water and cleaning.

MCT Power Generation - Hot Water System Project

CV Trans, Medan Automobile Body Assembly, Paint and Repair Works 0.06 0.11 96,000

MCT system will generate part of the power requirements of the metal treatment process. Recovered waste heat is used for producing process hot water and cleaning.

MCT Power Generation - Hot Water System Project

Karoseri Gunung Mas, Madiun

Automobile Body Assembly, Paint and Repair Works 0.06 0.11 96,000

MCT system will generate part of the power requirements of the metal treatment process. Recovered waste heat is used for producing process hot water and cleaning.

MCT Power Generation - Hot Water System Project

Krakatau’s Automobile Body Repair, Medan

Automobile Body Assembly, Paint and Repair Works 0.06 0.11 96,000

MCT system will generate part of the power requirements of the metal treatment process. Recovered waste heat is used for producing process hot water and cleaning.

MCT Power Generation - Air Conditioning Project

Asia Insurance Insurance Company

0.06 0.11 96,000

MCT system will generate part of the power requirements of the company office building. Waste heat recovered is used to operate a LAR system for producing chilled water for air conditioning.

4.2 7.8 6,784,000 TOTAL 7.8 14.4 12,592,000

= Tentative Demonstration Projects whose incremental cost is supported by MCTAP; 3.6 MWe Total.