Green Prosperity:

Potential Investment Partnership in

Power Generation from Palm Oil Mill

Effluent (POME)

Poppy Ismalina, Ph.D

Associate Director, Green Knowledge

“In Indonesia, Millennium Challenge Corporation

supports “Green Prosperity” program for 5 years, to support

low-carbon development program at local level”

President Obama

Climate Action Plan, Juni 2013

What is Green Prosperity? Development program to promote..

low carbon economic growth at district level

Thru assistance and ‘investment’ in:

Land use planning, low-emission development path

Sustainable agriculture & forestry

Renewable energy

Green knowledge

Reducing Poverty Through Low Carbon Economic Growth

Increased Household Income and Sustained Natural Capital

Reduce Reliance on Fossil Fuels

Promote Sustainable Landscape

Increase Productivity

Commercial Renewable Energy

Provision

Community Renewable Energy

Provision

Improved Natural Resource

Management

Improved Land-Use Practices

Agriculture Commodity

Intensification

Forest Products and Services Development

Spatial Certainty and Participatory Process for Sustainable Land-Use

Reduce poverty through low carbon economic growth:

provide renewable energy, maintain sustainable landscape and increase productivity

GP Logical Framework

GP model projects in 4 starter districts

GP is developing eight studies of projects based in real communities within the four “starter”Green Prosperity districts, and represent different combinations of renewable energy (RE) and natural resources management (NRM) projects. These studies are intended to provide examples: what kinds of projects does the GP program seek to fund, and what requirements must be met, while provide technical, economic, environmental and social impacts analysis.

1. Berbak National Park Integrated Natural Resource and Energy Management (Muaro Jambi)

2. Rantau Suli Integrated Micro-hydropower/Forestry/Agriculture (Merangin)

3. Grid-connected Electricity Generation from Methane Captured from Palm Oil Mill Wastes(Muaro Jambi)

4. Cacao Intensification (Mamuju)

5. Community Forestry in Bonehau Kalumpang(Mamuju)

6. Grid-connected Mini-hydropower in Mambi (kabupaten Mamasa, provinsi Sulawesi Barat)

7. Aggregated Micro-hydropower around Sumarorong (Mamasa)

8. Karampuang Island electrification (Mamuju)

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GP

Finance Facility

$242mil

Grants

$100mil*

Commercial

$142mil*

Alokasi Dana MCC

KOMERSIAL

PINJAMAN

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Proyek yang Memenuhi Syarat

• Pembangkit Tenaga Listrik dari Energi Terbarukan seperti a Hydro Power

Plant, Biomass Power Plant, PV & PV Hybrid Power Plant atau a

Methane Capture Power Plant dengan kapasitas KURANG DARI 10MW

jika offtaker adalah PLN dan telah disetujui untuk aplikasi pinjaman

komersial dan non komersial;

• Masing-masing proyek yang memenuhi syarat memiliki biaya total proyek

dalam nilai rupiah yang senilai dengan US$ 35 million (i.e. jumlah dari

seluruh Hard & Soft Costs termasuk IDC dan financing fees), kecuali ada

ketetapan lain dari MCA-I;

• Masing-masing proyek harus secara individual disetujui oleh Komite

Investasi;

• Ekuitas: 30%, Pinjaman 70%

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Commercial Structure of RE projects

SPP – Single-Purpose Project

Keunggulan Skema

1. Suku bunga pasar dalam US dollar sebesar 3% – 4 % (suku bunga untuk kredit PRODUKSI dalam Rupiah sebesar 9% - 10%);

2. Tenor (jangka waktu) berdasarkan kesepakatan;

3. Collateral/Jaminan tidak berdasarkan Aset Tetap (Fixed Assets/Permanent Assets) tetapi berdasarkan arus kas yang dijamin oleh “power purchasing agreement dari Offtaker”;

4. Technical Assistance dari MCA-I dalam bentuk Pre-Feasibilty Study dan Feasibility Study untuk menyiapkan pemenuhan kriteria-kriteria investasi (investment criteria);

5. Fasilitasi pembentukan SPP dan pencarian Off-taker (itulah sebabnya multi-stakeholders forum dan investment forum diselenggarakan)

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RE projects

• Off-grid hydro [Rantau Suli- Merangin, Jambi]

• Biogas-POME [Muaro Jambi & Merangin, Jambi]

• On-grid hydro [Mamasa, West Sulawesi]

• Aggregate microhydro [SumarorongPana, West Sulawesi]

• Solar PV [Mamuju, West Sulawesi]

NRM projects

• Peatland and forest conservation [Berbak-Muaro Jambi, Jambi]

• Cacao intensification [West Sulawesi & South Sulawesi]

• Community forestry [Mamuju, West Sulawesi]

GP Project Models

Green Prosperity has $242million financing facility to support low emission projects

Rantau Suli, Merangin• Merangin is a remote area with a hilly

topography, 2 main rivers and 6 sub rivers. These characteristics make the district well suited for small hydro projects. A NGO stated that there were 43 hydro projects with a total capacity of 2.3 MW.

• The goal of this project is to improve economic conditions in the area surrounding Rantau Suli through a project that incorporates hydropower, agriculture, and forest protection under a mutually-reinforcing system of economic growth and environmental management-- the core principles of GP program.

• The team will consider potential economic uses of additional energy, such as for agricultural processing and small businesses, and also the electrification of village facilities such as the school, health clinic, and mosque.

• Opportunities to encourage and incentivize protection of the upper catchment area forestfor the hydropower project will be examined through appropriate productive land use along with institutions for protection such as community forestry licenses and village regulations (peraturan desa).

