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Bioenergy Implementation in Indonesia Part 3

Updated: Jul 16, 2021

Hi everyone!

I am Indri from THINK-Research Team. This week, we hosted the Sustainability and Resilience Kick-off Workshop. I think I will write about this later.

As I said in my previous post, I will continue to write about biogas implementation in Indonesia. I said before that I would write about one of my previous projects: biogas to electricity. But, I remember when I did my on the job training in Pertamina and had a small project in engineering economy course in 2013. I learned about biofuel in those experiences. So, I will keep biogas to electricity topic to my next post.

When I did my on-job training, my project was making a portable water foam monitor as the safety tools for the oil tanks. That was a memorable experience since I joined a team that won the gold award at the provincial and national level. But, I don't want to write about that experience. I want to write about biofuel. At that time, that was my first time learning energy and renewable energy on the site. I did some industrial visit before, but it was just a visit. In 2013, the Indonesia government had a policy about B10 in biofuel implementation. As I mentioned before, B10 means that 10% of biofuel is mixed into fossil fuel. Based on my observation, they followed the rule by supplying FAME (Fatty Acid Methyl Ester) for biodiesel production from a company in Surabaya, East Java. That company use Ricinus (jarak) as the feedstock.

I saw the oil tanks, and I conversed with engineers, staff, and truck drivers. I did my on-job training at Pertamina Balikpapan, East Kalimantan. This branch office will supply oil to all regions in East and North Kalimantan. I found two biodiesel implementation issues: 1) biodiesel price 2) technical issue in vehicles. The first one, the biodiesel price, was not a competitive price compared with other oil products. Based on the old formula, the FAME market index price (MIP) still refers to the Mean Oil Platts of Singapore (MOPS), 103.48% of the MOPS. MIP is not attractive to biofuel producers with falling oil prices because of the higher FAME production costs. The formula has to be changed to take into account the components of production costs and margins. Then, the technical issue from vehicles, such as trucks, cars, and others. When I talked to drivers, they said it was different when they use diesel with biodiesel. When they used biodiesel, the vehicle didn't perform well. I just took a note and put it in my report when I found this issue.

A few years later, after learning more about renewable energy technology, I wrote in my project report that there are economy, technology, social, environmental, and policy barriers in Indonesia's bioenergy implementation. I will explain only the first and second barriers. There are some key points for economy barriers, such as lower selling price, purchasing price, maintenance cost, low investment, and low benefits of subsidies. In the technology aspect, production cost, infrastructure and network, blending technology and quality control, and engine warranty are the key issues.

So, I found the answer from the last two points. There are three blendings (splash, in-tank, and in-line) in biodiesel production that affect biodiesel's quality control and operational cost. There is an increased risk of losing a customer or having a higher operational cost for distributors, depending on the blending technique and the blending process's success. Moreover, biodiesel use in diesel engine has some impacts on the machine and component performance. Generally, most of the manufacturers supporting biodiesel up to 20% come from automotive equipment, while the heavy equipment industries are still on 10%. However, biodiesel's standard quality in Indonesia is lower than the standard used in the USA and Europe. Consequently, a possible risk of losing the warranty will be high.

When the government is focusing to increase bioenergy implementation in the industrial sector, I think those two issues have to be solved. If you want to read our previous publication, please visit our think page.

Thank you for reading ^^ See you next post!

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