Barriers and Opportunities of Bio pellets Fuel Development in Indonesia: Market Demand and Policy

Abstract

Abstract Biopellets, part of biomass, have excellent prospects to be developed further in Indonesia. The potential for developing biomass energy is estimated at 50 GWe, while the installed capacity is still around 1600 MW by 2018. This study analyzed the barriers and opportunities of bio pellets development in Indonesia. Data were collected from a systematic literature review and interviews with related stakeholders. Lack of market demand is one of the main barriers to boosting bio pellets development in Indonesia. We found that a lack of national demand was one of the barriers. National demand accounts only for about 10% of total production, with the highest coming from Java – produced for power plants and other industries such as food, cosmetics, ceramics, and furniture industries. About 90% of the biopellets market demand originates from Japan and Korea. Recently, the Indonesian government is drafting a regulation to support cofiring for coal power plants to increase national demand for biomass (including biopellets). This may open a window of opportunity to increase the national market demand for biopellets in Indonesia.