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Biomass Pome,Sengiti MuaroJambi

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BBIP Mill

• This study evaluates the production of electricity from palm oil mill wastewater.

• The mill will use electricity profits to pay a premium to oil palm smallholders.

• Local villages will receive grid electricity, cheaper than diesel generation currently used.

• Palm mills generally do not invest in electricity projects due to a lack of familiarity with energy and a focus on expanding their profits through expansion of oil palm plantations or palm oil production.

Cacao intensification• The goal is to improve the income of

Indonesia cacao farmers in Sulawesi. Cocoa is an important commodity of Indonesia, which is the third largest producer of cocoa beans in the word.

• The most significant reasons for the decline in production are aging trees and pest infestation.

• Indonesia implemented an export tax on cocoa beans in April 2010 which led to significant growth in grinding capacity over the past two years.

• Many associated companies including traders, processors, and manufacturers have invested in the livelihood of farmers to ensure a continuous supply of cocoa beans.

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Community forestry in Bonehau Kalumpang

• This study will evaluate a community forestry project in the villages of Keang and Lumika, focuses on crop shifting to timber cultivation on community forestry lands.

• This community-driven approach to forestry will ensure increased income for local people; equitable sharing of costs and profits between individuals, the community, and the project sponsor; and increase the sustainability/health of the village ecosystem.

• Four activities are central to the project’s success: Community engagement (Participatory Action Research); crop shifting from current cultivation to timber; establishment of an agreed upon payment structure; and ensuring sustainable land use through appropriate harvesting techniques.

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On-grid minihydro and cacao intensification inMambi, Bambang• The site for the hydro energy project is

located near the village of Bambang sub-district, near the city of Mambi, consists of rugged hilly terrain and has 6,569 acres of forest land; 75% is protected forest.

• This project site is very close to PLN distribution lines allow for easier interconnection. The estimated energy production is 4-5 MW will be to provide green power to PLN.

• Other potential projects include cacao intensification, and community forestry. Bambang is the number one producing district of cacao in Mamasa producing 33% of the 5,212 total tons, while a significant fraction of the total cacao produced in Indonesia comes from West Sulawesi, 11-18%.

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Aggregated microhydro,sustainable agriculture -Sumarorong Pana

• Aggregation of small micro-hydropower projects can result in a project of more attractive size with accompanying economies of scale.

• Establishment of a knowledge and training center that will provide operations and maintenance training for local system operators and will enhance the supply chain for local parts and service

• Development of catchment area protection programs in the local communities

• Community engagement programs focused on improved agricultural practices, sustainable land use, and increased utilization of the generated electricity for economic activities

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Karampuang islandelectrification• Several alternatives were evaluated for the

installation of photovoltaic (PV) energy systems. Communities on the island currently generate electricity using small diesel generators in each village, at a relatively high cost and environmental impact.

• The small generators are enough only to provide some lighting, cell phone charging, food processing, and entertainment for each home. Due to the high cost of fuel, the generators are run only for about 4 hours in the early evening.

• The power output and run-time of the generators are not sufficient to support productive uses. Fuel handling introduces a toxic hazard into each community through spills and used-containers, and the atmospheric emissions from the generators have a local health impact on the villagers (as does generator noise) and include greenhouse gases.

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Green Prosperity:

Power Generation from Palm Oil Mill Effluent (POME)

Opportunities for Palm Oil Mill

Indonesian Palm Oil Mills

Sustainable Production

Palm Oil Mill

Fresh Fruit Bunch

Water

Heat

Palm Kernel Oil

Oil Cake(“Bungkil”)

SALE

Crude Palm Oil Palm Kernel

Plantation

Palm OilMill Effluent

Empty Fruit Bunch

Fiber

Electricity

Shell Sludge Oil

Compost Plant

Palm Kernel

Mill

GREEN PRODUCTS

[MARIS 2012]

POME Characteristics

[Tetratech 2013]

1 kWh = 3.6 MJ

Caloric value biogas:15-35 MJ/m3

Yield biogas:0.30-0.45 m3/kg COD degradable

1 m3 POME produces:24-28 m3 of biogas

450 m3/day:

Electricity :± 3 MWe (eff. >40%)

Potential Electricity Generation

PARAMETER 30 ton/hr 45 ton/hr 60 ton/hr

Design POME flow 15 m3/hr 23 m3/hr 30 m3/hr

COD removal efficiency 90% 90% 90%

Produced biogas 380-450 m3/hr 565-670 m3/hr 755-895 m3/hr

Captured methane 55-65% 55-65% 55-65%

Produced energy7,400-8,750

MJ/hr

11,110-13,130

MJ/hr

14,810-17,510

MJ/hr

Potential capacity ±1.3 MWe

(750 kWe)

± 2.0 MWe

(1 MWe)

± 2.7 MWe

(2 MWe)

Biogas-POME FormationH

OU

RS

-D

AY

SM

INU

TES

-D

AY

S

MIN

UTE

S -

HO

UR

S

SEC

ON

DS

-M

INU

TES

[KME 2011]

Biogas-POME Flow Diagram

[NREL 2014]

Biogas-POME Application

Technology 1: Cover Lagoon System

LINING SYSTEM

COVER SYSTEM

FLARE SYSTEM

SCRUBBING SYSTEM

GAS ENGINE

Technology 2: Tank System

Technology 3: UASB System

Disclaimer

All figures, numbers and dates stated in our presentation are tentative, subject to change,

based on our best efforts and subject to the timely action by the pertinent local government.

Any requirement stated in our presentation may change from time to time as determined by MCA-Indonesia

and/or MCC and is subject to the applicable laws and regulations of the Republic of Indonesia.

THANK YOU!